Working fast or slow? Adjust your estimate for productivity
Installing a piece of equipment, drawing a PFD or operating machinery makes use of human beings to perform those takes. That is, as long as they’re not taken over by robots. And although a pressure vessel might need just as many welds in Western Europe as it does in the United States, the time it takes to finish the tasks is far from the same. That difference is due to the concept of productivity. This article explains how to adjust your project cost estimate to allow for these differences.
Causes for differences in productivity
The relative deviation in productivity compared to a certain labor norm or standard is called the productivity factor. Although there are many different causes for these deviations, they can be divided into two categories: project specific circumstances and regional effects.
The latter is related to culture, available skills and tools, infrastructure, et cetera. To account for regional effects, the difference from the norm can either be accounted for through applying productivity factors or location factors to the estimate. Some while ago we published a post on location factors, which explains their use in more detail. Project specific circumstances are almost always accounted for through productivity factors.
There can be many project specific circumstances that cause changes in productivity. People might have to perform tasks in congested areas, there might be a long walking distance between two facilities and extraordinary safety measures could require more preparation time: the list is endless. So how do you get to know these circumstances and more importantly, how do you know the effect on the project? For this, it is important to intensively talk to a wide range of stakeholders, for example: the project manager, the designer, the workers and sub-contractors. Furthermore, have a look for yourself. Plan a site visit, study the drawings, anything that might give you more insight into the project specifics.
Adjust the estimate
Now that you know what parts of the estimate are affected by a difference in productivity, it’s time to adjust the estimate to account for these differences. In cost estimating software like Cleopatra Enterprise, you can set up so-called factor tables. In those tables you can link a certain factor to any cost item or set of cost items. This way of working is highly preferred above changing the number of hours needed to perform a task, because it allows you to later check what factors were applied and why. It also makes it easier to benchmark projects against each other based on the original norm rather than the adjusted one.