Labor Productivity Claims

Labor productivity claims are some of the most contentious claims in the construction industry. This is based, in part, on the fact that labor productivity losses are often difficult to distinguish contemporaneously, as opposed to many claims which are related to direct costs. Additionally, labor productivity rates and other related data are often not tracked on construction projects with any degree of precision. As a result, substantiating a cause-and-effect relationship between issues and resulting labor productivity losses and establishing entitlement to recovery for lost labor productivity can be a difficult process.

Construction labor productivity is typically measured as labor hours per quantity of material installed. Labor productivity loss is experienced when a contractor, or a particular crew, is not accomplishing the anticipated or planned production rates. In other words, a loss of productivity is when it takes more labor and equipment to do the same amount of work, thereby increasing project costs. There are many common causes for labor productivity impacts on a construction project, stemming from owners, contractors, and construction managers. Common causes include, but are not limited to, mismanagement and maladministration, site access restrictions, differing site conditions, defective plans and/or specifications, changes in the work; labor availability, turnover, rework, testing/inspections, overtime and/or shift work, interferences, changes in construction means and methods, overcrowding, out-of-sequence work and inclement weather.

Primary challenges associated with labor productivity claims are identifying the root cause of labor productivity issues, quantifying associated labor productivity losses, corroborating the cause-and-effect relationship, and establishing entitlement to damages. One must review the contract to understand the basis of the agreement as certain productivity issues may have been foreseeable and therefore possibly accounted for in the contract commercial terms. The contracts may also identify if a party accepted certain productivity risks, and what contractual rights may exist to recover labor productivity damages. Belmont’s construction claims consultants have in-depth knowledge of productivity tracking methods and quantification techniques and extensive experience evaluating labor productivity issues, performing root cause analyses, and quantifying damages. Our consultants prepare and analyze labor productivity claims, present in meditations, and testify in litigation and arbitration proceedings on issues concerning labor efficiency and productivity loss.

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