This is the eleventh posting regarding labor/labour productivity and disruption. This contribution provides managerial considerations or issues regarding the impact of overtime on labor productivity. The Subject Series can be viewed here.
Two key points:
- “The project plan is needed as a baseline to calculate the expected cost and time performance (cost estimate or price and the project schedule)”
- “Time and cost forecasts must be evaluated and adjusted if the project plan execution changes and overtime is introduced, increased or reduced.”
Project planning is one of the major challenges for program and project management teams. Past posts have discussed many aspects of project planning. The series regarding Project Management Challenges is here. Part 5 of this series is particularly relevant or germane to the discussion regarding the impact of overtime on labor productivity in this post.
The impact of overtime on labor productivity is a relevant and serious consideration in many aspects of program and project management. 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.
Perhaps more importantly the impact on the schedule duration must consider the planned and forecasted progress using the proper productivity. As overtime is introduced, progress may well be impacted. The time impact of more work hours per week is mitigated or offset by the lowered productivity.
The impact of overtime on labor/labour productivity is not limited to construction field labor. It presents in engineering, construction management, programming, consulting and other professional man-hours.
The following key references are provided and most are linked in the Reference Center.
- The Effects of Scheduled Overtime and Shift Schedule on Construction Craft Productivity, Construction Industry Institute (CII)
- Change Orders, Productivity, Overtime, Mechanical Contractors Association of America (MCAA)
- Overtime and Productivity in Electrical Construction, National Electrical Contractors Association (NECA)
- Modification Impact Evaluation Guide, U.S. Army Corps of Engineers
- GUIDE TO GOOD PRACTICE IN THE MANAGEMENT OF TIME IN COMPLEX PROJECTS; The Chartered Institute of Building [CIOB]
As previously discussed, Schwartzkopf cites various reasons for managers choosing to work overtime:
“Overtime is worked on projects for several reasons. It can be worked on a sporadic or spot basis to handle unexpected problems or the finish time-critical work (such as concrete pours, getting ready for a concrete pour, and testing). It can also be used to produce more work in a given number of days through working more hours per day or more days per week. This may be necessary to overcome delays or because a project needs to be done in a less than optimum length of time for external reasons. Overtime is also worked on some projects as a way to attract additional workers because working overtime results in greater pay per week for the workers. [p21]”
The planning baseline is influenced by many execution considerations. Some simple or obvious factors include:
- Geographic locations
- Local labor/labour skills and work habits
- Imported labor/labour skills, work habits, adaption to the local conditions, and other
- Weather variations and climate factors
- Logistics such as the methods of transporting imported labor/labour
- Local commuting from the lodging (camp) or security check point
- And many other considerations
The references above are sources of information regarding techniques and factors that can assist in the planning and replanning process.
Regardless of the reason for using overtime (less than the optimum productivity work schedule or work week), the impact on planning is very important. For example, a large greenfield or grassroots project will often have infrastructure (including construction support such as camps or lodging and local transportation) in the project scope of work. The design (including capacity) of this infrastructure may be influenced by the size of the field labor force. Since the size of the field labor force is influenced by the baseline productivity and planned project duration, the planned work schedule or work week is an important consideration.
Once the planned work schedule or work week is established and reflected in the Project Management Plan, departures from this baseline can have widespread impacts. For example, negative productivity impacts due to working additional hours per week may require added field labor workers. The additional staff may strain the limits of the project’s infrastructure.
Again, the references above are sources of information regarding techniques and factors that can assist in the planning and replanning process.
Project professionals should approach the issue of project planning with consideration for labor/labour productivity and with all other factors in an integrated manner. Labor productivity must be integrated with 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. The managerial approach should include methods and Key Performance Indicators (KPI’s) that provide the feedback needed to detect and identify variances from the Project Management Plan baseline.
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.