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INFLUENCE OF LABOUR PRODUCTIVITY ON THE COST PERFORMANCE OF THE TRADITIONALLY PROCURED PROJECTS

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ABSTRACT

Based on low productivity problems facing the global construction industry, this study evaluated the influence of labour productivity on cost performance. The objectives include to identify productivity related factors influencing cost performance; determine the most significant productivity factor influencing cost performance, and to evaluate the relationship between labour productivity and cost performance.  A questionnaire survey was used to elicit relevant data from stakeholders in construction and project management (including other built environment professionals) in the construction industry in Akwa Ibom state. Eighty-two subjects were targeted and data collected was subjected to analyses using appropriate test statistics. Test statistics include percentages, mean item score and Spearman Ranked Correlation test. The study identified productivity related problems influencing cost performance; and conclude that the productivity of workers in construction sites does not correlates cost performance in these project. The implication is that, cost budgeting and planning for new projects fully acknowledged the low productivity problems and estimated often take steps to provide buffers for possible variation that may eschew.

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Construction is the world’s largest and most challenging industry. The industry is highly a dynamic sector and plays a very important role in the development of a country. However, construction industry, faces chronic problems such as poor productivity, poor performance of time and cost etc, as reported only 37.2% of projects were completed within their predetermined cost. This was as a result of lack of investigation on construction labour productivity and cost performance.

Butler (1986) in Anthil and Wood-Head (1990) defined productivity as ‘the rate between output and input’ and industrial productivity as ‘the arithmetical ratio between the work product and he total resources used.  Borcherding and Liou (1986) defined productivity as ‘the relationship between input and outputs’. Based on this view, Construction productivity can be dealt with as the measure of value of construction works in relation to the total cost of labour, plant and materials actually used in the execution of the work.

Labour is one of the basic requirements of the construction industry and is usually related to manpower. In other words, labour productivity was defined by Drewin (1982) as the ‘amount of goods and services provided by a productive factor (manpower) in the unit of time’.Gido and Clement (2003) mentioned that cost performance is an effective technique in project management effort expended and it is used to measure the efficiency of total cost to budgeted cost. It is found that it is important to study more details on cost performance of building and it is agreed by Ashworth (1994) that ‘cost studies of building consist of the application of techniques and expertise of economies to construction projects’. Also, it is to ensure available resources are used efficiently to increase the level of productivity in construction work. 

In the construction industry, site workers, account for approximately 40% of the cost of project thus a relationship is established between labour productivity and cost performance. In Nigeria’s construction industry for instance, companies are currently applying various non-financial incentives schemes aimed at operative productivity, this has significantly improved cost efficiency. If the concept of productivity of labour is properly understood, appreciated and facilitated, there will be an improvement of cost performance of projects. This will in effect, enhance workers out-put and further contribute to cost performance. It is in the light of this, that this research study on the Influence of labour productivity on the cost performance has been embarked upon.

1.2       Statement of the Problem

Many factors are responsible for the influence of labour productivity on cost performance in project. These factors when not put in place could bring about reduction in level of productivity and consequently affect cost performance of projects.  There has been lack of investigation into labour productivity and cost performance which is probably due to the low level of awareness of the merits of such investigations. This problem has overtime denied construction works of its ideal cost and if un-attended to, it might in the nearest future overshadow the important potentials of improved labour productivity.

Another problem that has been identified is that of inconsistency in the level of labour productivity. This has subsequently affected cost of the project. It is therefore imminent for this problem to be assessed and solved so as to institutionalize a consistent standard for construction projects.

Low level of motivation and incentives such as welfare packages, awards to best worker, award to longest serving staff all, serve as a dependable instrument for improving labour productivity. But this has not been found in construction industry. Finally, this study was embarked upon to ascertain how improved productivity would influence cost performance. This study seeks to provide solutions to the above identified problems.

1.3       Aim and Objectives of the Study

The aim of this research is to evaluate the influence of labour productivity on the cost performance of traditionally procured projects. The objectives of this study are as to:

•                     identify productivity related factors influencing cost performance 

•                     determine the most significant productivity factor influencing cost performance

•                     evaluate the relationship between labour productivity and cost performance

1.4 Research Questions

            The following are the research questions:

•                     What productivity related factors influences cost performance?

•                     What is the most significant productivity factors influencing cost performance?

•                     What is the relationship between labour productivity and cost performance?

1.5       Research Hypothesis

Hypothesis

Null Hypothesis (Ho): there is no relationship between labour productivity and cost performance of a building project

Alternative Hypothesis (H1):  There is a relationship between labour productivity and cost performance of a building project

1.6       Significance of the Study

Research work such as this is not merely done to fulfil an academic curriculum. It is expected that it should be a concerted effort to broaden or add to an existing knowledge on a particular subject, or more so establish a logical and important fact as a new contribution to the line of profession. Productivity of labour and cost performance of construction projects is as important to construction and national economic growth as it is vast and complicated. It is therefore imminent that further studies and researches be carried out to consolidate the already existing knowledge of it.

Construction clients, contracting organizations, specialist, consultants and suppliers, individual professional contractors, lecturers and students in the construction and allied field would find the study very useful as it will contribute to their own effort to optimize their level of involvement in construction activities. Based on the results and findings of this research work, construction stakeholders, would be able to appreciate and control the parameters involved in the productivity and cost performance concept of construction projects.

1.7       Scope of the Study

The influence of labour productivity on cost performance can be studied in any construction project throughout Nigeria. However, due to the outrageous cost of covering a wider area, this study has been limited to traditionally procured projects in Uyo capital city of Akwa Ibom State. Furthermore, due to the large scope of construction project the study was further limited to building construction projects.

1.8       Organisation of the Work

This research work is divided into five (5) chapters the first chapter contains the introduction which includes background of study, statement of problem, Research Questions, Aim and objectives, hypothesis, significance, scope and limitation of study. Chapter two (2) reviews the literature of related works while chapter thee (3) is the research methodology which includes Research Design, sampling Techniques, instrument of data collection and method of Data Analysis. Chapter four (4) is the data presentation and analysis while chapter five contains the discussion, and recommendations.

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