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Literature Review.........................................................................................................
Introduction...............................................................................................................
Definition of Productivity...........................................................................................
Problems Associated With Collecting Production Data..............................................
Uniqueness of Construction Projects......................................................................
Varied Locations.....................................................................................................
Dependence on the Economy................................................................................
Labor......................................................................................................................
Risk of Worker Accidents........................................................................................
The Work Breakdown Structure.................................................................................
The Data "Life Cycle"................................................................................................
Quantity Take-off...................................................................................................
Cost of the work and final pricing..........................................................................
"Clean-Up" of the Bid and Transfer to Project Team..............................................
Literature Review
Introduction
As in most industries that manufacture or fabricate goods, production is one of the most
frequently discussed topics in the construction industry. The reason for its importance is that it
directly translates into a contractors cost and ultimately into profits or losses on a job. Also, for a
Therefore, it is important for a contractor to collect and analyze production rates in order to
manage costs and schedule control on a project. It is equally important to archive this
Definition of Productivity
The general definition of productivity is often given as a ratio of output divided by input.2 In the
construction industry, productivity is defined in a narrower context of labor work hours divided
by work-in-place (i.e., 0.25 wkhrs/s.f. of forms). This ratio is commonly referred to as the unit
have the good fortune of being able to change their environment by locating, designing and
laying out their facility with the sole intent of making a product in the most cost efficient
Due to this fact, contractors are faced with a variety of conditions that affect production. The
place a high value on one-of-kind design. On the public heavy highway side, roads and bridges
are designed to "fit" and benefit a given environment. Whether it is a thoroughfare through an
area, each has its own distinctiveness. There are minimal benefits derived from learning-curve
models or techniques that are used successfully in other industries that do not undertake
Varied Locations
The construction process takes place at the project site. This equates to all resources (labor,
equipment, materials, supplies, and subcontractors) having to be transported to the site. Also,
depending on the location, materials may not be locally available. There may be a limited work
force, and, due to the cost of transporting equipment, resources remain idle at the site.
Construction is one of a few industries in which the product is built in an open environment. The
work is subject to various temperatures, precipitation, wind, and so on. Each of these conditions
affects labor and equipment production. In addition, there are environmental constraints on
TxDot, has ambient temperature restrictions on the placing of concrete). This forces contractors
to perform the work at different times or, when adverse weather develops, stop work altogether
at an undesirable time.
Dependence on the Economy
Like all industries, construction is greatly affected by the economy. Federal and state
governments often use monetary policy, fiscal policy, or tax laws to regulate construction
activities. These dramatic swings in policy can create drastic changes. Projects to bid and build
may be plentiful one year and the next year there may be only a few. These fluctuations affect a
contractors workload. If a firm’s workload decreases quickly, the firm is not likely to lay off
workers at the same rate. On the other hand, in good times, a contractor may not have the skilled
workers to efficiently complete the backlog. The end result in both extremes is idle or non-
productive work.
Labor
The construction industry is a labor-intense industry. This dependence on a significant amount of
labor creates problems of high cost, uncertainty of available skilled workers, and supervision.
During times of economic growth, contractors are competing with other industries for qualified
The worker is in a state of high physical risk. As a result, workers tend to protect themselves by
working a less- than-optimal productivity rate. Some of the factors influencing productivity
listed above deal with the industry as a whole, but most deal with site specific conditions and
challenges
system needs to be created that is able to deal with task level labor productions along with
categorizing work activities and capturing influences affecting production. The Work
Breakdown Structure is a technique that tackles these issues. In the not so distant past, the
primary reason contractors collected labor hours was to have a platform in which to report hours
to the payroll department with the purpose of paying laborers. This system eventually evolved
into time being charged to particular activities. With estimated costs being budgeted to those
activities, a project manager could see if and where he was making or losing money. The system
was very general and one dimensional in nature by primarily tracking only cost- Also, when
archived as historical data and used in assisting in bidding future projects, the process was poor
Therefore, when looking at the data, good conditions and productions were combined with poor
conditions and productions. This can have an adverse affect on the bidding process. For example,
a "clean" concrete paving job meriting higher productions may seem too aggressive when
compared with the historical data. Hence, the estimate is based on slower productions, generating
higher estimated costs, and, therefore, a less than competitive bid. The Work Breakdown
Structure (WBS) is designed to deal with the above shortcomings, plus address other matters in
project management.
The WBS is designed to provide a consistent, logical, and accessible structure for work
activities. Additionally, the framework of the system takes advantage of the sorting and filtering
capabilities of current spreadsheet and scheduling software. The WBS consists of three
components along with a template that further assists in cataloging and identifying work
illustration of the format. Numbers are used to identify only the spaces and are not used in the
Spaces 3 and 4 are used to name work packages. A work package is a well-defined scope of
work that terminates in a deliverable product. Each package may vary in size, but each must be a
piece of the structure designed to allow the project team to combine combinations of products
and processes on a particular site. As an example, on a project that requires phase construction,
the two-character combination can be used to identify bridge structure work for that particular
phase. It is also given to a foreman who is responsible for the construction of that particular work
activity. The package contains a list of labor, equipment, materials, subcontractors, and supplies,
Production rates and budgeted costs are included in the work package. These first four spaces
used for project identification and work packages are mostly used in project execution and
control. With a resource-loaded schedule, it is possible for the project team to filter and group
different types of work. The team can analyze labor, equipment, materials, subcontractors, and
supply requirements for a particular work package. Within that sort, budgeted costs and work
3 Kenneth K. Humhrays, Jelen’s Cost and Optimizaton Engineering, 3rd ed., American
Association of Cost Engineers, McGraw-Hill, Inc. 1983, 471
hours can be scrutinized.
In addition to the benefits on a project level, projects can be combined in the area to create a
district schedule. At this level, area management can better utilize crews and equipment between
projects. They can address conflicts that may arise when two projects schedule the same piece of
equipment or crews at the same time. The next six columns are used to classify the work in a
standard manner. The first four characters are used in describing the product and the next two are
To complete the Work Breakdown Structure, a template is added to the product-process. The
template is designed, in a standardized format, to capture practical and useful information about
the scope and difficulty of the code. These applications include, but are not limited to, standard
Unlike the other part of the structure that is determined during the estimating and pre-project
planning stages of a project, the template is attached after the completion of the product. Its use
is in estimating where completed projects can be filtered in the comparison of "most similar"
may be used for cost accounting, scheduling purposes, inventory control, or any other function
requiring the need for specific information. They are one-dimensional and designed to address
The Work Breakdown Structure is a system that addresses many sectors of a company. In a
construction company, the WBS is designed to complete the construction cycle (i.e.-, estimating,
construction, and historical information) and attend to the information needs of estimators,
operation managers, project managers, foremen, financial managers, and accountants. In the
estimating stage of a project, a standard Work Breakdown Structure allows for an easy method of
comparing similar work activities with completed work activities. In addition, the WBS
identifies and presents in a logical manner the work activities associated with the construction of
a product. Also, due to its flexibility, it allows for expansion and coding of out of the ordinary
work. In the construction stage of a project, the WBS shows its greatest value. It permits the
project team to manage the project from the task-level to the project manager level. With work
packages being scheduled activities, the project team can optimize the allocation of resources
other project components can be monitored and managed. The "roll up" or "tree" format of the
structure allows information to be captured from a detailed to a more general level. After the
"sell’ of a project, information is gathered for historical referencing. The project team completes
the templates on the WBS and the data is collected. The information retained involves labor,
equipment, materials, subcontractors, and supplies. Actual and budgeted (estimated) costs and
quantities are collected for each resource- In addition, and of most importance, work hours are
A cost estimate may be defined as a compilation of all the costs of the elements of a project or
effort included within an agreed upon project scope.4 To a contractor this is the cost that will
4 Kenneth K. Humphreys, Jelen’s Cost and Optimization Engineering, 3rd ed, American
Association of Cost Engineers, McGraw-Hill, Inc., 1983, 363
most likely be incurred to complete the project as defined in the documents.
In the public bridge and highway industry, the estimates are detailed and the contracts are
generally unit price. Also, the projects are competitively bid and the projects are awarded to the
Quantity Take-off
As mentioned, a detailed estimate tries to identify all factors that contribute to the cost of a
project. The first step in the process is to do a quantity take-off. The take-off is a measurement of
the quantities of the work to be performed. Also, it should be organized in phases or areas to help
1. The excavation required constructing the abutment to the required elevations. Unit of
2. The amount of drill shafts per size. Unit of measure is linear feet (lf) for each diameter of
shaft.
3. The amount of concrete for drill shafts. Unit of measure is cubic yards (cy).
4. The reinforcing steel required for the structure. Unit of measure is pounds (lbs).
5. The contact area of forms needed for the bearing area, back wall, and wing walls. Unit of
6. The quantity of concrete for the components formed. Unit of measure is cubic yards (cy).
7. The amount of backfill material required after forms are wrecked and the concrete cures.
Unit measure is cubic yards (cy).
If the bridge abutment example were in phases and / or the project contained more than one
The next step in the process is to assign resources to the work activities or processes. As
mentioned, those resources are labor, equipment, materials, subcontractors, and suppliers.
In the abutment example, several of the resources are already assigned by virtue of the
takeoff. That is, the materials needed for the structure are identified and quantified (re-bar,
concrete, and backfill). The same is true for suppliers (forms) and subcontractos (tie re-bar
The assigning of labor and equipment to an activity is not as easy as the process described
above. Like anything, there are many ways to perform a task and under certain conditions
some methods might be more cost efficient than others. In the abutment example, there are
many ways to excavate the structure and form the abutment. The difficulty lies in
determining the best method and crew mixture to perform the task. In conjunction with
This determination of resources and productivity usually comes from three areas. The first
area is from the expertise of the estimator. The second source is from filed personnel that
have performed similar work. The third is from historical data. As a result, the final crew and
will give quotes on materials and suppliers. Labor costs will be determined. Their cost will
include the best hourly wage plus burden (taxes, insurance, vacation, fringes). Equipment
cots are establishes and are generally separated between ownership and operating. Equipment
ownership includes depreciation, insurance, licenses, taxes, and other costs not dependent on
the running of the machine. Equipment operating consists of fuel, lube, repairs, maintenance,
and consumables.
The costing of work activities, as described above, are referred to as direct costs. Besides
these costs there are indirect costs. Indirect costs in construction are all costs which do not
become a final part of the installation, but are required for the orderly completion of the
project. Those costs are field management and supervision, field administration, payment and
performance bounds, job site offices / trailers, office utility expanses, and other costs not
related to the actual work activities in the construction of the project. Most of these costs are
dependent on the total duration of the project. For most construction companies, corporate
and district overhead are typically treated as general overhead and are costed as a percent of
the project costs. General overhead is not specifically applicable to any given job or project.
The above procedures are used for estimating the contractor’s cost to construct a project.
The amount charged to the owner for completing a project is the price. The price
incorporates direct costs, indirect costs, general overhead expenses, contingencies and profit.
With all costs and profits identified and determined for a project, the proposal is completed.
On a unit price proposal, this amounts to applying to all the bid items. This pricing can either
be balanced or unbalanced.
"Clean-Up" of the Bid and Transfer to Project Team
When unit price proposals are submitted to the owner, the low bidder is determined based on the
total estimated amount- The successful bidder begins the execution of the project by "cleaning-
up" the estimate. The objective of this procedure is to establish a balanced budget for the project.
In this process subcontractors, vendors and material suppliers used at bid time are identified and
substituted into the final estimate. Also, any "scratch pad" adjustments to arrive at the final price
are reflected in the final estimate. The final estimate, with the addition of profit and overhead,
should balance to the price on the submitted proposal. Besides cost balancing in the "clean-up,"
the assigning of the product and process components of the Work Breakdown Structure are
made. Since the estimator is most familiar with the project and how it was conceived to be built
at bid time, this responsibility rests with him. With the estimate balanced and WBS assigned, the
project team takes over the next steps in project execution. This transfer is done through the use
accounting system and project control system. In the case of ABC Construction, the estimate is
transferred to a customized database that acts as a hub between the accounting and project
control system. This system allows for a two-way link between actual and budgeted costs,
revenues, work hours, materials, subcontract, vendors, and schedule. The appendix is an example
1. Humphrays, K., English, L., 1993, Project and Cost Engineers’ Handbook, Marcel
Dekker, Inc.
2. Thomas, H., Kramer, D., 1988, The Manual of construction Productivity Measurement
4. Kenneth K. Humphreys, Jelen’s Cost and Optimization Engineering, 3rd ed, American