IV-Labor, Material and Equipment Utilization

1. IV-Labor, Material and Equipment Utilization • 1.Historical Perspective • 2.Labor Productivity • 3.Factors Affecting Job-Site Productivity • 4.Labor Relations in Construction • 5.Problems in Collective Bargaining • 6.Materials Management • 7.Material Procurement and Delivery • 8.Inventory Control • 9.Tradeoffs of Costs in Materials Management • 10.Construction Equipment • 11.Choice of Equipment and Standard Production Rates • 12.Construction Processes • 13.Queues and Resource Bottlenecks

2. 4.1 Historical Perspective • Good project management in construction must vigorously pursue the efficient utilization of labor, material and equipment. Improvement of labor productivity should be a major and continual concern of those who are responsible for cost control of constructed facilities.

3. 4.1 Historical Perspective • Material handling, which includes procurement, inventory, shop fabrication and field servicing, requires special attention for cost reduction. The use of new equipment and innovative methods has made possible wholesale changes in construction technologies in recent decades. Organizations which do not recognize the impact of various innovations and have not adapted to changing environments have justifiably been forced out of the mainstream of construction activities.

4. 4.2 Labor Productivity • Productivity in construction is often broadly defined as output per labor hour. • Since labor constitutes a large part of the construction cost and the quantity of labor hours in performing a task in construction is more susceptible to the influence of management than are materials or capital, this productivity measure is often referred to as labor productivity.

5. 4.2 Labor Productivity • Productivity at the Job Site • Contractors and owners are often concerned with the labor activity at job sites. For this purpose, it is convenient to express labor productivity as functional units per labor hour for each type of construction task.

6. 4.2 Labor Productivity • Productivity in the Construction Industry • Because of the diversity of the construction industry, a single index for the entire industry is neither meaningful nor reliable. Productivity indices may be developed for major segments of the construction industry nationwide if reliable statistical data can be obtained for separate industrial segments. For this general type of productivity measure, it is more convenient to express labor productivity as constant dollars per labor hours since dollar values are more easily aggregated from a large amount of data collected from different sources.

7. 4.3 Factors Affecting Job-Site Productivity • Job-site productivity is influenced by many factors which can be characterized either as labor characteristics, project work conditions or as non-productive activities. The labor characteristics include: • age and experience of workforce • leadership and motivation of workforce

8. 4.3 Factors Affecting Job-Site Productivity • The project work conditions include among other factors: • Job size and complexity. • Job site accessibility. • Labor availability. • Equipment utilization. • Contractual agreements. • Local climate. • Local cultural characteristics, particularly in foreign operations.

9. 4.3 Factors Affecting Job-Site Productivity • The non-productive activities associated with a project may or may not be paid by the owner, but they nevertheless take up potential labor resources which can otherwise be directed to the project. The non-productive activities include among other factors: • Indirect labor required to maintain the progress of the project • Rework for correcting unsatisfactory work • Temporary work stoppage due to inclement weather or material shortage • Time off for union activities • Absentee time, including late start and early quits • Non-working holidays • Strikes

10. 4.4 Labor Relations in Construction • Under an unstable economic environment, employers in the construction industry place great value on flexibility in hiring and laying off workers as their volumes of work wax and wane. On the other hand, construction workers sense their insecurity under such circumstances and attempt to limit the impacts of changing economic conditions through labor organizations.

11. 4.4 Labor Relations in Construction • Unionized Construction • The referral systems operated by union organizations are required to observe several conditions: • All qualified workers reported to the referral system must be made available to the contractor without discrimination on the basis of union membership or other relationship to the union. The "closed shop" which limits referral to union members only is now illegal. • The contractor reserves the right to hire or refuse to hire any worker referred by the union on the basis of his or her qualifications. • The referral plan must be posted in public, including any priorities of referrals or required qualifications.

12. 4.4 Labor Relations in Construction • Non-Unionized Construction • In recent years, non-union contractors have entered and prospered in an industry which has a long tradition of unionization. Non-union operations in construction are referred to as "open shops." However, in the absence of collective bargaining agreements, many contractors operate under policies adopted by non-union contractors' associations. This practice is referred to as "merit shop", which follows substantially the same policies and procedures as collective bargaining although under the control of a non-union contractors' association without union participation. Other contractors may choose to be totally "unorganized" by not following either union shop or merit shop practices.

13. 4.4 Labor Relations in Construction • The advantages of merit shops as claimed by its advocates are: • the ability to manage their own work force • flexibility in making timely management decisions • the emphasis on making maximum usage of local labor force • the emphasis on encouraging individual work advancement through continued development of skills • the shared interest that management and workers have in seeing an individual firm prosper.

14. 4.5 Problems in Collective Bargaining • Because of the great variety of bargaining structures in which the union and contractors' organization may choose to stage negotiations, there are many problems arising from jurisdictional disputes and other causes. Given the traditional rivalries among various crafts and the ineffective organization of some of contractors' associations, coupled with the lack of adequate mechanisms for settling disputes, some possible solutions to these problems deserve serious attention:

15. 4.6 Materials Management • Materials management is an important element in project planning and control. Materials represent a major expense in construction, so minimizing procurement or purchase costs presents important opportunities for reducing costs. Poor materials management can also result in large and avoidable costs during construction.

16. 4.6 Materials Management • First, if materials are purchased early, capital may be tied up and interest charges incurred on the excess inventory of materials. Even worse, materials may deteriorate during storage or be stolen unless special care is taken. For example, electrical equipment often must be stored in waterproof locations. • Second, delays and extra expenses may be incurred if materials required for particular activities are not available. Accordingly, insuring a timely flow of material is an important concern of project managers.

17. 4.7 Material Procurement and Delivery • The main sources of information for feedback and control of material procurement are requisitions, bids and quotations, purchase orders and subcontracts, shipping and receiving documents, and invoices.

18. 4.7 Material Procurement and Delivery • For projects involving the large scale use of critical resources, the owner may initiate the procurement procedure even before the selection of a constructor in order to avoid shortages and delays. Under ordinary circumstances, the constructor will handle the procurement to shop for materials with the best price/performance characteristics specified by the designer. Some overlapping and rehandling in the procurement process is unavoidable, but it should be minimized to insure timely delivery of the materials in good condition.

19. 4.7 Material Procurement and Delivery • The materials for delivery to and from a construction site may be broadly classified as : • bulk materials, • standard off-the-shelf materials, and • fabricated members or units

20. 4.8 Inventory Control • Once goods are purchased, they represent an inventory used during the construction process. The general objective of inventory control is to minimize the total cost of keeping the inventory while making tradeoffs among the major categories of costs: • purchase costs, • order cost, • holding costs, and • unavailable cost.

21. 4.8 Inventory Control • Purchase Costs • The purchase cost of an item is the unit purchase price from an external source including transportation and freight costs. For construction materials, it is common to receive discounts for bulk purchases, so the unit purchase cost declines as quantity increases. These reductions may reflect manufacturers' marketing policies, economies of scale in the material production, or scale economies in transportation.

22. 4.8 Inventory Control • Order Cost • The order cost reflects the administrative expense of issuing a purchase order to an outside supplier. Order costs include expenses of making requisitions, analyzing alternative vendors, writing purchase orders, receiving materials, inspecting materials, checking on orders, and maintaining records of the entire process. Order costs are usually only a small portion of total costs for material management in construction projects, although ordering may require substantial time

23. 4.8 Inventory Control • Holding Costs • The holding costs or carrying costs are primarily the result of capital costs, handling, storage, obsolescence, shrinkage and deterioration. • Capital cost results from the opportunity cost or financial expense of capital tied up in inventory. • Handling and storage represent the movement and protection charges incurred for materials • Storage costs also include the disruption caused to other project activities by large inventories of materials that get in the way. • Obsolescence is the risk that an item will lose value because of changes in specifications. • Shrinkage is the decrease in inventory over time due to theft or loss. • Deterioration reflects a change in material quality due to age or environmental degradation.

24. 4.8 Inventory Control • Unavailability Cost • The unavailability cost is incurred when a desired material is not available at the desired time. In manufacturing industries, this cost is often called the stockout or depletion cost. Shortages may delay work, thereby wasting labor resources or delaying the completion of the entire project

25. 4.9 Tradeoffs of Costs in Materials Management • To illustrate the type of trade-offs encountered in materials management, suppose that a particular item is to be ordered for a project. The amount of time required for processing the order and shipping the item is uncertain. Consequently, the project manager must decide how much lead time to provide in ordering the item. Ordering early and thereby providing a long lead time will increase the chance that the item is available when needed, but it increases the costs of inventory and the chance of spoilage on site

26. 4.10 Construction Equipment • The selection of the appropriate type and size of construction equipment often affects the required amount of time and effort and thus the job-site productivity of a project. It is therefore important for site managers and construction planners to be familiar with the characteristics of the major types of equipment most commonly used in construction.

27. 4.10 Construction Equipment • Excavation and Loading • One family of construction machines used for excavation is broadly classified as a crane-shovel. The crane-shovel consists of three major components: • a carrier or mounting which provides mobility and stability for the machine. • a revolving deck or turntable which contains the power and control units. • a front end attachment which serves the special functions in an operation.

28. 4.10 Construction Equipment • Excavation and Loading • Typical Machines in the Crane-Shovel Family

29. 4.10 Construction Equipment • Compaction and Grading • The function of compaction equipment is to produce higher density in soil mechanically. The basic forces used in compaction are static weight, kneading, impact and vibration. The degree of compaction that may be achieved depends on the properties of soil, its moisture content, the thickness of the soil layer for compaction and the method of compaction.

30. 4.10 Construction Equipment • Compaction and Grading • Some Major Types of Compaction Equipment

31. 4.10 Construction Equipment • Drilling and Blasting • Rock excavation is an audacious task requiring special equipment and methods. The degree of difficulty depends on physical characteristics of the rock type to be excavated, such as grain size, planes of weakness, weathering, brittleness and hardness. The task of rock excavation includes loosening, loading, hauling and compacting. The loosening operation is specialized for rock excavation and is performed by drilling, blasting or ripping.

32. 4.10 Construction Equipment • Lifting and Erecting • Derricks are commonly used to lift equipment of materials in industrial or building construction. A derrick consists of a vertical mast and an inclined boom sprouting from the foot of the mast. The mast is held in position by guys or stifflegs connected to a base while a topping lift links the top of the mast and the top of the inclined boom. A hook in the road line hanging from the top of the inclined boom is used to lift loads. Guy derricks may easily be moved from one floor to the next in a building under construction while stiffleg derricks may be mounted on tracks for movement within a work area.

33. 4.10 Construction Equipment • Mixing and Paving • Basic types of equipment for paving include machines for dispensing concrete and bituminous materials for pavement surfaces. Concrete mixers may also be used to mix portland cement, sand, gravel and water in batches for other types of construction other than paving.

34. 4.10 Construction Equipment • Construction Tools and Other Equipment • Air compressors and pumps are widely used as the power sources for construction tools and equipment. Common pneumatic construction tools include drills, hammers, grinders, saws, wrenches, staple guns, sandblasting guns, and concrete vibrators. Pumps are used to supply water or to dewater at construction sites and to provide water jets for some types of construction

35. 4.10 Construction Equipment • Automation of Equipment • The introduction of new mechanized equipment in construction has had a profound effect on the cost and productivity of construction as well as the methods used for construction itself. An exciting example of innovation in this regard is the introduction of computer microprocessors on tools and equipment. As a result, the performance and activity of equipment can be continually monitored and adjusted for improvement.

36. 4.11 Choice of Equipment and Standard Production Rates • Typically, construction equipment is used to perform essentially repetitive operations, and can be broadly classified according to two basic functions: • operators such as cranes, graders, etc. which stay within the confines of the construction site, and • haulers such as dump trucks, ready mixed concrete truck, etc. which transport materials to and from the site. • In both cases, the cycle of a piece of equipment is a sequence of tasks which is repeated to produce a unit of output.

37. 4.12 Construction Processes • During the course of construction, foremen and site managers will make decisions about work to be undertaken at particular times of the day based upon the availability of the necessary resources of labor, materials and equipment. Without coordination among these necessary inputs, the construction process will be inefficient or stop altogether.

38. 4.13 Queues and Resource Bottlenecks • A project manager needs to insure that resources required for and/or shared by numerous activities are adequate • Problems in this area can be indicated in part by the existence of queues of resource demands during construction operations.

39. 4.13 Queues and Resource Bottlenecks • In general, there is a trade-off between waiting times and utilization of resources. Utilization is the proportion of time a particular resource is in productive use. Higher amounts of resource utilization will be beneficial as long as it does not impose undue costs on the entire operation. For example, a welding inspector might have one hundred percent utilization, but workers throughout the jobsite might be wasting inordinate time waiting for inspections. Providing additional inspectors may be cost effective, even if they are not utilized at all times.