INDUSTRY STANDARDS
This is the ninth posting regarding labor/labour productivity and disruption. This contribution provides industry sources and references on the impact of overtime on labor productivity. The Subject Series can be viewed here.
Understanding the impact on labor/labour productivity and cost due to overtime is an essential skill related to both planning and forensic analyses. Remember, the impact on productivity applies to all hours worked, not just the hours associated with premium time costs. Hence, often the productivity impact is more costly than the premium time compensation component of the payroll costs.
The impact of overtime on labor/labour productivity is not limited to construction field labor. It presents in engineering, programming, consulting and other professional man-hours.
For this post, we will use United States definitions and standards as a baseline. Many of the authoritative studies and analyses are done relative to US practices, if not US Gulf Coast (a common estimating standard or baseline).
However, these standards are relevant to the world open market.
The following key references are provided and most are linked in the Resource Center.
- CALCULATING LOST LABOR PRODUCTIVITY IN CONSTRUCTION CLAIMS, William Schwartzkopf
- CALCULATING LOST LABOR PRODUCTIVITY IN CONSTRUCTION CLAIMS, 2010 Cumulative Supplement, William Schwartzkopf
- Overtime and Productivity in Electrical Construction, National Electrical Contractors Association (NECA)
- Modification Impact Evaluation Guide, U.S. Army Corps of Engineers
- Change Orders, Productivity, Overtime, Mechanical Contractors Association of America (MCAA)
- Labor Estimating Manual, Mechanical Contractors Association of America (MCAA)
- The Effects of Scheduled Overtime and Shift Schedule on Construction Craft Productivity, Construction Industry Institute (CII)
- Bulletin No. 917, U.S. Department of Labor
- Scheduled Overtime Effect on Construction Projects, Business Roundtable
In order to level set the topic a definition is in order. Schwartzkopf defines overtime as follows:
“Overtime is the use of labor in excess of 40 hours per man week. (Union or project agreements may require payment of premium time for work in excess of certain hours per day for work outside certain times or on certain days.) Because overtime is paid at a premium wage rate, such as time and a half or double time, it is inherently more expensive because the cost per hour for the overtime hours worked is greater. It is generally acknowledged that working prolonged programs of overtime can cause reduced productivity; that is, the units of work produced (output) are less per hour. Reduced productivity is a hidden cost of overtime. (p 21)”
Good luck and let us all attempt to approach the issue of labor/labour productivity with all the factors in an integrated manner relative to other related aspects of program and project execution planning or forensic analysis. In planning for these practices, consideration must be given to progress planning, labor/labour crew requirements, progress impacts and professional forecasts.
It is important to note that McLaughlin and McLaughlin [M&M] is not a law firm and is not intending to provide legal advice. M&M is a consulting firm providing (among other services) non-legal expertise in dispute resolution and litigation support. The Resource Center is for the convenience of blog visitors and M&M does not offer this for commercial purposes. For further information on M&M services, please see www.McLaughlinandMcLaughlin.com.