This document discusses how financial incentives can be integrated with lean construction and labor productivity. It explains that financial incentives have traditionally been used to motivate workers and increase productivity. Theories around the role of money in motivation are explored, including its ability to reduce anxiety or act as an extrinsic reward. Lean construction aims to maximize value and reduce waste, using techniques like just-in-time delivery and open information sharing. Factors that impact labor productivity include worker effort, skills, and team cohesion, while prefabrication and innovative practices can also improve it. The document argues that financial and non-financial incentives together are most effective at driving results.

1. helpdesk@construction-productivity.co.uk
htt://www.construction-productivity.co.uk
INTEGRATING FINANCIALINTEGRATING FINANCIAL
INCENTIVES WITH LEANINCENTIVES WITH LEAN
CONSTRUCTION & LABOURCONSTRUCTION & LABOUR
PRODUCTIVITYPRODUCTIVITY

2. Financial Incentives
 In the past, threat has been used as a
motivating device in our society.
 Threat is used in authoritarian
societies today to achieve objectives.
 Is threat working in the workplace, in
order to increase productivity or
reduce absenteeism?

3. Financial Incentives
 Management today, for many reasons,
gives rewards in order to motivate workers
and increase productivity.
 By the 70TH
incentives had become an
inherent part of the operating system of
the construction industry.
 Trades unions recognized the importance
of incentives as a means of enhancing
their members.

4. Financial Incentives
 They used it as a general expectation of
regular incentive bonus payments.
 As an essential part of an operative’s
earning.
 Financial incentives stimulate workers to
put more effort into their work.
 There are five theories of the role of
money in affecting the job behaviour of
employees.

5. Financial Incentives
These are:
1. Money as a generalized conditioned re-
enforcer;
2. Money as a conditioned incentive;
3. Money as anxiety reducer;
4. Money as a “hygiene factor”;
5. Money as instrument for gaining desired
outcome.

6. Financial Incentives
Theorists on motivation have generally
assumed that intrinsic motivations such as:
 Achievement;
 Responsibility;
 Competence;
 They are independent of extrinsic
motivation.

7. Financial Incentives
Extrinsic motivation are:
high pay;
promotion;
good working relations;
The cognitive evaluation theory
suggests that:

8. Financial Incentives
when extrinsic reward is used,
such as one used by
organizations (bonus pay for
performance improvement), the
intrinsic rewards of the individual
are reduced.

9. Financial Incentives
 Pay or other extrinsic rewards can be
effective motivators.
 However, they should be made contingent
as an individual’s performance.
 Another definition for the term incentive is
“something that inspires action”.
 In the construction industry it means the
attempts to increase production;
 have better performance;

10. Financial Incentives
 Those firms who use financial and non-
financial incentives side by side are those
that produce the best results.
 Motivation with pay increases, and
promotion can often back fire, and
decrease workers motivation.

12. Financial Incentives
Labour productivity & Lean
Construction

13. Lean Construction
 Lean construction main objective is to
maximizes value and reduces waste.
 It applies specific techniques in an
innovative project delivery approach.
It including:
1. supply chain management,
2. Just-In-Time techniques.

14. Lean Construction

15. Lean Construction
 As well as the open sharing of information
between all the parties involved in the
production process.
 Lean manufacturing is an outgrowth of the
Toyota Production system.
 Developed by Taichii Ohno in Toyota in
the 1950s.

16. Lean Construction
 The term supply chain, includes, all the
activities that lead a high quality product.
 Customer satisfaction comes from a good
service or high quality product such as:
 materials
 information

17. Lean Construction
 funds
 People
 etc.
 Some researchers argue that the cost of a
product or service will increase of up to
10% percent because of poor supply
chain design.

18. Lean Construction
Applying Lean Thinking in construction
 Using experienced design teams
 The same design team working on
the design of the project from
beginning to end.
 Speed up the design process.

19. Lean Construction
 Use innovative approaches to speed
up the design process.
 Innovative ideas in design and
assembly.
 The use of pre-fabricated building
elements.
 Manufactured off site and pre-
assembled on site.

20. Lean Construction
 Supporting sub-contractors in
developing tools for improving
processes.
 In order to keep up with Lean
construction It is important to follow the
work of Construction Lean
Improvement Programme (CLIP).

21. Lean Construction
 CLIP operates across the whole
construction supply chain, from raw
materials processors to clients.
 Lean thinking forces attention on how
value is generated rather than how any
one activity is managed.
 An overall success.

22. Lean Construction

24. Labour Productivity
A large proportion of the high cost
in construction work is as a result
of excessive labour costs.
These costs can be reduced if
productivity is increased by
improving labour efficiency.

25. Labour Productivity
 The difficulties in managing
manpower on a large scale may
result in productivity loss
(Thomas and Jansma, 1985).
 There are four main factors that
affect labour productivity;
 The duration of worker’s effort.

26. Labour Productivity
 The intensity of worker’s effort.
 The effectiveness of worker’s
effort combined with the
technology used.
 The efficiency of worker’s effort,
which can be described as a
measure of how much the worker
is utilising his ability.

27. Labour Productivity
 Work on a complex project (e.g. such
as the construction of a major
shopping centre) becomes more
difficult as the project advances.
 Off-site pre-fabrication units will
reduce the number of labour hours
required.

28. Labour Productivity
Other factors such as:
 the level of skill amongst the workers;
 the length of the workday;
 Innovative work practices can increase
productivity.

29. Labour Productivity
 Employment practice has an impact on
the cohesiveness amongst the workforce.
Some of the Important contributors towards
Labour productivity are:
 a culture of cohesiveness
 common goal
 strong sense of a team working
 towards a common goal

30. Labour Productivity
 A culture of team working involving all
workers is to achieve a common goal.
 A common goal is to achieve KPIs.
 Labour productivity can also be improved
if operatives avoid conflict.
 Conflict can hamper the progress of work.
 Team working reduces conflict and will
greatly facilitate increased productivity.

31. Labour Productivity
 The importance of a directly or indirectly
employed workforce.
 The effect on the dynamics of productivity
is reiterated in several research work.
 The growth in the construction sector is
relatively stagnant.
 The job security can be very bad during
any recession for construction workforce.

32. Labour Productivity