ICT and SNIPS Magazine recently sponsored a webinar on the Construction Labor Productivity: How These Construction Managers Use Labor Tracking to Save Money, Build Success.
We had Guy Gast, President of The Waldinger Corporation – Iowa Division, and David Francis, CTO of ICT on hand for a discussion on this topic. In addition, Guy discussed the findings and objectives of recent reports issued by the New Horizons Foundation and the Sheet Metal and Air Conditioning Contractors’ National Association (SMACNA).
Interviewed by Emell Adolphus, Editor of SNIPS Magazine, this four-part series covers many of the highlights of their discussion divided into the following topics:
- Part 1: Benefits of Productivity Tracking
- Part 2: Adopting and the ROI of Technology in the Field
- Part 3: Process and Best Practices
- Part 4: Impact of Implementing COVID-19 Protocols
Part 1: Benefits of Productivity Tracking
Emell: One of New Horizon’s research studies was on productivity tracking and making the connection to technology. Could you tell us a little bit about what was the motivation of conducting that research study? How were contractors tracking productivity before?
Guy: It was discovered that there are various levels of sophistication contractors were using. All sorts of methods such as tracking production by pounds of installation, some by pieces, some by square feet, and some by lineal feet. So, the purpose of the research was to determine what is really going on in the country. What are the trends? Was it based on size of contractor or by types or methods?
What we discovered is there are a lot of ways of capturing time – I call it time and attendance. How many hours have we posted, but not necessarily how productive are we? The purpose of the research was to get people to start thinking more about improving their methods of labor tracking and more particularly productivity tracking. Not just installation effort.
The study states that all sorts of things can contribute to potentially a loss of 17.9%. Why is that important? Well, because frankly, a very small needle move on labor is a big move on the bottom line. If we lost 10% of production on labor, we might lose the entire margin on the job and to the converse, if we improved labor production by 10%, we would probably double our margin. So, it was a paramount issue because at the Foundation, we generally say, “Give contractors a chance to grow”, but if you cannot grow you can’t protect the bottom line right now in these difficult times.
Emell: When you are talking about calculating productivity loss, are we comparing a job to another job such as, “It used to take us this amount to complete this type of job, and now it’s taking us this long”. Is that how you are calculating productivity loss?
Guy: That is certainly one way. I think one of the challenges is in the construction industry there is such a variable environment for performance. We may say these jobs are similar, but we may have a different foreman, you may be working with a different a general contractor, a different construction manager, different architect, and our partners in the industry are other MEP trades partners may be different. The weather may be different to geography. So, two buildings that look similar, theoretically, could potentially have similar production rates. But just the mix of the people on the crew and the circumstances of job management can drive a variance of as much as 25% or 30% for similar work. So, unfortunately relying on these historical numbers and reality is what we are counting on. But, in our everyday business it is based on “What was our estimate?”
Most of our productivity measurement, for a large part of the industry that we surveyed along with foundation research, was based on trying to figure out what is my cost to complete? This is because we are driven by our business model which asks, “What’s my financial statement look like?” It is more important for us figure out how much is left to do. But, by default we start with how much have we spent?
So, if we measure hours to complete that is one way but we couldn’t figure out if we are ahead or behind because the hours posted to the activity don’t always tell you what percent complete you are. An example: I might have spent half the hours on a task – I may have done all the material handling, I may have done all the hanger layout, hanger installation and I got a big pile of stuff on the floor all shook out and ready to go but, I haven’t put up a piece of duct yet. By that point I probably spent 25% of the labor that the estimator figured for that floor or area.
So, there is a big disconnect between some of our systems of estimating and some of our methodology for measuring in place production. And again, we may be keeping score of the hours spent but are we really measuring how productive was the crew relative to what we estimated?
That is where I think David’s talking about easier capture with ICT Tracker. Estimating systems are unit-based. We estimate that a terminal device takes an hour to an hour and a half to install and ductwork is so many feet per day, or pounds per day – whatever our basis is, but, that foreman out there is putting the terminal box duct work together and hanging it as an assembly. He is not hanging a box as an independent element. So, our methodologies in the industry don’t align estimating and field performance. That makes it challenging.