Construction Labor Productivity: How to Measure and Improve It
Andrew Roe • 
Measurement of construction labor productivity can be an elusive task. Unlike manufacturing and other industries, construction tasks vary widely by project type, contractor specialty, and other factors. In short, when you’re not mass-producing a standardized product, measuring productivity becomes more difficult.
Even with these challenges, industry researchers and practitioners have made strides measuring productivity in recent years, and some interesting trends have emerged. While exact productivity metrics have varied, most sources agree that construction labor productivity has room for improvement.
In September 2020, the U.S. Bureau of Labor Statistics (BLS) published productivity statistics for four construction sectors:
- Single-family residential construction
- Multiple-family residential construction
- Industrial building construction
- Highway, street, and bridge construction
The BLS statistics are based primarily on output and employment data from the Census of Construction (COC), which regularly compiles data in these areas. According to the latest numbers, productivity decreased between 2007 and 2019 in three of the studied sectors and increased slightly in one – industrial building construction.
Source: Bureau of Labor Statitics, Office of Productivity and Technology
Other studies have reached slightly different conclusions. In 2018, the BLS found that productivity had increased in three of the four sectors between 1987 and 2016. Only the highway sector showed a negative trend in that timeframe.
A 2016 report prepared by Whole Life Consultants Limited (WLC) for Experian and the British Construction Industry Training Board (CITB) determined that construction productivity in the United Kingdom increased by approximately 1 percent between 1998 and 2014. The report noted similar trends dating back to 1978.
Factors Affecting Productivity
Data aside, how can productivity be measured, and what are the factors that determine productivity? Again, opinions vary, but construction productivity is often measured as output per labor hour – how much work gets done in the time spent. Output can be expressed in terms of physical quantities (e.g., square feet) or financial units (e.g., dollars).
Factors affecting productivity can vary across different sectors, but many factors are common throughout. A study conducted by Carnegie Mellon University identified factors in three categories:
- Labor characteristics – Age, skill, experience, leadership, and motivation of the workforce.
- Work conditions – Job size and complexity, site accessibility, equipment use, and other project-specific factors.
- Non-productive activities – indirect labor, rework, work stoppages, and other activities not directly resulting in productivity.
The CMU study also identified sub-factors to assess in each of these areas. Labor performance, for example, can be assessed in much the same manner as employee evaluations – considering factors such as quality and quantity of work, job knowledge, judgment, communication, and leadership skills.
To track labor productivity, the CMU study suggests defining a base productivity level for a set of pre-defined work conditions and comparing that with productivity on subsequent projects. A labor productivity index can be determined to compare job-site labor productivity under a different set of work conditions to the base labor productivity. For example, if a contractor can track how many cubic yards of concrete were placed in a certain number of hours on a representative project, that rate can be used on future jobs to determine if productivity is higher or lower than the base level. The labor productivity index – the ratio of labor productivity under a different set of work conditions to the base labor productivity – provides a measure of the relative labor efficiency of a project under a new set of work conditions.
A study conducted by the University of Warsaw in Poland built a mathematical model representing the productivity of construction workers. The model included 17 factors influencing the productivity of construction workers and categorized them into five groups.
- Time spent outside work – worker absences, time spent with family, etc.
- Weather conditions – temperature, wind, and precipitation
- Psychophysical conditions – stress, fatigue, health, age, and recovery
- Organization and management of the worker – ergonomics, noise, duration of work shift, salary, organization of work and workstations
- Remaining factors – day of week, adaptation to new operating conditions, new technology
The previously referenced WLC report concluded that productivity is best measured at the macro level in terms of gross value added (GVA) per cost of labor and at the micro level in terms of earned hours divided by actual hours. GVA is the total output minus the value of all purchased services. The report categorized productivity factors as either internal – those within the control of a contracting organization, or external – those beyond the control of a contracting organization.
Internal factors affecting productivity include:
- Delays (e.g., issues related to equipment, sequencing, or work instructions)
- Working hours (e.g., regular hours vs. overtime)
- Size of labor force (e.g., planned or unplanned changes in workforce)
- Selection and training of labor force (e.g., experience and skill level of workers)
- Quality of management (e.g., planning and monitoring of projects and workers)
External factors that affect productivity include:
- Economic cycles
- Regulatory environment and encouragement of creativity
- Competition
- Promotion of partnering and trusting relationships between client and contractor
- Training within the supply chain
Improving Productivity
Given all the different factors related to productivity, how might contractors make improvements in these areas? Here are some possibilities, many of which are obvious but worth reviewing:
- Labor characteristics – Most contractors are already highly aware of the need to have a skilled workforce. But finding and keeping experienced workers can be a challenge given the cyclical nature of construction. A focus on retaining employees and minimizing turnover is one way to build and maintain an experienced workforce. By treating employees well, you will likely find employees more motivated to do quality work and remain loyal to the firm.
- Work conditions – Starting at the bidding phase, pursue projects that fit the size and complexity of your workforce. For active projects, provide adequate site accessibility, a safe work environment and proper equipment. Field equipment might include high-quality tools and machinery, personal protective equipment (PPE) and vehicles. In the office, employees value pleasant surroundings, current technology, manageable working hours, and flexibility to manage life outside the office.
- Non-productive activities – A certain amount of indirect labor or overhead is necessary to run any business, but right-sizing this is key to operating a successful business. Much like the importance of having qualified field staff, maintaining skilled staff to handle accounting, human resources, bidding, and other management tasks are invaluable. For small firm owners, you may be challenged to find the right balance of delegating these tasks and doing them yourself. Other non-productivities, such as rework, can often be minimized by proper training and addressing previously mentioned issues with labor force and work conditions.
- Weather – Obviously beyond contractors’ control, the impacts of this age-old nemesis can be mitigated with proper planning. Know your contract and any weather-related clauses. When possible, include language that can provide relief in extreme weather conditions. Technology, such as weather apps on mobile devices, can help with daily and hourly management of projects.
- Organization and management – Similar to work conditions, seek to run a company that is sensitive to ergonomics, noise, work hours, compensation and other factors. Simply put, provide a professional atmosphere for the company as a whole and for workers on an individual level.
- Technology – In addition to maintaining high-quality equipment and hardware, make sure you have current software that helps you manage your company and projects. Ideally, you want a system that allows project teams to collaborate and share information in real-time between office and field teams. Strive for a unified system with streamlined and consistent reporting, instead of fragmented methods that rely primarily on spreadsheets, email, or hand-written notes.
- Expertise – Seek out expertise in areas you may be unfamiliar with, such as building information management (BIM). This can help you reach new heights in building projects more efficiently and intelligently, but like any tool, needs to be in the hands of qualified, capable workers.
So while labor productivity can be difficult to measure, opportunities for improvement abound. Identification and awareness of factors affecting productivity provide a good starting point.
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Andrew Roe is a civil engineer and technical writer based in Minneapolis, MN. He is president of AGR Associates, Inc., and writes regularly for Fieldwire and various industry publications on construction, engineering, and other technology topics.
