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CHAPTER 3: HUMAN RESOURCES

MANAGEMENT IN CONSTRUCTION

3.1. LABOUR IN CONSTRUCTION

Definition

• Are human-conscious activities to turn raw materials

and resources into finished construction productions
and services, serving the needs of living, economic
development and social security of the society.

Role

• Essential ingredient for social development.

• Fundamental factor of production process.
• Decisive factor for social wealth.
• Civilisation indicator.
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3.1. LABOUR IN CONSTRUCTION

 Classification
Characteristics
• Direct labour
• Indirect labour (managerial jobs)

Contract form
• Permanent, full-time, long-term.
• Part-time, short-term, casual.

Managing scope
• Internal labour (inside business organisation)
• External labour (outside business organisation)
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3.1. LABOUR IN CONSTRUCTION

 Classification
Business fields

• Staff in construction field.

• Other business field:
• Financial investment, real estate development,
commercial, trade and other services.

Professionals

• Direct labour: 7 levels; 11 groups, as depending on

competencies, skills and required level of work
complexity.
• Managing job titles: competencies, qualifications,
experiences...
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3.2. PRODUCTIVITY

Definition Methods
Productivity describes Quantity of
the efficiency of
production. It’s production
measured by a ratio of
output to input of
production over the
specific period of time. Time-
required
Average quantity of
products produced by a
person.
Average time required Market value
to produce a unit of
production.
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3.2. PRODUCTIVITY
a. Calculation based on Quantity of Production

Formula

• (Quantities/unit of time-required)

• Q: the amount of work can be done in the specific

period of time (in accordance with particular
working condition).
• T: labour time-required (time consumption)
(person-day, person-hour,…) to produce the
amount Q.

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3.2. PRODUCTIVITY
a. Calculation based on Quantity of Production
Pros
• Revealing the exact nature of productivity.
• Ineffectiveness of market and working conditions.
• Comparability of productivity in various scope and
time.

Cons
• Applicable to specific works with the same
measure of products.
• Ungeneralisable for all construction works and for
all business activities.
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3.2. PRODUCTIVITY
b. Calculation based on time-required

Formula

• (time-required/unit of production)

• T: total time-required (time consumption) (person-

day, person-hour...) to complete the amount of
output Q.
• Q: the amount of work can be done in the specific
period of time (in accordance with particular
working condition)

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3.2. PRODUCTIVITY
b. Calculation based on time-required
Pros
• Revealing the exact nature of productivity.
• Ineffectiveness of market and working conditions.
• Comparability of productivity in various scope and
time.
• Comparability of productivity to production norm.

Cons
• Applicable to specific works with the same
measure of products.
• Ungeneralisable for all construction works and for
all business activities.
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3.2. PRODUCTIVITY
c. Calculation based on market value
Formula

• (value/unit of production)

• Qi: the amount of work output i can be

done in the underlying term.
• Di: price for unit output of work i.
• Ti: Time-required (time consumption) for
producing the amount of output Qi.
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3.2. PRODUCTIVITY
c. Calculation based on market value
Pros

• Applicable to any types of work with any product

measures.
• Applicable to production planning.
• Applicable to compare production to average wage.

Cons

• Influenced by market price of production input/output.

• Be affected by Unit price (Di)
• Be affected by work structure.
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3.2.3. PRODUCTIVITY IMPROVEMENT

Definition Affecting Weather conditions

factors

Material supply
Increasing of
production Technological
quantity. application
Managing and
monitoring
Reducing of
resources Skilled workers
required.
Working conditions
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3.2.3. PRODUCTIVITY IMPROVEMENT

 Outcomes:
 Running ahead of construction schedule -> Earlier
building transfer, time-related cost saving, reducing
loss for owner and constructors due to pending capital
recovery.
 Increasing production quantities-> the higher
productivity, the lower production costs, the smaller
fixed cost per output, the greater profit.
 Reducing in the number of labours -> cost saving,
benefits from marginal workforce, creating competive
advantages.
 Increasing award rate, quick recovering investment
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3.2.3. PRODUCTIVITY IMPROVEMENT

 Solutions:
 Using innovative technologies and effective
management in construction methods and material
supply chain.
 Applying effective human resources management,
employee training, and labour incentives.
 Taking advantages of weather and construction
conditions.
 Reducing negative effects of disadvantages.

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3.3. HUMAN RESOURCES MANAGEMENT

Definition

• Is a collection of managing activities aiming at

enhancing and consolidating individual contributions
to the goal of business organisation, society and
worker.

Objectives

• Effective employment the workforce.

• Effective using other production resources.
• Creating competitive advantages.
• Avoiding disadvantages.
• Contributing national wealth and social benefits.
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3.3. HUMAN RESOURCES MANAGEMENT

Targets

• Creating sufficient Jobs.

• Facilitating individual worker achieving his/her goals,
associating with the goals of business.
• Human resources management involves:
• Recruiting, selecting, inducting employees
• Imparting training and development
• Appraising the performance of employees
• Deciding compensations
• Providing benefits and motivating employees
• Ensuring employee safety, welfare and health
measures, in acompliance with labour laws.
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3.3. HUMAN RESOURCES MANAGEMENT

 Human resources management phases

Recruiting and inducting

Managing and evaluating

Developing
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3.3. HUMAN RESOURCES MANAGEMENT

Recruiting and inducting

Identifying demanded jobs and positions

Managing labour resources

(Internal or external recruitment)

Selecting, inducting and providing orientation

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3.3. HUMAN RESOURCES MANAGEMENT

Managing and evaluating
Planning and Co-operating
Scheduling
Working norm
Productivity
Wages, rates, allowances
Working conditions
Assessing performance
Exercising working discipline
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3.3. HUMAN RESOURCES MANAGEMENT

Developing

Training and re-training

Promoting (climbing the career ladder) and raising

Transferring and firing

Maintaining proper relations with employees and
trade unions
Providing compensations

Offering incentives and bonus

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3.4. LABOUR CONTRACT

Definition
 A labour contract is an agreement between
an employee and an employer on a paid job,
working conditions, and rights and
obligations of each party to the labour
relationship.

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3.4. LABOUR CONTRACT

Common types:
 Seasonal Contract: is a labour contract with the
duration of less than 12 months;
 Definite Term Contract: (the duration of between 12
months and 36 months). The term of a definite term
contract can be extended one time only. Thereafter, the
employer must enter into an Indefinite Term Contract
 Indefinite Term Contract: the two parties do not fix the
term nor the time of termination of the contract.

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3.4. LABOUR CONTRACT

Items to include
 Name of employer and employee

 Job title, main duties and responsibilities

 Start date of employment, Place of work;

 Duration of employment, Probation period;

 Working arrangements;

 Basic salary (basic rate of pays);

 Fixed allowances, types of leave (annual, sick leave);

 Other salary-related components: Bonuses and

Incentives;
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3.5. SALARY

Noted

• Salary refers to remuneration or money

compensation, including allowances, paid
for work done under a contract of service.
• In market economy, salary is subject to
negotiation and agreement between an
employer and an employee.
• The essential difference between a salary
and wages is that a salaried person is paid a
fixed amount per pay period (month or year)
and a wage earner is paid by the hour.
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3.5. SALARY
• Economic management
tool for labour
compensation and
productivity
enhancement.
• Tool for assessing
performance
(quantitative and
qualitative) and
contributing benefits.
• Encouraging economic
development and
ensuring social equality.
• Rule of benefit
contribution.
• Aligning with national
economic-social
circumstance.
• Consistent with demand
and living standard.
• Social equality and anti-
discrimination.

Purposes Principles
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3.5. SALARY
Based on pay grades:
 Benchmark (professional levels): in consistent with required
skill competence and work complexity. (for construction
labour: 7 levels and 11 groups)
 Pay grade (rate) is a system that determine how much an
employee is to be paid as a wage or salary, based on
qualification, skill level, experience, length of time served...
 Salary amount

 The amount of money is paid, associating with specific

rate or pay grade of worker.
 Base pay (lương cơ bản) = Rate x Minimum wage

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3.6. SALARY TYPES

Time-based salary:

Feature

• Time-based salary of paid work is based on the

duration of work and rate in a specific salary grade.

Pros and Cons

• Pros: representing fairly the quantity and quality of

labour, associating with skill level.
• Cons: the level of salary may not necessarily mean
quality of output -> less affecting to productivity
enhancement.
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3.6. SALARY TYPES

Time-based salary:

Scope:

• is more traditionally applicable for management

positions, and indirect labours

Types:

• Stime-based = Dwork x Rwage

• Dwork – duration of work (hours or days)
• Rwage – rate of specific time-based wage grade
• Stime-based = Dwork x Rwage + Abonuses
• Abonuses – Award amount (bonuses or incentives)
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3.6. SALARY TYPES

Output-based or performance-based salary:
Feature
• Out-based salary of paid work is based on the quantity
of output/work has been done and rate or unit price for
appropriate output.
Pros and Cons:
• Pros:
• Representing adequately the quantity and quality of
labour -> incentives for productivity and performance
improvement.
• Exercising contribution principles (the more output,
the more earned).
• Cons:
• For the sake of meeting deadline, quality of output
might be compromised.
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3.6. SALARY TYPES

Output-based or performance-based salary:

Applicability:

• Measurable quantity of work output

• Reliable and achievable production norm
• Regular evaluating and monitoring.
• Routine quality inspecting.

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3.6. SALARY TYPES

Output-based or performance-based salary:
Direct labour

• Soutput-based = Q x Doutput
• Q – quantity of output (inspected and approved)
• Doutput – unit price of output

Indirect labour

• Applicable for indirect labours (whose performance

evaluated by direct labours)
• Soutput-based = Q x DIndirect labour
• Q – quantity of output (inspected and approved)
• DIndirect labour – unit price of output paid for indirect labour
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3.6. SALARY TYPES

Output-based or performance-based salary:

Output-based salary plus bonus

• Soutput-based = Q x Doutput + Abonuses

Output-based marginal salary

• Soutput-based = Q x Doutput + Qabove norm x Dabove norm

• Qabove norm – Quantity of output be produced above norm
• Dabove norm – unit price of above-norm output

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3.6. SALARY TYPES

Lump-sum payment

Agreement between owner and contractors or

suppliers on a paid job, working conditions, and
rights and obligations.

Facilitating managerial accounting

Effective targeting on production output.

Increasing degree of working collaboration.

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3.6. SALARY TYPES

Allowances

• Area-based allowance,
• Extreme working conditions,
• Responsibility allowance,
• Night-shift allowance,
• Encouragement allowance: remoted island,
undeveloped areas,
• Site allowance: mobility and site working
conditions,
• Over-time allowance
• Special allowance: e.x. long service allowance
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3.6. SALARY TYPES

Insurance and Superannuation

Sickness/maternity benefit

Labour accident allowance

Unemployment allowance

Retirement superannuation

Health insurance

Severance allowance
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