When estimating project costs, contractors plan for historically achievable productivity under ideal labor/job conditions. Both owners and the legal system throughout North America recognize contractors have the right to an adjustment in contract prices due to changing conditions and their impact on labor productivity. Contractors need a logical and fair approach in order to estimate factors affecting labor productivity.

The principal researcher, Dr. Awad Hanna, University of Wisconsin – Madison, begins with the premise that, when productivity is lower than anticipated, contractors can suffer considerable financial loss. Dr. Hanna conducted an in-depth analysis of quantified productivity factors and data from 145 projects across North America. The research resulted in development of a new standard electrical contractors can use to calculate Loss of Productivity.

Contractors can use the approach proactively for forward pricing as the standard allows for anticipating adverse conditions. It can also be applied retroactively when contractors need to claim for extra construction costs while projects are underway.