"even a 10% improvement in efficiency can result in an additional 5% profit"
Labour is often a major component of the costs on a construction project. It sometimes accounts for more than 50% of the costs, meaning even a 10% improvement in efficiency can result in an additional 5% profit. Of course the converse is true, and if labour is 10% less efficient than expected then the profit is reduced by 5%.
But it’s usually more than just the direct costs of the workers.
Low productivity means more workers are required, which adds additional costs for accommodation, transport, mobilisation and supervision. Poor productivity also impacts the construction schedule which can result in the client imposing penalties for late completion, as well as the contractor incurring additional overhead costs.
Poor labour productivity is sometimes obvious when there are people standing idle on the construction site. However, often the poor productivity isn’t picked up before there are delays to the construction schedule, or the cost reports show labour losses. Usually by then it’s too late to rectify the problem.
It’s imperative to analyse why there’s poor productivity. There’s some truth in the saying ‘a busy worker is a happy one’. Workers who are idle tend to chat to colleagues, even influencing and interrupting others who are working, and start to see and create problems where there weren’t problems before.
(Read next week's article Why is there poor productivity on your construction project? which discusses the possible causes of poor productivity.)
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The opinions expressed in the attached articles are those of the writer. It should be noted that projects are varied and different laws and restrictions apply which depend on the location of the contractor and the project. It's important that the reader uses the supplied information taking cognisance of their particular circumstances. The writer assumes no responsibility or liability for any loss of any kind arising from the reader using the information or advice contained herein.
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