This document discusses various methods for measuring productivity in the construction industry. It outlines key factors that influence productivity such as pre-construction activities, resource management, and labor characteristics. It then describes different formulas that can be used to calculate productivity, including comparing the ratio of outputs to inputs or measuring the level of profitability and business efficiency. The document also provides an example of a formula for measuring productivity changes related to material waste.

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PRODUCTIVITY MEASUREMENT

2. 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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MEASUREMENT
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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MEASUREMENT
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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MEASUREMENT
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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1. Short term scheduling and
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.

23. 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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MEASUREMENT
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)

32.  Step 1-pull information from bill of quantity

33. Step 2-carry out calculations-use Dr F.Dejahang’s Formulas.

34.  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,

39. 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
=Cost
of
material
Waste Waste
Quanti
ty
(TQ)
Deliver
ed to
site
(Estima
te)
(Actual
)
(Act-) % %
156 31.14 5% 6.50%
264 18.88 5% 6.50%
282 8 5% 7.00%
708 1.71 5% 6.50%