THE PLANNED USE OF THE CONSTRUCTION SITE AND ITS IMPACT ON PRODUCTIVITY AND COST

INTRODUCTION

Cost and production control in the construction industry is an on-going concern for most construction managers. Frequently, their efforts are reactionary rather than pro-actionary. They react to an activity after it is apparent that it will be over budget, rather than "pre-building" the job so that few surprises are encountered. The planning effort becomes key to controlling the cost of the project. One phase of the planning function, the use of the construction site, will be discussed in this paper. Topics include current industry practices, educational opportunities available, and the principles and procedures for developing the site plan.

MATERIAL HANDLING AND SITE UTILIZATION IN THE CONSTRUCTION INDUSTRY

 Current Practice

Limited research suggests that materials handling principles and site planning techniques are either not being applied, or are being applied ineffectively in the construction industry. A time-lapse study by Burkhart and Pault of Phelps, Inc.(1983) indicated that the carpenters spent approximately 40 percent of their time waiting for materials. The activity photographed and analyzed was a simple column forming operation on a commercial structure. The authors concluded that one of the key problems was that materials were not stored close enough to the work area.

A series of 22 productivity studies carried out by O'Brien (1989) found that electrical workers spent only 32% of their day on fully productive activities. Site workmen spent 42% of their time on get-ready types of activities such as material handling and set-up operations.

As part of a study by Thomas, Sanvido, and Sanders, the erection of steel for a five-story building was interrupted by a lack of materials. When materials were made available, production was slowed because of poor site storage practices and no planned use of the site. The results of the study indicated that work-hour overrun was 18 per cent. This figure is three-times the overrun estimated by the Construction Industry Institute for industrial projects. In addition, by comparing this project to a well-run project, the researchers calculated that an investment of $ 1,570 in planning this activity would saved $8 ,942 in quantifiable disruptions, a benefit/cost ratio of 5.7 to 1.

Current Education

 A review of recent college catalogs (Muehlhausen, 1988) of 13 accredited schools of the Associated Schools of Construction (ASC) indicated that planning the use of the construction site to facilitate handling, storage, and erection of materials in a timely and cost-effective manner was, at best, a hidden part of the curriculum. The planning courses that were offered in the curriculum appeared to emphasize the students ability to design, schedule, and budget the project. Materials related courses emphasized materials properties and use for designing and building the structure. Methods courses tended to stress the type of building system and the resultant labor and equipment needed to erect the materials for the given system. Apparently, the principles and procedures for planning the use of the construction site was not a part of the classroom experience.

A review of a few construction management methods textbooks (Adrian, 1981; Anderson & Woodhead, 1981; Barrie & Paulson, 1984; Clough & Sears, 1979; Drewin, 1982, Fisk, 1984; Halpin & Woodhead, 1980; Kimmons, 1990; Lion, 1980; Maher, 1982; McNulty, 1982; Nunnally, 1980; Parker & Oglesby, 1972; Puerifoy & Ledbetter, 1985; Wood, 1977) indicated that construction site utilization was not a priority concern. For example, the formulation of a plan for the storage, fabrication, and movement of materials on the construction' site was presented in two paragraphs in Peurifoy and Ledbetter (1985). A more recent work (Kimmons, 1990) spends one chapter on materials management activities. However, the planned use of the construction site is not included. Material handling and storage and the efficient use of the jobsite was not a priority concern.

Chandler (1978) did offer the rudiments of a systematic approach to materials management in the construction industry. However, the book, which was published in Great Britain, was not readily available for distribution. (T. Fry, personal communication, January 22, 1985.) In an effort to provide information to construction managers who wanted to establish materials management systems on their projects, the Construction Industry Institute (1987) prepared a project materials management handbook. The contents described the ingredients of a materials management system for the industrial sector of the construction industry. The section entitled "Site Management" did devote approximately one page to warehousing and lay down areas, but failed to describe the principles and procedures for developing the site plan.

In summary, it appears that construction curricula do not offer learning experiences to the student to plan the use of the construction site. The "planning" effort seems to stop with the job schedule and the job budget. The schedule is the plan which identifies the timing and duration of a work activity, which identifies the construction resources needed at their point of use on the site. The budget is the plan which identifies the amount and timing of the cost of these resources.

The intelligent, planned use of the site will minimize loss in production, and will minimize increases in cost due to double handling, moving materials over long distances, improperly handling and storing material, construction delays, congested work areas, and a host of other jobsite related problems which keep construction materials from flowing smoothly to the cratsmen when he needs them. The site plan becomes a key element to complete the project on time and within budget. Yet, construction curricula apparently expresses little concern for this area of construction management.

PLANNING MATERIAL FLOW

Planning Yields Profit

 A common single leading reason for marginal or no profit on construction projects is insufficient planning of construction activities. From the contractor's point of view, it is the first management activity which influences material flow and is probably the most critical. A detailed plan where the planning team virtually "pre-builds the project" is the most effective way to minimize site material handling and storage costs, and minimize delays due to lack of materials at their point of use when needed.

Many contractors think that once the job budget (plan of the cost of resources) and project schedule (plan of the sequencing and timing of the use of resources) are completed, the initial project planning is completed. However, these two pans are actually peripheral to the physical acts of constructing the project. They do not identify the method by which an activity will be accomplished, the resources required to accomplish that activity, or the use of the construction site so that activities are accomplished without constraint.

O'Brien (1989) states ".. very little preplanning [is done] by contractors, especially in the area of materials handling... There is too often a `project slump' period between popping the champagne corks to celebrate the successful bid and actually starting work on the site. The high level of activity build-up during the estimate preparation drops off drastically [after the award of the contract]." The difference between success and failure is dependent upon how the contractor uses this `slump time'. If the contractor prepares a schedule, a budget, and material handling plan, then project profits will be maximized.

Planning does not come without a cost. The project management team must take the time to plan a project in detail. This includes interacting on a detailed level with subcontractors and suppliers. It takes time and costs money to plan! Does spending big bucks on construction projects in the planning give a return on investment?

Does this overhead cost generate more profits in sufficient amount to justify the cost? Consider the data found in Figure 1 based on the track record for general contractors in the United States (Robert Moms Agency Annual Statement Studies, 1989):

The relationship between job costs and earnings from projects was about 85% for a contractor whose earnings were $10,000,000 per year. This means that for every one dollar earned by the company $ .85 was spent on labor, material, subs, job overhead, or other job related cost. Overhead, those costs associated with being in business (often referred to as company costs), was 13% of earnings. This cost structure yielded profits of 2% of earnings.

Suppose the general contractor spends that $ 200,000 of profit (on $10 million in earnings) to give project management the time and resources to carefully plan the job in detail. In order to breakeven, that is to return $200,000 or 2% of earnings, the implementation of the plan must reduce job costs by 2.4%. Is this possible? Limited studies indicate that it is! Thomas, Sanvido, and Sanders quantified the cost to benefit ratio as 5.7 to 1, the Construction Industry Institute arrived at a 2 to 1 ratio, while Proctor and Gamble found that preplanning yielded a ratio of 4 to 1. These studies indicate that detailed planning (especially for those contractors who do not currently plan in detail) will probably save more than the 2.4% in job costs. If a 5% savings m lob costs is realized, then profit increases 112%. If a 10% savings in job costs is realized, then profit increases 325%. Obviously, the planning effort, even with the associated costs involved, is worth it!

MATERIAL FLOW ALTERNATIVES

Most construction materials arrive at the jobsite from an off-site point of origin.  Once at the construction site, there are three possible alternatives to the flow of material: direct, indirect, and multiple indirect. These alternatives and their impact on cost are graphically represented in Figure 2.

Material will flow directly to its point of use when applying the direct material flow alternative. In this instance, material handling and site storage costs will be minimized. Double handling does not occur, site handling distances are minimized, and storage of material on the site is of short duration. The direct material flow alternative requires strict control of vendor delivery. An example of the use of the direct material flow alternative for site planning was the construction of an office building complex in Los Angeles by Olympia and York Developers. The plan included finely-tuned delivery schedules (15 minute windows on tower cranes), controlled movement of materials from a command center, systematized storage, and special handling procedures such as oversized hoists, a delivery truck turntable, and one-way drive-through lanes to speed deliveries of materials to their point of use. Approximately 152,000 man-hours were saved on this $92 million project.

When using the indirect material flow alternative, materials are stored for a short period of time on the construction site before being moved to their point of use. This indirect flow of materials, is commonly practiced when material deliveries cannot be closely controlled and

site constraints do not allow the material to be stored at its point of use in advance of need. Handling and storage costs will increase when using this alternative. However, an effective plan avoids delays due to unavailable material at its point of use, and the resultant high cost of labor. A balance is struck between material handling and storage cost, and labor cost savings to yield the lowest project cost.

 Too often there is no "planned use" of the site. Material arrives at the site and is stored in any available space. The storage area is selected due to convenience of unloading, with no regard to future use. Invariably, the location chosen interferes with construction progress, requiring material to be moved to another storage location. Unnecessary additional handling and storage costs are incurred when the multiple indirect flow alternative is used.

In all material flow alternatives, it is interesting to note that "material handling adds cost to the project but not value". If materials are handled over long distances, are double handled, or are handled using an inefficient method, then costs increase with no increase in the value of the project. The ratio of material handling costs to total project costs will vary from 30-80%, depending on the type of construction and the cost of the materials. It

is apparent that a primary method of controlling project costs (even with a 30% ratio) is to plan the use of the construction site and to minimize the material handling and storage costs while making the materials available to the craftworker when he needs them.

MATERIAL HANDLING OBJECTIVES

 Materials handling facilitates the flow of materials to their final resting place in the project. If a brick layer is prepared to place masonry units in a wall, all necessary materials must be at hand. If not, the bricklayer is idle, thereby incurring cost with no production. Not only must there be brick and mortar convenient to the mason's station on the wall, but there must be a scaffolding system designed to aid the production process, not hinder it. In addition, a fork lift is required to lift the masonry units and mortar onto the scaffold in a safe manner.

Materials handling is an integral part of the construction process and is of vital concern to the contractor. The relationship between the materials handling function and the production function is often transparent. While the visibility of the materials handling effort is many times diminished by the production function, it still exists as a definite identifiable entity.

The objectives for planning, executing, and controlling the handling of material on a construction site attempt to minimize the cost of construction. These objectives include:

PRINCIPLES OF MATERIALS HANDLING

 All construction sites vary. Each site exhibits characteristics which yield unique material handling problems. When solving the material handling problems for a given construction project, the contractor should apply the following generally accepted principles:

 1.    Move over shortest distance.

In general, short moves require less time and cost less money than long moves. This principle applies to transporting materials several miles on a highway project, transporting materials from site storage to the structure, or moving materials within the structure.

 2.    Keep terminal time short.

The object of materials handling is to move materials. Therefore, it is inefficient to have material handling equipment delayed at terminals for pick-up or delivery purposes. A scraper entering a cut should not have to wait on another scraper or spend too much time loading. The delay, for whatever reason, increases cycle time, decreases production, and increases the cost of production.

 3.    Avoid partial loads.

E Some hand trucks handle loads of 200 pounds; some ickup trucks handle 2000 pounds; some larger trucks andle 20,000 pounds. The cost of operating the hand truck, pickup, or large truck is about the same whether they carry the full load they are designed for or only a partial load. Thus, it is often a waste of money not to use equipment to its capacity.

4.    Avoid manual handling.

 Advancing technology has created machines to perform tasks once performed by labor. In general, it is uneconomical to handle material manually. Labor costs have steadily risen, thus making manual handling increasingly more expensive.

5.       Limit the number of moves.

The handling of material adds cost but not value to the project. If possible, move material directly to its point of use. If not, have a detailed storage plan to reduce material movement from one storage location to another.

6.       Use gravity.

Gravity is the cheapest source of power known. It should be used whenever possible for moving material. For example, a haul road should be located such that a loaded vehicle operates down hill. If moving material from one floor to the next, the laborers should carry material down stairs rather than up the stairs, . Concrete is direct deposited through a chute more quickly and economically than any other way.

 7.       Bundle materials in like or complimentary units. (Unit-load principle!)

Materials should be grouped together in a large and consistent size, or should be packed in sets. The unit load principle facilitates mechanical handling of the material. It also assures that all parts in an assembly are available when the crafts worker needs them.

 8.       Clearly mark materials.

All materials should be clearly marked as to what they are and where they go. Identifying the material or material packaging will promote efficient handling, storage and retrieval of the material.

IMPACT OF MATERIAL HANDLING VIOLATIONS ON PRODUCTIVITY AND COST

 Cost Per Unit

The availability of space on the construction site may limit the alternative methods to handle materials. Once the material handling method is selected, the site must allocate space for haul roads and storage areas. This includes labor and equipment used to handle the material. Two objectives dominate the construction process:

1. TIME - Is construction on schedule?
2. COST - Is construction within budget?

The method selected to handle a given material on site is generally the one which minimizes the cost to build the project, or the time it takes to build the project. The choice is dependent upon which material handling constraint (time, space, cost, plant and labor) the project is operating under.

Generally, the method chosen to handle a given material is the one which yields the lowest cost per unit handled. This is true as long as the method does not negatively impact future activities to complete the project. For example: Assume two methods are available to excavate a basement, a hydraulic excavator with a hoe bucket and a loader. Suppose the loader could excavate the basement at a lower cost per unit, but is not as accurate and causes more hand excavation and loss of concrete during the footing placement activity. It is possible that the savings gained by using the loader was lost, and even more likely that additional costs occurred due to the higher cost of installing the footings. At all times, material handling decisions should be based on the impact on total job costs and not on individual activity costs.

The cost per unit is easily described mathematically as follows:

 COST/UNIT =                    RESOURCE COST (dollars/hour)

                         METHOD PRODUCTION RATE (units/hour)

WHERE:

Resource Cost is the cost of labor and equipment to handle the material for a given amount of time

Method Production Rate is the rate of production or the number of units handled over a given amount of time.

The production rate can be mathematically expressed as follows:

 RATE = CAPACITY PER CYCLE

                     CYCLE TIME

WHERE:

The Capacity is the number of units the chosen material handling method moves in one cycle. A material handling Cycle is the sequential and discrete elements to engage a load, move the load to a desired location, disengaged the load, and return for another load.

The Cycle Time is the time it takes for the material handling method to complete one cycle.

Impact of Violating Principles

When the material handling principles are violated, one or more of the variables which determine cost per unit will be affected. For example: For a given material handling method, if the material is not moved over the shortest distance possible on a project, then cycle time will increase. If cycle time increases, rate of production decreases. If rate of production decreases, then cost per unit increases.

Note that the relationship is linear. That means that a 10% reduction in cycle time yields a 10% decrease in production rate and a 10% increase in cost per unit. Many times the construction manager is fooled into thinking that an activity cannot be substantially improved upon, to warrant the time and effort to fully utilize the material handling principles. For example: A typical hydraulic excavator with hoe bucket can cycle once every 30 seconds with a swing angle of 180 degrees. If the work is planned to position the trucks so the excavator only swings 90 degrees or less, then cycle time can be reduced by 3 seconds of more. Most construction managers say, `Big deal! What's 3 seconds!' The answer is noting if the machine only cycles one time; however, the machine will cycle hundreds of thousands of times. If the manager can save 3 seconds or reduce cycle time 10% on each cycle, then he has cut costs by 10% on this activity. In this example, the manager has he reduced construction costs and has reduced the time to complete the activity by increasing the rate of production.

There is nothing sacred or earth shattering about the material handling principles and their use in planning individual activities or the use of the jobsite. What most managers fail to realize is that poor planning affects all activities, not just one. Thus, errors are compounded over and over again. That is why such huge cost savings can be realized if a project is "pre-built" in detail during a planning period before the work starts.

THE PROJECT PLANNING EFFORT

 Many construction managers assume that the bid estimate is a detailed estimate of construction costs. This is rarely the case. The purpose of the bid estimate is to set the cost parameters for the completion of a project. Overhead costs are acquired during the bidding process, with no guarantee that the contractor will be awarded the contract. Therefore, there is no guarantee that the contractor will get a return on the invested overhead dollars spent during the estimating process.

Rarely in the commercial construction industry does the estimator "pre-build" the job during the estimating process. It would take too much time and cost too much money to complete. Instead, the estimator completes a quantity take-off of the materials, and extends the quantities using unit prices to estimate the cost for labor and equipment to install the material. This practice allows the construction firm to bid jobs in a cost-effective manner. However, it provides the project planner with little information (other than milestone costs) with which to plan the job. For example: A bid estimate may call for 10,000 square feet of contact area for concrete formwork to build a cast-in-place concrete wall. The bid estimate will apply a cost per square foot for material, labor, and equipment to complete the forming activity. But does it indicate to the project planner the details of obtaining and erecting the formwork? Does it indicate the type of formwork? If it does, does it indicate the pieces required to build these forms (panels, walers, strongbacks, wedge bolts, ties, etc.) and the quantities required? If the panels are "ganged", does the estimate indicate the size and type of crane required to handle the materials on the site? Remember that an oversized crane will be a waste of money on crane rental, while an undersized crane will cost labor dollars due to delays! Does it tell the planner the labor requirements for the forming activity? The answer to these and other questions related to the actual construction process is almost always -- NO!

THE PROCESS OF JOB LAYOUT

 The process of planning the use of the construction site is not a casual thing. It takes time and thought to prepare a plan which:

1) identifies the appropriate methods to handle material;

2) identifies areas for movement and storage of materials;

3) identifies storage and handling requirements so that material does not become damaged, lost, or stolen;

4) and at the same time, insures that materials are available to the craftsman when he needs them;

5) ALL at the lowest project cost.

Because of the many hundreds of activities that can occur during the process of construction, it is important that the manager follow a set planning routine. A suggested planning routine is as follows:

 Prepare a schedule for the project. The schedule will identify the sequence and timing of construction activities. Thus, the planner will be able to identify

when materials, labor and equipment are needed on the jobsite. The planner will also be able to identify concurrent activities and their related material storage and movement requirements. From this information, the planner can plan for material movement at different stages of project completion without violating material handling principles.

1. Prepare a material handling checklist. As a minimum, the checklist should contain the following information:

·        Activities required to complete the project. - Materials required for each activity. (detailed description and quantity)

·        Packaging requirements for each material. - Handling requirements for each material. Storage requirements for each material.

·        Storage area for each material (configuration). - Dates of materials to arrive at the site.

·        Duration of materials to remain in storage. - Method to handle the material

2. labor and equipment)

3.      -Haul road requirements for the handling method (method selected for a specific material)

4. Prepare an accommodations checklist. Accommodations are items which occupy space or affect the storage area available to store and handle material. Several typical items which occupy space include the construction site office, employee parking, various tool-trailer and equipment storage areas, haul roads, etc. Items which may affect the storage area available include ground surface conditions, utility lines, easements, etc.
5. Identify the construction phases. A construction phase is a period of time of construction when different activities are being performed concurrently. Thus, the job layout is not one single sketch but a series of sketches (by phase) which changes as the site changes.
6. Prepare a job layout sketch for each phase of construction identified in Item #4. The sketch should identify storage and movement requirements for all materials and space requirements for all accommodations during that phase of construction. The material handling principles should be followed when identifying material storage locations.

CONCLUSION

Current research indicated that project management is not doing an adequate job in planning and controlling the use of the jobsite. Educational opportunities to learn about the principles and procedures for planning the use of the jobsite were apparently not readily available. A site plan which applies basic materials handling principles will effectively increase production and reduce cost during construction of the project. A set planning routine will allow the construction manager to become proficient in preparing a plan which maximizes the chance that materials will be available to the craftworker when it is needed, and in a cost-effective manner.

REFERENCES