The United States has enjoyed one of the highest workforce productivity increases compared with all other nations. With less than 4.5 percent of the world population, the United States controls more than 40 percent of the world wealth.
However, the national increase in productivity is not mirrored in the construction industry. According to the National Institute of Standards and Technology (NIST), the construction industry is a major contributor to the U.S. economy, but its contribution to U.S. productivity lags by 10 times the national average.
Accounting Methods Are Inadequate Measures
One of the most misunderstood concepts in the construction industry is the difference between productivity and production. Due to the nature of accounting principles used to manage company profitability, most measurements of job productivity are actually bookkeeping measurements of production.
The existing methods of measuring productivity primarily focus on accounting measures, such as Earned Value Analysis, which lack the jobsite reporting capability to allow contractors to make decisions or adjustments that would improve productivity. Accounting methods are primarily after-the-fact reporting of quantitative or earned value measures, and offer no information for improving the productivity of a construction project as it unfolds.
Using accounting-based methods to measure productivity often falls short, as they rely on measurements of “output,” such as hours worked or quantity installed, and not “outcome” of the construction as accepted by the customer. Comparing hours (as an input) to dollars (as an output) ultimately compares a sample to itself, because both dollars and hours represent the same units of measurement (money spent).
A New Metric
NIST identified the need for a metric to measure construction productivity, as well as inform the stakeholders of productivity losses to allow for corrective action.
In October 2009, the American Society of Testing and Materials (ASTM) ratified and adopted the first-ever standard metric for construction productivity measurement called Job Productivity Measurement (JPM).
JPM measures construction productivity by comparing work performed to construction put in place. It assesses the quality of the construction outcome by measuring observed completion of the project as accepted by the customer. The practice reduces the need for end-of-the-job inspection on construction projects by providing ongoing and periodic feedback on errors, repairs and rework.
By measuring productivity and its changes during construction projects, issues can be identified and resolved as the job progresses, resulting in better productivity on jobsites.
How JPM Works
ASTM’s UNIFORMAT II standard classification for organizing building data (or any other classification format such as company-established cost codes) can be used as a reference for breaking down projects into standard elements. Depending on where measurement is applied (building element, total job or industry), JPM measures construction productivity at three levels: task, project and industry.
JPM measures both the construction productivity differential on an ongoing and periodic basis, as well as the average productivity over the life of the construction project. JPM calculates the ratio of outcome per unit of input; i.e., how much work—construction put in place—was produced by how many labor hours. By comparing labor hours used against construction put in place, JPM allows for unified measurement of established building elements.
In other words, what matters to the customer is the measure of the job’s progress.
Additionally, JPM provides an early warning signal for construction performance. It measures ongoing productivity changes, trends and anomalies resulting from changes on a construction jobsite, enabling contractors, project managers, supervisors and foremen to react and improve productivity as the construction project unfolds.
In addition, general contractors and construction managers can measure the productivity of an entire project by asking each subcontractor to follow the JPM standard practice.
This standard practice is needed by all stakeholders throughout the construction industry to establish a uniform method for measuring productivity based on construction put in place. JPM reporting is simple, yet it gives an appropriate level of detail in the output to be used for productivity monitoring and improvement, from the job level all the way up through the national level.
Moreover, contractors that apply JPM tracking can improve their profitability. By correctly recognizing progress on jobs, they can accurately bill for completed work, improving their cash flow.