Construction Productivity: Measurement and Improvement Chapter Construction Productivity: An Introduction creases. The industry has witnessed at best only very small annual iricreases in the amount of construction in place per person-hour of labor, There are many reasons for this relatively low annual increase in productivity, including certain characteristics ‘unique to the industry, such as unpredictable weather and the fact that nearly every project is singular in some aspects ofits design and construction. Regardless of the numerous reasons (or excuses) one might give for low productivity increases in the construction indus- try, this condition has had a negative effect on all parties involved- project owners, project design teams (including architects and engi- neers), contractors, and craftspeople. In this introductory chapter we define construction productiv- ity, discuss reasons for low increases in productivity, discuss the ef- fect of low productivity on various segments of the industry, and outline an approach to inereasing productivity. DEFINING PRODUCTIVITY The term productivity has different meanings for different people. Many individuals automatically think only of labor and/or labor ‘unions when the term is mentioned. Others associate capital expen- ditures with productivity. Each of these interpretations is only partly correct. T ho construction industry is in dire need of productivity in-4 onstruction Productivity: Measurement and Improvement ‘The US. Department of Commerce defines productivity as dol- lars of output per person-hour of labor input (see Figure 1.1). Using this definition, the Department of Commerce reports on US. pro- ductivity annually. In order to make comparisons from one period to the next, federal statisticians adjust the numerator ofthe productiv._ ‘equation that is, dollars of output) for the Consumer Price Index” (CPD In ight of this definition of productivity, we might infer that there is only one way to increase productivity - through greater la- bor effort. This is not true, however. There are many ways to in- crease productivity. The following are eight recommendations. 1. Better combinations of equipment and labor. Tse more efficient equipment and tools. ‘Use better materials. 4"Tmprove production management. 6.Expend greater labor effort. 1. Improve training of labor free 8. Lessen governmental regulations. This list does not exhaust the means available to increase productivity, and it should make clear that expecting the workforce to work harder is not the only way to increase produc- tivity Providing a worker with better tools may actually allow that worker to expend less effort while increasing his or her pro- ductivity. Infact, better tools and equipment may enable work- rs to generate more work with the same or less effort. Although this author adheres to the definition of productiv. ity as dollars of output per dollars of input, thereby substituting dbllars for person-hours of input, this definition is not widely ac- cepted; the Department of Commerce's definition remains the accepted one. Therefore, forthe purposes of this text, the defini- Dollars of ouput Person-hours of labor Productivity = Figure 1.1. A defrion of produetity. The numerator must be adjusted forinfaton, Construction Productivity: An inraducion 5 tion given in Figure 1.1 applies where ever the term “productiv- ity” is used. DECLINE OF PRODUCTIVITY Perhaps the first and second problems of the construction industry are ts declining rateof productivity inereasesand its lack of produc tivity standards, respectively. In fact, these two problems are related. Inone study of industry productivity, a Federal Price Commis: sion concluded that an industry's abilit increase productivity 1s Sinasty dopendent on the dope to wich i can ot tus” ‘standards. These problems should initially be viewed in vthe ‘context of statistics on productivity in the United States published by gov- ternmenial agencies or collected frm industry stuies. Over the last TO years industrial productivity hes ben increasing ate rateatonly about 2.7% annually. If we compare this rate of increase with those of other developed countries, particularly Japan, it is evident that several others have been increasing their productivity at a rate in excess of 5% annually (all figures are adjusted for inflation each year). Onthebasiaf tees number, it appears that the United Stas has an overall productivity problem. (Infact, one staple definition of inflation is that it exists when costs increase faster than productivity increases) ‘The specific problem of productivity in the construction indus- try in regard to productivity is highlighted by data from the US. Department of Commerce, which reports on the productivity of indi- vidual industries Table 11 presente an excerpt of these data. AL Table 1.1. Productivity Increases for Various Industries Industry Productivity Increase (%) ‘Agriculture 3.64 Construction 0.80 Government 1.64 Manufacturing 260 Mining 347 Public utilities 540 ‘Transportation 4.80 Source: Construction Review, U.S. Depariment of Commerce, Washing- ton D.C., 2002.6 Consitucion Productivity: Measurement and improvement @__Gonsiruction Productivly: Measwement ond improvement though total US. productivity has been increasing at a rate of 2,79, annually, that ofthe construction industry has been increasing at a rate ofles5 than 1 % a year. In fact, from 1990 to 2004 the construc. ‘Wor industry has been rated as one of the worst industries, if not the worst, in terms of increases in productivity. If we examine the typical construction process, we find that it includes about 45% nonproductive time. Naturally, every industry “has nonproductive time; however, the nature of construction, includ- ing the fact that it occurs in a variable physical environment, is such that typically the process is unique in important aspects for each projet and is necessarily decentralized in terms ofits physical loca- tion, These factors contribute to a higher percentage of nonprodue- tive time than occurs in most industries-a situation that can be ex- pected, within limits. However, a 45% rate of nonproductive time for ‘typical construction project is clearly too high; neither efficiency “norareasonable profit results with such a rate: “Sraremoon With the use of a management technique developed by the au- thor (the Method Productivity Delay Model or MPDM, presented in. Chapter 9), a great deal of construction job-site data have been col- lected in order to analyze some of the causes of nonproductive time. This non-productive time can be separated into three broad cat- egories,asin Table 12. — It is important to note that approximately one-third of all non- productive time can be traced to industry-related factors, another third to labor-related factors, and a final third to management inef- Table 1.2. Sources and Percentage of Nonproductive Time in the Construction Industry ‘Sources of nonproductive time Labor 113 Management 113 Industry 13 Time Spent Productive 55% Nonproductive 45% Total 100% Construction Productvitiy: An Introduction Zz ia Table 1.3. Reasons for Nonproductive Time in the Construction Industry industry-related Laborrelated —_ Management-related aes _____ ee Uniqueness of many High percentage flabor Poor cast systems and projects cost ‘contol Locations at which \Vabilty of abor Poor project planning projects are buit produetivily ‘Adverse weather and Supply demand Poor planing for climate seasonality characteristics of ‘measuring and industry predicting productivity Dependence onthe tte potential for labor ‘economy learning ‘Smal size offs Risk of worker accidents Lackof R&D Union work rules Restretive bling Low worker motivation codes Government labor and ‘enutcamental las ficiencies. A more detailed listing of some of the reasons for nonpro- ductive time is given in Table 1.3. The high percentage of nonproductive time routinely affects con- struction cost and time estimating in several ways. The fact that actual productivity ean and does vary significantly from 25% to 75% _ seriously hampers contractors in their estimating efforts. This situ- ‘ation can and does create a high degree of financial risk for contrac- tors every time a project is estimated. Undoubtedly, the cost of performing construction work is closely related to the productivity rate for any construction job. THE EFFECTS OF LOW PRODUCTIVITY ON THE CONSTRUCTION INDUSTRY As noted earlier, while the overall US. economy has been increasing its annual productivity at an annual rate of close to 3% the construc- tion industry has averaged an annual inerease of less than 1 %. What has this low productivity rate done to the industry? Figure 1.2illus- trates some of the effects from 1990 to 2002. In particular, we can see how the project owner, the project designer, the contractor, and even the craftsperson have heen affected.. 8 Construction Productivity: Measurement and Improvement 8 _ Construction Preductiviy: rare mproverent Construction Productivtiy: An Introduction 9 Designers professional ability insurance per dolar of in-place constuction, one “ ‘There are two major means of fighting inflation. One is to hold “Number of const down costs; the other is to increase productivity. The fact that labor 7 \. Jon claims disputes gets a 10% raise will not by itself cause inflation, especially if the project owner gets a 10% increase in productivity. Some project own- < Annual increases ers have sought solutions by trying new project delivery systems, for in costofconstruction ‘example, the construction management process (see Chapter 2). Other owners have decreased the quality of their buildings, bought for- eign-made products or materials, or simply not invested. i Inflation of construction Effects on the Construction Contractor Projecto project owner As the spread between productivity and the cost of construction So. Craftsman hours has increased, the profitability of the construction contractor, like * worked per craftsman that of the project owner, has decreased. There are several ways to per year measure a contractor's profitability. One is to determine a contract- a Annual increases in ing firm’s net income or profit earned per dollar of sales or rev- ‘constuction industry enue. conser s no Nein ‘Although the rai of earned profs to sales does vy from one Perentage S firm to the next, there is evidence that the return on sales has gene’ a ally decreased for the contractor. One source of such financial dat fo ly = aE Robert Morse Associated, indicates thet since 1990 the contractor's ; earned profits on sales or revenue has decreased from approximately Figure 1.2. Erfects of low productivity in the construction industry. 6% to.a 2002 rate of lose than 3% (aoe Figure 1.3). One might assume ' that as the cost of construction increases, the contractor passes on a ‘The two solid lines in Figure 1.2 represent the increased costs of considerable portion of the lmsronce to the project omuce The come the components of the construction project (labor, material, and so tractor must also absorb some ofthis increased cost, however. Ifcon anand the increased productivity of the industry. The cost curve ‘actors absorb even as lite as 10%, this significantly decreases their sho in the fire can be derived from studying eost indexes such profitability. as those pu ingineering News Record. The annual cost 7 Ihren as en appointed a HO Tn anyons year th eres In ackition to affecting profaity the nablity to close the gap in construction labor or materials may vary below or above this per- heii wewertogerr iy tig operon dame atin amore Sentage; however, everstho past 10 yoera arl0% annual\incroase 18 point. It shows the profit margin of the contractor relative to varia~ fairly representative tions in the contractor's estimated costs for a project. On the aver- age, there is a 6% variation in actual and estimated costs. In other Efe: ots On the BrojpotiQumner: words, a construction cost estimate is normally accurate to within ‘The annual construction industry productivity increase can be ap- 6% on either side, Because of decreased profitability, the typical con- proximated at 0.8%. Note the increasing spread between the cost ‘Struction bid submitted by a contractor is now likely to entail more curve and the productivity curve. The typical project owner has seen. risk (6%) than profit (2.8%). Undoubtedly, this is one factor contrib- building costs increase 10% in a given year while productivity has ‘ting to the increased number of contractor failures, and it provides Yisen at a rate of less than 1 % annually. Simply put, this spread ‘an incentive for the contractor to do negotiated or construction-man- ~ tnieates that the project owner is suffering the effects of inflation, eeement work, ‘whiclcan be defined as the difference between costs and productiv- ity10 ‘Measurement and Improvement 738 Tae THI Figure 1.3 Contractor risks and profitability Effects on the Project Designer Indirectly the increasing spread between construction costs and pro- ductivity also negatively affects the project designers (architects/en- gineers), most of whose profit margins have decreased over the past decade or so. Equally important, the project designer has become ‘more accountable for design errors and omissions. The end result is ‘That the designer has witnessed rapidly increasing professional ji bility insurance premiums. Indeed, there has been a significant in- ‘crease in both the number and dollar amount of disputes and claims that have occurred in the construction industry over the past decade (see Figure 1.2), As the profit margins of the contractor and designer have decreased and the project owner has experienced tighter bud- get constraints, each party has shown less ability or willingness to compromise when construction problems occur. Disputes escalate into expensive and time-consuming lawsuits. The large number of claim disputes and lawsuits that have become commonplace in the con- struction industry are another result of the gap between rapidly in- creasing costs and slowly rising rates of productivity. Effects on Craftspeople Even the construction eraftsperson is negatively affected by the spread between increasing costs and productivity. The amount of Construction Productivity: An Introduction u" work available to the construction crafts has not significantly in- creased since the early 1980s. In fact, in spite of increased wage rates, the craftsperson has actually witnessed his or her real income de- crease. An analysis of Figure 1.2 indicates that the number of hours worked per year per craftsperson has actually declined. Although this figure was prepared from data on a single craft, electricians, itis arguable that a similar decline has occurred for several other crafts also. Undoubtedly, this varies from one part of the country to the next and also depends somewhat on the craft in question. ‘The unemployment rate in the construction trades is one of the highest of all industries, There is no question that high unemploy- ‘ment and reduced work hours are the result of several factors, not productivity alone. However, if one traces the problem of low pro- ductivity back to fewer owner-initiated building projects, clearly the craftsperson has been affected by the spread between costs and pro- ductivity. The end result is that itis questionable ifthe craftsperson’s inflation-adjusted annual income has significantly increased since the 1980s. REASONS FOR LOW PRODUCTIVITY Industry factors, labor factors, and management factors account equally for nonproductive time at a typical job site. Obviously, there are deviations from this “one-third” formula for any specific con- struction firm or job site; however, in general we can assume that. this is typical. We can now discuss specific reasons for low productiv- ity for each set of factors. Industry-Related Factors Uniqueness of Construction Projects. Each construction projeet has its singular aspects. Both project owners and their design firms place a high value on innovative, one-of-a-kind designs. Given the desirability of design uniqueness, there is little opportunity for project designers and/or contractor teams to take advantage of what ‘ts tearned from prior projects. There are minimal benefits to be de- rived from the use of a learning-eurve model or technique, which is ‘used successfully by other industries that do not undertake continu- ally unique projects. Although the nation’s preoccupation with unique project designs be they office buildings, commercial projects, or resi- dential units does lead to aesthetically pleasing construction and12 Construction Productivity: Measurement and Improvement + oreo mprovement award-winning designs, it also has a negative effect on productivity and on the overall cost of construction projects. Varied Locations. The construction process takes place at the project site, Materials, labor, and equipment must be transported to the job sit, Sind the transportation process itself increases nonpro: uckive time. ~ Once reSources are transported to a site, the contractor often leaves these resources at the site even on days when they are not “wooded, as this is more effective than bringing the resources to and ‘rom the project. Nevertheless, these resources remain idle and non- [productive when not in use. ™ ‘The decentralized aspect of construction projects also creates accountiiigand control problems. Accounting source data may origi- “hate at a job site, but they must be communicated to the contractor's central office for processing and in turn transmitted back to the job site. This creates timing problems as well as problems related to get- ting accurate input data. In order to be improved, productivity should bbe measured quickly and accurately so that firms can react to the problems causing it. Adverse, Uncertain Weather and Seasonality. Construction is one of the few industries in which the product is built in an open environment subject to variable temperatures, precipitation, wind, ‘and so on. Each of these and other environmental factors affect la- bor as well as equipment productivity. Given unexpected and unsea- sonable weather, we might well expect that a craftsperson would perform less than 30% of his or her normal and expected productiv- “ify. Even when adverse weather is anticipated and prepared for, the fact remains that contractors suffer in terms of both labor and equip- ment productivity. Dependence on the Economy. Along with the automobile in- dustry, the construction industry and its activity is greatly affected by the Tational economy. Federal and state governments often use “monetary policy, fiscal policy, or tax laws to regulate construction activity. For example, if inflation is running high, the government may indirectly raise interest rates (monetary policy) or cut back on building projects (fiscal policy) in an attempt to slow the construc- tion industry and lower inflation. Dramatic swings in policy might create 2 million housing starts in one year followed by less than 1 rillion the next. Obviously, these swings greatly affect individual contractors’ workloads. It becomes next to impossible for a firm to Construction Productivity: An Introduction 13 work at peak efficiency given wide variations in workload. For ex- ample, ifa firm's work load decreases quickly, the firm is not likely to lay off its workforce at the same rate; the end result is idle or non- productive workers. The same is true of equipment. Small Size of Firms. The very size of the typical construction. firm reduces its potential for high productivity. Although the con- struction industry represents one of the largest industries, account- ing for in excess of 10% of the gross national product annually, the majority of construction firms are small, closely held firms. The small firm seldom has the ability to purchase enough equipment so that it ‘always has the best or optimal piece of equipment for.a specific situ- ation. Instead, the firm often uses what it has on hand even if it is not optimal. Similarly, the small, underfinanced firm may not be able to acquire the most modern management tools or the most qualified supervisors or managers. This puts the small firm at a clear disad- vantage in terms of productivity. Lack of Research and Development. Most construction firms, especially the small ones, wage a weekly battle to maintain sufficient cash reserves to meet their payrolls, It is a rare construc- jon firm that has a research and development (R&D) budget. If we ‘assume that R&D generates new ways of doing things, including improved construction methods and materials, then the industry's nonfunding of R&D is yet another cause for low productivity. Building Codes. Construction building codes are an attempt to control quality. They serve the dual purpose of promoting an ap- propriate design aiid ensuring the safety of the design. Building codes can, however, prove troublesome with respect to productivity, For one, codes are sometimes outdated. For example, building codes may specify 16-inch spacing for residential stud walls in recognition of the structural properties of wood members. Should aluminum members be used, which may have additional structural strength, the same building code may specify 16-inch spacing even if the resulting spacing is unnecessary. The code’s failure to recognize aluminum as a framing material results in either an over-designed structure or the nonuse of an effective material. Building codes also vary from one city to the next. One method or construction material may be allowed in one city, but the same material may be prohibited in yet another city. This holds back techno- logical change in that an investor/manufacturer may not seek a new construction technology if its use is limited to a relatively small area.14 Construction Productivity: Measurement and Improvement 14 ___ Construction Productivity: Measurement and Improvement Building codes can also adversely affect productivity in that they tend to specify a method or material rather than setting out a range of acceptable methods or materials or setting out a performance measure. As noted earlier, the fact that a building code indicates that stud walls must be 16 inches on center may prevent materials other than wood from being used for stud walls. If the code specified how the wall was to perform-for example, that it must resist a specified vertical force or a certain measure of heat-then this “open-ended” specification would promote alternative methods and materials, “Although building codes supposedly protect the consumer and ensiire proper construction, gutdated or poorly written codes nega- “Lively affect productivity: The construction industry as a group, per- Tiaps ed by the design profession, could indirectly increase industry productivity by frequent review and analysis of the codes, ‘Regulations and Laws. Government can hamper industry pro- ductivity by passing various regulations and laws. Safety laws such as the Occupational Safety and Health Act (OSHA) and the Davis- Bacon Act are often controversial in regard to the benefits they con- “Ter relative to their cost. Labor-Related Causes High Percentage of Labor Cost. The construction industry is labor-intensive industry. For most construction projects, espe- ially building projects, the contractor incurs approximately 1 dollar in labor cost for each dollar of riaterial cost. This ratio is much higher “than those of other manufacturing industries; many of their ratios Beapproximately 1 dollar of labor for every 2 dollars of material ‘The construction industry's dependence on a significant amount of labor creates problems of high cost, adequate skills, uncertainty of labor availability, worker attitude, and supervision. All these con- cerns relate to the risk or variability of labor output. On the average, construction worker might be performing direct or productive work Yor only about 4 hours in an 8-hour day. The output of work per- Yormed by craftspeople is also quite variable. Even when a craflsperson is performing similar work-for example, framing a wall- cover a period of time, the output produced varies 34% from one hour to the next. The end result is that labor productivity is a high-risk clement of tf construction process, one that makes it difficult for the ontraclar to estimate project costs —— Construction Producti iy: An Introduction 15 Supply-Demand Characteristic. The economics of supply and demand are such that when the demand for a resource exceeds the supply, the available resources have leverage. This is not to imply that a laborer would necessarily take advantage of a contractor badly in need of his or her services. However, the fact remains that if the availability of labor greatly exceeds the demand for it, an individual worker has a tendency to give maximum effort so as to retain his or her job. Even in periods of relatively slow construction, the availability of construction craftspeople is often less than the apparent demand, ‘This is undoubtedly due in part to the declining number of young people entering the crafts, As long as demand exceeds supply, labor is likely to have the upper hand in regard to labor negotiations, work rules, and wages. le Potential for Learning. As noted earlier, almost every construction project is unique in regard to its design and required construction methods. Even within a specific project, the craftsperson is seldom required to do the same work every day. This differs from other manufacturing industries, where a worker may do repetitive ‘works. The “do something different” that characterizes the construc- tion process is favorable in regard to productivity in that it prevents ‘worker boredom and provides new challenges. However, this charac- teristic also negatively affects labor productivity in that it constrains the learning process. Risk of Worker Accident. The construction process is an in- jury prone industry. Governmental agencies keep track of two mea- sures of safety or accidents: the number of accidents per worker hour of effort (referred toas the disability frequency rate) and the disabil- ity severity index or rate, which is determined by associating lost hours with an accident. ‘The construction process has historically had the worst disabil- ity frequency rate of all industries. Next to the mining industry, it has had the second worst severity rate. It is an understatement to say that a construction worker is in a state of high physical risk. Workers may tend to protect themselves from injury by working at a less-than-optimal productivity rate. Labor also argues for vari- ‘ous work Files that, while constraining productivity, do reduce the risk of worker accidents. Should an accident occur, the negative ef- fect on productivity is quite direct. Time at the job site is lost and16 Construction Productivity: Measurement and Improvement worker morale decreases to the point that productivity may be re. duced for days or even weeks. Work Rules. The construction industry workforee can be di- vided into two parts, union and nonunion. Although many less-than- objective arguments Tan be Taade in favor of one or the other, to varying degrees both have certain directly and indirectly imposed work rules. An increased number of labor work rules are usually present with’inion construction. = Tris not our purpose here to argue the merits or disadvantages of union or nonunion construction or the fairness of various work rules. Some rules undoubtedly serve a useful purpose, such as pro- mating worker seloty or ensuring the quality of workmanship. Wow. “ver, tis alo true Mat historically some work rules have dampened productivity with no offsetting benefit. Work rules that require one craft to stand by idle for hours simply because of jurisdiction over certain work performed periodically during an 8-hour day clearly serve no useful purpose other than to subsidize that craft’s finan- cial gain Lack of Worker Motivation. The construction industry might be referred to as the “welthey” industry. The “we” might be the con- tracting firm and its supervisory staff, including superintendents The “they” might be the craftspeople. The individual craftsperson may not have the s Is or work objectives as the management ‘Weal. For various reasons, the craftsperson may lack pride in his or ‘work. Thus, the craftsperson may also lack the motivation to produce to his or her fullest. Lack of motivation, its potential causes, ‘and recommended management practices to address it are discussed in Chapter 7 Management Related Factors Management, or the lack of it, is accountable for a significant fion of the nonproductive time that characterizes the constric- {on process. Perhaps too much attention is focused on labor. In fact, @ craftsperson may perform productively when assigned work but may not necessarily pursue work when not assigned it. Ifthisis true, and many observers agree that it is, management should be included as a contributing agent in productivity problems. ‘Management must keep work in front of laborers to fully utilize la~ bor. This points to the need for improved scheduling methods, sho? Wferval training, personnel management skills, and improved Construction Productivity: An Introduction 7 accounting and control procedures to measure and monitor labor as ‘well as overall job productivity. Contractors often take a short-sighted view of a project. They sometimes focus on spending time or money on tools, equipment, or other tangible goods because this expenditure enables them to see a return tomorrow for expenditures today: Contractors may shy away” from the commitment to management tools or techniques such as critical-path scheduling because the benefits from their use may be harder to quantify in the short run. However, this preoccupation with short-term decisions undoubtedly hurts long-term productivity goals and profitability. PROGRAM FOR INCREASING PRODUCTIVITY What can the construction industry do to turn the problem of productivity around? In responding to this question we must decide ifwe aro addressing the question to the construction industry at large or to the individual construction firm. An individual construction firm will not be likely to alter labor work rules by itself, even if it judges some of the work rules detrimental to ita productivity and financial success. It takes a group of construction firms, perhaps joined together as an association, to gain a negotiating edge with labor. ‘We can now set out some approaches the construction industry might take as a whole. 1. The construction industry can address the seasonality and weather-related problems by proceeding with construction on specific dates that would enable a project to be enclosed dur- ing winter months. Methods and technology for enclosing projects can be develop 2. The industry can make better use of labor through prefabri- industrialization to fabricate more building com- systems offsite and in a controlled manufactur- 8. The industry can study, analyze, and possibly change labor work rules that are detrimental to productivity and of mar- ginal benefit to labor. 4, ‘The industry can develop funds that serve as a source of R&D support to enhance technological changes that result Proved methods and materials of construction.18 Construction Productivity: Measurement and Improvement 18 __Construction Productivity: Measurement ond Improvement 5. ‘The industry can take steps to lessen costly or wasteful gov. ernmental regulations that negatively affect industry pro. ductivity and provide little or no benefit to labor or construc. tion firms, 6. The industry can pursue funding an organizational process to enable better technical and management training of craftspeople and supervisory personnel. ‘The above list contains only a few of many approaches that the industry, including project owners, designers, contractors, and labor, can take to increase productivity for the benefit of all concerned, ‘The achievement of any of these approaches requires, however, a Joint effort, What can the individual construction firm do to increase its productivity and therefore add to its profitability? There are pos- sibly as many specific actions as there are construction firms. Some of the more viable approaches for the individual firm follow: 1. The construction firm can experiment with procedures to mo- tivate the workforce at a job site. The purpose would be to develop “goal congruence” between the workforce and the firm. 2, ‘The firm should pursue available new construction methods and materials with the objective of improving productivity. 3. The firm should implement management techniques, includ- ing techniques for analyzing methods, productivity, and sched- uling techniques. 4. ‘The firm can pursue and implement accounting and control procedures aimed at measuring productivity and detecting “problems so that the firm can rapidly improve productivity rates. 5. The firm can develop an internal department or other strue- ture with the sole objective of improving productivity. ‘These recommended industry and firm approaches to increasing productivity in the construction industry are directly and indirectly presented and discussed in the chapters that follow. EXERCISE 1.1 ‘One way of defining inflation in the construction industry is to mea- sure the difference between the increase in the cost of a worker and the inerease in the productivity of that worker. Ifa worker is able to n Productvitiy: An Introduction 19 Constru increase his or her productivity at the same rate as his or her wage increases, there is no inflation. ‘To illustrate the impact of low productivity on the cost of con- struction, consider this hypothetical data, Assume that in 20XO a mason’s labor rate I was $8.00 per hour, and he received a 12% an- nual increase each of the following 6 years. Thus, his wages in 20X1 through 20X6 increased at a rate of 12% a year. Assume further that a mason in year 20XO placed 120 blocks per day or 15 blocks per hour and that his annual increase in productivity for the following 5 ‘years was 1% a year. This produetivity increase may have occurred because of better technology or better management, or because the ‘mason worked harder. (a) Based on the above information, calculate the la- bor cost per block placed for each of the 6 years. (b) Calculate the inflation rate for each of the last 5 ‘years; that is, the percentage increase in the la- bbor cost per block for each year from the previ- ous year, EXERCISE 1.2 For each industry-related cause of low productivity, describe an action that (a) the design profession or a project-owner group or as- sociation might take to reduce or eliminate the eause, and (b) a con- tractor-based group or association might take to reduce or eliminate the same cause.160 Consnuton roduc: Measurement and Improven, rent Leamed rin) Hrs [Total (40 hr] Lessons ‘Other (describe) Hrs | Self Study] Hrs (books, ete.) Trade ‘shows (describe) Ars ‘Seminars Conferences (describe) Year 2004 2005 2006 2007 2008 2009 2010 Chapter _—_—— Personnel Management and Productivity ‘a psychological gap exists betwoon management and the con- struction workforce at the job site, The construction craftsperson is sometimes thought of as having a negative attitude toward work or management and a tendency to be lazy. Manage- ‘ment, including the job superintendent and project manager, are sto- reotyped as having a hard, cold, “get the most from the worker” atti- tude. The two views are at the least a bit exaggerated. Nonetheless, it is fair to say that there is often a gap between the attitude and objectives of the project management team and those of the workforce. In order for a construction project to be built on time and on budget, each individual involved in the construction process must have a positive work attitude and must be able to work with a team, ‘There are apparent constraints to this goal. Pethaps the biggest one is the fact that most of the on-site construction workforce can be viewed as working for a job rather than for a firm. Unlike a factory worker who works for a single company, attends its annual Christ- mas party, gets an annual report on the company’s profitability, and looks forward to a pension, the construction craftsperson works on several jobs and perhaps for several different contractors in a single ‘Year. The craftsperson seldom goes to any single contractor's Christ- mas party and is seldom given a firm's financial statements. The ‘¢raftsperson generally anticipates that a pension will eome from the {ihor hall, not a specific contractor. The ond result ofthis situation is at it may be difficult to align job-site craftpeople with the contrac- tor and its goals, T here is a widespread belief in the construction industry thatcunsrucion Prodvctiviy: Measurement and Inorg ment team must thus tor-management = seek w; The conto es referred £0 a8 “Boal congruence” ft? tain what 1 OY on-site workers. Motivational practices yy" management and OF) slook like a firm” to every worker NS be o mviow several classic management theories an” chaper we rae pe area of business management, and getgye te sos dle management ofthe construction process"? ope LEADERSHIP AND DIRECTING ngupervisors are to obtain a high level of product eons workers, They must have the ability to lead and ait them. Modern leadership theory defines leadership as interpersonal th Moaimed at the achievement of specific goals in specific situ. iene The objective of leader behavior in a business setting is tg tRomplish corporate goals. A leader's behavior and communicative siaity dictate his or her ability to influence workers. Leadership ‘ust relate to specific situations; the action of a leader may have ne effect in one situation and a different effect in another. Leaders exhibit different qualities and styles in obtaining their objectives. Such characteristics as vitality, persuasiveness, intellec- ‘tual eapacity, decisiveness, and responsibility are present in many leaders The degree to which each of these qualities is found in a given manager affects the classification of his or her leadership style. Generally, four types of leadership styles are recognized. The ‘outhoritarian or autocratic leader centralizes power and decision ‘making in himself or herself. Subordinates have little influence on decisions. The authoritarian leader determines all policy and assigns specific work tasks to each worker. Because of the high degree of ‘adr control workers are often discontented under this type of lead- deri derstanding. this, a high level of productivity is often with the authoritarian style of leadership. Asecond type of leadersh i i waxes ship style is referred to as participative. rater Auta leader shares responsibility with his or her subordi- indecision mak eetttalized and individual workers are invol they are incindea gf oe"eE Subordinates are peers with their leader: are needed, ‘in decision making only when the leader feels the¥ A democrat ieddtcgon maga P style emphasi decentral- makin iphasizes even more decentral leader seldom exert” Woes & participative style. The democratic exercises ‘ses authority; instead, he or she delegates anagement and Productivi personnel Menegement creme te of workers. The workers’ i ' sty to groups interests and initiative thority ‘yasized. A high degree of worker expression, originality, snd are om on are characteristic results of ademoeratic leadershiptvle cooperaiid be noted that although all policies are subject to worker Geahonl thang th democrat leader sll provider ste sa ce.) an" gen complete worker freedom is given in the decision-making se the leadership style is referred to as free rein. This type of eee ip results in the most decentralized decision making. Free leaders dership is usually not preferred because a high degree of dis rein Meation, nonproductive time, and play-oriented behavior fllow organgne leader's failure to assert authority. This is especially the from Then the workers are unskilled and not self motivating, ‘there is no single most effective style of leadership. The pre- ferred style depends on the work situation and most of all on the monal characteristics of the individual who is attempting to lead. Pensiderable research has been undertaken to determine what per- Comlity traits are associated with effective leadership. One survey jdentified the following qualities:* 1. Thorough, steady, reliable Completes the job Honest, trustworthy, conscientious, keeps. promises ‘Uses good judgment in decision making Meets schedules ‘Accepts full responsibility Inspires confidence Cooperative . Considers others 10. Good personal habits ‘The list contains a total of 21 qualities. Similar research has gen- erated yet other qualities, some overlappi6 cua Intelligence above all other traits is a necessary is ner intelli ity: In order for a manager to be an effective leader, iSO" Ne ang gence must be respected by subordinates. In genie) ability to lead increases with his or her level of n wena anen fortune, June 19 ruber P, On the meaning of executive qualities164 Construction Productivity: Measurement and Improvem, lent of intelligence doesnot guarantee effective leadory high level not demonstrate other required personal traits Pl ugh inteligence may infact be resented by their subordinatygt ‘effective leader must also demonstrate maturity, mie oe ‘maturity. To gain and maintain the respeey particu tetisrn managers must have selF-respect and selassuraneg ned st be able to share the interests and acknowledge the began others. ‘The effective leader must also possess initiative, That is, the le, rust want and constantly try to achieve certain goals. Another a portant personality trait is the ability to be objective but compan Sionate in human relations. Leaders must be unbiased in their dea), ings with workers. They should not prejudge a situation or a workes Having made a decision, they must be able to convincingly comman cate it to subordinates. The leader's personality should be such thet he or she is approachable by workers and can cooperate with thar suggestions when they are valid. Insummazy, the effective leader must have concern for both com- pany goals and workers as individuals. The leader who concentrates ‘merely on company goals may in fact obtain high produetivity for a short period of time; however, over the long run his or her lack of concern for the needs of the workers will result in less-than-desir- able levels of productivity. tis in fact possible for the supervisor to address both produ tion and the needs ofthe worker "The effect of varying dance or Smear for production and the workers is illustrated in a manage- [a frig shown in Figure 7.1. Five leadership approaches are shown pate grid. The numbers given for each indicate the extent of the theses og utetn for production and workers, respectively. Bach of low conch’ sale of 1-9. For example, a (2,8) style would indicate a ‘cern for production and a high concern for workers. high leve hip. 1p perse! spat Management and Produetiiy e185, 5,5) Adequate oltention to eoate Necessary ‘work performed concern for People 2 con Sinmun recognition of Mim pressre on Meeps Poor production worn tary Se Prodtnty peor a to) Concern tor Prodtion ww Figure 7.1. Managerial grid. (Source: Adapted from Blake, RR., and Niuuton, J.8. Managerial facades, Advanced Management Journal, Jy, 41966, p.31.) ‘The (9,9) approach shown on the grid assumes that a concern for production and a concern for the needs of a worker are not incompatible. Undoubtedly, the (9,9) approach should be the goal of the supervisor. To be realistic, however, the supervisor may settle for something less, such as a (5,5) approach. The construction supervisor has traditionally been viewed as an authoritarian type of leader. The type of work performed by the con- struction worker and the low degree of innovation typically required have usually made the democratic leader rather ineffective. The well- defined nature of the work to be done and the noneompany attitude of the construction worker would result in chaos under a free-rein leadership style, The construction industry is unusual in regard the Sah ship of the individual worker and his or her empl tion worker normally works for several employers within « short166 Construction Productivity: Measurement and Improvement we _Construction Rrocwemwty: Meosuementiand Improvement period of time. A given worker may work for one firm one day and another firm the following day. It may thus be difficult for the man. ager to gain the total cooperation and encourage the initiative of the workers, A participative, democratic, or free-rein leadership style ‘may prove somewhat inappropriate as a stimulus for greater worker productivity. This is not to say that a completely authoritarian style is the answer, however. There is evidence that providing the con. struction worker with the opportunity to participate in decision making has in fact resulted in higher productivity and worker mo- rale A construction supervisor who is authoritarian and incompe- tent with regard to construction drawings, construction methods, and work schedules will soon lose the respect of the workers, who will become nonproductive and have low morale. In the rather harsh and rough-seeming environment of the construction project, work- ers must respect the leader; lack of respect often leads to a too casual environment, which in turn can lead to low productivity and to acci- dents. In addition, laziness on the part of the leader will soon have a negative effect on worker productivity. The supervisor’s almost con- stant input into construction productivity requires a high degree of strong leadership. The strong leader is worth his weight in gold to the construction firm, COMMUNICATION Every supervisor must be able to communicate effectively. This is especially true in the case of the construction manager. Because the work performed in construction projects is detailed and nonrepetitive, the construction manager must continuously communicate with fore- ‘men and craftspeople during a project. There is also a need for com- ‘munication between the owners of the firm and project managers, ‘between the owners and potential clients; between the owners and labor unions, and between the builder and material suppliers. Sooee Symbol Source with yb: Sate vy | Ong” >| Channet |» [Receiver andes Feedback Figure 7.2. The communication process: personnel Management and Productivity 467 personnel Management ond Productvily _167 Every individual has participated in some form of communica tion without recognizing the process that is taking place. Communi- tevion cannot occur unless there is both someone to transfer infor- Giation and someone to receive it. The communication process con- Tete of four elements: the sender, symbols, a channel, and a receiver, ‘The process in which these four elements are found (shown in Fig- lure 7.2) begins with a person who has reasons for communicating. ‘This person is referred to as the sender. The objective of the commu. nication is to enable individuals (receivers) to accept the message of the sender. To communicate the message to another individual, the sender has to use symbols. Words are the symbols by which the sender of a message communicates with the receiver. One of the difficulties of communication is that words do not necessarily have commonly understood meanings; indeed, many words are likely to be ambigu- ous. (For example, the word “management” is one that has different meanings for the owner of the firm, the construction manager, and the construction worker.) ‘Words are often classified as concrete or abstract. Concrete words such as rebar, wall, and slab stand for an object with a physical real- ity. Abstract words such as strength, compact, tall, and progress rep- resent concepts. In general, concrete words enable more effective communication than do abstract words. Although it is sometimes necessary to use abstract words, the sender of messages in the con- struction industry will not find it difficult to emphasize the use of conerete words, as the industry concerns itself with well-defined physical objects. Specifications are generally written precisely and in concrete words so that freedom of interpretation is held to a mini- mum. Abstract words can be further classified as either connotative or denotative. Connotative words point to an individual’s inner feel- ings or reactions. Words such as fearful and cleverness are connota- tive. Such words are usually ambiguous. Denotative words point to external events outside the individual — for example, management, profit, and compaction are all denotative. These words, while less desirable than concrete words, are preferable to connotative words. However, connotative words can be more effective as motivators than denotative words. The proper symbols to use in sending a message depend some- what on who is to receive the message. The construction manager may not be able to effectively communicate with the construction worker if the manager uses very scientific, design-oriented words.ron Productivity: Measurement and 168 Constrveti !9rovemey highly abstract words will also prove On the other hand, Pig ce the sender has chosen thy on ih an environment = such als, nviromahe then has to use the proper channel for « sie the message. The simplest {Pe of communication channel sgh, at ‘only two people are involved; communicat wich ext gcometimes referred to as circuit comininleny such a Ciplex channelexists when several individuals or do mor Solved in the transfer of a message. This type of channel tional structure (see Chapter 5). volves organizat Communication can be further classified as downward or yan tem or informal, o oral o written. Typical communicati ard rvaion is downvrard; that is, management relates company 3s hes to project superintendents, who in turn communicate them qtcaectforemen, who assign tasks to the workers. Although the fo protstion industry does not promote upward communication (for Saatance, the worker does not work for a single employer and will ‘often refrain from making suggestions), upward communication can Gften prove financially rewarding to the firm. Construction firms Should encourage this type of communication when possible. ‘The distinetion between formal and informal communication is not totally clear. Generally, formal communication occurs in a rather structured environment and takes place via telephone calls, emails, and letters. A company meeting in which management relates com- pany goals to project managers typifies formal communication. A project manager's field instructions to an ironworker as to the place- rent of steel would also be considered formal communication. smu itfrmal communication exists because of personal and group interests This drs, fst communication is sometimes referred to sethe grapevine An example ofinformal communication is that which cca when workers anticipate the end ofa project and star to ds. camarne themselves the possibilty of layoffs. Although informal ecient along unstructured channels, itis often very the grapernganee? i that information communicated “through mes unfounded or distorted. Much of the eommi ties involved sah easication that takes place between the par tion ooeure wen ecenst7¥etion process is oral. Written communica- made, or atang enact are drawn up, when purchase orders are viiting. Oral ont itis advantageous to put. communication forfaeo exchanges oeauestion has the advantage of involving face- ‘couraging questions and a friendly spirit of inettecti ve el pero. ication. 4 nts in. communication, a vet Management and Produciviy co sonnel nel of communication chosen by the sender is not i ant cle the symbols used. Formal and written communicticn pendent OF aracterized by concrete words, whereas informal and oral are ypunication ‘make more use of abstract words. Regardless of the communi olved, the sender should always keepin mind the fa situation on choosing symbols or @ communication chanel Ho cnow what is to be communicated. 7 ‘Communicate adequately — no more, no less, t Reslize that the communication may be altered in its distribution. 44, Clarify ideas before communicating them. F. Consult with others where appropriate in planning ‘communication. 6. Follow up the communication. Seek not only to be understood, but to understand—be a good listener. ‘The fourth and final element of the communication process, the receiver, is arguably the most important one. ‘he success of a com reenication is based on the extent to which new information is gained and understanding achieved by the receiver; what both mean to the receiver dictates the effectiveness of the communication. ‘The receiver of a message interprets it on the basis of his or her peckground and experience. A construction worker who is told to brace a wall form will rely on experience to determine what the sender of the message intended. However, his or her experience may not conform to what the sender had in mind. Clearly, the receiver cannot be held totally responsible for the failure to carry out @ poorly de- fined instruction. The construction manager should be able to make some assumptions as to the level of understanding: and experience his workers; however, he is responsible for these ‘assumptions. ei ‘The sender must be sensitive to the nature of the reser all construction workers have the same level of experience ov inl gence. A sender’s tendency to categorize receiver or stereotyping, which impedes communication OF Ie tment; nication. “Talking down” to an informed worker con TT on in in such a case it is probably better if there were n° ‘comm the first place. ‘The sender of instruction: the receiver. The behavior of the 1. it tions of yuld be sensitive to the react f shold earing a ESConsruetion Productivity: Measurement and impr, ment be used as a means of judging the receiver's k ig. simple facial gesture or body movernent gga" ie of understanding. The sender and the comand cate the deare id provide for communication feedback. meettise tion channel shove Yation of the fect of the communicatige if —— and understandin, e = a from receiver to sender — is feedback. a roverse tetjon efforts cannot be evaluated without ‘ees ot ran feedback helps the sender to modify or clarify future a ‘munications. | Feedback will often bring to light a potential mistake or a prog, able ‘course of action. By means of feedback, a worker might. commu. ‘cate a time-saving construction method that came to mind when heorshe was informed of the current procedure to be followed. This type offeedback, in addition to being profitable to the message sender, often satisfies a worker's inner needs for recognition and serves as a produetion-motivating force. Effective communication that recognizes all four elements of the communication process should serve to motivate both management and labor. Sharing information of mutual interest and benefit moti- ‘ates all personnel. Explaining plans and policies, encouraging sug- gestions, and asking questions always have positive motivational e fects. MOTIVATION: THEORY X AND THEORY Y How does the construction supervisor motivate employees to be Productive? There are in fact several possible techniques, a few of hich are diseussed in this chapter. Setting aside specific techniques forthe moment, two contrasting theories can be said to dictate proper rag eetal practices: Theory X and Theory Y, which represent two wile reared assumptions regarding motivation theory. These ‘vocal, aa inthe 1950s and 1960s by Douglas McGregor, Accord ent dstie 22.0, Theory X, the average human being has an inher- assumes finn wrk #24 will avoid it if possible. This theory als0 at people sh de un responsibi and sro high dere of cars have little ambition Several my Sceeptance of Theory pee ouckes to motivation follow from the strong and responsi For one, it implies that leadership must be ity should be concentrated with the manage? NW y el Management and Produeti sonnel Mer wy 17 per the individual worker merely wants to be dire, "the individual worker by coercion, using ether erase five approach. That is to motivate the Theory X worker ie * might offer extra pay (a positive approach) or threate se manor with punishment (8 negative approach), estan ha a human bei ‘cory X states that ng works to satisfy his oh Teo geds, However, physical needs are only one faeveral yes that have been postulated by social scientists. In partic nes ffasiow identifies five types of needs, shown in Figure 7.3. The AGH Mimic needs shown in the illustration include needs for fod physioGi ‘These and the safety and security needs shown are oten snd ago as physical needs. Socal activity needs, estoom and sta referiods, and self-realization and fulfillment needs are often re- tus bd to as personal-satisfaction needs (sometimes called inner or Higher-order needs). ‘Theory X maintains that personal-satisfaction needs donot mot- ate work production; workers are influenced by only their physical « rent must therefore address these needs using either ;. Managemé reine ‘or negative approach. (Although both approaches are con- of needs Self-realization and fulfilment Esteem and status Belonging and social activt Safety and security Basic physiologic needs of needs. Figure 7.3, Masiow's hierarchy |172 conse Productivity: Measurement and improve nt ory X, the negative approach is much more eT its ith the theory.) Fe com. ts Contrasted with Theory X, Theory ¥ assumes that con oth external and internal satisfaction from ings dere and assures thatthe average person does nagar anes iike work, Theory ¥ holds that if workers are commiuneny, ret tives of tho work, they wil in fact accept work as there? the it The key is to make the worker's objectives consieye Bia he firm's objectives. Unlike Theory X, Theory Y assumes tent wae can learn to accept responsibility, and have the capacity teat Peomite and imaginative in solving work objectives. Theory ¥ se. saat the performance of work to the satisfying of hipher-order neers Ifa person can satisfy these inner needs by performing work. he oy the will ind eatisfaction in the work and thus be productive. ‘The assumptions of Theory Y imply very different management techniques for motivating a worker than do those of Theory X. Theory Y plays down the need to coerce workers; instead, this theory main, tains that management can motivate workers by helping them to perceive a congruence between their objectives and the company's ‘Objectives. That is, to obtain high levels of productivity, organiza. tional and personal goals must be integrated. Workers must be e couraged to develop and use their knowledge, creativity, and skills in ‘accomplishing organizational goals. For example, workers can be given added pay or benefits if they can find a better way of manufac- turing the firm's product. By enhancing the workers’ opportunities to be creative, managers are providing the potential for workers to satiety their inner needs, ‘The traditional view of motivation draws on Theory X. However, current personnel management is founded more on Theory Y. But ‘Theory Vis often difficult to apply when the production process uses "unskilled employees. Moreover, some production processes tend to ae opportunities to satisfy inner needs. In this type of situation, ‘manager is forced to accept Theory X assumptions. Although cons skiled Gath onstruction workers should not be classified as un- * {7Pe of work they perform and the type of environment dn which they perform make itd Te may be hard er ake it difficult to address their inner needs. creativity from a laborer whose main task is camryinghoards to sence of ements Pemters. Yt, a good manager may in fact instill a tion from their work ten 3° that they do obtain personal satisfac- clude solid commons The techniques used by such a manager in- munication, encouragement of pride in the work, human b the perfor. | Management and Productivity ors 8 orkers informed about company objectives, a . yoopine Wer formance. (Several Theory Yfounded errand 72st 1d Pe Practices used ing £0 om supervisors to motivate workers ave din se by ‘Theory X assumptions do in fi ised later) ing Theory: ions do in fact apply to the cone Aerker, “fhe motivational techniques used torino benteae sion womare somewhat constrained by current industry rane ae yastruction labor unions Kimit the negative metivatiocln, Strong tne construction supervisor has at his disposal Laker ages caictate a fixed hourly wage. In addition, the construction en. ments usually has to justify the firing of a worker. (Construction Vio may tend to keep a more productive worker fully employed) fame ey rales often play major role in worker assignments The nots does, however, have some freedom in assigning task toa mauate'a nonproductive laborer may be given a relatively undesir. worMusk, whereas a productive laborer may be given a more chal able ng and desirable type of work. Again, though, this type of moti seme Mfechnique can be applied only to a certain degree before it Vilates accepted industry practice. Current industry practices also limit somewhat the implementa- tion of positive motivational approaches. One of the more suecessful positive approaches is the use of piecework, common in the manu- facturing industry. The worker is paid for the amount of work per- formed; the more units completed, the more money received. Con- struction unions have historically opposed piecework. Among the reasons for their opposition are the variability of construction prod- ucts (which makes it difficult to measure the production unit) and the protection of the older (and presumably less productive) worker. Unions’ opposition to piecework means that there is practically no piecework in the construction industry; hence, a powerful pos! tive motivational approach is not available to the supervisor Con. struction supervisors have at their disposal some less direct postive motivational methods. For example, assigning overtime word © Py. ductive workers in a period of a slack work is a positine Teo © method; however, its use may bring managers into con copted industry practices Undoubtedly, proponents of Theory X and Theory © exch other for may years to come However the vail of Oey Versus the other is not the real issue. What isimpormr The riateness of the motivational techniques that fol0¥ TT ao. construction manager will have to continue ts ¢ roaches: tivation by using both Theory X and Theory YY approac snd Theory ¥ will debateonstruction Productivity: Meosurement ane! in HAVIOR a ea The behavior of the individual employee can yg Much of the behtre™e of the group in which he or she wre nd stood only in the cones’ © Macceptance of leaderchip. oT. Setment ood Ser of performance all and io tion with work, o°8 son with his or her co-workers. The effarent ation ord the work environment on the individual wore! Eo "ot portant with rogard to construction prodacn ars personnel management ree construction work is dane by an individual in ig, on izes several aborers representing more then one type ar on, Init in the building process, Labor union rules often ct al ineeoral types of eaftspeople work together. For examy 4 ‘Weny union agreements require the use of a laborer to help two eae, penters, Even if individuals are not mixed together for a particular penta fork hey ail interact with follow workers during lunch op {ape ot vk hours. As time goes on, groups of workers begin to share ommon goals and values. From a sociological point of view, a group is more than just a colleen of individuals working together in one location. A group ‘Pformed only as a result of interpersonal relations. Two research- is Peceribe the process of group formation as the result of the fol- lowing four essential characteristics: 1. A motivational base shared by individuals and condu- tive to recurrent interaction among them. 2, Anorganization (group structure) consisting of roles dif- ferentiated in some degree from those of nonmembers. 3. A shared sot of norms (values, rules, and standards of behavior). 4. More or less consistent effects, produced by the group, on the attitudes and behavior of individual members. svch Gatton union, which includes all onstruction labor 0 areca esne earn Ithas traits that are similar to the four Serer just ited. Smaller groups of inlviduals within 2000 Croapae Se reals also share these characteristics: tases fen classified hy type, One broad classification iden. * formal or informal. Examples of formal grouPS ker ivity Fe if, M., and 1069,9. 6578 Shs C. Soci Peychology, New York, Harper and Row rol Management ond Productivity pao ST iness organizations and profess ade business organ d professional associat oe 10 formal groups influence individual workers sociation, Al shot rormal gFOUPs are often more difficult to control and as orp infor er influence on personnel management In nv Foun when individuals with common oul iter ee refer These BFOUPS can be further clasiied as one ofthe fllowing three t¥PES Fares groups that arse because of internal polite, These Uppes of groups are often referred to as “gangs” of “crowds.” 9, Groups formed on the basis of common jobs. Members fre often intimate and work, talk, and even dine together. ‘This type of group is often referred to as a “clique.” 3, Small groups consisting of a few (two or three) close friends. This type of group is often referred to as “‘subelique.” Each of these three types of informal groups can be observed in the construction industry. Union workers gathering for alabor strike the coming a group to protest nonunion work can be lasified as a gang or crowd. Cliques are common ona construction proest, ORen Seforal workers may share a sport or hobby that brings them to- gether. Cliques can prove beneficial or detrimental to productivity, Sgpending on their goals and values. Smaller groups of two or three workers who live close to one. another are typically friends who share ‘ehmon interests and may prefer to work together. Generally this {ype of group presents few problems with regard to personnel man- agement. Gangs or crowds may have an adverse effect on productivity and company objectives. Communication of goals and an. ‘awareness of Worker grievances can go a long way to impede the formation of a group with a negative attitude. . Firms can do little, however, to prevent the formation ae and nothing a firm does will permanently destroy this WES fewie One of the cesulte of the now widely recognized study eT Ts homme plant of Western Electric’ was to confirm the er) a importance of such informal groups. The Hawthorne © om, Comamittes 0 7 Farigus of Workers Tee Relation to Industrial Pas" ld, 104, Work in Industry, National Research Council, Nev °° Pp. 56-57.176 Construction Productivity: Measurement ond imo, Sremeny cial organization of work groups and showed Seon ‘were a significant part of the organization, Tet. informa) Soaal noeds that they sought to satisfy at work, This fact po7028 hi socttam of diques, rivalries, and grapevines, all of whice'tlted in influences on employee behavior. exerted ven ifa firm can prevent the existence of cliques, i advantageous todo so. the goals of tho clique are eongieey Tote those ofthe fim, the frm wil reap the benefits; however nytt nay prove tobe a productivity constraint if its goals or vatgcy UU from those ofthe firm. With proper leadership, the goals ang yu? ff clique and firm can be made compatible. values Itis the supervisor's duty to encourage meaningful grou, Without them, group members are unlikely to share common objectives. I group goals are vague so that workers interpret foe differently, the possibility of increased productivity is lessened, ane manager must also see that workers in a group understand the veh tions between their personal objectives and group goals. Group val, ues favoring higher productivity are likely to develop when workers understand group goals, understand how their own objectives relate to those oftheir group or clique, aud find meaning and satistaction ‘in the work they do. Frederick Herzberg described two independent sets of factors that: ‘influence a worker's and a group's satisfaction and performance. ‘His motivation-maintenance theory holds that a worker's or group's ‘job satisfaction comes from motivational fé *s ivational factors, and that mainte- ‘incofactors results in dissatisfaction (see Figuro 7.4). According to ack or seine Set of factors leads to positive job feelings, and the . a a ‘set leads to negative job feelings. ‘or example, a worker or group is affected positively when given istormel te es, such as the task of ensuring that a slab ae ina humid: eee evation. In contrast, if a worker is asked to low morale and be loa ged tuizonment, he will often suffer from asked to worl han flly productive, Had this worker been ‘self would noc lace aca eaviFOMent, however, the environment tend to motivate age ded productivity. In summary, some factors ig enhance Productivity; others merely Dance factors are net foo productivity, although if these mainte- personne nagement and Produetiv | Manag} ity in ees rssh sony op ep ee eo otto racr ere Se | Responsibity ‘Advancement Maintenance Factors Company Policy Supervision | ‘Salary Interpersonal Relationships | _ ‘working Conditions Figure 7.4. Herzberg's motivational-maintenance theory. WORKER NEEDS es Every worker needs a measuring system to measure is or her work effort and results against a “budget”— that is, at cent of him or her. In addition, every worker needs commu er sot nels for expressing his or her knowledge in situation’ to ee Inowledge can contribute to project objectives, Finely oo Oe needs “pride in work”—to derive a sense of acto! the work itself. os in given If every individual involved in the conatruction a xing the these work “satisfiers,” the contractor is of ° job “look a firm.” We now discuss ea¢! either orally or in she is working 0” Measuring System jg seldom givers daily, weekly, oF ‘The construction craftsperson 1° ject he oF Print, a schedule of the construction proj fo daily. Craftspeople are also seldom BV"Construction Productivity: Measurement ond | a Imeroreney 1rs or work effort expected of t monty nude fn vr mance report showing nr 2 hoary daly, weekly or craftspeople are assigned daily tasee wie’ ave med, Inti gost or work-effort budget for the task, W220 mune eolated in their work tasks—which certainly a them feel lke part iia tive to leaving workers in isolation would b. intonation with them. Giving them a copy of the overall poet? ‘an, initially and on an ongoing basis, would seem appropriate, , Plan, int make a case for sharing with the workers a daily ney0"® meh cage for speific work tasks, For example, the contraction ees roprint, on the back of time cards, the number of craft-hours bad {eted foreach task. This could be given to each of the craftspeople ce fa work goal. If provided with a person-hour budget, some argue that a crew will work at a pace that will merely satisfy the budget. This may be {rue—but ifthe budget provides for profitability, pacing is not unde. sirable, (In fact, many if not all workers with pride in their work try to beat the budget, to outdo what is expected of them.) The alterns, tive isto give no budget to the crew — and without it, who is ta say how long the crew may take? There is no incentive to work to any particular rate or pace; no goal is established. ‘The lack of a work measurement system and communication channel for job-site personnel also weighs negatively on work per- formance and productivity near the completion of a project. Because craftspeople work out of a labor hall and are not employed all year by ‘one firm, they may slow down near the end of a project because they fear being laid off. It would thus appear that workers actually have ‘an incentive to be nonproductive near the end of projects: the less JTuEKthey output the longer they willbe employed and earn income. mast 8 ifcult problem for the project management team. A con- ia tignifiont oe on a project until the last few weeks, when ae lecrease in labor productivity occurs. one, ho oo deal with this potential slowdown? For ner the cay oe tractor closely monitor labor productivity dures for effective sere (This need for monitoring and proce: about the communicent ere discussed in Chapter 16.) But what than not, the contractor athe Project completion date? More often date tothe workfores feat 0t disclosed the planned completion 8 actualy start to pace ane S*@ued that, being uncertain, work *emselves (to slow down) long before the 178 does nor ne seomnel Management and Productviy fe 179 jon date becomes a reality. One cannot compicpy hiding information, budget or scheduec 4 esoned worker mation surely builds a wall between maser eotshating ce. The benefits of sharingjob schedules, budget oa? find measures Of Progress would appear to nreemresta- doting information. a right direction would ‘one step in the righ would be the design of a we oroven daily) report forthe erafteperson, Many consttuchon cong ergind accountants have designed information sytone ternal jsors. They are not highlighted in contractor’ newsletters, per focus instead on the accomplishments of managersend or ees. The craftsperson usually has little or no opportunity foros re advancement. Hence, the eraftsperson's attitude may be nega. tive, in part because of a lack of pride in work. ‘Some creative contractors and their on-site supervisors have be- gun to address the craftsperson’s need to take pride in his or her Bark. Recognizing performance, getting the craftsperson involved in site planning meetings, focusing newsletters on individual 2m Repeople, or sponsoring family tours at which the eraftsperson San show his or her family what he or she has done on the jab are all Sheans instilling pride in work. A good craftsperson should be as proud this or her work and job and is the contractor ofits role and secom- plishments. It is the responsibility of the manager to see that this is, the case. “MAKING A JOB LOOK LIKE A FIRM” ‘This section presents a 45-step program for the contractor. Its objective is to help contractors “make a job look like a firm.” If most of the following procedures are taken seriously, the contractor can anticipate significant financial returns. Contractors should determine whether their firms are presently implementing these 45 procedures; ifnot, they should view the list as an action plan. Overall Company Policies ‘ 1. The firm establishes an annual budget for the fem (0° on a job basis) for a productivity program—For , 0.1% of annual volume. 2. The firm subscribes to th ductivity does not necess: ‘There are many ways to increase ing smarter, not harder. .e notion that increasing Pro- farily entail working harder. rroduetivity — by workConstruction Productivity: Measurement and Improv ment ‘80 somel Monogernent and Produaviy Po 181 «firm employs an individual to administer a pr . ty program. At the very least, this responsibil eyed to an individual with additional tasks, Thic > ‘Gvidua is responsible for monitoring the program am} reporting on results Communications 4, The firm has a policy that requires managers or super. visors to frequently ask subordinates their advice on work task 5. When superintendent tells another worker what to do, he then asks for the subordinates’ understanding of the instructions. 6. Ifa worker gives a supervisor a work idea and that idea isnot implemented, the superior has to explain why the idea was not implemented. 7. Ona regular basis, perhaps as part of the weekly job safely meeting, attendees discuss alternative meth- ods of construction and ideas related to improved pro- ductivity At the beginning of the job and subsequently on an in- crim basis, a meeting is held with all job site workers to g, imumicate the planned progress of the job. . Ia jaumunieating instructions at the job site, the firm 2es positive actions rather than continually eriti- izing past act i ya atiitis or placing the blame for failures on 10. The on-site man: struction metho. k without py nager takes time to explain a new con- ‘or work task rather than assigning the roper instructions. "ncentivesiPride in Work M.By means of actions andi the firm comm ct’ @"d literature posted at the job trailer, 13 14. 15. 16. 1. 18. 19, 20. 21. 22, ished; the best idea would be selected each month, and the worker submitting the idea could be awarded aemall prize. On larger projects the firm might publish a project news- Ietter that spotlights an on-site worker and discusses project progress. ‘When a worker performs a task well, the manager/su- perior congratulates him or her in front of fellow work. ers. ‘The owner of the construction firm frequently visits the job site, discusses the project with specific craftspeople {especially those who appear troubled), and thanks work- ers who have performed well. Company goals, including desired work quantity goals, are communicated to workers to provide a challenge. On larger projects the firm has a “family day” on which workers can tour the site with their families. Craftspeople are given the opportunity to select who they want to work with rather than always being directed by the on-site manager. ‘The firm assigns an individual with a poor work atti- tude to a crew that has positive attitudes regarding the firm and the job. The firm does not assign anew craft some crew. 7 Without adversely affecting the quality of work, ones attempts to develop productive competition crews. person toa trouble- - th one new On each job the firm attempts to come uP WHAM Te, and creative idea to promote pride in Wt i for site — perhaps constructing showers a the jobs the workers to clean up after work: fim communicates ite keris key pe environ 8 interest in providing a good 23, The firm promotes the concept that every 0 12, THEY needs a well gt i: the firm is attentive to to the success of the project: 2. The firm 48 its profit objective: a he ae mune Pvides onsite la * 24. ‘The firm posts a list ofall workers t TMT ta ow sent BE Knowledge 200 With a means of com- bulletin board either near the centre cumple, gigs Work methods to manage cation at which the public can view estion box might be estab-Construction Productivity: Measurement and 182 orev Job Conditions 95. Thejob site is kept clean to promote positive work, atti, es t, and the le : requketieatiape met, ad the relatisnah) 26. Sec project and a safe project is stressed site management. ~ 27, Job-site layout is structured to ensure efficie, i nt “ial low and to minimize any worker inconvenieneat”” 28. Thejob site is laid out to provide a place for crafts) to secure their personal belongings, a clean place tou lunch, and a safe, convenient place to park vehicles, Information System 29, Every worker who is asked to fill out a form is in tum given back a report; that is, no one fills out a form un. less he or she is subsequently given feedback. 30, Each individual requested to submit information is told ‘what purpose the information serves. 31. Forms such as time eards identify goals — for instance, >budgeted person-hours. Each worker is informed by means of a report or a meet- ing how he or she is performing relative to a goal or initial plan. 38. An on-site information system, rather than a system of monitoring individual output, enables the firm to keep the project on time and budget. Productivity Measurement 34. The firm has an informati an informati he ieatltgatin ion system that enables tl productivity improvement efforts to be mea- {uid and the firm communicates these measurements to the workers, 32. 35."The fin . 28, Seer ttm inthe construction ofa project. rasa of new Seka etm performs an economic ap- not harder nologies aimed at working smarter, rol Management and Productivity nn prs 183 es and kc ‘The firm analy: ceeps past data on producti fas a function of various crew sizes, Productivity day the project at the end of every day the project superintendents set 38-4" Je (2) the work they plan to perform the next day (2) the quantity of work to be done, and (3) the resources (including materials, tools, and labor) thet will be needed. ‘The firm has a policy of trying to assist subcontractors 89. “ith the identification of productive and cost effective work processes. 40. Work schedules are prepared, revised, communicated to Workers and subcontractors. 441. The firm uses scientific management techniques to per- form studies of construction methods. 442. Before the start of a project, the project superintendent and any additional individuals assigned to the project review the project estimate with the estimating person- nel. ‘43. When the firm experiences either exceptionally high or exceptionally low productivity, the firm attempts to de- termine the reason, 44, The firm has a policy and procedures for communicat- ing the ideas of one job-site worker to other job-ste per- sonnel. 31. Measurement of Results rn i ers, the gross 45. ‘The firm plots, on a chart visible to all wor profit margin of jobs as a function of time (gross profit margins may be plotted on the ¥ axis and time o» Te number of projects on the X axis) The gross Prof aor” gin is defined as the contract amount minus 40 struction costs divided by contract amount. © PT tivity increases, the chart should indicate « ing increase in the profit margin. QUALITY CIRCLES spate in Japon, ha The concept of quality circles (QCs), which oF ETE productivity ained popularity in recent years a8 @ W8Y OP Ty tod States and profits. The approach first gained net184 Construction Productivity: Measurement and Improve, nt fers realized th: tate 19706, when American managers ri ae eepetitive edge in torms of productivity: Although the Q@ am M4 a in US. manufacturing industries, it ig relatives a un. js now common i r eked in the construction industry. uuality cirle can be defined as a small group of pe afen'd to 16) who do similar work and who voluntarite ao gether weekly for 90 minutes to an hour (in paid time), under na seiner ip of a supervisor, to analyze and solve problems in (yn age nQC groups present solutions to management. and, when fo Sblo, implement solutions themselves. ‘The term “quality circle” does not necessarily imply tha group meets to solve problems of product defects. The Bb that the Sens range from the viability, variety, and reliability of the firm's product to productivity, work environment, and other issues, * ‘To evaluate the QC approach, we must contrast it with alterna. tive management approaches. One of these, Taylorism (after Freder. ick Taylor, a management theorist), grew out of operations research which evolved with the American industrial revolution. Taylorism requires that work tasks be broken down into their smallest pieces (ee Figure 7.5). Each task is “deskilled” as it is broken down further and further. Problem solvingiis taken away from the individual worker and elevated to the management level. The work process tends to be sequential, and each worker does a piece of work in the sequence. Once individual workers learn their job routine, they simply repeat hen pos. nel Management and Productivity pots0n0e 85 apoirtask(s) on. continuous basis they are nt une ything further ‘Taylorism is cloarly common in the con ges include high productivity at | ovantatje results, the use of low-akil workers cngemurable ‘and prolitah phiticated, highly trained managers and peeer oe ment cqrever, Taylorism also creates low morale the ptestal he ers. Howity, and lack of job pride, and it offer: tial for yf quality ro opportunity for pooer self-development. “Another approach, opposite to Taylorism, is referred toas “crafts. manship.” With this approach the company or management dbsarn rmamghe means and facilities for the workers to perform entire op- only sms. To some degree each worker has a free rein, The supervisor crzomee the leading craftsperson and leads by example (see Figure 76). ‘The advantages of the craftsmanship approach include pride in work, worker self-confidence, and the potential fr self-improvement thd unique or improved work methods. The disadvantages include ins high cost of labor, possible low output per individual, scheduling problems, and monitoring and potential control problems. The QC approach is an attempt to reap the advantages of both ‘Taylorism and craftsmanship. The supervisor (in construction, the job foreman or superintendent) is a part of the group (or groups) and provides a link to a management specialist in the firm (see Figure 1D, Such specialists may be company estimators, schedulers, oF accounting personnel. The supervisor meets with the quality control group(s) to address a variety of issues, including: * Productivity (work performed per time period) invited to contrib- struction industry. Its individuals have contol Figure 7.6, Craftsmanship management pproeeh186 Construction Productivity: Measurement and Imp “ovement Figure 77. Quality circle management approach. + Wastage of materials + Delays + Safety + Quality + Handling of materials + Equipment usage For QCs to be effective, it is important that each individual in the group contribute ideas. It is also important that individuals as- signed to a given group perform similar or related work. It is the role of the supervisor to bring out the ideas of each group member. Once QGs are developed, problems identified, and apparent solutions ap- plied, the group should develop a measuring and monitoring system to evaluate its applied solutions. This system can vary significantly, depending on the type of problems being addressed. io anes data collection, cause-and-effect analysis, and re- rears mulorslanants of QC meetings: Eide in work is likely to recut ‘The supervisor who is part of the group serves ax a loads competing between the group and the specialist. Tn this way problems are possible. and worker goals, as well as solutions t? The QC ay crete QC sproach esembles the craftsmanship appro oe vantage ofcontec a adidas aro given autonomy Taylorishy wry of he meen and direction is obtained in the QC approseh by ‘ent link provided by the group supervisor: anol Management and Productivity ese 187 ero aro problems with using the son may Deda grspinddi romaine may we importantly, the individual worker area PrhaPe only fr a single jo, Workers may Be hed ae maybe empl continually. Howeves, these probes do not eof an sre enofts of improved worker altitudes, seltestoem, 1 po- ential gntractors may have tobe more innovative inthe oe forth ey eirles. It would appear tha relatively large approach to que conatruction projects offer the best setting for the @ ons ach in construc. performing similar work, proach. ee EXERCISE 7.1 ‘the Moto Construction Company isa progressive contruction man- Grement firm whose management has always prided itself on em: age relations in the company. The founder ofthe firm believed plovefhe firm's success had to be based on complete employee com- that Jent. Unlike many construction firms the firm offers fringe ben- waged has an employee suggestion system that provides a gener ofits francial reward for any suggestion that result in productivity guprovements. It also contributes a fixed percentage of ts profits to aapmployee investment and retirement fund—a major factor in pro- moting high morale. ‘Jack Egan is a typical product of Moto’s motivation programs. “Ascverall company project superintendent, Jack has never ha prob peoverith individual project superintendent motivation. Havers rer ie past two years the construction industry has sufored ¢ within the Pasesponse vo market conditions and competitive foc so do rsontey Moto Conetruction Company has hed to make Poy woanel reductions, and morit increases have been larly curated Gomeany profite were low last year and so was the conti m the employee investment fund. o ‘The general economic climate has meant (18) fewer company foremen endl aaperintendents areavailable odo net dents Egan was gratified at the response of fore™ and sored oe during the first several months of the Ee The has detected time to complete required work. Recently Hover yelping prob: several attitudes that he believes are indicate complaining Tem, On three specific oecasions he has heard Te wor, One of Mis about the overtime necessary 10 comple 81 rrieeabor under the superintendents stated, “Motois getting *rection Productviy: Measurement ond Imp. 198 _ conse Prove men) ent, and Tdon'tsee any end in Sight.” A toy presen al dt the firm recently to work for other ¢ intend Uber. oma, os eenly mentioned these events £0 you, Moa » has reeanitid you be particularly concerned by the sonnel die ts have Ft the company? What can yout that fo super iatonal climate? Write your solution in ey ore. Te particu, sat out the problem to be solved, disease sry Fo cltions and make & case fo YOUr preferred solution EXERCISE 72 = was overall project superintendent for the Ma Zap) Orion Compan: He had the reputation of being a harnoel Cone demanded strict adherence to his instructions as well as to smal control methods. His promotion to project superintendent arermars ago generated; considerable amount of discord inthe com. tiny. During the fist nine month of his appointment, five job fore Pane ier his jurisdiction quit the firm However, just as Eugene ‘Hancock, the company’s president, was about to remove Spears from his job, the problems subsided as the remaining job foremen and those he hired accepted Spears's style of leadership. Although Spears tencouraged participation of his foremen during the planning stage ‘of projet, once he made procedure and scheduling decisions, he ex- pected strict compliance, During his tenure Spears reduced overall project costs by 6% ile meeting alltime schedules for his projects. He had the reputa- tion of running tight and efficient operation. Because of his perfor- ‘mance record he was made an irresistible offer with another firm and, after giving adequate notice, left the Makum Construction Com- any. pets departure left gap in the frm. Bugene Hancock de ie naps one ofthe firm's current foremen, Mike Nicol Gaal! Project superintendent, Another foreman was hired to fill Mike's poston et ulin Mie was regarded as highly competent foreman rience .eW position as an oe aroater exp clog than nee in m prt to ga rete exe ficek was a ‘ beled cient batiover in management by objectives. He the india) oy ae 25S interme of objectives and leaving it uP (@ accomplish the ohn nn 2 develop the necessary procedures 12 oie te: He was avilable for advice, howe in every detail monogement ond Productivity ane! 189 Nicek’s fiat few months at his new poston, ter NIT Costa were above estimates and ths on tear et ine isc four projects pot 608 "3 edaedule. In discussing the problem with tne ohne Hancock found that they didnot believe thet Ne so he work he was supervising. He was nt acteg oo wperviaor: Be rose accra eons ere tbe accompishe, orig the individual foremen responsible when project cost and be Bete uhe project was behind schedule Therefore the ne wer hie Frustrated. at, ifanything, should Eugene Hancock d? Write your sls Mage study form. Identify the problem, propose alternate si grad make th argument for the salto ou ees,