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Scheduled Overtime Effect on Construction Projects

Business Roundtable Report

The Business Roundtable (“BRT”) issued a task force report in 1980 entitled, “Scheduled Overtime Effect on Construction Projects”, which was an update of their 1974 report entitled, “Effect of Scheduled Overtime on Construction Projects.” The original data relied upon were actual project records derived from a series of short jobs over a 10-year period in the 1960s. The output was recorded from physical count and the input was based on actual payroll labor hours. The work was carried out in static labor climate with excellent field management. The nature of the construction activities and the trades involved are unreported.

The measure of labor productivity in the BRT is a comparison of actual work hours expended for preplanned operations with a fixed standard base of calculated work hour requirements called a “bogey.” The “bogey” standard is for a straight-time schedule. The data does not compare straight time and overtime productivity.

The report addressed the ratios of productive return to over-time hours for long-term job schedules of overtime operations and the average and the range of expected performance. After several weeks of overtime, the reduced labor productivity reaches the point of no return. The study also suggests that a 45-hour job schedule quickly becomes nothing more than wage inflation.

The study contains the following warning:

“The industrial firm’s data on productivity is based on Fixed Standards, and a performance of 1.0 may not be the same as a performance of 1.0 referenced to same other standard of comparison. As a result, a 30% reduction of productivity in one set of data could compare with a 15% reduction reflected in another set of data due to these differences.”

American Association of Cost Engineers – Garbage In, Garbage Out

In 1973, the American Association of Cost Engineers (“AACE”) published a report on the “Effects of Scheduled Overtime on Construction Projects”, where it relied on the same flawed BRT labor data. Similarly, “The Owner’s Guide to Overtime, Construction Costs and Productivity”, published in 1979 by the Associated General Contractors, the American Subcontractors Association and the Associated Specialty Contractors relied on the same BRT labor data. Finally, the 1994 MCAA publication includes the same BRT data as proof of the relationship between overtime and the increasing ratio of inefficiency during consecutive overtime periods. These publications, or “studies”, contain no original data and the limitations and shortcomings of the BRT Study are arguably equally applicable to each publication and their conclusions.

Findings

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