PRODUCTIVITY MEASUREMENT

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PRODUCTIVITY MEASUREMENT

A high level of productivity can be achieved if

the following factors are managed properly on
construction sites and at the head office. These
are as follow:
 Pre-construction activities

 Site/project manager Characteristics

 Management Factors

 Resource Management

 Management Systems
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 Labour Characteristics
 Waste on site
 Delay and disruption
 Motivating Factors
 Hygiene Factors
 Manufacturers measure productivity
using the notion of ‘sales return on
capital employed’ or ‘profit to assets’
ratio.
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 These are used as a measure of success
for business efficiency and some
managers use this as a measure of
productivity.
 Some of the formulas used by managers
to measure the level of their success,
profitability or output are listed below.
 Current (liquidity) ratio = Current
asset Value/Current liabilities
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Current assets are:
 Cash
 account receivable
 market securities
 inventories.

Current liabilities are:

 Debts
 bank overdrafts
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tax payable
and other expenses.
For the purpose of this Power
Point, productivity is defined as:
The ratio of output/input
The output is the final product
and the input is all the resources
used.
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The resources may be:
 Land
 Materials
 Machinery
 Tools
 manpower

The output is higher for firm(a) when

compared with firm(b) with the
same amount of input,
 a>b in terms of productivity.
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 or the same output is achieved but
with a lesser input
 then the productivity is considered
to be high for that firm.
 Other methods of measuring
productivity are described below
 The advantages or disadvantages of
them are mentioned.
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Baseline
 The baseline is an estimate of the best
productivity level that a contractor can
achieve during the construction work on a
particular work.
 The baseline presents actual performance
(disruption to the work is minimal or none at
all).
 It is a function of the design complexity
(Thomas et at, 1999).
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Efficiency is defined as:
The ratio between useful outputs
compared to input
 Within the construction industry
‘input’ includes a wide range of
different resources such as:
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 labour
 material
 plant and finance
 ‘Output’ is the final product,
which may be a simple
Housing Development or a
more complex project such as a
nuclear plant.
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 Units of input and output are generally
different
 This problem can be overcome to some
extent by the use of monetary units.
 The ratio of value or profit to cost could be
used as an indicator of efficiency, since
 V/C= (P+C)/C=1+P/C+ …..
 V = Value
 C = Cost
 P = Profit
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This ratio cannot be used to
compare efficiency between
different sites because:
it depends on the contractor’s
judgement;
it cannot be defined in
absolute terms.
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 Cost Control is one of the most important
objective in Construction Management and
Construction Scheduling.
 The actual control is achieved through the
ultimate decision of the manager that
something should be done differently and the
translation of that decision into practice.
The elements of a cost control system are:
 Observation and collection of information;
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 Comparison of observation with base
line or benchmark or benchmarking
 0ther desired standard.
 Corrective action to be taken if
necessary ASAP.
 A construction cost control system
should enable the management team
to observe current cost levels.
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Be able to compare them with a
standard plan or norm.
To take immediate corrective
action to keep cost within the
budget.
Most construction cost control
systems should have an
immediate response mechanism.
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The best cost control system
AVAILABLE provides
information on what was
happening last week or last
month.
In construction projects some
activities finish in a week or a
month.
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 No action could be taken if the
performance of such activities was
reported a month later.
 In case of smaller projects,
sometimes cost overrun is assessed
at the end of the project.
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 There most be a method to report to
the management the cost overrun for
each activity as it happens,
 Software’s such as ‘asta’ shows the
cumulative cost of the project,
 There is no method of estimating
cost overrun for a small project such
as:
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Short term scheduling and
1.

control.
2. Project Cost model.
3.Quantitative scheduling
For more detail on these
three cost control go to Cost
control PPTs
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Descriptive analysis-
continue
An investigation into 32 case
studies with 16 cases with high
productivity and another 16 with
low productivity.
All housing developments.
It was also important to find out if a
finished project was built within
their budget.
To see how the net rate for each
activity was derived.
If it was met at the end of the
process.
A formula was derived to
measure the productivity loss or
gain for each selected activity for
several case studies.
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 The Formula enables managers to
monitor and find out why
productivity has been low for a given
project activity.
 If managers specifically know where
and by how much there was a loss or
gain in productivity it would become
easier to remedy the causes of
productivity decline
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They can pursue successful
strategies for maintaining high
productivity levels.
From collected information
managers can re-adjust the Net
rate (Bench mark).
Gross rate for their future
pricing.
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 This is very time consuming and a
software based on these formula
must be designed.
 This technique will aid a firm to
have a stronger edge for bidding
lower for a job.
 Will help them to remain more
competitive.
 The formula can be demonstrated as:
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 Let MD=Cost of Material /unit
 A =% allowed for material wastage in the
schedule of rate.
 X=% actual recorded waste after completion
of the job.
 Productivity change relating to wastage is
measured:
 by the difference between the expected
level of waste on site as normally scheduled
in SPONS or LAXTON’s price book
 and the actual recorded waste after the
completion of the job.
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AC = a EC (1+Σ xi) and similarly AL = a EL (1+Σ xi)
xi = % of influential factors such as weather, crew size, absenteeism, machinery,
accidents on site, etc.

•With the aid of a mathematical

formulas labour and craft productivity
for a number of activities on
construction site is calculated.
•These tables enable managers to see
which activities were completed within
the budget/on time,
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and allow them to evaluate the
quality of the completed work.
Tables entitled ‘Productivity
measurement tables shown
below.
also gives the level of
productivity loss or gain for
selected case studies.
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 The success or failure of a project is measured
by considering whether a project has met its
targets.
 However, it was also important to find out if a
completed project was built within their
budget.
 and to see how the net rate for each activity
was derived.
 and if it was met at the end of the process.

PRODUCTIVITY MEASUREMENT CASE 1

STEP-1 (next page)
 Step 1-pull information from bill of quantity
Step 2-carry out calculations-use Dr F.Dejahang’s Formulas.
 COST CONTROL-AOA
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 Design of project control software,
 Based on the mathematical formulas
mentioned above,
 ACTIVITIES 1-2, 2-3, 3-4, 1-12, 1-9, ….
To measure Items such as:
 Time (increase/decrease),
 Cost (increase/decrease),
 Labour (increase/decrease),
 Material (Material waste-
increase/decrease)
 Machinery (efficiency increase/decrease).
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 Compare Actual completion time for
Activities 1-2, 2-3,..agonist allocated
time for Activities 1-2, 2-3,
 Compare Actual completion cost for
Activities 1-2, 2-3,..against allocated
cost for Activities 1-2, 2-3,
 Compare Actual waste allowed(%)
for Activities 1-2, 2-3,..against
allowed waste (%) for Activities 1-2,
2-3,
COST OF MATERIALS
31.14
5% WASTE ALLOWED
6.50% WASTE EXPERIENCED
31.14(6.50-5)=31.14X1.50=£46.71
46.71X156=7286.76
THE ESTIMATED COST FOR THIS ITEM=
7286.76-46.71=7240.05

Total MD Waste Waste

=Cost
of
material
Quanti Deliver (Estima (Actual
ty ed to te) )
(TQ) site
(Act-) % %

156 31.14 5% 6.50%

264 18.88 5% 6.50%

282 8 5% 7.00%
708 1.71 5% 6.50%