1994 AACIE TANSACllOINS
Vie A by,9 PE CCE
llMTIROD)UCnlON
This paper argues that productivity is one of the basic
variables governing economic production activities, perhaps the
most important one. At the same time, productivity has too often
been relegated to second rank, and neglected or ignored by those
who influence production processes.
Why Wdte About Inducivlty?
The decision to write on these matters was entirely emotional,
originating from a growing feeling of professional and intellectual
indignation developed while listening to concerned individuals of
disparate interests and purposes. With alarming recurrence,
managers, entrepreneurs, cost professionals, economists, news
commentators, politicians, and others have been advocating
measures that ignore the benefits of increasing productivity or,
worse, have lobbied for measures that decrease it, on the
assumption that other factors have a greater role in improving the
well being of businesses, people, or nations. This should be
enough to turn a cost engineer into a crusader.
Productivity is a very broad subject. Therefore, this paper
focuses on labor productivity in plant construction projects. As a
general principle, the fundamental concepts on productivity apply
with minor adaptations to all fields of economic activity; it is the
practical application of the concepts, or the interpretation of data,
that require a customized approach to specific fields of activity.
The paper has been developed with four broad purposes:
o to provide a brief theory of productivity, specifying
definitions, measurementprinciples, variables affecting it,
and affected by it;
o to review the availability of empirical data on
productivity, looking at some of the main data sources,
how closely the records seem to confirm the theory, and
how reliable and useful the data appear to be;
o to examine the merits of managing productivity, arguing
that productivity is the fundamental controllable factor in
wealth production, while many other economic variables
depend on it; that increasing productivity tends to have
beneficial multiplying effects on other economic
variables; and that this is generally true at every level of
economic aggregation; and
MAT.4.1
o to propose that AACE International become a leader in
studying productivity, starting by initiating a continental
database of normalized productivity data to be maintained
up to date in future years.
lIRODUCTIV[lITY THgEORY: lIDEMJIMIfYIONS AN1D CONCIIIEMS
Defintioas and Tenninology
Productivity is a scientific concept, in the sense that it can be
logically defined and empirically observed. It is also measurable
in quantitative terms, which qualifies it as a "variable." Like most
scientific variables (such as density or pro-capita income),
productivity can be defined and measured in absolute or relative
terms. A suitable definition of absolute productivity is the quantity
of physical work produced by a unit of labor directly engaged in
its production.
By this definition, productivity in a constructionproject would
be measured in tons of steel erected per work-hour or meters of
pipe installed per work-hour, these are simply the inverse of what
industrial terminology defines as "installation unit rates" or "labor
unit rates."
An absolute definition of productivity is not very useful.
Mucl more useful, and widely used in industry, is the concept of
relative productivity or productivity factor (PF), defined as the ratio
of the quantity of physical work produced by a unit of labor on a
specific project and activity, to the quantity of the same work
produced by a unit of labor on a standard project in standard
conditions. Note that, by this definition, productivity is the inverse
of what industry defines as "labor factor" (LF) (work-hours per unit
of work completed, divided by the corresponding "standard" work-
hours).
Also note that, using the given definitions, the productivity
factor can be calculated by dividing the standard labor unit rate by
the current actual labor unit rate. This is an alternate method used
in industry to measure productivity.
Productivity should not be confused with competitiveness or
profitability, which are directly affected by it, but are also
influenced by other unrelated factors, such as raw materials costs,
transportation costs, overhead, financial costs, and taxation.
 1994 AACE TRANSACTIONS
Productivity is sometimes considered as an indicator of good
work ethics, but in reality, it is only loosely affected by prevailing
work habits. Nor should productivity increases be considered as
achievable by staff cuts, because personnel reductions follow
productivity growth; they do not cause it. Long-term wage and
salary increases, not reductions, are made possible (and often
induced) by productivity growth, just as stagnation in inflation
adjusted wage and salary levels is inevitable in the long term, if
productivity fails to grow.
Productivity and Peiformance
In this paper, "productivity" will always mean "relative
productivity" measured by means of productivity factors, as defined
above. This definition is very useful and practical, for at least four
good reasons:
* its meaning is easy to grasp (1.1 is better than 0.9);
it is independent of the units of measure used on a
project (tons or pounds, English or metric);
it permits the calculation of weighted average
i r t cfweigntedaverage
productivities, thus permitting to define and measure
project productivities, or regional productivities, or
productivity evolution through time; and
* it permits measuring the productivity of any project
versus a single accepted standard (the "standard project"),
making productivity measurements objective, not just a
measure of performance relative to a budget for a given
project.
Productivity is an objective concept measured, ideally, against
a universal standard, whereas budget performance is relative,
measured against a project budget which can be "fat" or "lean,"
right or wrong, commercially or politically motivated, or a bit of
all. Productivity monitoring is useful mainly for strategic reasons,
such as corporate planning or competitiveness improvement.
Controlling performance to budget is useful mainly for tactical
reasons, such as project control. It follows that budget
performance and productivity, which are sometimes confused, are
only indirectly related.
Productivity Measurements
Like most variables in economics and management sciences,
productivity is not easy to measure, and can only be measured
indirectly, that is, by measuring other variables and then
calculating productivity from them.
Measuring the productivity factor (PF) for an activity involves
three necessary steps:
* measuring physical work performed (typically, quantities
installed or produced);
* measuring the work-hours to complete it, thereby
calculating the actual labor unit rate; and
* relating the actual labor unit rate to the standard unit rate:
Productivity Factor PF = Standard Labor Unit Rate /
Actual Labor Unit Rate, or:
Labor Factor LF = Actual Labor Unit Rate / Standard
Labor Unit Rate
MAT.4.2
In practice, the performance to budget factor is usually
measured as part of standard project management; the productivity
factor can be calculated indirectly by multiplying the performance
factor by the productivity factor assumed in the budget estimate for
the project. The applicable formulas are reported below.
An accurate measure of the PF, therefore, compounds the
accuracies of two measurements and the availability (and correct
use) of a suitable standard. Techniques for recording physical
quantities of work and work hours are not to be discussed here;
these techniques can be sufficiently accurate for practical purposes,
and the records are normally collected and kept for reasons
independent from considerations of productivity, such as payroll,
unit price contracts, progress payments, cost accounting, and other
"hard" requirements.
The difficulty arises in relating the current labor unit rate to
a comparable standard rate. Considerable confusion permeates the
issue of productivity standards, which deters many managers from
dealing with productivity issues. In addition, the standards are
simply not available to (or understood by) many project or
production management professionals.
EFFECTS OF PRODUCTIVITY GROWTH: DISCUSSION
Interdependence and Controllability
Some management actions have durable effects, and their
benefits are compounded by the resulting positive impacts on other
factors. Other measures tend to generate secondary effects that
will in time offset the initial benefits, or even result in a global
loss. In economics and management, the cause and effect principle
is less than straightforward, and effects always feed back on their
causes to some extent. We should therefore ask, "If we improve
productivity, what will the secondary effects be, and will there not
be negative consequences after the short term?"
Some variables affecting economic production are totally
uncontrollable; others are under some control by national bodies,
such as governments or central banks. Individual companies are
rewarded for predicting these variables but cannot control them.
Other variables are controllable to various degrees at the individual
company, plant, or project level. Intelligent control of these
variables must be the objective of management. Hence, we should
also ask, "How controllable is productivity?"
By experience as well as intuition, productivity depends on
several major contributing factors, and in turn generates a wide
range of consequences. The main factors that affect productivity
are:
investment in production technology, equipment, and
facilities;
* training and experience of the workforce (including the
"learning curve" effects);
* quality of management (organization, motivation,
incentives, procedures);
* egislative and regulatory environment
*· quality of surrounding infrastructure (tranlsportation,
suppliers);
 1994 AACE
° general levels of education;
o social environment (labor relation patterns, social
tensions); and
o geographic factors, including weather patterns.
From the viewpoint of controllability, the first three factors are
highly controllable at the company or project level; the fourth and
fifth factors are marginally controllable at best; the sixth and
seventh are only controllable at the national levels; and the last is
uncontrollable. Quantitatively, the impact of these factors has been
found to be considerable. On this basis, productivity is found to
be highly controllable, much more controllable than, for example,
wage or salary levels, purchased material costs, or financial costs.
Effects of Productivity Gwth
In terms of direct effects, an increase in productivity by
definition reduces labor costs in direct proportion. At the primary
impact level, this causes increasing profit margins, decreasing
prices and increasing sales, or a combination of all. Therefore, in
first approximation, all economic variables in the affected activities
show improvements.
While cost savings generated by productivity While
cost
gains
savings
gains are
generated
are of
of byproductivity
immediate benefit, the side effects, both positive and negative,
must be analyzed too. What follows is a brief review of these
Investing in productivity-enhancing technology, equipment,
g i. . t
and facilities increases indirect costs, often expressed as a burden
on the hourly rate for direct labor. This extra cost must be
measured against the savings in labor costs. Additionally, some of
... se ,investment
wl o increes dt.fi
these investments increase flexibility, while others decrease it.
This factor can be difficult to evaluate, but is important and must
be analyzed in each case. The same general comments apply to
training and to the quality of management.
The most insidious secondary impact of productivity gains lies
in the fact that they reduce work-hours, and therefore tend to
originate staff redundancies. Demoralization usually follows
personnel redeployments, underutilization, or layoffs, and
demoralization is the number one enemy of productivity. North
American petroleum and automotive industries in recent years have
provided textbook cases of this type of situation. As an alternative
to personnel reductions, increases in productivity can be turned into
production increases; the risk, in this case, is the buildup of excess
capacity. Airlines in North America and the automotive industry
in Europe and Japan have provided textbook cases of this
alternative development and the problems it generates.
Long-tenn Effect of Producsivity Growth
Because these negative side effects are so often highlighted in
public forums and can cause widespread economic pain, it is
worthy to briefly examine the long-term effects of productivity
growth. Staff underutilization induced by productivity gains
depresses pay levels in the short term. However, a reduction in
direct work-hours for the same production volume creates room for
real wage and salary increases in the long term, and especially
when productivity gains are achieved by technology, it also creates
the need for a better educated workforce, and this need will in time
MAT.4.3
RANSACTONS
stimulate higher earnings and better work satisfaction. Experience
indicates that pay increases invariably follow productivity growth,
after some time, and conversely, both theory and common sense
indicate that without productivity growth, there is no room for real
(inflation adjusted) growth in average earnings. If we also note
that
that these
these processes
processes tend to be
tend to be anti-inflationary, the global
anti-inflationary, the global long-
long-
term impact of productivity growth on society is highly desirable.
These consideraions leaduone toon cde s highly desrable.
These considerations lead one to conclude that the creation of
excess productive capacity as a side effect of productivity growth
is probably less desirable from a societal viewpoint than the
"recycling displaced worers is usually easier than converting
plants and equipment
Long-tennm enefl
r ef
The problems frequently associated with productivity gains,
discussed in the previous paragraphs, should always be considered
at
at the planning stage,
stage, but
but they should always be viewed as risks to
the planning they should always be viewed as risks to
be managed, not as problems to be avoided altogether. Otherwise,
absurdly, any productivity increase should be avoided.
absurdly, any productivity increase should be avoided.
That productivity gains are bad is, indeed, the undeclared
(and, possibly, not deliberate) assumption made by several groups
or individuals, advocating productivity reducing measures, with the
bankruptcies, and other economic distress. There are unlimited
varieties of these measures, often advertized in appealing terms.
The most common ones are local contents in procurement or
contracting, subsidies to this or that sector, import containment or
substitution policies rtiv lab or professional practices
substitution policies, restrictive labor or professional practices,
targeted tax exemptions, industrial policies, and so on ad infinitum.
All of these and other similar measureshave three characteristics
All of these and other similar measures have three characteristics
I common:
o they aim at reducing productivity in one way or another,
o they bring large benefits to a small number of businesses
and people, at least for some time;
o they cause small (sometimes negligible) economic
damage to the majority of businesses and people.
Productivity reduction measures often have some vocal supporters,
and the damaged majority often remains silent. And this is also
the reason why these measures look so appealing to political
candidates.
Economic theory, however, as well as all empirical studies on
long-term productivity developments, show that productivity gains
are of lasting benefit, and that productivity losses, especially when
forced by artificial measures, cause equally lasting damage. The
theory goes as follows. If a business accepts the risks associated
with productivity gains and manages them successfully, it will
eventually develop the ability to produce more with less, thereby
building intrinsic competitive strength. If instead the same
business (or sector, group, or nation) is protected from competitors
that are increasing their own productivity, it will lose the incentive
to match productivity gains achieved by others; so, inevitably, such
gains will not be achieved or will be achieved more slowly. The
business profitability will continue to depend not on intrinsic
competitiveness, but on protection, often to a progressively
increasing degree. The business will become a protege of the
 1994 AACE TRANSACTIONS

government and of public good will until, eventually and
inevitably, the protection disappears (the subsidizers, whether
taxpayers, consumers, or foreign competitors, one day will stop the
subsidy). At that point, recovering the lost ground will be hard,
painful, and perhaps impossible.
Conclusions From The Productivity Theoly
The conclusions drawn from the theory of productivity, no
matter how it is formulated or presented, are:
· productivity is controllable by management;
· productivity gains always provide immediate benefits, but
often cause short-term pain too;
· productivity gains always provide long-term benefits
while short-term pains tend to revert to benefits in the
longer terms; and performance on a given project are the best measures of contingent
in any case, a business cannot afford not to take the risks success and of positive results. Productivity factors and their
with
inanyociase,
productivity improvements,
associated with productivity improvements. totrends
economically successful for a company or, indeed, a nation. Lack
Why Pductivity is Neglected, But Should Not Be of interest in monitoring productivity by corporate management is,
therefore, never justified.
While monitoring productivity is so central to business
management, in practice many managers do not feel comfortable
with it, and prefer to deal with other variables. Such neglect is an
anomaly and should be corrected. The main reasons for this lack
of interest are:
* most project, production, and financial managers feel
comfortable with hard variables; costs, profits and budget
performance factors are perceived (only half correctly) as
being more objectively measurable than productivity
factors; ~~~~~~~~factors; ~ProductivityData Sources
· most project managers feel responsible to a budget. Their
budget is specific to the conditions of the project, is well
understood, and is often negotiated (and further
modifiable to some extent) with clients and/or corporate
bosses. Managers are therefore comfortable with budget
performance factors being used as a measure of their
project (and their own) performance;
* by contrast, most project managers are equally reluctant
to measure their projects against an objective standard,
which they are not sufficiently familiar with, is not
negotiable, and by definition is not meant to reflect the
specific conditions of their project; hence, while budget
performance control seems useful, productivity
measurements seem abstract and academic;
* while, hard variables and budget performance are
generally understood, productivity factors are easily
misunderstood and misconstrued by non-specialists, and
managers dislike data requiring frequent explanations;
and
* productivity information, if disclosed to competitors,
cus tomers,and the public in . an uncontrolled manner, can productivity in a reference year), mainly for macroeconomic fine
These are justifiable reasons for project managers to concentrate on
budget performance as opposed to productivity monitoring.
Different is the case with corporate management; the lack of
objective productivity data deprives a business from an essential
tool to monitor its intrinsic competitiveness, and therefore its long-
term health. In business reality, productivity, whether or not it is
measured or understood, is as hard as cost or profit; referring to the
reasons above, its monitoring is important precisely because it is
objective and unspecific, the main reasons why it is disliked. With
sufficient education and information, productivity data should be
neither misunderstood, nor seem soft or abstract, at least no more
than costs or profit reports. Productivity is often the hidden cause
of cost and profitability trends. Attempting to act on the latter
without trying to manage the cause is not being "results oriented";
rather, it leads to managerial ineffectiveness.
In conclusion, profit for a given period and budget
are better measures of the long-term ability to remain
For these reasons, corporate (as opposed to project) managers
should insist that productivity records be maintained and analyzed,
and should themselves be intimately familiar with the global
picture provided by these records. Estimators, especially on hard
money contracts, also need reliable information on productivity
trends.
EMPIRICAL DATA ON PRODUCTIVITY
The following four types of productivity data sources are
available (with examples for each type):
international organizations:
-
- international development banks, and
- United Nations;
* private monitoring organizations:
economist intelligence unit,
economist intelligence unit,
- international investment firms, and
- some large accounting fins;
national organizations:
natonal anzatons:
- financial ministries, and
ati
* major corporations.
The first three sources collect productivity data at the global level,
as productivity indicators (typically as a percentage of U.S.
tuning (governments and central banks) or for strategic reasons
(investment companies). Some of these sources make their data
available; some do not. Some are politically motivated. Most do

MAT.4.4
 1994 AACE TRIANSAMCTONS
not provide good documentation on their data collection methods
and assumptions. The vast majority of the productivity indicators
reported by these sources are related to the manufacturing industry.
All sources are interesting from the viewpoint of global
perspective, and to occasionally verify the data used for business
management purposes, for example, to estimate work transfers
from one location to another,
For planning and management, however, businesses have to
rely mainly on their own data. Typically, the major construction
and manufacturing companies maintain standard labor estimating
manuals, also used as productivity standards, and collect historical
productivity factors.
Pidulactivity Standardns
For a typical corporation, the standard labor estimating manual
provides labor unit rates for the detail operations most frequently
performed in its business, under standard conditions. Detail
operations are defined in similar, but not identical, ways by
companies in the same line of business. Some familiarity with
company manuals and definitions is therefore required for correct
interpretation.
Standard conditions include:
o a standard place (often in the proximity of the company
headquarters);
o a reference time, often meaning the time frame when the
standards were developed and found applicable, and
o standard working conditions, meaning different things to
each company, but usually relating to factors such as
workforce training, tooling, learning curve, and weather
and environment. These factors are assumed to be either
ideal/optimum, or average/typical, depending on how
each company defines its own standards.
Productivity factors (PF), when recorded, refer to these standards;
for example, for a given project, the historical PF is the ratio of the
theoretical work-hours calculated using the standard labor unit
rates, to the actual work-hours historically recorded for the project.
Similarly, at the planning level, a planned or budgeted PF is
defined by estimating the expected overall deviation of project
conditions from the standard. The PF formula is the same as for
the historical PF, but using the budgeted in place of actual work-
hours.
D£ta Nounnmalsizolon
To be useful for management and planning, productivity data
must be normalized. This means separating the effects of specific
conditions or requirements of a project, from the productivity
typical of the place and time. In practice, referring to the above,
this is achieved by splitting the project PF in two components, so
that:
PF(Project) = PF(Location, Time) x PF(Project Conditions)
Equation (I)
PF(Location, Time) is defined as the normal PF for that location
and time.
MAT.4.5
Project conditions include the work conditions already
mentioned plus other possible requirements such as schedule
accelerations or slowdowns, construction work in operating plant
conditions, or through inclement seasons.
The practical necessity of this separation for planning as well
as for monitoring
separation be madeis when
obvious. This productivity
historical requires that factors
the same
are
recorded for future reference. A smart analysis of the data is
required when history is recorded; otherwise, the data may be
almost useless in the future.
Hstoical Data Conelations
A classic historic association is the "boom and bust" cycle.
Normal productivity factors show a considerable worsening during
a strong increase in business activity (boom cycle), especially the
late phase of the cycle; by contrast, the PF improves during a
recessionary cycle, especially towards the end, when business
volumes cease to decrease. The range of this variation has been
found to reach 25 percent on construction projects in Western
Canada. With reference to the factors affecting productivity, boom
conditions lead to deterioration of workforce experience and
training, of management quality, and, to some extent, have a
negative impact on infrastructure and social variables.
Another recurring historic pattern is the association of pay
levels, tooling, and productivity. A classic case is provided by
South Korea in the past 25 years. In 1974, the pay levels for
unskilled construction labor in South Korea were a fraction of
those in the U.S. (less than 1:10); levels of tooling were at an
absolute minimum (almost no cranes or hoists); and staffing was
huge (10 to 20 workers in lieu of one crane), giving a PF of
perhaps 0.1 (10 percent). Under these conditions, construction
equipment was simply not economical. Ten years later, in 1984,
South Korean pay levels had grown to 25 to 35 percent of those
in the U.S., the levels of tooling appeared comparable, and
productivities made the South Korean total costs comparable to
those in the U.S. The PF, still lower than in the USA, had
increased in rough proportion to wage rates, that is, work-hour
factors had decreased in inverse proportion to wage rates, keeping
total labor costs in balance with those in the U.S. By 1989, the
situation had evolved into the typical "boom" phase of the "boom
and bust" cycle, with productivity still growing, but slowly, while
wage and indirect cost levels were spiralling upwards. Overall
fabricators' costs were on the verge of losing the competitive
advantage on those in the U.S.
Similar quantitative correlations among variables would be
found if the corresponding cycles were examined in the EEC
countries, Japan, and the U.S.
PIROIDUCTIVIMIIY OIIORMG
Pnbject PndanlLcdviy IRepoRnng
At the estimating and budgeting stage, the expected project
productivity rates should be studied and evaluated, and used to
derive estimated installation unit rates for detail operations. At the
project execution stage, "performance to budget" will be monitored
and managed, while productivity will not be directly monitored
during day to day operations:
 1994 AACE TRANSACTIONS
Performance to Budget Factor = (Budget Labor Unit Rate) /
(Actual Labor Unit Rate) Equation (2)
But:
Budget PF = (Standard Labor Unit Rate) / (Budget Labor Unit
Rate) Equation (3)
Therefore:
Actual PF = Budget PF x Performance to Budget Factor
Equation (4)
In other words, monitoring "performance to budget" indirectly
provides constant information on productivity, as long as the
budget PF is known.
At project completion, the actual "final performance to
budget" will be recorded for the project, and compounded with the
original budgeted productivity as shown, to calculate the historical
productivity rate for the project. Once historical productivity
records have been normalized for several projects, a databank of
historical productivities will become available for future reference
and planning.
To be meaningful, PFs on each project should also be broken
down by main category of work (mechanical, electrical, piping,
civil).
Local Productivity Factors
The historical records from projects in the same geographic
area provide normalized local productivity factors for that area.
These records are very useful for estimating and for corporate
planning. They are essential for evaluations of similar operations
in different locations or conditions.
Piductivity versus Time
Local productivity factors fluctuate with time. If productivity
records are kept by area, patterns of evolution of these factors with
time can be monitored and related to their causes. The periodic
analysis of these patterns provides corporate managers with a
valuable tool for monitoring competitiveness, and a basis for
continuous improvement of productivity. In other words, corporate
managers, by examining productivity trends by area, will identify
where actions are required to boost productivity, and will receive
feedback information on the results of these actions after their
implementation.
Special Project Conditions
Experienced variances from normalized PFs can be used to
analyze the impact of special conditions, some of which are
recurring. The derivation of historical patterns for these variances
leads to the development of factors for winter work (significant in
some regions), for constructionwork in operating plants, and under
plant shutdown conditions.
MAT.4.6
Separation of Effects
In conclusion, productivity monitoring and management aims
at separating the effects of the different variables that are
associated with productivity levels, so that specific information on
each separate component can be used in order to take appropriate
actions.
CONCLUSION: PROPOSAL THAT AACE START A
PRODUCTIVITY MONITORINGPROGRAM
Purpose and Scope of the Program
Once fully implemented, the program should gather
productivity records, verify and validate them, normalize them,
categorize them, and report the resulting information, at minimum
to the entities participating in the program, and possibly to public
bodies and the public.
The scope should cover at minimum labor productivity data
in construction projects in the U.S. and Canada. Possible additions
in future could include Mexico and other locations.
Organization of the Program
The program should be organized by AACE International,
which would supply the leadership, the conceptual basis, the
organization, the operational rules, the key analytical skills, and
guarantees of impartiality and confidentiality. A sufficient number
of companies should agree to participate to the program, to provide
data, and possibly also logistical support to the program.
Highlights of the Process
After the initial phase, the program would follow this ongoing
process:
organize the following activities;
* participating companies would submit productivity data
to the program committee, following specified guidelines
(detail, definitions, categorization) under mutual
guarantees of correctness and completeness by the
accuracy by
companies, and
companies, and of confidentiality and
of confidentiality and accuracy by
* the committee would review and verify the data received;
require clarifications when needed; and decide on
minimum requirements for data acceptance, weeding out
anomalous
anomalous records;
records
* the committee would categorize and classify the data,
perform statistical analysis, derive parameters and trends,
and prepare periodic analyses;
* the committee would issue the resulting information to
the participating companies as a periodic "bulletin" and
would occasionally perform special studies; and
 1994 AACE TRANSACTIONS
0 the committee would constantly verify and improve the
reliability of the process, and the value of the information
generated.
IBnefts and RiDsks of XIe Itgrm
This program should be of considerable benefit to the
participating businesses, because each of these would gain access
to a volume of information that reflects the experiences of all.
Ways should be explored to extend the regular availability of
the produced information to other parties, possibly for a
subscription fee, with proceeds used by the program to offset
operating costs and enhance the process.
AACE should gain in profile and prestige, and upgrade its
abilities as a generator of sophisticated information and smart
analysis. Individual AACE members would benefit from
privileged access to the information, for example, an annual issue
of the database extract at no cost (or at a reduced rate).
The public good in general would be well served, because the
information produced would serve purposes of general education
on business and economic issues, and possibly inspire political and
social leaders in positive and useful ways.
Risks of failure exist, and could originate from two causes:
o the information produced may not carry enough value to
generate sufficient interest from enough parties; and
Vic Alby, PE CCE
Bantrel, Inc.
917 Royal Ave., SW
Calgary, Alberta T2TOL6
Canada
MAT.4.7
° the information may be too expensive to produce with
the resources available for the effort.
PnogmnnOimplementafion
The program should be implemented in stages, with success
after each stage being a precondition for proceeding to the next.
A proposed plan could be:
o 1-general feasibility study;
o 2-detail feasibility study, including survey of businesses
interested in participation and budgeting;
o 3-formation of initial committee;
o 4-defimition of process, procedures, methodology,
standards, operating rules;
0 5-recruit participating companies;
0 6-gather historical data from companies and other
sources (20 years of history);
o 7-compile 20-year history of productivity indicators by
region
o 8-activate continuous data gathering and processing
system; and
o 9-program up to speed;
A realistic time frame might be nine months for steps 1 and 2; six
months for steps 3 and 4; nine months for steps 5 through 7; and
12 months for steps 8 and 9, a three-year total.