UK Construction Journal - Issue 1 - April 2026 - Flipbook - Page 25
Using the earthworks example:
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What if the contractor always required 3 machines to carry
out the work but only based its tender on 2 machines?
The contractor budgeted that it would take 144 machine
(CAT637) hours to move 15,000m3 of material to the
stockpile. This is the Earned Value for this work.
If 72 machine hours have been recorded to date, then the
EV method estimates that 50% of the work has (or should
have been) completed.
If the contractor has actually spent 243 machine hours to
complete the work, then 99 machine hours measured as
lost productivity (144hrs – 243hrs = -99hrs).
The productivity factor is calculated by dividing the
earned hours by the actual hours:
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I expect many of you will have been in a tender finalisation
meeting where the director ‘requests’ that time, money or both
are ‘stripped’ out of the ‘realistic’ tender programme and sum
to win the work! I know I have!
It may be that the Employer change did cause a loss
of productivity, but this was further exacerbated by the
contractor’s own culpable performance.
Performance Analysis
What I have described so far is about recognising issues
with productivity to help in recovering additional costs where
it is appropriate to do so and as such, it is often carried out
after the event – indeed it is often an afterthought and only
recognised once the contractor realises it has lost money on
the project. However, performance analysis is also a helpful
and transparent tool to help manage and deliver the project.
144 / 243 = 0.59
This is a 41% loss in productivity.
If the contractor is able to carry out these calculations early
enough in the programme, it has the opportunity to make
informed decisions with regard to improving the productivity
factor, this is Earned Value Management.
When the project programme is updated, it is normal to record
current progress (% complete) up to the date of updating. The
programme is then rescheduled, and the completion date is
forecast.
Establish causation?
Having determined there has been a loss of productivity –
and therefore higher costs – the next step is to establish the
cause of the loss. In the earthworks example, the cause was
the change of the stockpile location. The Employer was to
provide an area of land for the stockpile but once the project
commenced the location was not available and an alternative
was provided.
This approach - which is common practice – assumes
the remaining work will be completed within the planned
remaining durations.
However, a question to be asked is how long did it take to
achieve the current work completed?
For example:
This is quite straightforward but, what if the contractor’s
planned outputs and resulting budget was over ambitious in
the first place?
Below, diagram 1
Below, diagram 2
Activity 1 has a duration of 20 working days (diagram 1).
Below, diagram 3
After 4 weeks, the programme is updated, and a measure of
the work shows that 50% of the Activity 1 – which started on
06 May - has been completed (diagram 2).
The forecast effect is Activity 1 will finish on 13 June, and the
project will be completed 2 weeks late.
However, a closer look at the critical driving activity tells us
that the contractor has taken 18 working days to achieve 50%
of the work which was planned to take 10 working days.
UK CONSTRUCTION JOURNAL
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