Productivity is defined by economists as the amount of output per unit of labor. For example the number of light fixtures installed per labor hour worked. As a subcontractor I would modify that definition to read: the amount of output per unit cost of labor. There is a specific difference and it is dramatic. Let's say we have a veteran employee that is making $30/hr and a relatively new person to the trade that makes $15/hr. If each of them install 4 fixtures per hours then per the economists they have the same production, but I would say that the veteran has a productivity 0.133 and the new guy has a production rate of 0.266 (or double the production rate). I will come back to why this is critical to driving results near the end of this piece, but let's get back on topic.
Now that we have some background on the definition of production, I would like to focus on my main point TRACK IT. Production tracking needs to be implemented for every hourly field position in a subcontractor's company. If you don't you will not be able to drive production. There are several reasons to be tracking this daily.
Psychological Reason
Most people that end up in construction related fields are competitive people. They were athletes in competitive leagues at the high school or even college levels. They typically still play softball, pool, bowling, etc. with a desire to win and beat the other guy. If we put these folks at work and don't track production we are losing that key trait that could be worth 10-30% labor savings. Tracking their results is keeping score in their world. Nothing will be a competition unless there is a score and unless it is competitive. If they know what their production is as well as others, they will push hard to win with great results for everyone.
Estimating Reason
Most of us use computerized estimating systems in some way shape or form, but have we really updated our production rates? I would venture to say no as we don't have the data to perform the update. We are all pretty sure that we beat that item and don't make money on that item, but that is all a gut feel. If you are tracking production units, you would have that data which would make you more competitive on the right jobs and less competitive on the jobs that are not right.
Financial Reason
This goes without saying that it is difficult to know where you are at on the project without tracking production units. We can all walk a project and come up with percent complete look at the project, but that is only part of the picture, what production level are we at and is that sustainable for the remainder of the project? Are we done with all of the units that we typically win on and have the units that we typically lose on?
Change Order Reason
Let's face it, some jobs just kick our ass. Why? Tracking production at each level can shed some light onto what is causing the monetary losses. If we find that one of our better crews is having horrible production in the surgery suite of the project we can look into what is going on and it is possible that change to the contract are going on that we were not aware of. This is a good method to check on the validity of scope.
So begin tracking production units if you are not and if you are start posting them. You should be adjusting the production value by the cost to level out the field. When I say cost I mean labor costs and everything associated with it (vehicles, cell phones, laptops, vacation, etc). Here is the thought that will become valuable, each employee has a set value and cost. When talking to employees they will bring up the values to justify the cost. When talking with an employer, they will bring up the cost to demand the value. This method puts a metric to it. Yeah it is not the end all be all of labor relations, but isn't better to know some exact facts? Players in the NHL don't go in and have a general conversation about what they did last year, they talk goals, assists, points, etc. Yeah that team has other considerations like his personality and ability to work with the team, but the metrics are not forgotten. Back to the veteran employee from the beginning of the article. He should be installing twice as many as the new employee or adding other value to the company to justify his costs. If that became evident to everyone, the statistics would change with the performance.
Start tracking, it will make your life better, the field will enjoy work more, and you can win more work. As a footnote, these tracking programs always work better with a defined bonus or incentive program that will yield results from increased production on the job site.
Now that we have some background on the definition of production, I would like to focus on my main point TRACK IT. Production tracking needs to be implemented for every hourly field position in a subcontractor's company. If you don't you will not be able to drive production. There are several reasons to be tracking this daily.
Psychological Reason
Most people that end up in construction related fields are competitive people. They were athletes in competitive leagues at the high school or even college levels. They typically still play softball, pool, bowling, etc. with a desire to win and beat the other guy. If we put these folks at work and don't track production we are losing that key trait that could be worth 10-30% labor savings. Tracking their results is keeping score in their world. Nothing will be a competition unless there is a score and unless it is competitive. If they know what their production is as well as others, they will push hard to win with great results for everyone.
Estimating Reason
Most of us use computerized estimating systems in some way shape or form, but have we really updated our production rates? I would venture to say no as we don't have the data to perform the update. We are all pretty sure that we beat that item and don't make money on that item, but that is all a gut feel. If you are tracking production units, you would have that data which would make you more competitive on the right jobs and less competitive on the jobs that are not right.
Financial Reason
This goes without saying that it is difficult to know where you are at on the project without tracking production units. We can all walk a project and come up with percent complete look at the project, but that is only part of the picture, what production level are we at and is that sustainable for the remainder of the project? Are we done with all of the units that we typically win on and have the units that we typically lose on?
Change Order Reason
Let's face it, some jobs just kick our ass. Why? Tracking production at each level can shed some light onto what is causing the monetary losses. If we find that one of our better crews is having horrible production in the surgery suite of the project we can look into what is going on and it is possible that change to the contract are going on that we were not aware of. This is a good method to check on the validity of scope.
So begin tracking production units if you are not and if you are start posting them. You should be adjusting the production value by the cost to level out the field. When I say cost I mean labor costs and everything associated with it (vehicles, cell phones, laptops, vacation, etc). Here is the thought that will become valuable, each employee has a set value and cost. When talking to employees they will bring up the values to justify the cost. When talking with an employer, they will bring up the cost to demand the value. This method puts a metric to it. Yeah it is not the end all be all of labor relations, but isn't better to know some exact facts? Players in the NHL don't go in and have a general conversation about what they did last year, they talk goals, assists, points, etc. Yeah that team has other considerations like his personality and ability to work with the team, but the metrics are not forgotten. Back to the veteran employee from the beginning of the article. He should be installing twice as many as the new employee or adding other value to the company to justify his costs. If that became evident to everyone, the statistics would change with the performance.
Start tracking, it will make your life better, the field will enjoy work more, and you can win more work. As a footnote, these tracking programs always work better with a defined bonus or incentive program that will yield results from increased production on the job site.