The construction market has a new standard for measuring job productivity. The American Society of Testing and Materials International (ASTM) recently adopted a new standard for measuring construction productivity at task, project, and industry levels. The new standard (ASTM E2691-09) is a fast-paced and real time measurement of productivity, which relies on true input from the field for measuring construction put in place — and reflects on any gains or losses of productivity instantaneously. The new standard is called job productivity measurement, or JPM. In addition to the rate of productivity, JPM also measures the change of rate of productivity at the same time it measures job progress.
The motivation for the standard is linked to a widely recognized need for productivity improvement in construction. What gets measured gets managed, and without a standard and correct measurement, the industry has suffered for decades. Overall, the United States has enjoyed one of the highest productivity increases of workforce as compared with all other nations. The national increase in productivity of all industries, however, is not mirrored in the construction industry (Fig. 1). According to the National Institute of Standards and Technology (NIST), the construction industry is a major contributor to the U.S. economy; however, its contribution to the national productivity level lags by 10 times the national average. Construction productivity cannot be improved unless it is correctly measured — and that measurement is acted upon for improvement.
Fig. 1. Construction productivity levels
have not grown as strongly as those in
the manufacturing sector.
JPM identifies productivity trends of the total job as well as the field response to individual cost codes. The graphed productivity trends model the job, enabling you to visualize, monitor, and root-cause the labor productivity variation from the field’s perspective. This insight into the job provides you with a way to manage the causes of labor productivity variation and, ultimately, to manage the relationship between labor productivity and job profitability.
Once a baseline construction budget has been established, the work is tracked with regular frequent updates from the field. While current information comes with every update, productivity trends can be seen in just a few update cycles. JPM projects the productivity through the end of the job based on individual cost codes, giving early warning signals regarding the outcome of the job.
Figure 2 (click here to see Fig. 2) shows a sample of the commercial application of JPM. With the graph line positioning above the baseline, one can clearly see this project is proceeding more productively than planned. If the graph line fell below the baseline, this would indicate the project was proceeding less productively than planned. Even more important than the actual positioning of the line is the trend — is the job or cost code becoming more or less productive as the work proceeds?
Let’s take a look at another example. The overall job in Fig. 3 (click here to see Fig. 3) is showing a special cause variation evident in the downward trend of five consecutive data points, each lower than the last (the difference from expected productivity is lower and lower each week). To further identify the causes of variation in a job, the job can be segregated into cost codes. By separately evaluating the individual components of the job (click here to see Fig. 4), it becomes clear that most of the job is progressing as expected, with the exception of one cost code.
In this example, we can see the installation of conduit is the underlying source of the productivity decline.
This job productivity measurement process begins with the development of a common language — a defined cost codes system of high level “activity codes.” These cost codes should be used consistently across all projects on a company-wide (or division-wide) basis. If your company has different divisions doing other types of work, you may need to use a different set of cost codes. However, you should limit each division to about 15 to 20. Of this total, only seven to 10 different codes should generally be used to break down any one job.
Old School Measurement Techniques
One of the most misunderstood concepts in the construction industry is the difference between productivity and production. Due to the nature of accounting principles used to manage company profitability, most measurements of job productivity really are bookkeeping measurements of production and not measurements of productivity.
The existing methods claiming to measure productivity primarily focus on accounting measures such as earned value analysis (EVA) and lack the capability to report the ongoing events on the job site in time to make decisions or adjustments that would improve productivity. Accounting methods are primarily after-the-fact reporting of quantitative or earned value measures and offer no information for improving productivity of the construction project as it unfolds.
JPM begins at the job planning stage of a project with the development of the work breakdown structure (WBS), which translates a job from the estimate to the field baseline labor hour budget. Initially, your project planning team segregates the job into the cost codes according to the type of work being performed, creating a very high level work breakdown structure of the major activities on the job. This work breakdown structure also includes activities from the field’s perspective, which are more than likely not thought of during the estimate. For example, activities such as layout, labeling, cleanup, and commissioning are all identified up-front, so their contribution to the final installation can be measured and tracked.
On the job, the electrician reports the “Observed Percent Complete” for each of the tasks he has worked on during the update period. These completed percentages are compared with the high level cost code labor hours submitted weekly for payroll. If the observed completion is outpacing the planned hours, the job is deemed to be ahead of schedule and therefore more productive.
On any job, two to four cost codes will generally be the “driving cost codes” that encompass the majority of the work and are weighted accordingly in the graph reporting.
As noted in ASTM Standard E2691, 2009, “JPM is a new standard practice for measuring construction productivity by measuring work performed compared to construction put in place. JPM measures quality of the construction outcome by measuring observed completion of the project as accepted by the customer. Use of this practice will reduce the need for end-of-the-job inspection on construction projects by providing ongoing and periodic feedback on errors, repairs, and rework. These issues will be resolved as they are identified with JPM as the job progresses.”
By measuring productivity and its changes during construction projects, you can identify problem areas and resolve them more quickly, resulting in better productivity on job sites. Contractors who apply JPM tracking will be able to improve their cash flow and profitability.
Daneshgari is president and CEO of MCA, Inc., Flint, Mich. Moore is an associate implementer. They can be reached at [email protected] and [email protected].
