Productivity, or rather the lack of it, is the foremost problem confronting many construction firms. Contractors commonly measure their productivity by taking their output (measured in dollars or units) and dividing it by the number of labor hours required to achieve the output. But productivity is the efficiency by which materials are placed by labor and equipment. According to leading equipment manufacturers, contractors can expect to get 800 to 900 productive hours from a typical piece of equipment in a given year. Assuming a 2,080-hour work year (52 weeks, with a 40-hour work week) and 800 hours of productive equipment time, construction equipment is nonproductive 62% of the time.

Contractors can take the following six steps to improve both labor and equipment productivity:

  1. Keep track of productive, standby and nonproductive time.
  2. Consider the hourly cost of owning or renting equipment.
  3. Monitor variable vs. fixed costs.
  4. Manage equipment maintenance and repair.
  5. Schedule equipment efficiently.
  6. Select the right equipment for the job.