In the construction industry, it is largely agreed that delays, multiple changes, out-of-sequence work, overtime work, and other disruptive events adversely affect labor productivity. However, there is no universally accepted method for estimating the resulting loss of productivity, and certain studies used to estimate such losses have been subject to criticism by industry experts and the courts.

Delays and impacting events often cause the contractor to work overtime, perform work out of its planned sequence or in parallel rather than in series, work in weather conditions that are less favorable than reasonably planned, work in crowded conditions, employ multiple shifts, etc., all in an effort to make up time to mitigate delay. When there are multiple changes and impacting events on a project and they act in sequence or concurrently, there may be a cumulative effect of the individual changes and impacting events that is much greater than a sum of the individual parts. Multiple change orders and other types of owner-caused delays and disruption, as well as contractor-caused and force majeure delays and disruption, can negatively impact the contractor’s performance of unchanged work such that a contractor expends additional time, man-hours, and costs in completing its “unchanged” base scope work. These disruptions often result in the contractor submitting delay and labor productivity loss claims in construction.

To determine the contractor’s entitlement to loss claims, or to defend against such claims, a detailed construction productivity analysis of contemporaneous man-hours and installed quantities, the timing of changes and impacting events, and an allocation of responsibility for the various causes of delay and disruption is often necessary.

Long International’s labor productivity experts employ numerous methods to analyze, demonstrate or disprove a contractor’s entitlement to recovery of increased costs as a result of engineering and/or construction labor productivity loss caused by delays and impacting events for which the owner and/or the contractor may be responsible.  If a negotiated settlement of a loss of productivity claim is not reached, our labor productivity experts have testified in both domestic and international arbitration and litigation proceedings involving the complex issues of labor efficiency and productivity loss.

Our methods for performing loss of construction productivity analysis are consistent with those set out in:

• The Society of Construction Law (SCL) Delay and Disruption Protocol;
• AACE International’s Recommended Practice 25R-03, Estimating Lost Labor Productivity in Construction Claims; and
• American Society of Civil Engineers (ASCE) Standard ANSI/ASCE/CI 71-21, Identifying, Quantifying, and Proving Loss of Productivity.

These methods include:

• Measured Mile Analysis
• Actual Productivity/Earned Value Calculations
• Corroboration with Industry Studies
• Assessment of the Reasonableness of Bid Estimate Productivity using Industry Estimating Guide Productivity Comparisons
• Identification of the Timing of Impacting Events
• Evaluation of Cumulative Impacts

Our quantum experts also have expertise in Dynamic Simulation Analysis and System Dynamics, and have analyzed what was purported at the time (2017) to be one of the largest and most complex Dynamic Simulation models ever created.

Once the contractor’s various heads of claim are identified, evaluated for entitlement, and quantified, we may utilize various methods of presenting such damages, depending on the contract terms, legal issues, and availability of data and documentation.

Our methods of preparing or evaluating the contractor’s claim for damages including loss of productivity damages are described in our article Discrete Damages/Cost Variance Analysis Method for Quantifying Damages in Construction Claims and include:

• Total Cost
• Modified Total Cost
• “A”/“B” Estimates
• Jury Verdict
• Delta Estimates
• Specific Damages Analysis
• Quantum Meruit
• Quantum and Damages Graphics

For a discussion about labor loss of productivity, please view our article A Reasonable Method to Estimate Loss of Labor Productivity Due to Overtime.