Construction labor productivity losses is often in the news. Not long ago, the United State Department of Labor released updated overtime guidelines, which will affect your workforce. When you deal with construction claims, many believe that the most significant element of any kind of request for additional compensation is usually labor costs.
In a published Construction Briefings write-up by Kathleen Harmon, the author breaks down loss of productivity claims based upon a claim of acceleration to overcome excusable delays, or a claim for cumulative impact of an owner’s changes. In general, labor productivity describes the measurement or unit of work that is completed for a specified duration. A contractor usually bids a scope of work based upon several presumptions relating to labor costs as well as labor productivity. A compensable loss in terms of labor productivity occurs when the contractor uses more hours to complete a given unit of work than it would have used absent the intervening cause. According to Harmon, the leading factors affecting labor productivity losses on a construction project normally include:
Adverse weather is a substantial cause of labor productivity losses on a construction project. The parties’ contract usually will address where the contractor is entitled to additional time for “unusually severe weather” as well as the kind of proof that may be required for submitting a claim. The lost productivity may include those days when the contractor experiences adverse weather, but also when delays brought on by the owner push the project schedule into weather conditions that affect performance. The parties’ contract usually will address where the contractor is entitled to additional time for “unusually severe weather” and the kind of proof that may be required for submitting a claim.
Out of Sequence Work
The contractor may be entitled to seek additional compensation when its work is impacted by needing to change its anticipated method of performance or sequence of work. When its work is impacted by having to change its anticipated method of performance or sequence of work, the contractor may be entitled to seek additional compensation for labor productivity losses. When a contractor needs to modify its work plan due to owner interferences or delays, it can experience labor productivity losses having to work around the unforeseeable event.
Crowding and Stacking of Trades
Like out of sequence work, a contractor may be impacted by numerous trade contractors working in an area that was not otherwise anticipated. The crowding and stacking of trades can have a substantial effect on labor productivity losses, and courts have acknowledged a loss of efficiency experienced by a mechanical subcontractor when the general contractor accelerated the work, causing overcrowding on the project, increased man-hours, and unavailability of materials.
According to Harmon, fatigue, and increased absenteeism due to scheduled overtime work can have a huge effect on labor productivity losses. Again, the underlying cause must be compensable, and these types of impacts are recoverable.
Restricted Site Access
Given that the contractor is usually entitled to control its own means and methods of performance, restricted site access can also substantially impact labor productivity losses. This might include actual access to the site as well as anticipated use of certain laydown areas.
Unavailability of Manpower
Lack of skilled labor has a direct impact on the schedule, often causing the contractor to accelerate its work to overcome the delays related to maintaining a steady workforce. Given the typical contract language placing the risk of labor on the contractor, it is difficult to prove and recover additional compensation due to the unavailability of manpower. But labor productivity losses continues to be a genuine issue in some areas.
Contractor may be able to recover labor productivity losses for the combined impact of numerous changes on a project. This is sometimes called the “ripple effect” of having multiple changes on the project.