Determining the profitability of a construction project is straightforward: it’s simply the difference between what a contractor gets paid to complete a project, less what it costs them to do so. When contractors create budgets for their projects, they have to estimate the cost and profit margin for every item of work they must perform. This includes materials, equipment, supplies, overhead expenses and of course – the cost of labor. Given that the vast majority of projects depend heavily on those who physically perform the work, it only makes sense that labor costs on most projects is substantial. It’s not uncommon for labor costs to make up the majority of a project’s total budget. The more efficient and productive the crews onsite work, the more profitable a project is. But how is this productivity calculated? How can construction managers and supervisors know whether or not the workers are meeting the budget? What if some items are going better than estimated, while others are doing worse? This is why tracking construction productivity on a regular basis is so important. Let’s go through a few examples of how to track construction productivity using an Excel template, which you can download for free below!
Formula For Calculating Production Rates In Construction
In a general sense, a production rate refers to the amount of work performed in a given time period. By ‘work performed’, I refer to a quantity of tangible work being completed within one specific work task. More specifically, a production rate represents the quantity of work performed by each worker over a given period of time.
For example, let’s consider a fence project. Suppose two workers are expected to completely paint a fence in one 8-hour shift. The fence is 80-ft long x 7-ft high and must be painted in both sides.
In this case, the total square footage of fence that must be painted is 1,120 square feet (SF), which we get by multiplying 80 x 7 x 2 sides. Given that two workers will be on the job, each worker must paint 560 SF of fence in an 8-hour period.
Production rates are calculated using the following formula:
Production Rate = Quantity of Work / Time to Perform Work
Using this formula, we can determine the budgeted production rate of our fence project:
[ 1,120 SF of Fence ] / [ 2 Workers ] / [ 8 Hours ] = 70 SF Per Hour Per Worker
In order to begin tracking construction productivity, we must use the formula above to understand how much work is actually getting done in an exact-quantity sense.
With production rates now defined, let’s talk about how to actually track productivity onsite. Be sure to download our free construction productivity tracking template below!
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Tracking Construction Productivity: Essential Steps
Tracking construction productivity is simple…once it’s set up right, that is. As we’ve all experienced at some point, tracking the production and labor budget for a project can become a huge mess if it’s done improperly. I’m a huge believer in using standard operating procedures (SOP) for tracking project information.
Here are the steps that make up my personal SOP for tracking construction productivity:
- Separate project scope into categories: Trade, item of work, section of project, etc.
- Break each category into quantifiable subtasks
- Determine total quantities of work in each category / subtask
- Use your project’s estimate to determine how many hours are budgeted for each subtask
- Track the hours spent on subtasks and the quantity that’s completed each day
Let’s go through an example for each of these steps using our free construction tracking template, plus a few additional tips!
1. Separate Project Scope Into Categories
The first step we must take in order to track construction productivity is to separate the project into categories. Every project involves performing a series of tasks – both big and small. While a small project can consist of just a couple tasks, medium and large projects involve performing several types of work, each of which contains several smaller steps within them.
For these types of projects, it’s useful to separate the work by trade i.e. carpentry, labor, roofing, etc. You can also categorize your project by component or section of the structure. Below is an example we’ve created using our productivity tracking template.
2. Break Each Category Into Subtasks
As mentioned above, most tasks on a construction project can be broken into several smaller subtasks. Before we can start tracking construction productivity, this is an absolutely essential step!
Below is an example of how we can separate two big tasks on a project – earthwork and foundation – into all of their subtasks. Note that each item should be able to be quantified in some way – more on that next.
3. Determine Quantities Of Work In Each Category / Subtask
Now that we’ve outlined the tasks we want to track on our project, we can fill in the actual quantities of work that need to be completed in each step.
The best tip I can provide for quantifying work in order to track it is this: keep it simple.
After tracking construction productivity for many years, I’ve learned this the hard way all too often. Time is of the essence in construction, so it only makes sense to be able to track finish quantities efficiently. Check out the examples below.
4. Determine Hours Budgeted For Each Subtask
Every construction project has some kind of estimate behind it – that is, some itemized breakdown and calculation of how much labor, equipment, materials, supplies and other costs will be needed in order to price the job.
While we must track how much time and work is completed for each task simply to have monitor ourselves, it makes even more sense to track time and quantities against what has been estimated i.e. what’s in the budget. That’s the whole point after all!
As you can see in our example below, we’ve added timeframes (in man-days, ‘MD’) to each of the tasks in our work breakdown.
5. Track Hours Spent & Quantities Completed
Now that we’ve established the quantities of work we must get done and the time we think it’ll take to do it, let’s start actually tracking what’s going on.
As you can see below, the tasks being worked on each day are accounted for by tracking the amount of work that was done and how many man-days, hours, etc. that were spent in the process.
Our construction productivity template automatically totals the information we’ve recorded and calculates the total quantity of work done, time spent completing it and actual production rate for the week (sample below).
This template also calculates the quantity that’s remaining, the time left to complete them (based on the budget) and the production rate required to finish. As you can see, we’ve added red and green conditional formatting to the template in various columns in order to indicate where productivity rates are higher or lower than our estimate.
Simply use this template each week to track your project’s productivity! As you finish a week, you can manually carry over the quantities completed and time spent on each into a new blank template by entering them in the ‘total previous periods’ section. That way, you can track your project’s overall progress to-date, not just for the current week.
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Tracking Construction Productivity: A Few Additional Tips
I’ve spent a lot of time tracking budgets and labor productivity on construction projects over the years, so I’ve had plenty of opportunities to make mistakes! Given that I’ve learned the hard way so many times, you should get to learn the easy way. Here are a few additional tips for tracking construction productivity.
Don’t Use ‘Hours’ As A Unit of Measurement
It’s always tempting to use ‘hours’ as a unit of measurement in our estimates. “Building that wall should take about 32 man-hours”. While this is an easy calculation and could be correct, how to we track it? If our crew has spent 16 hours building that wall, how to we know for sure that they’re exactly halfway done, ahead or behind? It’s not always possible.
Therefore, it’s best to stick with quantities of physical work that can be measured in order to determine a rate of progress over time.
Track Production Every Day
Projects move fast. In just one week, workers can find themselves significantly ahead or behind schedule when compared to the total budget. If several work days or a couple weeks go by without tracking how much work is getting done, we may be in for a rude awakening when we finally do run the numbers.
For this reason, tracking construction productivity should be done every day!
Avoid Tracking Huge Quantities Or Tiny Components
As we mentioned earlier, the quantities we use to track our projects should be simple and easy to track with a measuring tape or quick count. There’s seldom going to be one person specifically on the project just for the purpose of tracking quantities – it’s likely going to be done by foremen, supervisors and construction managers who have plenty of other work to do.
That said, quantities should be generally simple to track. If our project involves building a stud wall, we certainly don’t want to track productivity by counting screws and nails! That’d take forever. Instead, we can track the stud wall’s progress by linear feet of lumber installed or even by the total linear (or square) footage of actual stud wall installed.
For example, building and installing a 10-ft x 10-ft section of stud wall can be tracked as 10 linear feet (LF) or 100 square feet (SF).
Try Not To Split Hairs…
Just one more time for good measure – I highly recommend keeping tracking simple on your projects. Details are great, but the overall purpose of tracking construction productivity is to have a reasonably-accurate, simple breakdown of how work is going relative to our budget. If there’s a simple way to do that on your project, it’s likely good enough!
