Assessing Loss of Productivity in Construction: The Importance of Contemporaneous Documentation
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March 17, 2025
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This article from Quebec General Contractors Corporation was published on February 25, 2025. Full article available at: https://www.cegq.com/fr/details-article-2/evaluation-de-la-perte-de-productivite.
In construction, unexpected impacts can often disrupt work, leading to losses in labour productivity. The impacts build up over time, which can make it difficult to assess the loss of labour productivity. To overcome this difficulty, and assess the loss of productivity, it is crucial to maintain accurate and detailed project records. This article explains the two most commonly used methodologies for assessing loss of productivity and explores how the availability and quality of project records can significantly influence the credibility of an analysis. This article also identifies important information that should be documented from the project outset to improve claim success.
Core Inputs into a Productivity Analysis
Generally, at the core of any productivity analysis are two essential components: labour hours and production (i.e., quantities installed). Productivity is measured in measures of output per unit of time or effort (e.g., meters of pipe installed per labour hour). As such, it is essential to maintain detailed and accurate project records of labour hours and production to accurately assess the loss of productivity. These records are the foundation of a reliable analysis and help identify when disruptions occurred. Once the overall productivity is measured, the reasons for losses in productivity can be identified through other contemporaneous documentation.
Preferred Methodologies for Assessing Loss of Productivity
According to the AACE RP 25R-03,1 the two preferred methodologies for quantifying loss of productivity are the Measured Mile and Earned Value Analysis.
- Measured Mile Analysis is the most widely accepted method in the industry. It compares productivity rates during impacted periods with productivity rates during non-impacted or less-impacted periods of similar work. By isolating unaffected or less-affected work, it provides a clear basis for measuring losses in productivity due to disruptions.
- Earned Value Analysis compares the earned hours to the actual hours to assess the planned productivity rates against the actual productivity rates during impacted and unimpacted periods. The earned hours are the budgeted hours multiplied by the percent complete for each scope of work.
Both methodologies are considered project-specific studies, as they rely entirely on project records produced on a project. According to the AACE RP 25R-03,2 courts and arbitration panels tend to favor analyses supported by such project-specific studies that rely on relevant data. However, without accurate and detailed project records, even the most sophisticated analysis can become unreliable.
Why Quality Documentation Matters
Contemporaneous documentation forms the backbone of any credible productivity analysis. If records are incomplete or inaccurate, the analysis becomes vulnerable to challenge, potentially weakening the claim. Therefore, contractors should keep detailed and organized records, not just to explain what happened, but to ensure disruption can be tracked.
Having voluminous project records may be helpful, but what matters most is their accuracy and relevance. To prepare a robust loss of productivity analysis, contractors should ensure their records include the details identified in the table below.
| Contemporaneous Documentation | Details to Include in the Contemporaneous Documentation |
|---|---|
| Daily Logs and Timesheets |
— Labour hours recorded daily and associated with specific activities — Distinction between labour hours spent on base scope work versus change orders — Documentation of impacts on specific activities and crews |
| Schedule Updates | — Inclusion of requests for information (‘RFIs’), change orders and change directives as activities, with logic links added to the affected work |
| Quantity Tracker |
— Daily tracking of quantities installed, associated with specific locations, activities and crews — Track the percent completed for items identified in the budget — Track the percent completed of change works |
| Cost Breakdown Structure (‘CBS’) and Work Breakdown Structure (‘WBS’) | — A clear mapping between the CBS and WBS to ensure alignment and traceability |
| RFI and Change Order Log |
— Identification of activity codes, work breakdown structure codes and cost codes related to the RFI and change orders — Identification of the originating RFIs for change orders — Identification of dates (i.e., submitted, approved, revisions, works started, works ended, etc.) |
| Correspondence |
— Describe and specify what caused the productivity impacts and which activities were affected — Include a chronological timeline along with annotated photos and drawings |
Organizing records by project phase, work type and activity will make it easier to prepare a detailed timeline of events and will make it possible to demonstrate the cause-and-effect relationship between the impacts and the loss of productivity. Good documentation helps compare productivity during normal and disrupted times, leading to better results in the analysis. On the other hand, poor records make it hard to draw conclusions, weakening your case.
Conclusion
Keeping accurate and detailed records is essential for assessing and proving loss of productivity claims. Contractors that adopt a disciplined approach to record-keeping and leverage proven methodologies will be in a far stronger position to address project disruptions and recover associated costs. In today’s fast-paced construction environment, maintaining detailed and well-organized documentation is not just a best practice — it’s a competitive advantage to maintain your financial interest.
Reprinted with permission from Quebec General Contractors Corporation.
Footnotes:
1: American Association of Cost Engineering Internation Recommended Practice 25R-03: Estimating Lost Labour Productivity in Construction Claims.
2: American Association of Cost Engineering Internation Recommended Practice 25R-03: Estimating Lost Labour Productivity in Construction Claims.
Published
March 17, 2025
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