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ABSTRACTContractors face several challenges when developing claims for productivity loss due to owner/architect/engineer or third-party interference. These include the burden of linking the interference to the productivity loss and establishing the reasonableness of estimated increased time and/or costs. AACE International describes various methodologies in its Recommended Practice No. 25R-03 for estimating lost productivity, with the most favorable being the Measured Mile. This paper discusses this methodology in which labor performance is compared between two time periods – an unimpacted period called the “Measured Mile” and an impacted period. This paper discusses the challenges in comparing Measured Mile performance criteria, including work tasks, productivity levels, worker skill levels, work scopes, and work environment. By following the guidelines outlined in this paper, contractors and claim preparers can ensure they are utilizing the best available facts and records to package their claim in an understandable and believable format to ultimately be successful in their recovery of damages.

Introduction

Delays and disruptions are common interferences in construction projects. For a contractor to develop a claim for productivity loss due to interference by an owner/architect/engineer or a third party, it has the burden to not only link the interference to its alleged effect, but establish that the increased time and/or costs are a reasonable approximation of those actually incurred.

There are several approaches a contractor may undertake to develop these time and monetary costs. The most effective and acceptable approach would be to develop a cost coding and tracking system contemporaneously that quantifies the impact. However, rarely will a contractor have the ability to foresee that a tracking system is necessary before it is too late to develop such a tracking system.

This paper will discuss the various methodologies one can utilize to determine the time and monetary costs associated with a productivity loss claim. Particularly, this paper will focus on the Measured Mile approach and the challenges in choosing and accurately evaluating the performance criteria associated with this approach.

Methodologies for Estimating Lost Productivity

Recommended methods for estimating lost productivity can generally be grouped based on availability of project information, articles, and/or relevant publications. According to AACE International Recommended Practice No. 25R-03 [1], the various methodologies for estimating lost productivity are categorized as follows:

Project Specific Studies

  • Measured Mile Study
  • Earned Value Analysis
  • Work Sampling Method
  • Craftsmen Questionnaire Sampling Method

Project Comparison Studies

  • Comparable Work Study
  • Comparable Project Study

Specialty Industry Studies

  • Acceleration
  • Changes, Cumulative Impact, and Rework
  • Learning Curve
  • Overtime and Shift Work
  • Project Characteristics
  • Project Management
  • Weather

General Industry Studies

  • U.S. Army Corps of Engineers Modification Impact Evaluation Guide
  • Mechanical Contractors Association of America
  • National Electrical Contractors Association
  • Estimating Guides

If one does not have sufficient documentation to utilize the above methodologies, AACE International Recommended Practice No. 25R-03 [1] lists the following two additional categories, which may be utilized as an alternative:

Cost Basis

  • Total Unit Cost Method
  • Modified Total Labor Cost Method
  • Total Labor Cost Method

Productivity Impact on Schedule

  • Schedule Impact Analysis

Cost Basis is generally utilized if it is possible to demonstrate entitlement and causation, but there is insufficient project documentation to support damage calculations using any of the primary techniques.

Although AACE International Recommended Practice No. 25R-03 [1] does not recognize Productivity Impact on Schedule as a recommended method for estimating lost productivity, it discusses the fact that there is a relationship between a lost labor productivity analysis and lost labor productivity’s impact on a project schedule. Therefore, schedule analysis often plays a major role in analyzing entitlement and impact of productivity loss.

Generally, the categories described above, excluding Cost Basis and Productivity Impact on Schedule, are listed in order of preference, from most reliable to least reliable. I will discuss each category, from least reliable to most reliable, as follows.

General Industry Studies are the least favored methodologies for estimating lost productivity because they are based on industry-wide studies and are not job-specific. These studies are generally developed to price future work and not past work. If a contractor utilizes industry-published productivity studies, two of the better known of these are published by the Mechanical Contractors Association of America (MCAA) [2] and the National Electrical Contractors Association (NECA) [3]. The MCAA publication itemizes and ranks by potential impact many productivity factors, such as added work, crowding of work space, supervision, and manpower availability. However, these studies are reference documents specific to certain trades and cannot be universally utilized.

The next category listed, Specialty Industry Studies, describes specialized studies of specific types of problems. As these studies involve activities such as acceleration, changes, overtime, and others; most of the studies are articles and papers written by individuals on specific real-life construction projects. However, some specific studies are published by recognized associations, such as the Construction Industry Institute [7], based out of the University of Texas; the Business Roundtable [6]; and the American Society of Civil Engineers [5].

Several other approaches, categorized as Project Comparison Studies, may be utilized when a project is disrupted to the point that no period was unimpacted and establishing an appropriate project baseline is not possible. The first of these approaches is a Comparable Work Study, which involves comparing work within the same project. If the more heavily impacted work can be isolated from the least impacted work, one can establish a reasonable productivity factor to apply to the more heavily impacted impacted work. Another approach, a Comparable Project Study, compares labor productivity on the impacted project with a separate project involving similar work. For this method to be reasonable, the similar project must be of a similar size and magnitude, and be in a similar location with similar weather, environmental, and labor conditions.

The most favorable approach to developing a lost productivity cost analysis is categorized under Project Specific Studies, and is known as the “Measured Mile” approach or concept. This approach is most favored by claims analysis experts in the field, and involves a comparison of actual labor performance between two periods: a normal one called the Measured Mile and an impacted period.

The Measured Mile can be defined as a continuous period when labor productivity is unimpacted by outside sources. The impacted period is the period during which outside sources interfere with the normal labor performance. There could reasonably be more than one impacted or unimpacted period on a construction project. Selecting the appropriate periods is critical for the development of a reasonable delay/disruption analysis. However, if there was never an unimpacted period, the Measured Mile approach is not a viable option unless one can demonstrate the relative range of labor productivity impact from low to high and utilize the lowest impact as the Measured Mile. This alternative approach to the Measured Mile must be discussed in a separate publication.

The following sample plot illustrates man-hour levels on a hypothetical work task impacted by an outside interference. Cumulative man-hours are charted over the course of 100 weeks for the purpose of establishing a baseline. In this hypothetical plot, at about the 70th week of the task, the contractor experienced an increase in man-hour expenditure for the task due to interference by either the owner/architect/engineer or a third party. As will be discussed in this paper, the two periods, the unimpacted period and the impacted period, become the basis for comparison of work performed. It is important to note that the first and last 10%, or 10 weeks in this plot, of the work task is excluded from the analysis because the early portion of the task is considered the learning curve and the last portion of the task is considered the wind-down period.

                        Figure 1 – Sample Measured Mile Man-hour Plot

 

Provided that there are two distinct, measurable periods, one being unimpacted and the other being impacted, the Measured Mile approach for analysis is reasonable and desirable. However, the difficulty in utilizing the Measured Mile to quantify damages arising from lost labor productivity is that the Measured Mile methodology is a concept, not a procedure. No rules exist regarding the proper procedures to be utilized, as use of the concept relies on the analyst performing the study as one pleases.

There have been numerous papers and articles describing the Measured Mile concept relative to demonstrating labor productivity losses, and they generally agree on how to quantify the work performed during the two periods. Two papers on this topic are “Quantification of Losses of Labor Efficiencies: Innovations in and Improvements to the Measured Mile,” by H. Randolph Thomas, M.ASCE [4], and “Getting the Most out of Your ‘Measured Mile’ Approach,” by Michael C. Loulakis, M.ASCE, and Simon J. Santiago [5].

These studies maintain that the work performed in the Measured Mile period and the alleged impacted period should:

  • Be substantially similar work in both periods;
  • Represent reasonable, attainable levels of productivity;
  • Be demonstrated based on a productivity definition of labor hours per unit (unit rate) or quantities of units installed;
  • Maintain the same productivity level during the Measured Mile period;
  • Have comparable skill levels involving work in both periods;
  • Be performed on the same type and complexity of work;
  • Be performed in a similar environment compared to the environment when the affected (impact period) work was performed; and
  • Exclude from the analysis the first and last 10% of the work.

It is important to note that the impact of overtime cannot be evaluated in the Measured Mile analysis, whether it was required by an owner/architect/engineer or self-imposed. This is because reasonable levels of productivity cannot be effectively measured when overtime is involved.

It is well known that overtime has its own inefficiencies. There are many studies regarding overtime affecting labor productivity; however, the Measured Mile is not one of them. Of the various overtime studies such as those by the Business Roundtable [6], Department of Labor, and National Electrical Contractors Association (NECA) [3]; the Construction Industry Institute study (CII) [7] is the most extensive. The CII study is significant because it contradicts some of the findings of the other studies. The CII study concludes that overtime does not automatically create productivity losses. In fact, the CII study maintains that even consecutive 60-hour weeks can be worked without serious negative consequences, provided the work is managed properly.

Introduction to the Measured Mile

When performing a Measured Mile delay/disruption analysis, the most critical factor in developing a reasonable conclusion is comparing work efforts of similar tasks. In other words, the task should be confined to a measurable quantity that is not so broad that differing scopes of work are performed. As the old saying goes, one should "compare apples to apples, not apples to oranges." By utilizing at least the following performance criteria, one will be able to develop reasonable comparisons of work efforts.

Measured Mile Performance Criteria

Substantially Similar Work Tasks

When comparing work effort for a task during two different periods (impacted versus non-impacted), one must evaluate work being performed on the task that was substantially similar. For example, the productivity of plumbing pipe fitters cannot be compared to the productivity of HVAC (Heating, Ventilation, and Air Conditioning) pipe fitters, even though pipe fitters may both be involved in plumbing and HVAC work. Plumbing work and HVAC work are not substantially similar work. Also, work in the rough-in phase of plumbing cannot be compared to finish work of a plumbing task. This is true for most other craft workers like electricians, carpenters, and insulators.

Additionally, concrete work for a building foundation is not the same as concrete work for building slabs, walls, and columns. There are many craft workers such as carpenters performing similar activities or functions, but the various building components such as building slabs and columns do not have similar productivity values. For comparison purposes, a broad category such as concrete work cannot be utilized. Only similar activities must be evaluated. Understanding this factor is essential to providing a reasonable Measured Mile analysis.

For a building project, the same craftsmen can perform different work; yet on a civil project, those craftsmen perform their own distinctive work. In a civil project such as a long roadway project, the site grading, form work, paving work, and finishing work require unique craftsmen for each task and crewmembers generally do not perform multiple job functions. When comparing impacted and unimpacted periods, one must be sure to compare substantially similar work and not merely work that appears to be the same type.

In conclusion, grouping substantially similar work into similar categories is necessary for this type of labor productivity analysis.  If one groups a major classification of crafts such as electricians or carpenters into one category without breaking the electrician or carpenters  into groups performing similar work, such as rough-in work separated from finish work, and slab form work from column form work, one will obtain a flawed result.

Reasonable, Attainable Levels of Productivity

The next criterion, establishing reasonable and attainable levels of productivity, generally, involves establishing labor productivity levels for the most efficient portion of the work activity. It is common knowledge that the beginning and ending of the work activity is not the same productivity level as the middle of the same activity. Normally, the first and last 10% of the work effort can be considered inefficient due to starting and finishing the work activity; therefore, those crew hours and the associated productivity must be eliminated from the study.

For the balance (remaining 80%) of the work effort completing a task, a reasonable baseline of productivity must be established. A reasonable, attainable level of productivity should be based on high levels of output, and not necessarily high levels of man-hours.  High levels of output progresses the job toward completion, while increased man-hours may not necessarily result in completion of certain tasks.

A baseline level of productivity must also be attainable. As an example, if one produced 10 widgets a week for only one week out of a 20-week production run and never attains that productivity level again throughout the balance of the production run, it may not be a reasonable baseline since it never occurred again. Choosing a reasonable, attainable level of productivity requires good judgment by the person performing the Measured Mile analysis and is important in establishing damage entitlement as a result of disruptions.

If a reasonable, attainable level of productivity cannot be established as the Measured Mile, the Measured Mile productivity analysis is probably not appropriate unless one can demonstrate the relative range of impact on labor productivity. For example, if a project is continually disrupted, the most productive output during an extended, reasonable period may be utilized as the Measured Mile.

Established Performance Definition

Establishing a performance definition is also a critical criterion for conducting a Measured Mile analysis, as it is the quantifier of the damages. Performance requires two components: output (units constructed or installed) and input (man-hours). It is extremely difficult, if not impractical, to evaluate labor costs during an impacted period and an unimpacted period without determining a performance (productivity) definition, such as man-hours spent per unit, or total units constructed or installed compared to total man-hours.

Units constructed or installed (output) per labor hour (input) are recognizable performance metrics and should be developed for the various crafts or disciplines. A baseline unit rate would be the work installed or accomplished during the unimpacted period, and that rate would be compared to the work installed or accomplished during the impacted period.

Examples of quantities produced or installed would include cubic yards or square feet of concrete cast, tons or pounds of steel erected, pounds of duct work installed, or feet of pipe installed. Each craft should decide its productivity definition, and productivity loss can be determined by the difference in units of work performed in the baseline, or unimpacted, period as compared to the impacted period.

When using units constructed or installed per man-hour for analyzing labor productivity, it follows that higher values mean better productivity. As such, better productivity would result in increased unit-per-man-hour rates and lower cost per unit. In other words, installing 100 linear feet of 4-inch copper pipe per man-hour is better productivity than installing 40 linear feet of 4-inch copper pipe per man-hour. These productivity levels convert into unit rates or unit costs. One can track the various unit rates and determine when the impacts affected productivity.

For calculating productivity loss, one would determine the unit rate, or cost per unit, and subtract the difference between the unimpacted period and the impacted period. In the example cited above, if installing only 40 linear feet of pipe per man-hour during the impacted period costs $36.50 per foot, and the cost per foot for installing 100 feet per man-hour during the unimpacted period (Measured Mile) is $19.95 per foot, the difference would be $16.55 per foot, or a productivity loss of 45.34%. The labor cost of the impacted work task would be modified by a 45.34% factor, resulting in a cost of the lost labor productivity.

Total labor costs accumulated during the impacted and unimpacted periods are neither appropriate nor reasonable for tracking labor productivity. This is because the Measured Mile analyzes productivity levels – which accounts for output (units) as well as input (man-hours) – not cost of labor, which only accounts for input. As such, there must be measurable productivity definitions associated with the labor costs. Additionally, total labor costs should not be utilized because addressing only labor costs between the two periods does not take into account the many other factors affecting it.

An example of this is when a contractor or practitioner determines that the total labor cost for period A was $100,000 and the total labor cost for period B was $150,000. No one knows exactly what affected the two periods, and these two figures alone do not express productivity levels for the given periods. Period B, even though it cost more overall, may have been the most productive period because more output was produced per unit of input. Additionally, some other factors affecting labor costs during these periods are: labor rates may change during a period, additional scope changes may have occurred, or weather may have affected the project. None of this fluctuation in labor cost is relevant to a productivity analysis.

It is important to note that one cannot utilize a category so broad (such as total labor cost) that it encompasses most, if not all, of the craftsmen performing the work. Again, as described earlier, one must demonstrate that both periods involve work that is substantially similar; involve crews with comparable skill levels; and represent reasonable, attainable levels of productivity.

One of the more inappropriate and incorrect performance measurements attempted by so-called experts is the utilization of estimated work percentages completed of broad-scope work such as plumbing. Percent complete as a performance metric is generally an estimate of the total broad-scope work amount completed during a specific timeframe by construction personnel that incorporates many factors and does not utilize actual and specific performance factors such as units completed per man-hour. Estimated work percentages of a broad scope of work completed are imprecise, unspecific, and ignore actual output and input. Therefore, this approach is inappropriate, unreliable, and should be discouraged.

One cannot take the percent of plumbing work completed in the unimpacted period and compare it to the percent of plumbing work completed in the impacted period. As an example, if a plumbing crew completed 30% of the entire plumbing scope of work during the unimpacted period and another 20% of the entire plumbing scope of work during the impacted period, these comparisons of percent complete would not be relevant to productivity. The percent of completion of the work performed is not a measurement of units constructed or installed per man-hour performed or some other performance measurement. Measuring the percent complete has no relationship to measuring labor production. Percent complete is too broad of a quantification, and a flawed result will be obtained.

Consistent Productivity Level during the Measured Mile Period

It is important that the productivity level of the contractors or craftsmen working in the unimpacted period, or the Measured Mile, demonstrate consistency and the crews maintain the same productivity levels throughout this period. The Measured Mile period should include the contractors’ most reasonable work effort. By doing so, any self-imposed inefficiencies or delays borne by the contractor will be included within the Measured Mile. Otherwise, by excluding these self-imposed delays and disruptions, it would skew the results and the Measured Mile would not be appropriate.

If the contractor’s self-imposed inefficiencies or delays continue into the impacted period of work, then they should be included as well; however, new and different self-imposed inefficiencies or delays borne by the contractor must be excluded from the impacted period unless these delays and disruptions were essentially the same as those that were included in the Measured Mile period. Quite often, a Measured Mile labor loss productivity analysis is challenged because a contractor’s self-imposed labor productivity loss is included in one period but not in the other. As long as a contractor’s self-imposed labor productivity loss is included in both periods, the Measured Mile analysis is still valid.

Comparable Worker Skill Levels

The next criterion for performing a Measured Mile analysis is ensuring that worker skill levels are comparable. For example, if one crew is composed of 5 journeymen and 5 apprentices, it could not be compared to a crew of 8 journeymen and 2 apprentices, even though the crew size of both is 10 individuals. The composite skill levels of both crews are not comparable, as one crew has a greater proportion of journeymen, which have a higher level of skill, than the other crew. Therefore, if one is attempting to compare the labor productivity of one crew of 10 welders in an unimpacted portion of the job to an impacted portion of the job, the crew make-up of welders and apprentices must be comparable in skill level. Though the make-up of skill levels between various crews is generally never the same, one must make the best attempt possible to utilize crews of comparable skill levels in one’s analysis.

When multiple crews are involved, the overall skill level of the composite labor force must be determined to be comparable and reasonable. Again, if one groups a major craft, such as all pipe-fitters, into one category without breaking the craft into comparable skill levels, one will obtain a flawed result.

Comparable Work Scope

Work involved within a construction project changes drastically as a project evolves. The early periods of a project are substantially different than the later periods of a project. Different work is performed, different crews are involved, different manning levels are utilized, and familiarization with the work is different. Generally, the one agreement among analysts is that using the Measured Mile at the beginning of a project to quantify damages at the end of a project is an inappropriate and unsuitable methodology. As shown in the “Sample Measured Mile Man-hour Plot,” at the beginning of a project, the contractor is building its learning curve while its crews and personnel are becoming familiar with the work effort. Consequently, at the end of a project, crews are winding down their activities and wrapping up finishes; and work is traditionally slower. Neither of these periods should be included in one’s analysis of labor productivity periods.

There are multiple work tasks occurring throughout a project; therefore, when comparing productivity, the work tasks that occur during the impacted and unimpacted period must be comparable work. Because work involved during the beginning of a project is different than work involved at the end of a project, different environments or conditions can occur throughout any phase of a project. As such, care must be taken when comparing work performed. Examples of these differing environments or conditions include:

  • Rough-in and finish work occurring simultaneously
  • Architectural changes in the configuration of a building, such as changes in shape or size of different floors
  • Progressing from small, compact spaces to large, expansive spaces
  • Building various tenant spaces in one facility such as restaurants, retail, entertainment; or building similar spaces such as a complex of offices
  • Building a long roadway project that increases the distance that supplies and equipment must travel
  • Changes in the design cross-section of a roadway project or drainage project

Accounting for Work Environment Problems

Complications with the work environment are also important to account for and potentially exclude in a Measured Mile analysis. One of the more critical factors that affect the work environment is the weather. Seasonal weather such as snow or rain, heat or cold, and/or windy or calm days can impact labor productivity.

Other work environment impacts that must be accounted for and potentially excluded from each period studied include contractor-related impacts such as absenteeism; availability of skilled labor; craft turnover; supervision disruption; material, tool, and equipment shortages; corrections of unapproved work; and/or contractor errors.  Any of these impacts cannot occur in one period studied and not the other. However, if any or all of these impacts occur throughout both periods, they do not need to be excluded, as they would affect both periods equally.

Summary of the Measured Mile Productivity Analysis

Provided that a contractor and/or a subcontractor is legally eligible for damages for productivity loss and entitlement has been established based on liability and causation, is the Measured Mile productivity analysis always the best approach?

To determine if the Measured Mile is the best approach to developing a claim for productivity loss, one must ensure that the approach is focused on a single work task. That is not to suggest that only one work task was affected by an owner/architect/engineer or third-party-caused interference, as multiple work tasks may be impacted. As such, each work task that was affected by the interference would be evaluated separately, and the cumulative costs (each cost code of work that was affected) would be included in the damage assessment. The foremost cause of rejection of a Measured Mile productivity analysis is using too large of a sample (different types of work). Most practitioners agree that the composition of the work during the periods to be compared must be appropriate and similar. Again, without following the previously-described various performance criteria, a flawed analysis can easily result.

Once the analysis has been focused on a single task or combination of affected single tasks, a productivity baseline based on actual productivity should be established. However, if insufficient jobsite records are available to develop this baseline, one must rely on projected manpower utilization for units of work, which is not ideal. An actual, post-construction productivity baseline is more reliable than a projected baseline because it is based on jobsite records. Additionally, the actual baseline is based on production or output, not on proposed or assumed productivity. In summary, an effective baseline based on actual, not projected, productivity is the best leverage to determine the Measured Mile period as well as impacted periods.

When establishing the Measured Mile, it is important that work performance represents reasonable, attainable levels of productivity and that this productivity was maintained at the baseline level during the Measured Mile period.

Furthermore, when establishing the impacted and unimpacted periods, jobsite records should be utilized to establish that substantially similar work was performed in both periods; the work crews had comparable skill levels while working in both periods; and the work was performed in a similar environment compared to the environment when the affected (impact period) work was performed.

Another important responsibility when comparing the impacted and unimpacted periods of the project, is ensuring that no self-imposed disruptions are included in one period and not included in the other period. In other words, if the contractor disrupts its own work (self-imposed) during one period and not both periods, adjustments must be made to eliminate this impact to the one period. If the self-imposed disruption occurred in both periods, they cancel or compensate for its effect on productivity. 

Conclusion

If a contractor has suffered interference by an owner/architect/engineer or third party, it can develop a claim for productivity loss for that delay and/or disruption. However, it has the burden to not only link the interference to the effect of the interference, but establish that the increased time and/or costs are a reasonable approximation of those costs actually incurred. As discussed in this paper, the difficulty in quantifying damages arising from loss of labor productivity utilizing the Measured Mile Methodology is that this approach is a concept, not a procedure. No rules exist regarding the proper procedures to be utilized, as use of the concept relies on the analyst performing the study as one pleases. This paper discussed the various performance criteria that must be followed, and detailed problems with each criterion that must be avoided to prevent flawed conclusions.

There is no question that certain courts throughout the country, as well as governmental boards, have allowed damage assessments utilizing the Measured Mile methodology without all of the criteria discussed in this paper; however, the better the facts and records, the more persuasive the claim. Finally, to be successful, the preparer of the claim must utilize the best available facts and records and ultimately package the claim in an understandable and believable format.

References

  1. McDonald, Jr., PE, CCE, Donald, and Zack, Jr., James G.; AACE International Recommended Practice No. 25R-03: Estimating Lost Productivity in Construction Claims, TCM Framework: 6.4 – Forensic Performance Assessment, The Association for the Advancement of Cost Engineering International, Morgantown, West Virginia (2004): Pp. 8-9

  2. Mechanical Contractors Association of America; Change Orders, Productivity, Overtime – A Primer for the Construction Industry, Mechanical Contractors Association of America, Rockville, Maryland (2011)

  3. National Electrical Contractors Association; Volume I, Second Edition, Guide to Electrical Contractors’ Claim Management, National Electrical Contractors Association; Bethesda, Maryland (1985)                  

  4. Thomas, M.ASCE, H. Randolph;Journal of Legal Affairs and Dispute Resolution in Engineering and Construction, Volume 2, Issue 2, Quantification of Losses of Labor Efficiencies: Innovations in and Improvements to the Measured Mile, American Society of Civil Engineers (2010)

  5. Loulakis, M.ASCE, Michael C. and Santiago, Simon J.; Civil Engineering Magazine, Vol. 69, No. 11 Getting the Most out of Your ‘Measured Mile’ Approach, American Society of Civil Engineers, Reston, Virginia (1999): P. 69

  6. Business Roundtable; A Construction Industry Cost Effectiveness Task Force Report, Report C-2, Scheduled Overtime Effect on Construction Projects, Business Roundtable, New York, New York (1980)

  7. Construction Industry Institute; The Effects of Scheduled Overtime and Shift Schedule on Construction Craft Productivity, Construction Industry Institute, Austin, Texas (1988)