Industrial And Labour Relationship In Project Management

Good project management in construction must pursue the efficient utilization of labor, material
and equipment. Improvement of labor productivity should be a major and continual concern of
those who are responsible for cost control of constructed facilities. Material handling, which
includes procurement, inventory, shop fabrication and field servicing, requires special attention for
cost reduction. The use of new equipment and innovative methods has made possible wholesale
changes in construction technologies in recent decades. Also the labour relations with the
construction are highly discussed nowadays.

Labor Productivity

Productivity in construction is often broadly defined as output per labor hour. Since labor
constitutes a large part of the construction cost and the quantity of labor hours in performing a task
in construction is more susceptible to the influence of management than are materials or capital,
this productivity measure is often referred to as labor productivity. However, it is important to note
that labor productivity is a measure of the overall effectiveness of an operating system in utilizing
labor, equipment and capital to convert labor efforts into useful output, and is not a measure of the
capabilities of labor alone. For example, by investing in a piece of new equipment to perform
certain tasks in construction, output may be increased for the same number of labor hours, thus
resulting in higher labor productivity.

Factors Affecting Job-Site Productivity

Job-site productivity is influenced by many factors which can be characterized either as labor
characteristics, project work conditions or as non-productive activities.

(a) The labor characteristics include:

 age, skill and experience of workforce

 leadership and motivation of workforce

(b) The project work conditions include among other factors:

 Job size and complexity.

 Job site accessibility.
 Labor availability.
 Equipment utilization.
 Contractual agreements.
 Local climate.
 Local cultural characteristics, particularly in foreign operations.

(c) The non-productive activities associated with a project may or may not be paid by the owner,
but they nevertheless take up potential labor resources which can otherwise be directed to the
project. The non-productive activities include among other factors:

 Indirect labor required to maintain the progress of the project

 Rework for correcting unsatisfactory work
 Temporary work stoppage due to inclement weather or material shortage
  Time off for union activities
 Absentee time, including late start and early quits
 Non-working holidays
 Strikes

Each category of factors affects the productive labor available to a project as well as the on-site
labor efficiency.

Labor Characteristics

Performance analysis is a common tool for assessing worker quality and contribution. Factors that
might be evaluated include:

 Quality of Work - caliber of work produced or accomplished.

 Quantity of Work - volume of acceptable work
 Job Knowledge - demonstrated knowledge of requirements, methods, techniques and skills
involved in doing the job and in applying these to increase productivity.
 Related Work Knowledge - knowledge of effects of work upon other areas and knowledge
of related areas which have influence on assigned work.
 Judgment - soundness of conclusions, decisions and actions.
 Initiative - ability to take effective action without being told.
 Resource Utilization - ability to delineate project needs and locate, plan and effectively use
all resources available.
 Dependability - reliability in assuming and carrying out commitments and obligations.
 Analytical Ability - effectiveness in thinking through a problem and reaching sound
conclusions.
 Communicative Ability - effectiveness in using orgal and written communications and in
keeping subordinates, associates, superiors and others adequately informed.
 Interpersonal Skills - effectiveness in relating in an appropriate and productive manner to
others.
 Ability to Work Under Pressure - ability to meet tight deadlines and adapt to changes.
 Security Sensitivity - ability to handle confidential information appropriately and to exercise
care in safeguarding sensitive information.
 Safety Consciousness - has knowledge of good safety practices and demonstrates awareness
of own personal safety and the safety of others.
 Profit and Cost Sensitivity - ability to seek out, generate and implement profit-making ideas.
 Planning Effectiveness - ability to anticipate needs, forecast conditions, set goals and
standards, plan and schedule work and measure results.
 Leadership - ability to develop in others the willingenss and desire to work towards
common objectives.
 Delegating - effectiveness in delegating work appropriately.
 Development People - ability to select, train and appraise personnel, set standards of
performance, and provide motivation to grow in their capacity. <li>Diversity (Equal
Employment Opportunity) - ability to be senstive to the needs of minorities, females and
other protected groups and to demonstrate affirmative action in responding to these needs.

Example 1: Effects of job size on productivity

 A contractor has established that under a set of "standard" work conditions for
building construction, a job requiring 500,000 labor hours is considered standard in
 determining the base labor productivity. All other factors being the same, the labor
productivity index will increase to 1.1 or 110% for a job requiring only 400,000
labor-hours. Assuming that a linear relation exists for the range between jobs
requiring 300,000 to 700,000 labor hours as shown in Figure 4-1, determine the
labor productivity index for a new job requiring 650,000 labor hours under
otherwise the same set of work conditions.

Figure 1: Illustrative Relationship between Productivity Index and Job Size

The labor productivity index I for the new job can be obtained by linear interpolation of the
available data as follows:

This implies that labor is 15% less productive on the large job than on the standard project.

Example 2: Productive labor yield

In the construction of an off-shore oil drilling platform, the potential labor hours were found to be L
= 7.5 million hours. Of this total, the non-productive activities expressed in thousand labor hours
were as follows:

 A = 417 for holidays and strikes

 B = 1,415 for absentees (i.e. vacation, sick time, etc.)
 C = 1,141 for temporary stoppage (i.e. weather, waiting, union activities, etc.)
 D = 1,431 for indirect labor (i.e. building temporary facilities, cleaning up the site,
rework to correct errors, etc.)

Determine the productive labor yield after the above factors are taken into consideration.
The percentages of time allocated to various non-productive activities, A, B, C and D are:

The total percentage of time X for all non-productive activities is:

The productive labor yield, Y, when the given factors for A, B, C and D are considered, is as
follows:

As a result, only 41% of the budgeted labor time was devoted directly to work on the facility.

Labor Relations in Construction

The market demand in construction fluctuates greatly, often within short periods and with uneven
distributions among geographical regions. Even when the volume of construction is relatively
steady, some types of work may decline in importance while other types gain. Under an unstable
economic environment, employers in the construction industry place great value on flexibility in
hiring and laying off workers as their volumes of work wax and wane. On the other hand,
construction workers sense their insecurity under such circumstances and attempt to limit the
impacts of changing economic conditions through labor organizations.There are many crafts in the
construction labor forces, but most contractors hire from only a few of these crafts to satisfy their
specialized needs. Because of the peculiar characteristics of employment conditions, employers and
workers are placed in a more intimate relationship than in many other industries.

Labor and management arrangements in the construction industry include both unionized
and non-unionized operations which compete for future dominance.

Unionized Construction

The craft unions work with construction contractors using unionized labor through various market
institutions such as jurisdiction rules, apprenticeship programs, and the referral system. Craft
unions with specific jurisdiction rules for different trades set uniform hourly wage rates for
journeymen and offer formal apprenticeship training to provide common and equivalent skill for
each trade. Contractors, through the contractors' associations, enter into legally binding collective
bargaining agreements with one or more of the craft unions in the construction trades. The system
which bind both parties to a collective bargaining agreement is referred to as the "union shop".
These agreements obligate a contractor to observe the work jurisdictions of various unions and to
hire employees through a union operated referral system commonly known as the hiring hall.
The referral systems operated by union organizations are required to observe several conditions:

1. All qualified workers reported to the referral system must be made available to the
contractor without discrimination on the basis of union membership or other relationship to
the union. The "closed shop" which limits referral to union members only is now illegal.
2. The contractor reserves the right to hire or refuse to hire any worker referred by the union
on the basis of his or her qualifications.
3. The referral plan must be posted in public, including any priorities of referrals or required
qualifications.

While these principles must prevail, referral systems operated by labor organizations differ widely
in the construction industry.

Contractors and craft unions must negotiate not only wage rates and working conditions, but also
hiring and apprentice training practices. The purpose of trade jurisdiction is to encourage
considerable investment in apprentice training on the part of the union so that the contractor will be
protected by having only qualified workers perform the job even though such workers are not
permanently attached to the contractor and thus may have no sense of security or loyalty. The
referral system is often a rapid and dependable source of workers, particularly for a contractor who
moves into a new geographical location or starts a new project which has high fluctuations in
demand for labor. By and large, the referral system has functioned smoothly in providing qualified
workers to contractors, even though some other aspects of union operations are not as well accepted
by contractors.

Non-Unionized Construction

In recent years, non-union contractors have entered and prospered in an industry which has a long
tradition of unionization. Non-union operations in construction are referred to as "open shops."
However, in the absence of collective bargaining agreements, many contractors operate under
policies adopted by non-union contractors' associations. This practice is referred to as "merit shop",
which follows substantially the same policies and procedures as collective bargaining although
under the control of a non-union contractors' association without union participation. Other
contractors may choose to be totally "unorganized" by not following either union shop or merit
shop practices.

The operations of the merit shop are national in scope, except for the local or state apprenticeship
and training plans. The comprehensive plans of the contractors' association apply to all employees
and crafts of a contractor regardless of their trades. Under such operations, workers have full rights
to move through the nation among member contractors of the association. Thus, the non-union
segment of the industry is organized by contractors' associations into an integral part of the
construction industry. However, since merit shop workers are employed directly by the
construction firms, they have a greater loyalty to the firm, and recognize that their own interest will
be affected by the financial health of the firm.

Playing a significant role in the early growth and continued expansion of merit shop construction is
the Associated Builders and Contractors association. By 1987, it had a membership of nearly
20,000 contractors and a network of 75 chapters through the nation. Among the merit shop
contractors are large construction firms such as Fluor Daniel, Blount International, and Brown &
Root Construction. The advantages of merit shops as claimed by its advocates are:

 the ability to manage their own work force

 flexibility in making timely management decisions
 the emphasis on making maximum usage of local labor force
  the emphasis on encouraging individual work advancement through continued development
of skills
 the shared interest that management and workers have in seeing an individual firm prosper.

By shouldering the training responsibility for producing skill workers, the merit shop contractors
have deflected the most serious complaints of users and labor that used to be raised against the open
shop. On the other hand, the use of mixed crews of skilled workers at a job site by merit shop
contractors enables them to remove a major source of inefficiencies caused by the exclusive
jurisdiction practiced in the union shop, namely the idea that only members of a particular union
should be permitted to perform any given task in construction. As a result, merit shop contractors
are able to exert a beneficial influence on productivity and cost-effectiveness of construction
projects.

The unorganized form of open shop is found primarily in housing construction where a large
percentage of workers are characterized as unskilled helpers. The skilled workers in various crafts
are developed gradually through informal apprenticeships while serving as helpers. This form of
open shop is not expected to expand beyond the type of construction projects in which highly
specialized skills are not required.