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Productivity in Residential Construction:

An Annotated Bibliography

Center for Building Technology

National Engineering Laboratory

National Bureau of Standards

Washington, DC 20234

February 1981

U S. DEPARTMENT OF COMMERCE

NATIONAL BUREAU OF STANDARDS

•QC—

IGO

,U56

80-2150

1981

C.2

uce E. Thompson

)bert E, Chapman

National Bureau of Standards

Library, E*01 Admin. Bldg.

mar i 3 1981

NBSIR 80-2150 -

. <4 PRODUCTIVITY IN RESIDENTIAL CONSTRUCTION: ^ AN ANNOTATED BIBLIOGRAPHY

Bruce E. Thompson

Robert E. Chapman

Center for Building Technology

National Engineering Laboratory

National Bureau of Standards

Washington, DC 20234

February 1981

U.S. DEPARTMENT OF COMMERCE, Malcolm Baldrige, Secretary

NATIONAL BUREAU OF STANDARDS, Ernest Ambler, Director
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PREFACE

This report was carried out under the sponsorship of the Rehabilitation

Technology Group, Building Economics and Regulatory Technology Division,

Center for Building Technology. It provides an annotated bibliography covering

topics related to productivity in residential construction. Each bibliographic

reference and abstract is listed under one or more of the categories covering

various aspects of productivity in the construction industry. The references

have been categorized so that articles and publications dealing with specific

productivity and construction topics can be easily identified. The categories

emphasized in this report are: general productivity/productivity measurement;

construction productivity; residential rehabilitation/renovation; construction/

housing costs; construction cost estimation and control; economics of construction; and building codes and regulations. Some of the references appear under

more than one category. This indicates that the article, report or book contains substantial information related to more than one of the categories listed

above. One should also note that the authors have been quite selective in both

their choice of documents abstracted and the method of defining the primary and

secondary technical areas. This approach was taken for two reasons. First,

the technical areas abstracted were chosen to span the entire topic of productivity in the construction industry. This choice required the authors to

perform an in-depth reorganization of the material turned up in the literature

search; as a result the seven topic areas abstracted no longer fit the keywords

used in the source documents searched. Second, to include all articles turned

up in the search would significantly increase the size of the present document

without providing the reader with much additional technically relevant information. In producing a survey such as this one, it is inevitable that some documents which are relevant will be overlooked. These omissions are regrettable

and it is hoped that future research on the topic will add the needed emphasis

to these documents.

Special appreciation is extended to Dr. John S. McConnaughey , formerly with

the Applied Economics Group, whose stimulating discussions played an important

role in developing the approach of this study. Appreciation is extended to

Dr. Harold E. Marshall, Applied Economics Group, Mr. James H. Pielert, Rehabilitation Technology Group, and Dr. Belinda Collins, Building Safety and Security

Group, of the Center for Building Technology, and Ms. Patsy B. Saunders, Operations Research Division, Center for Applied Mathematics, who provided many

useful suggestions regarding the organization and treatment of specific topics

within the paper. Special appreciation is extended to Ms. Elsie Cerutti,

Library Division, for her thorough and efficient use of the numerous computerized information services. Without her assistance this survey of the literature

would have been much more difficult and time consuming. Special appreciation is

also extended to Mr. David Dresia, Director of Publications, American Society of

Civil Engineering (ASCE) for permission to reprint the author's abstracts from

the articles in The Journal of the Construction Division and Engineering Issues

published by ASCE.

iii
ABSTRACT

This report presents a state-of-the-art review of the technical literature

related to one or more of the factors affecting productivity in residential

construction. Particular emphasis is placed on identifying potential sources

of variation between the level of productivity in new housing construction

versus that in housing renovation. Although this report focuses on the

residential sector, emphasis is also placed on topics such as construction

management and cost control which perhaps more appropriately apply to the

non-residential sector. The references have been categorized so that articles

dealing with specific productivity and construction topics can be easily identified. The categories emphasized in this report are: general productivity/

productivity measurement; construction productivity; residential rehabilitation/renovation; construction/housing costs; construction cost estimation and

control; economics of construction; and building codes and regulations.

Key Words: Building codes; building economics; construction, cost; economics;

housing; productivity; regulation; renovation.

iv
TABLE OF CONTENTS

Page

PREFACE iii

ABSTRACT iv

SI CONVERSION UNITS vi

1 . Introduction 1 1.1 Background 1 1.2 Purpose 1 1.3 Organization 2

2. General Productivity/Productivity Measurement 4

3. Construction Productivity 10

4. Residential Rehabllltatlon/Renovatlon 21

5. Construction/Housing Costs 28

6. Construction Cost Estimation and Control 34

7. Economics of Construction 38

8. Building Codes and Regulation 41

9. Concluding Remarks 49

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1 . INTRODUCTION

1.1 BACKGROUND

Over the past several years the median cost of a new single-family housing

unit has increased at an annual rate in excess of 12 percent. Unfortunately,

this upward spiral in housing costs has forced many prospective homeowners

to look elsewhere in order to satisfy their housing demands. Since current

forecasts indicate that between 22 and 30 million additional housing units

will be needed in the current decade, this trend is likely to continue over

the next five to ten years. A significant Increase in the number of housing

units being renovated is therefore likely if the Nation's housing needs are

to be satisfied. The vital role that costs play in all investment decisions

is a strong indicator that any significant change in current housing Investment

trends calls for a better understanding of how the recent decline in productivity on a national scale affects the relative cost of housing produced

through renovation vis-a-vis new construction.

A comprehensive study of this problem cannot be separated from broader issues

such as the implied productivity decline in the non-res idential sector, the

greater sophistication of modern construction management techniques, and the

economic impact of building codes. A survey of the existing literature

can, however, provide some basic guidelines for a limited approach which

is more manageable and highlights major areas of Interest within the broader

topic. Due to the breadth of the Issues mentioned above, as well as other

problems which affect the structure of construction costs, the housing renovation industry has received relatively less research attention in the past

than the other sectors of the construction Industry. Its rapid growth over

the last several years, however, has raised many pertinent research questions.

One of the most important, at least from an economic viewpoint, concerns

the determinants of productivity. This issue is important not only for its

obvious Impact on renovation costs but also for technical reasons tied to

the basic production process of renovating buildings. More specifically,

a better understanding of the determinants of productivity may free resources

from a relatively inefficient endeavor to one which Increases the returns

to all factors in the construction process. It is with this latter objective

in mind that this survey of the literature was conducted.

1.2 PURPOSE

The purpose of this report is to present a state-of-the-art review of the

technical literature on one or more of the factors affecting productivity

in residential construction. Particular emphasis has been placed on identifying potential sources of variation between the level of productivity

in new housing construction versus that in housing renovation. Although this

report focuses on the residential sector, emphasis is also placed on topics

such as construction management and cost control which perhaps more appropriately apply to the non-res idential sector. In all, seven distinct areas relating to the overall productivity issue are abstracted. These seven areas

are:

1
general productivity/productivity measurement;

construction productivity;

residential rehabilitation/ renovation;

construction/housing costs;

construction cost estimation and control;

economics of construction; and

building codes and regulations.

It is important to point out that the seven areas mentioned above were chosen

in such a way that they span the entire topic of productivity in the con- struction industry. These areas are, in part, a reflection of the unique

nature of the construction industry vis-a-vis the nation's other major industries. This uniqueness stems both from the fact that the construction industry

does not produce a homogeneous product as well as the fragmented structure

of the industry itself. The seven areas abstracted also reflect the physical

process of construction which is perhaps unique among the nation's industries

in its management, control and regulation. Finally, the choice of the topic

areas was designed to reveal why the problem of productivity measurement in

the construction industry is significantly more difficult than in other

industries

.

1.3 ORGANIZATION

The basic format of this study consists of a brief description of each of

the seven major categories affecting productivity in residential construction.

Specifically, the study is organized as follows:

Chapter 2 focuses on a general discussion of the concept of productivity

and its measurement. Included are international comparisons of productivity

growth, examinations of productivity trends, and methods of improving productivity through measurement and operations research techniques.

Chapter 3 includes studies dealing specifically with productivity in the

construction industry.

Chapter 4 is concerned with various aspects of the renovation process. Issues

treated include: scale economies, financial arrangements, and indicators of

housing quality.

Chapter 5 concentrates on the factors affecting housing costs. Separate

articles on cost and price indices, the comparative costs of new versus re- habilitation production of housing, and cyclical instabilities are presented.

Chapter 6 discusses the estimation and control of construction costs. Methods

for estimating and controlling field labor construction costs which explicitly

consider productivity factors are also presented.

Chapter 7 deals with economic analysis as it relates to the construction

industry. Cost-benefit analysis and economies of scale with regard to residential construction are examined.

2
Chapter 8 examines building codes and regulations as they relate to the

diffusion of technological innovations and overall construction costs.

Chapter 9 presents concluding remarks designed to summarize the major points

addressed in the literature survey.

Several on-line computer searches were conducted in the preparation of this

productivity bibliography. In cases where bibliographic information was obtained through computer sources, the name of the computer index utilized

is indicated in parentheses following the abstract. Computer indexes cited

in this report are: Data Courier's ABI/INFORM; Engineering Index's Compendex;

and NTIS (National Technical Information Service).
2. GENERAL PRODUCTIVITY /PRODUCTIVITY MEASUREMENT

The studies abstracted in this section provide a general discussion of the

concept of productivity, its measurement and those factors which affect

its level and growth rate. Included are international comparisons of

productivity growth and measurement, analyses of worker productivity,

examinations of productivity trends, and methods of Improving productivity

through productivity measurement and operations research.

A study by Ruch and Hershauer identifies major factors which influence

worker productivity. Denison discusses the effect on productivity of various

changes in the institutional and human environment. The influence of technical change on gross output per manhour is described in an article by Solow,

where six key industries are examined in terms of their ability to compete

for world markets and employment opportunities. Various research needs are suggested in the Proceedings of an industrial workshop sponsored by the

National Science Foundation. Leuthold indicates the profit potential for

those investing in companies and industries instrumental in solving productivity problems.

Several studies provide an international perspective on the issue of

productivity. The Saunders and Crum article presents information on the

comparative productivity growth during the 1950' s of several highly industrialized countries. Regarding the matter of inter-country economic comparison, Pilarski indicates that output per worker is a more meaningful measure

of economic development than output per capita. Rostas' study uses three

alternative methods to compare labor productivity in British and American

manufacturing industries. British industries are also examined in an article

by Tippett and in a book by the Anglo-American Council on Productivity. These

works discuss the use of productivity measurement as a means of improving

productivity in various industries.

Productivity trends are analyzed in separate books by Kendrick and Stigler.

The Kendrick study estimates productivity in terms of all relevant inputs

for 33 industry groups and the 20th century private American economy as a whole. Stigler analyzes output, employment, and output per worker in six

industry groups over a period of forty years ending in 1939. A pamphlet by

Steiner and Goldner discusses the concept of productivity and its measurement. Sears suggests that methods from operations research which seek to measure productivity for the system in its entirety, rather than simply for

labor, are a more efficient means of improving productivity.

Anglo-American Council on Productivity. Productivity Measurement in

British Industry . New York, 1950, 38 pp.

Abstract ; This book is the result of a symposium of papers concerned with

the use of productivity measurement in improving productivity and efficiency

in the factory. The authors of the articles have direct experience in various

industries including steel, light engineering, boots and shoes, and textiles.

The use of productivity measurement for making comparisons between operatives

4
and shifts within a particular factory and between factories in the same industry is discussed, and methodologies for overcoming difficulties in making

comparisons where products differ are described. Some papers indicate the

improvements resulting from the application of productivity measurement to

activities in a wide range of industries.

Denison, Edward F. "Effects of Selected Changes in the Institutional and

Human Environment Upon Output Per Unit of Input," Survey of Current Business , Vol. 58, No. 1 (January 1978), pp. 21-44.

Abstract ; The effect upon output per unit of input of three changes in the

operating environment of business is estimated in this article. The study

deals with the non-residential business sector, and with changes in the

institutional and human environment within which business operates. The three

changes are: (1) New requirements to protect against pollution of the physical

environment; (2) Increased requirements to protect the safety and health of

employed persons; and (3) A rise in dishonesty and crime. The common characteristic shared by these changes is that they have reduced the measured

output (national income) produced by any given amount of input. The reductions

were found to be small from 1968-70, but rose rapidly in the 1970*s. In

1975, output per unit of input in the non-residential business sector of

the economy was estimated to be 1.8 percent smaller than it would have been

if business had operated under 1967 conditions. Most of this amount (1.0

percent) is ascrlbable to pollution abatement, while employee health and

safety programs, and Increased crime and dishonesty accounted for 0.4 percent

each.

Kendrick, John W. Productivity Trends: Capital and Labor . New York:

National Bureau of Economic Research, 1956, 23 pp.

Abstract : This paper summarizes productivity trends in the 20th century

American economy by major segments and industries. It attempts to measure

total factor productivity (i.e., productivity in terms of all relevant Inputs)

by relating output to all tangible Inputs to determine the net saving in

real costs per unit of output. Total factor productivity is estimated for

33 industry groups and the private domestic economy as a whole. In addition,

the ratios of output to both labor and capital are estimated. Productivity

in the private domestic economy rose at an average annual rate of 1 3/4

percent between 1899 and 1953, and accounted for more than half of the 33

percent average growth rate in real product.

Leuthold, Steven C. "U.S. Productivity Problem Means Big Profits for

Insightful Investors." Pensions and Investments , Vol. 6, No. 22 (23

October 1978), pp. 31-32.

5
Abstract : Major problems like the decrease in U.S. productivity, create

major investment opportunities for those investors able to identify the

companies and industries potentially instrumental in the problem-solving

process. This benefit could become a major stock market conception of

investment theory. The best investment opportunities will be found among

the problem solvers since it is better to invest with those who cure the

problem rather than those who cause it. Watch the future, as some of the

gains of the past might have reached their peak. Catch the turnarounds,

the companies on the verge of a productivity breakthrough; catching them

is a rare dramatic experience. The lagging U.S. economy is a real and

complex problem, and the decline in productivity is one of the chief causes.

It will not go away by itself; it must be treated. Improvement of services

industries, the fastest growing part of the U.S. economy, is one way to cure some ills. These industries can be rescued the same as manufacturers.

The potential for productivity improvement through systems and equipment is

huge, but special research and counseling may be necessary. (ABI/INFORM)

Pilarski, Adam M. "Output Per Worker - A More Meaningful Measure of Economic

Development," Economic Inquiry , Vol. XV (July 1977), pp. 435-440.

Abstract ; Recent fluctuations in exchange rates have led to changes in the

ranking of the richest countries in the world. A survey of the Union Bank

of Switzerland, for example, places the United States only in fifth place

for 1974 with respect to per capita income. This raises the question of

inter-country economic comparison. A country's level of development is

traditionally measured by income per capita. I want to argue here that

output per worker ("worker" meaning economically active person) rather than

output per capita is a measure which has more meaning. I also want to show

that these two criteria produce significantly different rankings of countries.

(Author)

Proceedings of Industrial Productivity Workshop Held at Washington, D.C. on October 29 and 30, 1975 . V7ashington, D.C.: Research Applied to

National Needs, National Science Foundation, January 1976, 53 pp.

Abstract ; This Workshop was conducted to solicit from key labor leaders an assessment of research required to enhance industrial productivity.

Productivity is defined here as the ability of American industry to compete for world markets and employment opportunities. Six key industries

were selected for study in the workshop; automobile, steel, manufacturing

and processing, transportation, food, and construction. A previous workshop

has been conducted which included managerial executives in the six selected

industries. Both labor and management agreed on the need for more productivity research. Major research needs suggested by the workshop

participants are as follows; (1) Analysis and Measurement of Productivity;

(2) International Productivity Comparisons; (3) Quality of Work Environment;

(4) Government Regulation; (5) Construction; (6) Transportation; (7) Implementing Productivity Improvement; and (8) Socioeconomic Impacts. (Author)

6
Rostas, Laszlo. A Report on International Comparisons of Productivity in

British and American Manufacturing Industry . Research Paper 13. London:

National Institute of Economic and Social Research, 1947.

Abstract : This study concentrates on comparing the productivity of labor, as measured by physical output per head or per manhour, in British and American

manufacturing industries. Three alternative methods of comparison are utilized: (1) The sample method, (2) the global method, and (3) the net output

value method. Long-term changes in the labor productivity of British and

American industry are analyzed. The degree of capital intensity on mechanization, organization factors, labor conditions, the degree of standardization

and other factors are examined with regard to their effects on output per

worker. Non-manufacturing sectors of the British and American economies such

as agriculture, service industries, and building and construction are also

compared in terms of labor productivity.

Ruch, William A. and James C. Hershauer. Factors Affecting Worker Productivity . Tempel, Arizona: Bureau of Business and Economic Research, Arizona

State University, 1974, 133 pp.

Abstract : This study explores productivity with the purpose of identifying the

major factors that influence output over time. The basic interactions between

these factors are also examined. Three concurrent methodologies were utilized

in this effort. First, conceptual schematic models were developed. Then

expert opinion from individuals representing a broad range of organizations

(small and large manufacturers, government agencies, consulting firms, labor

unions, etc.) was gathered. Finally, specific company and employee data was gathered from seven Arizona firms. The study develops a variety of research

tools, techniques and methodologies. The report also establishes the need and

feasibility for studying productivity from both macro and micro economic

perspectives

.

Saunders, C. T. and R. E. Crum. "International Comparison of Productivity

Growth in the 1950's." Journal of the Royal Statistical Society , Series A,

Vol. 126, part 2 (1963), pp. 227-235.

Abstract : This paper explores some of the facts about comparative productivity

growth in advanced industrial countries of the "Western world" during the

1950* s. Our special interest is in the extent to which changes in productivity

are associated with changes in total output, as between countries and between

industries; and in what inferences (if any) can be drawn from this association

(or lack of it), about the causes of changes in productivity. (Author)

Sears, G. W. "Productivity Improvement through Operational Research."

Journal of the Royal Statistical Society , Series A, Vol. 126, Part 2 (1963),

pp. 267-269.

7
Abstract : This paper expresses the view that a basic understanding of

statistical philosophy and methodology is essential to success in the improvement of productivity. It is indicated that productivity improvement is the

prime objective of industrial operational research. The operational research

theorists attempts to develop a measure of productivity for the system as a whole, rather than simply measuring labor productivity. To accomplish this

the organization (system) must have a clearly defined "master" objective, so that the whole range of resources can be allocated in a manner which most

effectively reaches that objective. Brief examples of operational research

approaches are provided, as is a simple mathematical model which illustrates

the productivity improvement potential of the method.

Solow, Robert M. "Technical Change and the Aggregate Production Function."

The Review of Economics and Statistics , Vol. 39 (August 1957), pp. 312-320.

Abstract : This study describes an elementary method for separating variations

in output per head due to technical change from those due to changes in the

availability of capital per head. The theoretical basis for this method is

established both mathematically and diagrammatically . The method is applied

to aggregate U.S. production for the years 1909-1949. Study conclusions indicate that during this period technical change was neutral (marginal rates of

substitution remained unchanged while the output attainable from given Inputs

increased or decreased) on average. Apart from fluctuations, the upward shift

in the production function was at a yearly rate of approximately one percent

for the first half of the study period and two percent per year for the last

half. The aggregate production function when corrected for technical change

displayed diminishing returns. Gross output per manhour doubled between 1909

and 1949. Technical change was responsibile for 87.5 percent of the Increase,

while increased use of capital accounted for 12.5 percent of the gain.

Steiner, Peter 0. and William Goldner. Productivity . Berkeley, California:

Institute of Industrial Relations, University of California, 1952, 60 pp.

Abstract : The concept of productivity and how it is measured are examined in

this pamphlet, as well as the effect of productivity on output, wages and the

standard of living. The direct Involvement of productivity measures in union

agreements covering minimum production standards, piece rates and Incentive

wage systems and its effect on labor-management relations are also discussed.

Stigler, George J. Trends in Output and Employment . New York: National

Bureau of Economic Research, 1947, 67 pp.

Abstract : This study analyzes output, employment, and output per worker from

1899 to 1939 in six groups of industries. These Industry groups—manufacturing, agriculture, mining, gas and electric utilities, and steam railroad

displayed a tripling of physical output between 1899 and 1939.

8
I

I

Output per manhour of labor also tripled, while manhours of employment

remained about the same time due to a 30 percent rise in employment countered

by a decline in weekly hours of work. Rough estimates of changes in

efficiency; that is, output per unit of all inputs, indicate that for the

major manufacturing categories output per worker is an unreliable index of

efficiency, especially when production is relatively capital intensive.

Tippett, L. H. C. "Productivity Measurement as an Aid to Productivity

Improvement." Journal of the Royal Statistical Society , Series A,

Vol. 126, Part 2 (1963), pp. 262-266.

Abstract ; This paper aims at providing technical management with information

which will help to improve productivity in the individual factory. Conclusions are drawn from a productivity survey of the British cotton spinning

industry. Data were obtained on operative-hours per 100 pounds of yarn

produced (OHP) and other factors from a sample of about 100 mills conducted

between 1946 and 1948. For a given measure of yarn fineness the OHP for the

least efficient mills was found to be two or three times that of more efficient mills, indicating the potential for substantial Increases in labor

productivity with existing mill equipment. The spinning mills were again

surveyed in 1954-56, and although individual mills exhibited notable improvements in productivity, overall industry improvement was less than was earlier

anticipated. The study concludes that productivity improvement comes from

management action in individual factories. Relatively simple Indexes of

productivity are most likely to be utilized by management and the chief

effect of productivity surveys is likely to be educative, rather than leading

directly to improvements.

9
3. CONSTRUCTION PRODUCTIVITY

This section includes abstracts of studies dealing specifically with

productivity in the construction industry. Some of the studies provide data

based on measurements of construction productivity. Also examined are labor

productivity and appropriate methods of increasing it. Productivity studies

of specific skills (e.g., masons and carpenters) are Included, as are several

articles and reports which discuss the link between labor and management in

improving productivity. Two articles examine the effect of equipment on construction productivity. Some of the studies abstracted develop models

designed to measure and estimate productivity. Several other aspects of con- struction productivity are also discussed.

A report by the National Academy of Sciences focuses on the development of

a national strategy for improving productivity in the construction industry.

Included in this report are papers on labor-management relations, financial

issues, innovation, and public sector activities aimed at promoting productivity growth in the construction industry. Finn's article Indicates manhour

requirements for public housing construction. A British Ministry of Works

survey shows Increased productivity resulting from incentives paid to workers

and increased construction volume. Reiners and Broughton confirm the notion

that cash incentives lead to higher productivity. In addition, their report

indicates that productivity improved when the main contractor directly

supervised work and was an experienced home builder.

Several articles and reports are concerned specifically with construction

labor productivity. McNally and Havers consider various factors which have

a substantial impact on labor productivity. Their study examines methods

for determining the optimum crew size for various construction activities.

Numerous in-depth interviews were used by Borcherdlng and Oglesby in determining that a well-planned, smooth work flow contributes to improved job

satisfaction and productivity. The study of mason productivity (by Johnson,

Worchel, Ferguson, and Geyer) indicates that labor is not solely responsible

for productivity problems; other segments of the construction industry also

bear responsibility. The Behman, et al. report derives physical labor productivity estimates for a number of building trades and examines the effect

of several factors on the price of single-family housing.

Articles by Kupperman, Fox, and Borcherdlng, offer a variety of productivity

improvement suggestions. Logcher and Collins examine the effect of management on labor productivity and suggests work specialization, work supervision,

motivations and other methods as means of productivity improvement. Peltier,

reporting on a construction industry productivity conference, indicates that

mangement must develop innovative approaches in dealing with productivity

problems. The study by Maloney presents the view that cooperation between

labor and management is an Important factor in achieving productivity gains.

10
Oriole discusses the productivity decrease resulting from government regulation.

Howenstein indicates a higher European rate of productivity than has been

achieved by the American construction industry. A National Association of

Home Builders (NAHB) study comments that construction productivity gains have

been obscured by rising land, labor, money and material prices, and other

factors. Crandall's report indicates that there is a critical need for

research on productivity Issues and that an effective means of distributing

research information within the construction industry is required. Two NAHB

studies suggest subjects for productivity research, and detail methods for

improving productivity. Reports by Dacy and Hahn provide Information on the

Construction Labor Demand System (CLDS). This model is used in forecasting

at the local level labor hour requirements by construction type and building

trade. The Adrian and Boyer article discusses another model, the Method

Productivity Delay Model (MPDM) . The focus of this model is on method productivity factors that the average construction firm can measure and control.

Adrian, James J. and LeRoy T. Boyer. "Modeling Method Productivity." Journal

of the Construction Division , Proceedings of the American Society of Civil

Engineers, Vol. 102, No. 1 (March 1976), pp. 157-168.

Abstract ; A productivity model has been developed that provides the average

construction fira with the means of measuring, predicting, and improving a given method's productivity. The model, referred to as the Method Productivity Delay Model (MPDM), focuses on method productivity parameters that

are measurable and controllable by the average construction firm. Method

productivity parameters are addressed by documenting productivity delay. The

model recognizes the environment and constraints of the average construction

firm, requires only simple mathematics, and is compatible with existing union

work rules. The MPDM evolved from considering the positive attributes of

existing models, from considerations of contractors' viewpoints, and from

experience of observing construction methods and methods productivity. The

model possesses all of the attributes necessary to provide the average con- struction firm with the means of measuring, predicting, and improving productivity. Its use can often provide dollar benefits exceeding its cost

of implementation. (Author)

A National Strategy for Improving Productivity in Building and Construction;

Proceedings of the Building Research Advisory Board's 1979 Building Futures

Forum, November 7-8, 1979 . Washington, D.C.: National Research Council,

National Academy of Sciences, 1980, 209 pp.

Abstract: The Forum brought together representatives of all elements involved

in or influencing construction. The primary objective of the Forum was to

provide a foundation for improving productivity by: (1) delineating and

developing a better understanding of the factors influencing productivity

in the built environment; (2) determining how these factors affect productivity; (3) determining what must be done to improve industry efforts; and

(4) making recommendations and identifying appropriate responsibility for

necessary action. The Forum was organized into five major sessions:

11
(1) managing the building process for improved productivity; (2) financial

planning for improved productivity; (3) government and public action for

improving productivity; (4) human motivation and Incentives for improving

productivity; and (5) innovation for improved productivity. (Author)

A Pilot Study on Productivity in Residential Construction . Rockville,

Maryland: National Association of Home Builders Research Foundation, July

1971, 49 pp.

Abstract : Rising prices of land, labor, money, and materials, along with the

increasing size and increasing number of luxury, convenience, and comfort

features in dwellings, have tended to obscure productivity gains by the

industry. (NTIS)

Behman, Sara, Max DeGialluly, Erwin Dreessen and Clyde Johnson. Productivity

Change for Carpenters and Other Occupations in the Building of Single-Family

Dwellings and Related Policy Issues . Berkeley, California: Center for Labor

Research and Education, University of California, April 1971, 221 pp.

Abstract: This study develops average physical labor productivity estimates

for building trade occupations. Data on carpenters and other occupations

involved in the on-site building of single-family dwellings in Alameda County,

California in 1930 and 1965 are examined. The study seeks to determine (1)

the extent to which new building techniques influenced carpenter employment

over the 35 yaers; (2) the impact of productivity change on labor requirement

forecasting in the selected building occupations; and (3) the inflationary

bias, if any, of wage rate increases in these occupations. Findings indicate

that average physical labor productivity for a crew of carpenters and related

occupations working on the construction site grew at a rate of 3.2 percent per annum between 1930 and 1965. Despite a sixfold increase in total output (in

terms of square feet of living area) between 1930 and 1965, the number of

carpenters needed in 1965 was 55 percent of the number which would have been

required in the absence of improved building methods and industry organization.

Study findings suggest that manpower forecasts which do not consider rising

productivity are likely to overestimate projected labor requirements.

Borcherding, John D. "Improving Productivity in Industrial Construction."

Journal of the Construction Division , Proceedings of the American Society of

Civil Engineers, Vol. 102, No. 4 (December 1976), pp. 599-614.

Abstract : Electric utility executives ranked productivity, manual labor, union

restrictions, and overtime at the top of the list of 10 problem areas where

major improvements were needed. Previous research by manufacturing organizations that were faced with similar productivity problems indicate that 30 percent to 60 percent improvement is achievable by proper managment of human

resources. In this paper, attitudes of workmen, supervisors and managers on $100,000,000 to $1,000,000,000 three-year to ten-year projects are compared to

those of individuals on much smaller commercial building projects. Deep

12
hierarchical organizational structures which are familiar in government and

manufacturing, but now appear on the larger construction projects are examined.

Recommendations for improving motivation of workmen and supervisors on large

projects plus alternative organizational structures will be given to improve

overall productivity. (Author)

Borcherding, John D. and Clarkson H. Oglesby. "Construction Productivity and

Job Satisfaction." Journal of the Construction Division , Proceedings of the

American Society of Civil Engineers, Vol. 100, No. 3 (September 1974),

pp. 413-431.

Abstract : This article reports a portion of the findings of a study of the

relationships between job satisfaction and construction productivity. Its

objective was to clarify current thinking on personal work relationships,

understanding, and communication as they affect home office management, field

supervisors, and workmen. Data were collected from 65 in-depth interviews of one hour to five hours each with management and labor from companies employing

carpenters, electricians, plumbers, pipe fitters, and sheet metal workers primarily from St. Louis, Missouri, with supplemental interviewing from Los

Angeles and San Francisco. The research showed that in construction satisfactions are inherent in the work itself. It follows that efforts to improve job

satisfaction and productivity lie in well-planned, smooth work flow rather than

in job enrichment, as is advocated by organizational behaviorists for industrial or bureaucratic work situations. (Author)

Crandall, Keith C. Workshop for the Formulation of Specific Projects in

Productivity Research for the Construction Industry . Technical Report No. 5.

Berkeley, California: University of California, July 1978.

Abstract : This report is based on a workshop intended to provide a forum and

a consensus for the advancement of specific research and development projects

in construction productivity. The workshop utilized a broad definition of

productivity — it was considered to entail any problem that ultimately affects

unit production. Panels composed of leaders from all sectors of the construction industry discussed proposals received from the research community. A

panel was appointed to discuss each of seven areas related to the productivity

question. The areas of emphasis were: Management, Labor, Capital Budgeting

and Finance, Technology, Regulatory, Design/Construction Interface, and Productivity and Public Policy. The segment of the construction industry selected

for review was larger projects valued at more than $1 million. The workshop

concluded that there is a critical need for a national center which would

review and establish research priorities for the construction industry, with

special emphasis on research related to productivity. A means for effectively

disseminating relevant research information within the industry is required.

The workshop also Indicated the need for increased research funding.

13
Dacy, Douglas C. An Evaluation of the Treatment of Labor Productivity in the

Construction Labor Demand System. Institute for Defense Analyses Paper P-1351.

Arlington, Virginia: Program Analysis Division, Institute for Defense

Analyses, July 1978, 35 pp.

Abstract ; The Construction Labor Demand System (CLDS) is a model for

forecasting labor hour requirements by region, type of construction and building craft. The paper is concerned primarily with the appropriate adjustment

for productivity growth. The CLDS method for adjusting labor requirements for

productivity changes is described. Discussions are presented on the problem of

productivity measurement, and on various construction costs and price indexes

published by the Federal government. A critical evaluation of the CLDS method

is included along with suggestions for generating slightly better estimates.

There is also a discussion of productivity forecasting methods. The study

indicates that the employment estimate in the CLDS model will be biased in an undetermined direction. This bias is due to the fact that the current system

directly adjusts for labor efficiency changes over time, while it also implicitly adjusts via construction deflator Indexes.

Finn, Joseph T. "Labor Requirements for Public Housing." Monthly Labor

Review , Vol. 95, No. 4 (April 1972), pp. 40-42.

Abstract : This study was designed to measure the number of manhours per

$1,000 of public housing construction contract. Forty-eight of the 354 projects sponsored by the Housing Assistance Administration of the Department of

Housing and Urban Development, and scheduled to be completed between January

1967 and March 1968 were surveyed. The average apartment in a public housing

project completed in 1968 was smaller in size and cost considerably more to

build than the average apartment completed in 1960. The study indicates a decline in manhour requirements per unit of output over this period when measured in constant dollars. Each $1,000 of contract construction required a total of 177 manhours in 1968, as compared to 241 manhours required in 1960.

Onsite manhours per $1,000 of contract cost declined from 114 to 80. The

decline in onsite manhours between 1960 and 1968 to a large extent reflects

the impact of rising construction costs. When square footage was used as a measure of output, onsite manhours per 100 square feet remained virtually

unchanged. Public housing construction provided 32,990 full-time jobs in

construction sites and 5,129 jobs for offsite contractor personnel in 1968.

Another 30,249 full-time jobs were estimated to have been created through the

production and distribution of materials used in public housing construction.

Fox, Arthur, J. "Productivity in the Construction Industry." Engineering

Issues , Proceedings of the American Society of Civil Engineers, Vol. 104,

No. 1 (January 1978), pp. 49-52.

14
Abstract ; An Interest in the problems of improving productivity in all the

processes of construction led to an ASCE invitational conference on the subject in August 1976. The proceedings of that conference, preprinted for the

participants, offered valuable suggestions for improving productivity, as reviewed herein. The conference itself created a momentum within ASCE, its

newly established Engineering Management Division, and many of its members

who continue to press for improved productivity as an engineering problem,

and as a management problem. (Author)

Hahn, William F. "Construction Labor Demand System: An Overview." Research

and Information in the Building Regulatory Process: Proceedings of the Third

Annual NBS/NCSBCS Joint Conference , National Bureau of Standards Special Publication 552 (edited by Patrick W. Cooke). Washington, D.C., July 1979,

pp. 185-196.

Abstract : Currently under development by the Department of Labor is an extensive modeling effort designed to provide accurate forecasts at a local

level of future construction levels and on-site labor requirements. The Construction Labor Demand System (CLDS) is a computerized management information

system that provides continuously updated forecasts for local regions, for

specific types of construction, and for precise construction trades. Actual

construction project information is the nucleus of the CLDS system. Information on hundreds of thousands of current and planned projects are included in

CLDS. Each project is time-phased to completion and estimates are generated of

the associated craft requirements. Forecasts of construction initiations are

accomplished through econometric modeling. Initiation forecasts are transformed into pseudo-projects within CLDS and pseudo-projects are combined with

hard project data for the generation of forecasts of construction activity.

A conversion subsystem translates construction activity into demand for labor.

Over 200 conversion profiles translate activity levels into time-phased flows

of requirements by occupation. (Author)

Howenstine, E. Jay. "Productivity Trends in the Construction Industry: A

Comparative International Review." American Association of Cost Engineers

Bulletin , Vol. 17, No. 6 (December 1975), pp. 189-194.

Abstract : A survey of European and American studies on productivity trends in

the construction industry is presented. The survey focuses on (1) long-term

productivity trends for the entire industry, (2) productivity trends in specific on-site studies, and (3) comparisons of productivity trends in construction

vis-a-vis other industries. Empirical evidence uncovered in the survey indicates that post World War II productivity is significantly higher than the

levels prevailing in the pre-war period and that the United States and a majority of the European counties had post-war growth rates in construction

productivity below those in the manufacturing sector.

15
Johnson, Franklin D., Philip Worchel, Carl S. Ferguson, and John Geyer.

Mason Productivity Study—Volume II: A Construction Industry Opinion

Survey on Mason Productivity . Austin, Texas: Center for Building

Research, Texas University, 12 July 1972, 228 pp.

Abstract ; A survey of major U.S. masonry leaders and leaders from 23 fo-reign

cities seeks to identify and evaluate the constraints to mason productivity

as seen by the various segments of the industry. The general practice has

been to blame construction unions for reducing productivity through local

work rules, and strikes which impede the use of technological development.

While there may be some justification for this criticism, all of the problems

of productivity are not the responsibility of labor and must, as the survey

shows, be shared with other segments of the industry. The macro problem of

increasing productivity can be solved only by increasing the productivity

of the individual crafts and better management techniques. (NTIS)

Kupperman, Melvin. "Improving Productivity: The Construction Phase."

Consulting Engineer (Barrington, Illinois), Vol. 49, No. 6 (December

1977), pp. 52-55.

Abstract : This study focuses on the role played by construction management

in containing the costs of increasingly more complicated building designs.

The application of construction management to the problems of scheduling,

budgeting, organizing, and coordinating, which have traditionally been carried

out independently throughout the design and construction of the building, is

the largest single step in the direction of completing the building within

cost and on schedule. It is stressed that even on jobs where a construction

manager is not utilized directly, the use of a group approach is required

due to the complex interrelationships among the members of the building team

and the construction problems they face.

Logcher, Robert D. and William W. Collins. "Management Impacts on Labor

Productivity." Journal of the Construction Division , Proceedings of the

American Society of Civil Engineers, Vol. 104, No. 4 (December 1978),

pp. 447-461.

Abstract : This paper uses a simplified model of specific building operations

in order to recognize and determine basic influences of management on labor

productivity. By making continuous on-site observations of many jobs of the

same building operation with differing levels of management, the effect of

management actions on labor productivity can be determined. By modeling the

building operation around one of its major activities that has a quantifiable

labor input and work input, a variety of jobs can be compared in spite of

their lack of similarity. It is suggested that by applying the measurable

work rate of the modeled activity to the percentage of productive work, a labor productivity index can be derived and used for comparison. The study

indicated that labor productivity, even in a trade as simple as tile laying, can be improved 100 percent or better where work specialization, work

supervision, on-site coordination, job security, motivations, and long-term

pacing are employed and encouraged. (Author)

16
Maloney, William F. "Productivity Bargaining in Construction." Journal

of the Construction Division , Proceedings of the American Society of

Civil Engineers, Vol. 104, No. 4 (December 1978), pp. 369-383.

Abstract ; Labor and management in the unionized sector of the construction

industry have, in several instances, reacted to the growth of the non-union

sector by engaging in productivity bargaining. Collective bargaining in

the industry has, historically, been characterized by union dominance. As

employment in the union sector has decreased, management has begun to press

for union concessions on work rules and practices in order to increase productivity and decrease unit labor costs. Productivity bargaining requires

an explicit link between changes in work practices and changes in compensation. To date, the impact of productivity bargaining has not been great

with regard to productivity and unit labor costs. The real impact has been

on the parties* attitudes, which have become more cooperative. With the

change in attitudes, the foundation has been laid for the beginning of true

productivity bargaining. (Author)

McNally, Harold E. and John A. Havers. "Labor Productivity in the Construction

Industry," Journal of the Construction Division , Proceedings of the American

Society of Civil Engineers, Vol. 93, No. 3 (September 1967).

Abstract ; Construction labor wage rates are increasing more rapidly than

material and equipment costs. For this reason it is important to identify

factors which significantly effect labor productivity. This study categorizes

factors affecting labor productivity under the headings of Environmental,

Labor Availability, Job, and Management Factors. Environmental Factors

reflect the influences of climate and weather on various job locations. Labor

Availability Factors refer to the adequacy of the available supply of trained

labor in a given geographic area. Job Factors have to do with characteristics

unique to a particular job. Management Factors cover project planning and

scheduling decisions made by management. Possible methods for determining

the optimum crew size for various construction activities are examined.

These methods are; Time and Motion Studies, Random Observational Studies,

Multiple Activity Charts, and Photographic Analysis. Also discussed are

the effects of psychological factors and work area size on labor productivity.

The study indicates that the various techniques could be applied to pilot

studies of selected construction operations. The final research objective

would be to improve the capability of predicting labor requirements for actual

construction operations. (Author)

Ministry of Works, Productivity in House-Building; A Pilot Sample Survey

in the South, East and West of England and in South Wales , August 1947-

October 1948 . National Building Studies Special Report No. 18. London,

England; His Majesty's Stationery Office, 1950, 32 pp.

17
Abstract ; The focus of this study is on discovering changes in house building

productivity during a particular period and the factors affecting these

changes. A sample survey based on approximately 160 contracts covering more

than 3,000 homes built in areas of England and South Wales in 1947 and 1948 was conducted. The houses in the sample had an average size of 935 square

feet (plus 85 square feet for an outhouse). An average incentive of 15 pounds

per house was paid. The average number of houses on a site was 20. Although

survey results varied widely, it was found, on average, that the payment of a five pound bonus reduced manhours by 60. Furthermore, for every five pounds

spent on incentives there was a net average saving of five pounds over and

above the bonus paid. Productivity increased during the study period as manhours were reduced by 2 1/2 percent (or about 75) on a standard house design.

Increases in material prices, however, offset the effect of the productivity

rise on total costs. Findings also indicate that for each additional ten

houses built on a site, manhours were reduced by 2 1/2 percent, as were labor

costs.

Oriole, Kenneth A. Productivity in the Construction Industry—Influence of

Regulatory Law . Unpublished Master of Science Thesis, Department of Civil

Engineering, Worcester Polytechnic Institute, 1979, 261 pp.

Abstract : Government regulation of the construction industry results in

increased construction cost and decreased productivity. This thesis reports

the effect of regulation on the productivity of contractors and business operating in various construction sectors. Results from a questionnaire survey of

the construction industry are presented to Illustrate the effect of regulation

on construction productivity. Most of the data used in this study comes from a comparative analysis of various areas of regulation with different aspects of

the construction industry. Output per manhour of work, total amount of con- struction put in place and comparative costs for units of construction are among the methods used to measure regulatory effects on productivity.

Recommendations for improved productivity through regulatory enforcement are

provided.

Peltier, Eugene J. "Productivity in the Construction Industry Management

Processes." Engineering Issues , Proceedings of the American Society of Civil

Engineers, Vol. 104, No. 1 (January 1978), pp. 53-56.

Abstract : A conference on construction industry productivity at Lincolnshire,

Illinois in August 1976 is reported. Improving productivity in designing, con- structing and operating facilities is central to the health of the construction

industry. Suggestions are made for improvements in these areas. Top management support for the philosophy and the requirements of the control system,

along with timely data collection and analysis produce tangible results. The

main responsibility in design and construction rests with management, and man- agement should take fresh approaches to solving productivity problems. The

ASCE Committee on Engineering Management should work in this area and seek generalized and specialized definitions and methods of measuring productivity. It

should collect, analyze, and disseminate productivity data in design and con- struction, and foster development of positive productivity improvement

approaches. (Author)

18
Productivity in Residential Construction . Rockville, Maryland: National

Association of Home Builders Research Foundation, March 1974.

Abstract : Overall good supervision, detailed work planning and scheduling

plus the application of Industrial engineering concepts and techniques to

a home building operation are of significant value to productivity gains.

Of prime importance is the ability of management to design the structure

for optimum material use and for maintaining a high quality of construction

so that excessive material and the proportionate amount of labor is eliminated. Report includes charts, analysis and evaluation sheets for 49 case

studies and a summary of builder comments and recommendations dealing with

methods to improve productivity. Productivity potential gain assessment,

evaluation, dollar savings and principles are discussed. An example is

given of the potential productivity gain for a floor system. Potential

subjects for long-range productivity research are included. (Author)

Productivity in the Residential Building Trades . Washington, D.C.:

National Association of Homebuilders, 1976.

Abstract ; This study seeks to determine the productivity of several building

trades involved in the construction of typical single-family homes and

low-rise apartments. Two methods, the Group Timing Technique (GTT) and Work

Sampling Technique, are used in classifying work as productive-direct (work

applicable to a particular construction operation), productive- support (necessary work not specifically applicable to a particular construction operation)

,

and nonproductive (personal breaks, unfavorable delays, idleness, and rework).

The GTT records the amount of work done by a crew every 30 seconds throughout

the workday. The Work Sampling Technique permits work classification by

detailing the type of work performed by a crew at stratified random times

throughout the workday. The productivity of carpenters, bricklayers, electricians, plumbers, and painters is examined. Findings of 13 case studies

indicate that on average, 65.4 percent of work time is productive, 19.6

percent is support, and the remaining 15 percent is nonproductive. The

study also indicates that productivity may be significantly Improved in

the areas of material handling and productive time.

Reiners, W. J. and H. F. Broughton. Productivity in House-Building; Second

Report . National Building Studies Special Report No. 21. London, England:

Her Majesty’s Stationery Office, 1953, 41 pp.

Abstract ; This study applies the direct method (a detailed study of a relatively small number of individual firms) to a sample of 177 completed

housing contracts for from two to 80 homes built in England and Wales between

October 1947 and March 1951. The average contract called for the construction

of 26 houses with an average floor area of 938 square feet. Data were

collected on the manhours of operatives directly engaged in production. This

information was obtained for each trade and for labor employed by both main

and sub-contractors. About 25 percent of the work on an average house was sub-contracted, and the labor expenditure in manhours per house for

19
sub-contractors averaged between 17 and 26 percent less than that of main

contractors for work in the same trades. Results also indicate that

productivity was higher than average when cash incentive schemes were used,

when the main contractor was an experienced home builder, and when the main

contractor directly supervised work. Regional differences in manhours per

house were found to exist, and manhours per house was determined to be

inversely related to the number of units specified in the contract.

U.S. Bureau of Labor Statistics. Labor and Material Requirements for Private

Multi-family Housing Construction .

For complete citation see Chapter 5, Construction/ Housing Costs.

U.S. Bureau of Labor Statistics. Labor and Material Requirements for Private

One-Family House Construction .

For complete citation see Chapter 5, Construction/Housing Costs.

20
4. RESIDENTIAL REHABILITATION /RENOVATION

This section is concerned with various aspects of the rehabilitation and

renovation of existing residential structures. Residential rehabilitation

is an increasingly important facet of the construction industry. Studies

abstracted in this section detail the level of expenditures on residential

renovation, and indicate the extent of such renovation activities in urban

areas. Other reports discuss ways of financing residential rehabilitation

efforts.

In the Sternlieb and Listokin study, cost-benefit analysis, an economic

evaluation technique, is used to compare the relative value of rehabilitation

versus new construction. A separate study by Bagby also estimates rehabilitation costs and compared them to the costs of new housing and urban renewal.

It also discusses societal costs and policy implications arising from

rehabilitation activities.

Separate articles by Downs and Ingersoll indicate that small builders may be

particularly suited for rehabilitation work. This belief contradicts the view

expressed in the Rogg article; that is, the rehabilitation industry should be

characterized by sizeable firms. Ingersoll 's article details various costs

related to remodeling and new construction and gives pointers to builders on

the estimation of remodeling costs. The Downs study and more comprehensive

ones by Colwell and Valenza are also concerned with the motives by which

investors alter the flow of housing services through rehabilitation activities.

Goedert and Goodman provide an evaluation of the quality of the U.S. housing

stock.

Urban Land Institute studies by Black, and by Black, Borut and Dubinski provide

information on the trend toward private-market renovation activities in central

cities. The latter report presents case studies of five neighborhoods where

residential rehabilitation has occurred, while the former report has as its

focus a survey of central cities conducted to determine the extent of privatemarket renovation activity throughout the nation. Rubinstein's article is

based on a U.S. Census survey and gives a broad overview of the extent of

alterations and repairs to residential properties. Two reports sponsored by

the U.S. Department of Housing and Urban Development (one of them in conjunction with the Department of Interior) provide guidelines covering the planning

and execution of residential rehabilitation efforts.

Approaches to financing housing rehabilitation activities are provided in

reports by Gressel and by Phillips and Teitz. The Gressel report details

several techniques which communities can use in financing rehabilitation

efforts, while the Phillips and Teitz study concentrates on the mortgage

refinancing authority provided under the 1974 Housing and Community

Development Act as a means of obtaining reahbilitation financing.

Bagby, D. Gordon. Housing Rehabilitation Costs . Lexington, Massachusetts:

Lexington Books, 1973, 98 pp.

21
Abstract: This study examines the belief that decent housing provided through

the rehabilitation of substandard dwelling units offers an alternative to new

construction at a lower cost. The data utilized pertains to single-family

brick row houses located in the North-Central section of Philadelphia.

Eighty-nine row houses wrecked out and restored to a common standard served

as a basis for cost information. The nature of rehabilitation, its cost and

long-term prospects, as well as the societal costs and policy implications

arising from rehabilitation efforts are discussed. Multi-variable regression

of data on several structural characteristics is used to derive rehabilitation

costs and revenue estimates. When these estimates were compared with the

costs of new construction, rehabilitation was found to be 12 to 15 percent

cheaper than new housing and 22 to 24 percent cheaper than urban renewal.

Black, J. Thomas. "Private Market Housing Renovation in Central Cities;

A ULI Survey." Urban Land , November 1975.

Abstract ; A number of cities have recently been experiencing increased

private-market, non-publicly-assisted housing construction and renovation

activity. This report includes case studies of three cities—St. Louis,

Dayton, and Philadelphia—where older, deteriorated neighborhoods were experiencing renovation activity. A mail and telephone survey of the 260

central cities with populations of 50,000 or more was conducted to determine

the extent of renovation activity nationally. Survey results indicated that

124 of the 260 central cities (48 percent) are experiencing some degree of

private-market, non- subsidized housing renovation. The incidence of renovation activity varies considerably by city size and location. Cities with

populations over 500,000 have the greatest likelihood of reporting renovation

activity (73 percent). Central city housing renovation is most extensive

in the South and least extensive in the Western region of the U.S. An estimated total of 54,600 units (441 units per city experiencing private market

renovation activity) have been renovated since 1968.

Black, J. Thomas, Allan Bo rut and Robert Dubinsky. Private-Market Housing

Renovation in Older Urban Areas. Washington, D.C.: The Urban Land Institute,

1977, 47 pp.

Abstract ; In recent years there has been a definite trend toward property

renovation in many older, inner-city neighborhoods. This report discusses

general trends in renovation and the factors which appear to influence these

trends. Case studies of five neighborhoods where private-market renovation

has occurred are presented. The areas studied are: The South End in Boston,

Inman Park in Atlanta, Munger Place in Dallas, the Hill District of Saint

Paul, and the Victorian areas of San Francisco. Each case study includes a description of the nature of the particular renovation activity, and analysis

of factors which have affected renovation, and a presentation of the economic

characteristics of renovation in the area.

22
Chapman, Robert E. Cost Estimation and Cost Variability In Residential

Rehabilitation .

For complete citation see Chapter 6, Construction Cost Estimation and Control.

Colwell, Peter F. An Economic Analysis of Residential Abandonment and

Rehabilitation . National Bureau of Standards Interagency Report

76-1043. Washington, D.C., May 1976.

Abstract ; This paper is an analysis of market and governmental factors

which lead to socially inefficient rehabilitation and abandonment decisions.

Its purpose is to abstract from complex problems related to the rehabilitation and abandonment of residential buildings by identifying the essential

characteristics of the problems and the role some past and existing social

programs have had on aggravating or mitigating these problems. Alternative

programs are analyzed for their potential effects on these problems, however

policy recommendations are not made. (Author)

Downs, Anthony. "Investing in Housing Rehabilitation Can be Successful."

Real Estate Review, Vol. 6, No. 2 (Summer 1976), pp. 66-73.

Abstract ; This article is concerned with the principles governing the

rehabilitation of older urban housing primarily for investment purposes. It

suggests that rehabilitation must shift each structure from a lower^rent,

lower-value status to a higher-rent, higher-value status, and that each

structure should be located in a neighborhood characterized by this transition. High crime areas should be avoided by investors; they should seek areas

in which at least some rehabilitation efforts have begun and where local

property values have stabilized or are rising. Some desirable design features

should be present in the structure to be rehabilitated which are not found

in more modern housing units. Since residential rehabilitation is generally

unsuited to large-scale rehabilitation and the economies of mass production,

it should be conceived of and carried out on a relatively small scale.

Furthermore, the economic feasibility of urban housing rehabilitation often

depends on the intense personal involvement of the investor in the renovation

process

.

Goedert, Jeanne E. and John L. Goodman, Jr. Indicators of the Quality of U.S.

Housing . Washington, D.C.; The Urban Institute, September 1977, 69 pp.

Abstract ; This study develops a set of housing quality indicators and applies

them to the nation's housing stock. It is part of an attempt by the Experimental Housing Allowance Program (EHAP) of the Department of Housing and Urban

Development to analyze and develop U.S. housing policy. Meaningful quality

indicators are defined as housing deficiencies that tend to be present in

the dwellings of households with low long-run expected income. The analysis

indicates higher incidences of deficiencies in rural housing relative to

23
urban housing and in rental units as compared to owner-occupied units. Housing

deficiencies were found to be widely distributed over the majority of all

units, and not limited to a relatively small number of seriously dilapidated

units. The study concludes that no simple measure adequately assesses the

many dimensions of housing quality. The housing deficiencies listed in the

set of basic indicators are, however, more likely to be present in the dwelling

units of households with low incomes than in those of high income households.

Gressel, David. Financing Techniques for Local Rehabilitation Programs . Washington, D.C.: National Association of Housing and Redevelopment

Officials, 1976, 98 pp.

Abstract ; This guidebook examines alternative techniques that a community

can use to make affordable rehabilitation financing available to owners of

properties in need of rehabilitation. It is noted that no single housing

rehabilitation financing technique is appropriate for all communities.

Rehabilitation programs that rely on public resources alone are discussed,

as are those programs that take advantage of both public and private capital.

A discussion of local direct loan and grant programs is included in the

guidebook. It is indicated that community development block grant funds

have been used to provide financing directly to property owners. Basic techniques for leveraging public funds such as subsidizing or guaranteeing loans

made by local lending Institutions are examined. Another technique covered

in the guidebook is tax-exempt revenue financing; that is, channeling the

flow of private capital to the property owner so that the Federal government,

in effect, subsidizes the interest rate on each rehabilitation loan. There

is also a discussion of a housing assistance payments program (Section 8,

The Housing and Community Development Act of 1974) which can aid lower-income

tenants of rehabilitated properties.

Gross, James G., James H. Pielert and Patrick W. Cooke. Impact of Building

Regulations on Rehabilitation — Status and Technical Needs .

For complete citation see Chapter 8, Building Codes and Regulations.

Guidelines for Rehabilitating Old Buildings; Principles to Consider When

Planning Rehabilitation and New Construction Projects in Older Neighborhoods . Washington, D.C.: U.S. Department of Housing and Urban Development and

U.S. Department of the Interior, January 1979.

Abstract ; This report lists several principles to be considered in the

planning of new construction or rehabilitation projects. Specific actions

to be considered or avoided to insure that new work does not damage the

distinguishing qualities of buildings or neighborhood environments are provided. The guidelines were designed to assist property owners and local

officials in the formulation of plans for the rehabilitation, preservation

and continued use of old buildings, neighborhoods and commercial areas. They

24
were primarily developed to aid persons eligible to receive Historic Preservation Loans and for local officials responsible for the community development

block grant program of the Housing and Community Development Act of 1974.

The report provides as appendices lists of HUD offices, State Historic Preservation Officers, and other helpful offices and organizations.

Ingersoll, John H. "Remodeling: A Natural for Builders—But with Key

Differences." Housing , Vol. 55, No. 2 (February 1979), pp. 76-81.

Abstract ; Estimating remodeling costs is far more difficult than estimating

the cost of building a new home. The costs per square foot of a new house

are generally lower than those for remodeling. In Minneapolis, additions

and alterations average $70 per square foot while new houses go for about

$30 to $40 per square foot. Small builders are particularly advantaged when

tackling remodeling jobs because of their experience in custom building and

in dealing with customers on a personal basis. Special care should be taken

in estimating labor costs and time utilized by unproductive labor, as well

as in figuring set-up and clean up time. Overhead (salaries, insurance,

rent, etc.) and profit margin should be considered in remodeling job estimates,

since the small size of these jobs (generally ranging from $5,000 to $15,000)

relative to new house construction can undermine profits by greatly magnifying

a small dollar mistake in estimating.

Kapsch, Robert J. "Building Codes: Preservation and Rehabilitation."

For complete citation see Chapter 8, Building Codes and Regulations.

Phillips, Kenneth F. and Michael B. Teitz. Housing Conservation in Older

Urban Areas; A Mortgage Insurance Approach . Institute of Governmental

Studies Report 78-2. Berkeley, California; University of California,

February 1978, 42 pp.

Abstract ; This report examines the feasibility of utilizing the mortgage

refinancing authority provided for under Section 223(f) of the Housing and

Community Development Act of 1974 to rehabilitate older declining urban areas

(ODA's). The study suggests administrative mechanisms and program supports

which would promote rehabilitation activities in ODA's. It is noted that

the unavailability of rehabilitation financing, the mixed record of past inner

city rehabilitation efforts, and the lack of managerial and technological

rehabilitation know-how are impediments to the revitalization of ODA's.

Conversely, the high cost of new construction and the neighborhood preservation movement emerging at state and local levels tend to favor the expansion

of rehabilitation activities. The report suggests that the skillful use of

Section 223(f) to gain ODA's mortgage insurance, in conjunction with housing

and non-housing program aids could provide significant resources for moderate

rehabilitation without requiring major subsidies or forcing rent increases.

25
Rehabilitation Guide for Residential Properties . Washington, D.C.: U.S.

Department of Housing and Urban Development, January 1968.

Abstract : This report provides physical guidelines for the rehabilitation of

existing residential properties. The provisions are intended to provide minimum design and construction criteria on a national basis. The rehabilitation

of a broad range of residential structures is covered—from the single family

detached house to the large multi-story apartment building. The Guide is

intended to be used (1) in the development of local "Property Rehabilitation

Standards" for urban renewal rehabilitation, (2) for property rehabilitation

under FHA mortgage insurance programs, and (3) as a guide for judging the

adequacy of local codes in concentrated code enforcement areas.

Rogg, Nathaniel H. Urban Housing Rehabilitation in the United States . Chicago: United States League of Savings Associations, 1977.

Abstract ; Several major American cities are reversing the trend of decline

through efforts aimed at rehabilitating and revitalizing their neighborhoods.

The study Indicates the need for a housing rehabilitation industry characterized by sizeable firms with adequate capitalization. The constraints inhibiting the expansion of rehabilitation efforts are noted. They include land use,

construction standards, building codes, income and real property taxes, lack

of agreement on what segments of society should benefit, lack of adequate

resources on the part of many city residents to undertake rehabilitation,

problems of credit access and availability, absentee ownership of inner-city

property, and construction industry preference for new housing, among others.

A series of recommendations desined to encourage urban rehabilitation are listed. These recommendations present policies and strategies which could be

utilized by financial institutions, the building and real estate industries,

local and Federal governments, and neighborhoods to revitalize housing and

other facets of urban areas. Details on visits to elevent cities located

throughout the United States provide background for the study’s conclusions

and highlight specific urban rehabilitation activities in various cities.

Rubinstein, Nathan. "Residential Alterations and Repairs." Construction

Review , Vol. 23, No. 3 (Aprll/May 1977), pp. 4-14.

Abstract ; This Bureau of Census survey of alterations and repairs to

residential properties covered structures with at least half of their enclosed

space devoted to nontransient residential use. In 1976, household interviews were used to sample 4,900 owner-occupied housing units out of a universe of

44,800,000, and a mall survey sampled approximately 1,500 residential and

non-resldential owners of rental or vacant properties out of a universe of

11,500,000 rented properties. Expenditures incurred by residential property

owners are broadly classified as either maintenance and repairs (current costs

arising from the upkeep of property) or construction improvements (additional

investment in property). Total expenditures increased from $25.2 billion in

1975 to $29.0 billion in 1976, with maintenance repairs accounting for $11.4

billion (39 percent) and construction improvements costing $17.6 billion or

61 percent of the 1976 total.

26
Smith, Baird. "Information Structure of Building Codes and Standards

for the Needs of Existing Buildings."

For complete citation see Chapter 8, Building Codes and Regulations.

Sternlieb, George and David Listokin. Rehabilitation Versus Redevelopment;

Cost-Benefit Analyses . New Brunswick, New Jersey; Center for Urban Policy

Research, Rutgers University, June 1973, 202 pp.

Abstract ; This study evaluates and compares costs and benefits of rehabilitation and redevelopment (new construction) efforts in considering the

optimal housing strategy. Findings indicate that the initial costs of

rehabilitation are generally at least 20 percent cheaper than those incurred

in new construction. Long term cost-benefit analysis indicates that

redevelopment is usually cheaper than rehabilitation, but the extent of

redevelopment's cost advantage varies by neighborhood and the level of

rehabilitation effected. Rehabilitation was slightly cheaper than new

construction according to mid-range cost-benefit analysis results. It is

significant to note that the alleged social benefits of rehabilitation were

disregarded in this study due to the difficulty in assigning dollar values

to some of these benefits and the belief of many that such factors are ancillary to rehabilitation's cost advantage in producing housing.

Valenza, Joseph J. Residential Rehabilitation. Unpublished Ph.D. Dissertation, Department of Economics, George Washington University, 1978, 181 pp.

Abstract ; This study examines the issue of residential rehabilitation from

the viewpoint of a profit maximizing landlord. Based on the profit motive,

the landlord makes adjustments to the dwelling unit, one of which is residential rehabilitation. Several decision alternatives are open to the landlord in an attempt to maximize the present value of the annual profit flow

from the dwelling unit by altering the flow of housing services. These

decisions relate to variations in the level of mainteiiance , operating inputs,

or investment. At the beginning of each time period the landlord assesses

the current situation and modifies the flow of housing services accordingly.

The direction and amount of change in the level of services is based on the

landlord's perception of existing conditions. The landlord then selects the

least-cost combination of inputs for the desired level of housing services.

27
5 . CONSTRUCTION/HOUSING COSTS

The studies abstracted in this section deal with construction and other costs

related to residential housing. Clearly, cost information is essential to

any discussion of construction productivity. Several articles and reports

provide data on various types of construction costs. Reports of the U.S.

Bureau of Labor Statistics provide construction cost information. Two of

these reports present data on construction wage rates paid to workers throughout the U.S. Two other studies provide survey results on labor and material

requirements for residential construction. The Levy article provides con- struction cost indexes which permit the measurement of real cost changes

between any two years (from 1915-76). Musgrave discusses research efforts

toward the development of construction price indexes for single-family homes.

The Eaves study Indicates the major factors contributing to increased housing

costs and suggests means of cost reduction. The Burns and Mittelbach article

touches on many of the Issues addressed by Eaves but focuses more on productive (and distributional) efficiency and impediments to the diffusion of

innovation which affect both productivity and costs. The Mills book discusses

the bases of inflationary pressures in the construction industry and includes

an examination of public policy problems with regard to housing. A wideranging report of the U.S. Department of Housing and Urban Development

pinpoints several national policy problems related to housing. In addition,

it gives recommendations to reduce or stabilize new housing costs and to

make rehabilitation more affordable.

Mastey discusses the role of the open shop contractor in reducing construction

costs. Social costs arising from instability in the construction Industry

are considered in a U.S. Labor Department report. This study presents dollar

values representing the potential savings which would result from a reduction

in the magnitude of construction fluctuations.

Bergman, Edward M. External Validity of Policy Related Research on Development

Controls and Housing Costs — Final Report .

For complete citation see Chapter 8, Building Codes and Regulations.

Burns, Leland S. and Frank G. Mittelbach. "Efficiency in the Housing Industry."

Housing and Economics; The American Dilemma , (edited by Michael A. Stegman)

Cambridge, Massachusetts: The MIT Press, 1970, pp. 119-185.

Abstract : This study focuses on three interrelated areas: (1) the productive

and distributional efficiency of the housing industry; (2) the effects of

various factors which may impede the diffusion of innovation; and (3) the effect

of such factors on the cost of housing. These areas are addressed by first

analyzing the historical performance of the housing industry, including the

concept of housing as an operating subsystem within other systems. The factors which affect the price and value of housing are discussed next. The

study concludes with a discussion of the level and incidence of housing costs.

28
Eaves, Elsie. How the Many Costs of Housing Fit Together . Research Report

No. 16. Washington, D.C.: National Commission on Urban Problems, 1969,

111 pp.

Abstract t The challenge of providing sufficient decent housing for low Income

families has produced the need to determine the costs of housing and their

effect on total cost. This study attempts to devise a cost reduction strategy

through the use of data from a broad range of public and private sources.

It was found that specific housing cost components (site acquisition and

improvement, structure, overhead, financing, etc.) varied significantly in

different parts of the country, among different types of housing, and from

one builder to another. The greatest recent increase in housing cost has

been in land prices; labor costs, mortgage prices and interest rates have

also increased markedly. It is indicated that lengthy delays in the building

of public housing have resulted in high overhead and carrying charges. Conversely, large cooperative projects displayed the lowest cost figures. This

fact implies that the cooperative method and economies of scale both yield

significant housing cost savings.

Final Report of the Task Force on Housing Costs , Washington, D.C.; U.S.

Department of Housing and Urban Development, May 1978.

Abstract ; Throughout the nation, the costs of acquiring and occupying decent

housing have increased dramatically in recent years. This study examines

reasons other than general inflation for the rise in the costs of housing.

Specific measures to reduce or stabilize new housing costs and ways to make

rehabilitation more affordable are presented, as well as recommendations to

reduce operating costs. The HUD sponsored Task Force identifies several

national policy problems. Some of the solutions proposed to remedy these

problems are: (1) setting national monetary policy with stabilization of

the housing sector as one of its goals; (2) examining the use of tax incentives and indirect subsidies as part of a national tax policy which takes

into account the needs of the housing sector; (3) attacking poorly conceived

and cost-increasing regulation; (4) establishing mechanisms for creating new

building technology and financing techniques; (5) using modified design and

financing schemes to support housing development or renovation as part of

a concerted effort to meet the needs of those for whom housing costs are an especially intractable problem; and (6) reducing high operating costs through

analysis of potential energy conservation benefits, studies of local property

tax and hazard insurance cost impacts, and exploration of innovative utility

tax and Insurance practices.

Ingersoll, John H. "Remodeling: A Natural for Builders — But With Key

Differences ."

For complete citation see Chapter 4, Residential Rehabilitation/Renovation.

29
Levy, Elliot. "Construction Cost Indexes, 1915-76." Construction Review , Vol. 23, No. 4 (June/July 1977), pp. 4-17.

Abstract ; The article provides data based on 19 construction cost indexes

updated and revised from a mid-sixties Construction Review supplement. The

data allows for the measurement of real changes in cost between any two

years (up to 1976). A description of each index is provided, in addition

to a discussion of its use as a deflator for construction activity. The 19

construction cost indexes are presented on a 1972 = 100 basis, with changes

in common index values obtained by expressing the index at various points

of time as a percent of a selected base. Changes in construction costs are important to real estate investors, insurance companies, mortgage lenders

and local government bodies in estimating current property replacement values,

and to homeowners and insurers concerned with accurately determining adequate

insurance coverage.

Mastey, Anthony. "New Competition Lowers Construction Costs." Industry

Week , Vol. 193, No. 5 (June 1977), pp. 66-70.

Abstract: This article focuses on the cost saving potential of the increasing

trend toward the use of open shop contractors. Over the past five years the

number of open shop contractors, as measured by membership in the Associated

Builders and Contractors Inc., has more than tripled. Problem areas such as jurisdictional disputes, restrictive work practices, construction supervision

and labor classification associated with reliance on the building trades unions

has prompted many large clients to switch to open shop contractors. Representatives from large industrial firms and utilities are Interviewed and report

savings in terms of the difference in project bids, of between 15 and 45

percent on the cost of the project. The rapid increase in the volume of

open shop construction has resulted in several major concessions concerning

overtime wage rates, scheduling and the appropriate scale for small projects.

In several instances however, the reaction to the inroads made by open shop

contractors was marked by violence and property damage. The effect of the

failure of the trades unions' bid to pass the common situs picketing bill,

which would permit a single building trades union to picket the general

contractor and in essence shut down the entire project, is unclear at the

present time. Some contractors claim that if it is ever passed its effect

would be to drive contractors toward the use of nonunion labor exclusively.

Mills, Daniel Q. Industrial Relations and Manpower in Construction . Cambridge,

Massachusetts: The Massachusetts Institute of Technology Press, 1972, 307 pp.

Abstract : This work explores the sources of inflationary pressure in con- struction and means of reducing them, attempting also to accurately reflect

the enormous variety in the industry and in the relationships between con- tractors and their employees. The book is divided into four sections:

Collective Bargaining—which describes the inflation that developed in the

late 1960's; Manpower Utilization—including seasonality, manpower planning,

and problems of racial Imbalance; Formal Training—particularly apprenticeship;

30
and Problems of Public Policy—especially in regard to housing. The study

ends early in 1971, at the time of the imposition of wage controls in con- struction. (Author)

Musgrave, John C. "The Measurement of Price Changes in Construction."

American Statistical Association Journal , Vol. 64 (September 1969).

Abstract ; The development of a statistically adequate set of construction

price indexes is the goal of a research effort recently instituted at the

Bureau of the Census. This paper describes research done to date on price

indexes for single-family houses and indicates plans for future research.

Using data from the Bureau's Housing Sales Survey, Indexes of the price of new one-family houses sold (including value of site), have been computed

by determining the most important characteristics of these houses and estimating, by regression analysis, the price change in houses with a constant

"mix" of these characteristics. (Author)

Office of Construction Industry Services, Labor-Management Services Administration. Social Costs of Instability in Construction; A Preliminary Report . Washington, D.C.: U.S. Department of Labor, April 1979.

Abstract ; The magnitude of cyclical and seasonal fluctuations in employment

and output in the construction industry exacerbate inflation and unemployment

in the national economy. This study assigns dollar values to the potential

savings that would accrue to society from a modest reduction in the amplitude

of construction fluctuations. Savings would be realized through lower unem- ployment benefits, since there would be a heavier reliance on year-round

workers, and through lower depreciation charges on invested capital. Stability in the construction industry would also yield lower inventory carrying

costs by supplier firms, and savings through lower wage rates (due to a reduction in the number of construction workers) and higher annual Incomes.

Fewer accidents would occur because of the smaller number of inexperienced

workers. Shorter apprenticeships and fewer dropouts due to steadier employment

during the early months of training would also produce substantial savings.

These factors represented a potential annual total savings of nearly $5.7

billion in 1977, while social costs for that year were estimated at $7.1

billion.

Paulus, Virginia. Housing; A Bibliography 1960-1972 . New York: Ams Press,

Inc., 1974, 351 pp.

Abstract ; This book focuses on the years 1960 through 1972 which represented

an era of growing concern with the nation's housing problem as well as a time

of vigorous experimentation and research in the housing field. It is a selective listing of materials of research value Issued during that time

period and is intended as a reference source for those studying various

aspects of housing. Included in the bibliography are also a number of major

works published before 1960. The bibliography is largely limited to items

31
published in the United States and dealing with housng concerns of that

country.

U.S. Bureau of Labor Statistics. Industry Wage Survey . Bulletin 1911.

Washington, D.C.: U.S. Department of Labor, 1976.

Abstract ; The results of a September 1973 survey of wages and related

benefits in the construction industry in 17 areas are summarized in this

bulletin. Based on a representative sample of construction firms in selected

metropolitan areas, this survey of both union and non-union contractors

measures pay levels and pay relationships by occupation at a particular time.

Findings of the study indicate that average straight-time hourly earnings of

union and non-union construction carpenters ranged from $6.19 an hour in

Dallas to $9.56 an hour in Cleveland, while the wage for construction laborers

ranged from $3.41 in Dallas to $7.39 in Cleveland. Construction workers

whose rates were set by labor-management agreements were generally found to

enjoy substantial, although widely varying, wage advantages over their non- union counterparts.

U.S. Bureau of Labor Statistics. Labor and Material Requirements for

Private Multi-family Housing Construction . Bulletin 1982. Washington,

D.C.: U.S. Department of Labor, 1976.

Abstract ; This study provides detailed information on employee-hour

requirements by occupation and contractor, and data on the amount and type

of materials and supplies used in the construction of private multi-family

housing. A sample of 89 projects of five or more dwelling units each in

22 Standard Metroplitan Statistical Areas located throughout the continental

United States was used to measure the employee-hours and value of materials

required for each $1,000 of and each 100 square feet of new private multifamily housing construction in 1971. Findings indicate that this type of

construction required 50 employee-hours of on-site labor for each $1,000

and 65 on-site employee-hours for each 100 square feet of space. A total

of 126 employee-hours per $1,000 of multi-family housing construction (or

164 employee-hours per 100 square feet), was generated in all sectors of

the economy, and materials and supplies constituted over two-fifths of

construction costs.

U.S. Bureau of Labor Statistics. Labor and Material Requirements for

Private One-Family House Construction . Bulletin 1404. Washington,

D.C.: U.S. Department of Labor, June 1964, 41 pp.

Abstract : This study analyzes the labor and material requirements for private,

nonfarm, new, one-family house construction. Expenditures in 1962 on this

type of construction amounted to about $14 billion, while accounting for

approximately 75 percent of private nonfarm new housing construction and

23 percent of all construction. Data were collected on 101 houses located

throughout the continental United States. These homes had an average floor

32
space of 1,240 square feet and an average construction price (construction

cost to purchaser) of $14,585. Survey findings indicate that for every

$1,000 of construction price utilized in building private one-family homes

in 1962, 204 manhours of employment—72 for on-site construction and 132

for off-site activities—were created. Material costs made up 48.2 percent

of the total construction price of all the houses surveyed.

U.S. Bureau of Labor Statistics. Union Wages and Hours . Bulletin 1907.

Washington, D.C.: U.S. Department of Labor, 1976.

Abstract ; This bulletin provides a study of construction wage rates paid

to union workers primarily engaged in the construction of commercial and

residential buildings. Thirty-three building trades are covered by this

study. Average union wage rates for building trades workers increased by

8.6 percent between July 1, 1974 and July 1, 1975, in cities of at least

100,000 inhabitants. Average wage rates were found to be highest in the

Middle Atlantic and Pacific regions of the U.S. and lowest in Southeast

and Southwest.

33
6. CONSTRUCTION COST ESTIMATION AND CONTROL

The studies abstracted in this section discuss methods, techniques, and

systems useful in the estimation and control of construction costs. The

Schmidt article is concerned with various factors related to estimating

international construction costs. Several articles are concerned with the

estimation of labor requirements and/or the control of labor costs of con- struction projects. Guthrie uses graphical techniques as a means of analyzing

field-labor requirements. Paulson's study considers labor costs in terms of

financial and productivity factors. The article outlines principles for estimating and controlling field labor costs. The Telcholz article delineates the

characteristics of a labor cost control system, while Ulrich's study examines

project cost control techniques and suggests a specific cost control system.

Likewise, the Shaw article provides information on an effective construction

cost control program. Gates' paper reviews techniques and strategies utilized

in construction cost estimating and contract bidding. The study by Chapman

presents a critique of the four major types of cost estimation procedures which

may be used for rehabilitation projects. Implications of the cost saving

potential associated with the use of performance concept are also discussed.

Chapman, Robert E. Cost Estimation and Cost Variability in Residential

Rehabilitation . National Bureau of Standards Building Science Series 129.

Washington, D.C.: U.S. Government Printing Office, December 1980.

Abstract : This study analyzes four methods of estimating the costs of

residential rehabilitation. Each method is critiqued with regard to its

treatment of changes in the size of the renovation project, the productivity

of labor, and the contractor's markup for overhead and profit. Cost comparisons and a discussion of the way in which the inherent riskiness of renovation

activities may be assessed are also presented. A theoretical approach for

dealing with cost variability which integrates the performance concept with

established engineering economics techniques is also developed. (Author)

Gates, Marvin. "Review of Existing and Advanced Construction Estimating

Techniques." Advanced Construction Estimation and Cost Control Methods . Proceedings of a Conference Held at the University of Houston, 1976, 31 pp.

Abstract : This paper provides a non-technical discussion of a wide variety of

techniques and strategies currently used in construction cost estimation and

contract bidding. Preliminary estimating methods discussed include the treatment of capacity, unit pricing considerations, key systems and parameters, and

component ratios. Pricing schemes for line items of work are then discussed.

Nomographs are also used to illustrate how one would apply an elementary form

of break-even analysis. Probabilistic concepts are then Introduced which show

how to compute the likelihood of at least breaking even. Other topics discussed Include: index numbers; the efficiency of labor; economies of scale;

and bidding strategy.

34
Guthrie, K. M. , "Field-Labor Predictions for Conceptual Projects. Chemical

Engineer , Vol. 76, No. 7 (7 April 1969), pp. 170-172.

Abstract ; This study presents techniques which can be used to anlayze

field-labor requirements for capital projects. The graphical techniques also

permit the visualization in early phases of development of the construction

schedule for capital projects. This study provides data helpful in testing

and appraising the realism of labor manhours in relation to material cost,

manpower, density, craft availability, and other limitations. This data also

serves as a basis for predictions of approximate manpower requirements and

field durations. An example illustrating field-labor analysis is provided.

Paulson, Boyd C. Jr. "Estimation and Control of Construction Labor Costs."

Journal of the Construction Division, Proceedings of the American Society

of Civil Engineers, Vol. 101, No. 3 (September 1975), pp. 623-633.

Abstract ; This paper outlines basic principles for estimating and controlling

field labor costs on construction projects. It divides labor costs into two

main categories. The first deals with the strictly financial aspects. These

Include basic wages, fringe benefits. Insurance, taxes, and wage premiums.

Most of these are readily quantifiable. The second category Introduces factors

related to productivity. These include regional variation in skill and work

rules; environmental effects ranging from weather and topography to the

immediate working conditions of individual craftsmen; learning curve relationships; project work schedule; and interrelationships of labor and management.

Productivity factors are difficult to quantify and require much experience

and judgment to do so. However, they also offer the contractor the greatest

opportunity for control. In both the financial and productivity categories,

several of the more subtle cost implications of the various factors are explained. Brief precautionary reference is also made to the many published

sources of labor cost data. (Author)

Schmidt, Hubert 0. "Construction Cost Estimating International."

Transactions of the American Association of Cost Engineers 21st Annual

Meeting . Morgantown, West Virginia; 1977, pp. 60-63.

Abstract ; Construction cost estimating for architects, engineers and builders

in the international area requires careful studies of the local market and

the many components which make up the construction estimate. Architects and

engineers often obtain cost data by talking with various local or foreign

contractors who worked in that area. A prepared survey check list containing

questions on major material and labor components is an excellent guide. Relating these questions to construction costs in the United States will result

in a sound understanding of the local costs and any special conditions which

may exist there. The following list highlights some of the major components

of an estimate which have to be studied carefully; Material and equipment.

Labor, Contracting, Shipping, Taxes and Duties, Currency fluctuations.

Escalation, Schedules, and Profit. (Author)

35
Shaw, Robert J. "Bringing the Project in With a Profit." Management Focus , Vol. 25, No. 2 (March-April 1978), pp. 18-27.

Abstract ; This article describes the characteristics of a project control

system. It is specifically targeted to the small contractor. The system

seeks to provide for the accurate and timely reporting of actual construction

costs and commitments, to compare these costs with the project estimate or budget, and to predict final direct construction costs on the basis of work

performance as the project is completed. The article provides an example

of a project control system which involves significant use of construction

labor in the field. Information on subcontractors and labor, in addition

to data on office and field purchases are used to develop a summary of the

entire project status.

Teicholz, Paul. "Labor Cost Control." Journal of the Construction Division , Proceedings of the American Society of Civil Engineers, Vol. 100, No. 4

(December 1974), pp. 561-570.

Abstract ; The complexity of a labor control system Increases in direct

proportion to the size of a project and the variables that must be monitored.

A comprehensive system must delineate variances resulting from differences

in budgeted and actual productivity, labor rates, overtime, and quantity of

work performed. The system should produce a weekly report that highlights

significant variances. In addition, internal controls are necessary to

ensure the accuracy of the reports and to permit the tracing of a given

cost figure back to its source. On projects involving significant equipment

resources, it is desirable to monitor the combined cost of labor and equipment, since these may be combined in a variety of ways to accomplish a given

operation. Finally, it is Important to emphasize that a labor control system

is effective only when it is utilized as a decision-making tool. This often

requires teaching project managers how to make the best use of control

reports, and to employ this knowledge in taking effective corrective action.

(Author)

Ulrich, Walter E. Jr. "Construction Labor Cost Measurement and Control."

Journal of the Construction Division, Proceedings of the American Society

of Civil Engineers, Vol. 103, No. 3 (September 1977), pp. 329-341.

Abstract ; This paper examines project cost control techniques. Problems

particularly relevant to the construction industry are specially and separately examined. A specific cost control system is suggested including

detailed report descriptions. Briefs. (Author)

Zelechoskl, Joseph R. "Compatible Units — A Multi-project

Synthesizing Cost Estimating, Engineering, Productivity and

Transactions of the American Association of Cost Engineers , C5.l-C5.10.

System

Accounting.

July 1979,

36
Abstract ; Compatible units (CU) is a computer system utilized at the

Pennsylvania Power and Light Company to generate cost estimates, standards

for productivity measurement, accounting data, etc., for the entire transmission and construction effort. Unique to this system, relative to normal

construction practice, is its application of the Methods-Time Measurement

(time standards system of work measurement) as the method for the measurement

of crew efficiency. The CU system is outlined, and the details are reviewed

of an American Association of Cost Engineers Sample Job. Also addressed is

how the engineer becomes and then handles the role of cost engineer and

standards setter for productivity for each project which he designs. The

time standards approach is discussed as it applies to these latter responsibilities. Diagrams. (ABI/INFORM)

37
7. ECONOMICS OF CONSTRUCTION

Studies In this category relate economic analysis to the construction Industry.

The effect of volume on the cost of residential construction Is examined In a report of the National Association of Home Builders Research Foundation.

The Fh.D. Dissertation of McConnaughey and to a lesser extent the Casslmatls

book take a more comprehensive approach In examining the Interrelationship

of contract construction, total construction activity, and the national economy.

Econometric techniques are used by both authors to derive production functions

for the contract construction Industry. McConnaughey also presents empirical

evidence which supports the claim that substitution of materials for labor

and capital may be an Important source of productivity growtK in the contract

construction Industry. Similarly, Hlllebrandt* s study discusses economics as

It applies to the construction Industry, the market, and contracting firms.

The book describes the supply and demand situation relative to the construction

industry in detail.

A Pilot Study of the Economies of Scale Related to Residential Construction . Rockville, Maryland: National Association of Home Builders Research

Foundation, April 1968, 96 pp.

Abstract t The principal objectives of this study are to determine the effect

of volume on the cost of residential construction and the market potential

required to Induce manufacturers to Invest In the development of new products

for use In low-cost housing. Personal and telephone Interviews, as well as letter requests for Information, were utilized to obtain data from builders

and manufacturers on: (1) Price-quantity breakpoints for major materials

and products used In low- and middle-income housing; (2) The effect of volume

on builders' site operations and management; and (3) Methods and criteria

used by major building product manufacturers to determine whether to Invest

In new product development. The builders studied varied widely In terms of

their volume, geographic location and type of operation. The study expresses

the belief of many builders that maximum or near maximum overall efflcencles

can be achieved at a volume of about 70 to 100 dwellings per year. In judging

whether to Invest In new product development. It was found that manufacturers

stress the Importance of yield and likelihood of success over potential market

volume

.

Casslmatls, Peter J. Economics of the Construction Industry . Studies In

Business Economics No. 111. New York: National Industrial Conference Board,

1969, 168 pp.

Abstract : This study seeks to advance economic knowledge of the contract

construction industry and examines the relationship of contract construction

to total construction activity and the national economy. Factors governing

the economic efficiency of the construction Industry are assessed. The study

utilizes econometric techniques to derive production and cost functions. The

analysis Indicates that productivity Is lagging In construction partly due

to failure to achieve economies of scale. The lack of continuous working

38
relationships between general contractors and subcontractors which leads

to Inefficiency or limits the effective span of managerial control is the

primary source of diseconomies of scale. Productivity in construction in

terms of output per manhour increased an average of about three percent

annually between 1947 and 1965. This figure is well below that of other

industries and that of the national economy. Furthermore, gains in labor

productivity were more than offset by rising wage rates. '

Hillebrandt, Patricia M. Economic Theory and the Constuction Industry . London: Macmillan Press Ltd., 1974, 245 pp.

Abstract ; The book deals with the economics of the construction industry,

the market and the contracting firms. In the introductory chapters the

subject is defined and set against the background of the way in which the

Industry is connected the whole economy. The demands on this industry

are examined from a theoretical standpoint including an examination of the

intricacies of the market for housing, the importance of the accelerator in

derived demand, and the peculiarities of social type demand, e.g., hospitals

and schools. The theory is related to the practice of forecasting demand

for construction in all major sectors. The demand section ends with a description of the way demand is put to the industry, as this has implications

for later chapters. The nature of the supply situation is then analyzed,

keeping always in sight the problem of the relationship of the underlying

cost and revenue functions to the requirement in the industry to determine

cost and price separately for each individual project. The cost curves

of the firm are examined and the market supply curves derived from them.

The market and Industry demand and supply curves are combined in a discussion

of market equilibrium, after which it is possible to determine the characteristics of the demand curves facing the individual firm. There follows a section on the mechanism for price determination of a single project and

finally a synthesis of the whole analysis. (Author)

McConnaughey, John S. Production Functions in Contract Construction for

the United States, 1972 . Unpublished Ph.D. Dissertation, Department of

Economics, Michigan State University, 1976, 133 pp.

Abstract : This study estimates single equation Cobb-Douglas and Constant

Elasticity of Substitution (CES) production functions^ for twenty-four 4

digit contract construction industries using data from the 1972 Census of

Construction Industries . This census, the second since World War II, is

the first to contain data on capital inputs. No previous production function study of this type has been undertaken for the contract construction

industries because of the lack of appropriate statistical data. The models

The production function expresses the maximum possible output which

can be produced with any specified quantities of the various necessary

Inputs

.

39
developed are similar to those used in production function studies of

manufacturing. Traditional production function models generally use value

added as output, and ignore the possibility of substitution between materials

and other inputs. This study provides evidence that substitution of materials

for labor and capital occurs in construction, and that this substitution may

be an important source of productivity growth in the sector. Models are developed which facilitate an analysis of substitution between materials and

other inputs, especially onsite labor.

> .

40
8. BUILDING CODES AND REGULATIONS

This section examines the nature of building codes and regulations, and their

impact on technical innovation and building costs. Such regulations can

significantly affect construction productivity. The book by Field and Rivkin

and the articles by Falk and by Oster and Quigley indicate that the nature

and effectiveness of local building codes varies among different communities.

They contend that outmoded local regulations make it difficult to Introduce

technical improvements. The McConnaughey report provides an economic analysis

of the cost to society of saving a life through the code provision requiring

the use of Ground Fault Circuit Interrupters in residences. Trellis’ National

Association of Home Builders study is concerned with the rapidly escalating

cost of housing and the role of regulations by all levels of government in

increasing housing costs. The cost effects of controls on development on the

supply of new housing are examined in a report by Bergman.

Several articles discuss the nature of the building code process and its

effect on technical innovation. Winter indicates that despite constant

innovation in the building industry, the language of the major U.S. codes

often does not allow for items not specifically identified. Kornsand notes

that in recent years there has been a trend toward greater complication of

the building code process. His study indicates areas in which the process

of building code promulgation can be refined and made more efficient. Owen's

paper suggests a lessening of producer influence on building codes and

Increased input by users as a means of speeding evaluation and implementation

procedures necessary to introduce innovations in standards and codes.

A brief introduction to the growing literature on the performance concept in

building is provided by the Wright article. In this article the prescriptive

and performance approaches to code compliance are compared and a framework

for introducing the performance concept in building is outlined. An application

of the performance concept is given in the report by Nelson and Shibe which

develops the Fire Safety Evaluation System for health care facilities. The

Nelson-Shibe methodology is a hybrid system because it draws on some attributes which are prescriptive in nature to define a- level of performance for

each of four categories of fire safety. The economic aspects of the NelsonShibe methodology is pursued in the study by Chapman, Chen and Hall. This

study shows that the Fire Safety Evaluation System can readily be adopted

to mathematical optimization techniques which permit the least-cost means

of achieving compliance to the Life Safety Code to be identified. This

study also demonstrates the greater flexibility of the performance-based

approach by permitting on-the-scene decision makers to superimpose their

objectives on a set of retrofit alternatives which are known to be equivalent

to the code.

Three studies deal with the effect of building codes on rehabilitative

construction. The Gross, Pielert and Cooke report discusses the development

of technical bases for regulation, new technology and evaluation tools, and

cost effective decision methods with regard to the rehabilitation of existing

structures. Kapsch's paper summarizes a number of studies concerned with

41
the impact of building codes on rehabilitation and preservation projects.

Masterson indicates that the development of computer-based systems for

building regulation can lead to a more efficient, performance-oriented

regulatory process.

Bergman, Edward M. External Validity of Policy Related Research on Development Controls and Housing Costs — Final Report . Chapel Hill, North

Carolina: Center for Urban and Regional Studies, University of North Carolina,

August 1974, 226 pp.

Abstract: The three papers which compose this study are each concerned with

a particular perspective on development controls and their probable or potential cost effects on the supply of new housing. The papers are: (A) - A

Guidance System Perspective on Development Controls and Housing Costs;

(B) - A Residential Investment Perspective on Development Controls and Housing

Costs, and (C) - A Reasonable Level of Protection Perspective on Development

Controls and Housing Costs. The perspectives dealt with in each of these

papers represent major objectives underlying the adoption and use of development controls. The "guidance system" paper (A) covers a wide array of development controls, while the "residential investment" (B) and "level of

protection" (C) papers deal exclusively with zoning ordinances, subdivision

regulations and building controls.

Chapman, Robert E., Phillip T. Chen and William G. Hall. Economic Aspects

of Fire Safety in Health Care Facilities: Guidelines for Cost-Effective

Retrofits . National Bureau of Standards Interagency Report 79-1902.

Washington, D.C., November 1979, 117 pp.

Abstract : This study focuses upon one aspect of the fire safety problem in

health care facilities; the use of the Fire Safety Evaluation System developed

by the Center for Fire Research at the National Bureau of Standards for deter^

mining equivalence to the Life Safety Code. The Life Safety Code, a voluntary

code developed by the National Fire Protection Association, is currently the

most widely used guide for identifying the minimum level of fire safety in

buildings. Using the Fire Safety Evaluation System as a basis, this study

developes a computerized procedure which permits the least-cost means of

achieving compliance to the Life Safety Code in health care facilities to be

identified. Since each of the parameters used in the Fire Safety Evaluation

System has a unique value which corresponds to strict compliance, it is

possible to quantify the cost savings attributable to the use of the Fire

Safety Evaluation System over strict compliance to the Life Safety Code.

Preliminary studies conducted by the National Bureau of Standards of a prototypical hospital have concluded that the use of this computerized procedure

can result in cost savings of 50 percent or more over those associated with

strict compliance to the Life Safety Code. (Author)

Falk, David. "Building Codes in a Nutshell." Real Estate Review , Vol. 5,

No. 3 (Fall 1975), pp. 82-91.

42
Abstract ; Model code associations and allied groups are largely responsible

for the drafting of basic building codes in the U.S. The technical core of the

model codes is provided by three types of national standards: (1) Engineering

practice standards, which define methods of design, fabrication or construction; (2) Material standards, which establish quality requirements, physical

properties, and sampling and testing methods; and (3) Test standards, which

indicate quality and performance testing methods under conditions of use. States normally delegate their building code authority to local governments.

Consequently, the nature of these codes as well as the effectiveness in enforcing them often varies greatly among localities. Due to the fact that building

codes are generally written in terms of specifications, it is difficult to

introduce new materials and techniques which are acceptable under local code

provisions. The establishment of a National Institute of Building Sciences

under the Housing and Community Development Act of 1974 may facilitate the

development and maintenance of nationally recognized performance criteria and

standards, and the evaluation of new and existing building technologies.

Field, Charles G. and Steven R. Rivkin. The Building Code Burden . Lexington,

Massachusetts: D.C. Heath and Company, 1975, 215 pp.

Abstract ; This book asserts that the present system of locally based building

codes is overly restrictive and restrains the diffusion of industrialization

and innovation in the industry. The authors recommend a move from the custom

manufacture approach forced on the industry by the nature of the building regulatory process to a system analagous to assembly-line mass production. Such an approach would better serve the goals of the home building industry to provide

quality housing at lower costs and Increased efficiency by creating a market

large enough to justify investment in innovation and industrialization and to

set professional standards for developing and testing new products. To remedy

the problems caused by the local nature of building codes, the authors recommend a regulatory system oriented to the local community and its particular

problems but operating through a nationwide framework.

Gross, James G., James H. Pielert and Patrick W. Cooke. Impacts of Building

Regulation on Rehabilitation; Status and Technical Needs . National Bureau of

Standards Technical Note 998. Washington, D.C.: U.S. Government Printing

Office, May 1979, 50 pp.

Abstract ; This report presents the results of a study of the impact of

regulations on building rehabilitation and includes a discussion of the

activities of the Building Rehabilitation Technology Group of the Center for

Building Technology. Particular activities discussed relative to existing

buildings include: (a) development of the technical bases for regulations

and an Improved regulatory process, (b) development of new technology and

evaluation tools, and (c) development of responsive and cost-effective

decision tools. A new code concept is outlined which could be a replacement

for the "25-50 percent" rule presently in codes for new construction.

This rule often controls the amount of work that may be required in the

43
rehabilitation of existing buildings. The status of existing code documents

for building rehabilitation is provided along with an overview of other publications which discuss the impact of building regulations on rehabilitation.

(Author)

Kapsch, Robert J. "Building Codes: Preservation and Rehabilitation."

Research and Innovation in the Building Regulatory Process: Proceedings

of the First NBS/NCSBCS Joint Conference , National Bureau of Standards

Special Publication 473 (edited by Patrick W. Cooke). Washington, D.C.,

June 1977, pp. 437-452.

Abstract : There has been a large rise in interest in the last ten years in

building reuse, rehabilitation and preservation projects. This trend is

expected to continue in the foreseeable future. Such projects pose difficulties for the building regulatory system since many of these buildings

were originally constructed prior to the existence of building codes. Most

of these buildings do not meet modern levels of building regulation and

application of building regulations to them poses difficulties as these

regulations are essentially designed for new construction. The potential

impact of these regulations includes the increase of project costs and

damage to the fabric of the building intended to be preserved. Yet safety

and health must be achieved in existing buildings as well as new. This

paper summarizes studies and other activities that are presently being

conducted by a number of organizations on this subject. One such study con- ducted by NBS has indicated that numerous State and local jurisdictions and

model code organizations are adopting historic building waiver clauses and

similar regulations as a partial answer to this problem. The National Trust

for Historic Preservation sponsored the first national conference, in 1974, on this question and is currently cooperating with NBS in a study of the

effectiveness of selected historic building waiver clauses. The National

Endowment for the Arts has sponsored a study, reported in a separate paper

in these Proceedings, on how a standard designed for existing buildings might

be structured and formatted. NBS is also studying, for the Department of

Housing and Urban Development, technological aspects of neighborhood consefvation, including the role of building regulations. As of this writing, no final or definitive answer has been developed for the problem of achieving

contemporary levels of safety and health in existing buildings. (Author)

Kornsand, Norman J. "A Consulting Engineer's View of Building Code Process

from Conception to Adoption." Research and Innovation in the Building

Regulatory Process: Proceedings of the Joint Conference , National Bureau of

Standards Special Publication 518 (edited by Patrick W. Cooke).

Washington, D.C., August 1978, pp. 67-76.

Abstract : The author has been attending the meetings of the model code

groups for the past several years. During that time period, he has observed

the process, noted the changes that are taking place in the process, identified forces responsible for the changes, analyzed the problems and has

formulated possible areas to refine, streamline and be more efficient in

44
the building code promulgation process. The paper presents the building

code process from the standpoint of the designers and engineers who must

work with its provisions. The paper shows a significant trend in the

past few years that is complicating the process. This includes more code

changes, more complex code changes, expansion of the codes into more areas

of control, and attempts to keep pace with the plethora of new products,

devices and designs flooding the building materials market. (Author)

Masterson, Charles. "The Development of Computer Based Systems for Building

Codes." Research and Innovation in the Building Regulatory Process;

Proceedings of the First NBS/NCSBCS Joint Conference National Bureau of

Standards Special Publication 473 (edited by Patrick W. Cooke).

Washington, D.C., June 1977, pp. 369-375.

Abstract ; The purpose is to explain, in a brief fashion, the most important

aspects of four years of research into computer-based systems for building

regulation. The topics of automated plan review and performance, evaluations

through computer technology are covered. And, the basic strategies of

a master plan for applications oriented development are outlined. The basic

thrust of the argument is that computer-based systems can provide major

assistance in moving the regulatory process towards a performance-oriented

basis. (Author)

McConnaughey , John S. An Economic Analysis of Building Code Impacts;

A Suggested Approach . National Bureau of Standards Interagency Report

78-1528. Washington, D.C., October 1978, 65 pp.

Abstract ; This report suggests an evaluation approach which can be used

by building officials and legislative bodies faced with making building

code decisions. A method to evaluate many of the potential benefit and

cost impacts of specific building code provisions is developed. The report

also defines and categorizes the economic impacts of building codes. While

no approach to classifying building code impacts will be fully appropriate

for all uses, the definitions and categories proposed may help to clarify

or reconcile some of the differing opinions concerning the impact of building

codes. Finally, the report illustrates the suggested approach by evaluating

the 1975 National Electrical Code requirement for the use of Ground Fault

Circuit Interrupters (GFCIs) in residences. Based on sensitivity analysis,

estimates are made of how much it costs society in order to save one life

through the GFCI code provision. This case study concludes that the estimated

cost to save a life is nearly $4 million. A lower bound estimate of the

cost to save a life is about $2.5 to $3.5 million. (Author)

Nelson, Harold E. and A. J. Shibe. A System for Fire Safety Evaluation

of Health Care Facilities . National Bureau of Standards Interagency

Report 78-1555-1. Washington, D.C., May 1980.

45
Abstract ; A quantitative evaluation system for grading health care facilities

in terms of fire safety is described. The system can be used to determine how

combinations of widely accepted fire safety equipment and building construction

features may provide a level of safety equivalent to that required by the

widely accepted Life Safety Code of the National Fire Protection Association.

The system will provide flexibility to both the designer of new facilities and

to the renovator of existing health care facilities. Three major concepts form

the basis for code equivalency: a. Occupancy Risk - the number of people

affected by a given fire, the level of fire they are likely to encounter and

their ability to protect themselves; b. Building Safety Features - the ability

of the building and its fire protection systems to provide measures of safety

commensurate with the risk; c. Safety Redundancy - in-depth protection, through

the simultaneous use of alternative safety methodologies such as containment,

extinguishment, and people movement methodologies. The design of the complete

fire safety system is intended to ensure that the failure of a single protection device or method will not result in a major failure of the entire system.

In this system, equivalency is judged to exist when the total impact of the

occupancy risk factors and the compensating building safety features produce

a level of safety equal to or greater than that achieved by rigid conformance

to the explicit requirements of the NFPA Life Safety Code. In this evaluation,

safety performance is gauged both in terms of overall safety impact and depth

of redundance. (Author)

Oriole, Kenneth A. Productivity in the Construction Industry — Influence of

Regulatory Laws .

For complete citation see Chapter 3, Construction Productivity.

Oster, Sharon M. and John M. Quigley. "Regulatory Barriers to the Diffusion

of Innovation: Some Evidence from Building Codes." The Bell Journal of

Economics , Vol. 8, No. 2 (Autumn 1977), pp. 361-377.

Abstract : Previous studies, including the reports of the Douglas and Kaiser

Commission, have suggested that outmoded local regulation of residential con- struction has impeded technical progress in the industry. In this paper, we

try to Identify the determinants of differences across communities in these

regulations. The permissibility of four particular innovations in a cross section of jurisdictions in 1970 and the timing of these innovations are explained by attributes of local firms, labor unions, building officials, and

housing demand. Our results suggest that the educational level of the chief

building official, the extent of unionization, and the relative size of housebuilding firms in an area affect the diffusion of innovations in residential

construction. (Author)

Richard, Owen. "Performance vs. Producer-Controlled Codes." Research and

Innovation in the Building Regulatory Process: Proceedings of the First NBS/

NCSBCS Joint Conference , National Bureau of Standards Special Publication 473

(edited by Patrick W. Cooke). Washington, D.C., June 1977, pp. 279-284.

46
Abstract ; This is intended to speed evaluation and implementation of

innovations in standards and codes, which too often await change initiated

by large producer corporations. Such producers tend to take such action

only when no damage is done to a status quo that favors them and, further,

when they stand to benefit from a change. The writer, a would-be innovator

in in-place field evaluation of concrete insulation and strength for twenty

years, would leaven producer domination of codes with more vigorous participation of users. Products and methods should be evaluated not under artificial conditions, but under conditions of intended use. Examples include

performance versus potential in thermal insulation and nondestructive

in-place strength testing by the pullout method. (Author)

Smith, Baird. "Information Structure of Building Codes and Standards for

the Needs of Existing Buildings." Research and Innovation in the Building

Regulatory Process; Proceedings of the First NBS/NCSBCS Joint Conference , National Bureau of Standards Special Publication 473 (edited by

Patrick W. Cooke). Washington, D.C., June 1977, pp. 453-489.

Abstract ; With the increased occurrence of rehabilitation and preservation

projects, the problem of code compliance for these buildings is growing in

magnitude. We are no longer dealing with Isolated historic buildings, but

with both entire historic districts and an ever increasing number of recycled,

adaptively used buildings. The problem of code compliance for these projects

frequently causes the destruction of the historic integrity of the building,

the replacement of serviceable materials and, at the same time, increases

project costs. The compliance problems may stem from the organization and

format of the model codes which are based on new construction materials and

techniques. This study examines the present organization and format of the

three model codes, and develops a decision flow chart which analyzes how

these model codes are used. The regulatory problems facing rehabilitation

and preservation projects are then reviewed. From this investigation, a proposed decision process, based on the needs of rehabilitation and preservation projects is developed. Such a decision process could be used if and

when building regulations are developed for the unique needs of these type

projects. (Author)

Trellis, Alan. "Regulation and the Housing Industry." Research and Innovation

in the Building Regulatory Proceedings of the First NBS/NCSBCS Joint Conference , National Bureau of Standards Special Publication 473 (edited by

Patrick W. Cooke). Washington, D.C., June 1977, pp. 391-396.

Abstract ; The National Association of Home Builders (NAHB) has become

increasingly aware of the disproportionate Increase in the cost of owning

a new home, in relationship to the general increase in consumer prices.

These increases are rapidly raising the cost of housing out of the reach

of an ever increasing percentage of the population. What are the reasons

for this inordinate increase in housing costs? NAHB has embarked on a major national study effort to answer this question. The study is intended

to pinpoint the causes of this cost escalation, and in particular, determine

47
the impact of increasing state, local, and Federal regulations on spiraling

housing costs. It is a growing feeling among consumers and homebuilders

alike, that a significant portion of the increased regulations associated

with housing construction, do not provide benefits in relation to the overall

costs incurred by the builder, which of course are ultimately passed on to

the home buyer. (Author)

Winter, Steven. "Response to Building Innovation by Building Codes and

Regulations." Research and Innovation in the Building Regulatory Process ; Proceedings of the Second NBS/NCSBCS Joint Conference , National Bureau

of Standards Special Publication 518 (edited by Patrick W. Cooke).

Washington, D.C., August 1978, pp. 49-66.

MPS issues updates as they are processea, buua issues supplements annually,

etc.). The States and other regulatory bodies which adopt these codes do

so sometime after the updates are issued. The result is that there is a considerable time span for the process of: recognition of the need for

a code change; adoption of the code change; revision of the code; adoption

of the revision by regulatory bodies; and implementation of the revision.

Innovations in the building industry, however, are constantly occurring, and

there is frequently no allowance in the language of codes or in their interpretation for items not specifically identified. The position of the author

is that building codes and regulatory agencies must be more responsive to

innovative materials and methods in order to foster, rather than hinder,

improvements and efficiencies in the building process. (Author)

Wright, James R. "Performance Criteria in Building." Scientific American , Vol. 224, No. 3 (March 1971), pp. 17-25.

Abstract : This article compares the prescriptive and performance-based

approaches as they relate to both building specifications and building

regulations; a framework for introducing the performance concept in building

is also outlined. (A prescriptive approach specifies the dimensions,

composition and nature of materials, components and systems. A performance

approach sets forth the results expected rather than the means of achievement.) In its most basic form, the performance approach identifies human

requirements and the attributes necessary to satisfy them. Second, it

undertakes to convert the attributes to criteria that a builder or manufacturer can follow. Third, it establishes procedures for evaluating

against the criteria a material, a component, a system or an entire building.

In addition, the greater flexibility associated with the performance concept

should promote innovations which will result in lower costs to purchasers

of construction services.

^ Minimum Property Standards,

o Building Officials and Code Administrators.

Abstract : viD cl TTTTr.. The major U.S. building

48
9. CONCLUDING REMARKS

This report has presented a state-of-the-art review of the technical

literature concerned with the various factors affecting construction productivity. Particular emphasis was placed on identifying potential sources of

variation in the level of productivity in residential construction. Although

the emphasis of this report is on the residential sector and rehabilitation

activities in particular, it is also focused on topics such as construction

management and cost control which perhaps more appropriately apply to large

non-residential contractors. During the course of this literature survey

a number of recurrent issues were uncovered.

The single topic of greatest interest was concerned with how one can identify

the factors affecting productivity and measure their differential impact.

Such issues as building regulations, management expertise, job size, training,

crew composition, the method of financing, and the quality of materials,

equipment and the work environment all exert some influence on the productivity of the factor inputs.

1,2,3

One theme which recurred throughout the documents abstracted was the effect of

building codes on construction costs and productivity. Although many authors

agree that some form of building code is necessary to ensure compliance with

health and safety regulations, the set of codes actually in place goes far^

beyond these minimal levels in its regulation of the construction process.

The building regulatory process including codes and their enforcement affect

productivity in two distinct ways. First, they place physical constraints

on the construction process by creating a series of critical check points

which may cause work stoppage. The proliferation of on site inspections by

code officials was cited frequently as a cause of unnecessary delays by both

residential and non-residential contractors. Second, and perhaps more

fundamental, building codes slow or prevent the introduction and diffusion

of innovations in building technology. * In the opinion of several authors

studied, the nation's set of building codes is poorly organized. * Furthermore, they conclude that coordination among local jurisdictions is

inadequate. This lack of coordination is perhaps the single largest setback

to the introduction of new building technologies because the innovator is

faced with a task of introducing the technique into many areas, some of

which may have conflicting requirements for the same product or process.

Therefore the costs of introduction and the time before any major economies

of scale are realized may be such that the innovator's initial investments

in the technique could never be recouped. Approaches recommended by the

surveyed literature to the solution of this problem include either the use of

the performance concept or the establishment of a uniform set of code

provisions (or both).

9,10

At a finer level of detail, labor productivity is affected by the size and

composition of the crew carrying out the work; the construction practices

which govern how these workers carry put their tasks; - ,an the relative skill

levels of the labor force engaged in^ and managers of^ the construction

activity. Another factor affecting labor productivity will be reflected

in differences in the availablility of mechanical equipment and specialized

49
17 18 tools which would promote a smooth work flow. * Since residential

contractors tend to be small relative to non-residential contractors and

sub-contractors, it seems reasonable to assume that less "capital" equipment

will be available to their workers.

Another question of crucial importance is whether the production function for

all types of construction is the same. Since the technical options open to

certain types of contractors are much more constrained than for others, it

is likely that the physical process will exhibit systematic differences in

the utilization of labor and materials. The levels of productivity are therefo^e^^ikely to differ significantly. Empirical studies cited in this

report^ * have shown that production functions for different classes of

construction activities may differ significantly. This would imply that

marked differences in the marginal physical product of the factors of production (labor, materials and equipment) would quite likely exist. Their

measurement is by no means a "simple" problem, however.

Another issue which affects productivity is the cyclical nature of the

construction industry. Construction is very sensitive to cyclical changes of

both an economic and a seasonal nature.^ * The impact of cyclicality on

the productivity of the industry is uncertain, however, since it has been

hypothesized that the productivity of employed factors would be higher during

times of substantial unemployment in the industry. This hypothesis is based

on the assumption that as unemployment rises contractors lay off their least

productive (unexperienced) workers and idle inefficient equipment. Thus

greater production efficiency is achieved through the use of better "qualified"

labor and equipment. In addition, during a recessionary period there will be

more competition for the limited projects available which will also tend to

increase productivity. On the other hand, due to cyclical instabilities

during recovery it will be necessary to hire back less efficient labor and

equipment to meet the increased demand for the industry’s product. The bid

price for contracts may also rise due to lower levels of competition. Another

issue related to cyclicality concerns industrialization, a process which seeks

to increase productivity by mass producing certain products which are traditionally fabricated at the job site.'^ * ° Industrialization will also reduce

the seasonal effects on the construction industry to a certain extent. As

pointed out by a number of authors, however, the regulatory nrpcess may

prevent innovation and industrialization from taking place. *

The issues discussed previously were often mentioned in the studies cited.

Unfortunately, agreement on the issues does not imply agreement on the

approach for resolution. In particular, some of these issues pose problems

in measurement almost as difficult as the measurement of productivity Itself.

How does one quantify managerial expertise, the amount of human capital the

worker brings onto the job, the relative safety or danger of the task, or

the quality of the materials and equipment? These issues must be understood,

if changes in the level of productivity for certain factors of production

are to be carried out in a systematic and efficient manner.

50
CITATIONS FOR THE CONCLUDING REMARKS SECTION

^ Charles G. Field and Steven R. Rivkin, The Building Code Burden, Lexington, Massachusetts: D.C. Heath and Company, 1975.

2 John S. McConnaughey, An Economic Analysis of Building Code Impacts:

A Suggested Approach , National Bureau of Standards Interagency Report

78-1528, Washington, D.C., October 1978.

o Norman J. Kornsand, "A Consulting Engineer's View of Building Code

Process from Conception to Adoption," Research and Innovation in the

Building Regulatory Process: Proceedings of the Second NBS/NCSBCS

Joint Conference , National Bureau of Standards Special Publication 518

(edited by Patrick W. Cooke), Washington, D.C., August 1978, pp. 67-76.

^ A National Strategy for Improving Productivity in Building and

Construction: Proceedings of the Building Research Advisory Board's

1979 Building Futures Forum, November 7-8, 1979 , Washington, D.C.:

National Research Council, National Academy of Sciences, 1980.

^ Charles G. Field and Steven R. Rivkin, op. cit.

^ Sharon M. Oster and John M. Quigley, "Regulatory Barriers to the

Diffusion of Innovation: Some Evidence from Building Codes," The

Bell Journal of Economics , Vol. 8, No. 2 (Autumn 1977), pp. 361-377.

^ Charles G. Field and Steven R. Rivkin, op. cit.

O Sharon M. Oster and M. Quigley, op. cit.

^ Charles G. Field and Steven R. Rivkin, op. cit.

Sharon M. Oster and M. Quigley, op. cit.

James R. Wright, "Performance Criteria in Building," Scientific American , Vol. 224, No. 3 (March 1971), pp. 17-25.

David Falk, "Building Codes in a Nutshell," Real Estate Review , Vol. 5,

No. 3 (Fall 1875), pp. 82-91.

13 Harold E. McNally and John A. Havers, "Labor Productivity in the

Construction Industry," Journal of the Construction Division , Proceedings of the American Society of Civil Engineers, Vol. 93, No. 3

(September 1967).

Melvin Kupperman, "Improving Productivity: The Construction Phase,"

Consulting Engineer, Vol. 49, No. 6 (December 1977), pp. 52-55.

51
John D. Borcherding and Clarkson H. Oglesby, "Construction Productivity and

Job Satisfaction," Journal of the Construction Division , Proceedings of the

American Society of Civil Engineers, Vol. 100, No. 3 (September 1974),

pp. 413-431.

Robert D. Logcher and William W. Collins, "Management Impacts on Labor

Productivity," Journal of the Construction Division , Proceedings of the

American Society of Civil Engineers, Vol. 104, No. 4 (December 1978),

pp . 447-461

.

John D. Borcherding, "Improving Productivity in Industrial Construction,"

Journal of the Construction Division , Proceedings of the American Society

of Civil Engineers, Vol. 102, No. 4 (December 1976), pp. 599-614.

Melvin Kupperman, op. cit .

Peter J. Cassimatis, Economics of the Construction Industry, Studies in

Business Economics No. Ill , New York: National Industrial Conference

Board, 1969.

John S. McConnaughey , Production Functions in Contract Construction for

the United States , 1972, Unpublished Ph.D. Dissertation, Department of

Economics, Michigan State University, 1976.

21 Ibid .

22 Office of Construction Industry Services, Labor-Management Services

Administration, Social Costs of Instability in Construction: A Preliminary

Report , Washington, D.C.: U.S. Department of Labor, April 1976.

22 Daniel Q. Mills, Industrial Relations and Manpower in Construction , Cambridge, Massachusetts: The Massachusetts Institute of Technology Press,

1972.

2^ Anthoney Mastey, "New Competition Lowers Construction Costs," Industry Week , Vol. 193, No. 5 (June 1977), pp. 66-70.

22 Office of Construction Industry Services, op. cit .

26 Charles G. Field and Steven R. Rivkin, op. cit .

22 Ibid .

22 Sharon M. Oster and John M. Quigley, op. cit .

52
NBS-114A (REV. g- 78 )

U.S. DEPT. OF COMM.

BIBLIOGRAPHIC DATA

SHEET

1. PUBLICATION OR REPORT NO. NBS 80-2150 ' 4' ^ ' "&4^/ 'f‘^i/v/44'/

' ' '7V'W44n4m "4A

,

TITLE AND SUBTITLE

Productivity in Residential Construction: An Annotated

Bibliography

5. Publication Date Febuary 1981

7. AUTHOR(S)

Bruce E. Thompson and Robert E. Chapman

8. Performing Organ. Report No.

9. PERFORMING ORGANIZATION NAME AND ADDRESS

NATIONAL BUREAU OF STANDARDS

DEPARTMENT OF COMMERCE

WASHINGTON, DC 20234

11. Contract/Grant No.

12. SPONSORING ORGANIZATION NAME AND COMPLETE ADDRESS CSfreot. City, state, ZIP)

Same as item 9

13. Type of Report & Period Covered

Final

15. SUPPLEMENTARY NOTES

I I Document describes a computer program; SF-185, FIPS Software Summary, is attached.

IS. ABSTRACT (A 200^word or teas factual aummary of moat significant information. If document includes a significant bibliography or

literature survey, mention it here.) This report presents a state-of-the-art review of the technical literature related to one or more of the factors affecting productivity in residential construction. Particular emphasis is placed on identifying potential sources of variation between the

level of productivity in new housing construction versus that in housing renovation.

Although this report focuses on the residential sector, emphasis is also placed on

topics such as contruction management and cost control which perhaps more appropriately

apply to the non-residential sector. The references have been categorized so that

articles dealing with specific productivity and construction topics can be easily

identified. The categories emphasized in this report are: general productivity/

productivity measurement; construction productivity; residential rehabilitation/

renovation; construction/housing costs; construction cost estimation and control;

economics of construction; and building codes and regulations.

17* KEY WORDS (six to twelve entries; alphabetical order; capitalize only the first letter of the first key word unless a proper name;

separated by semicolons)

Building codes; building economics; construction; cost; economics; housing; productivity; regulation; renovation.

18. AVAILABILITY (Unlimited

I I For Official Distribution. Do Not Release to NTIS

I I Order From Sup. of Doc., U.S. Government Printing Office, Washington, DC

20402, SD Stock No. SN003-003- ^Order From National Technical Information Service (NTIS), Springfield,

VA. 22161

19. SECURITY CLASS

(THIS REPORT)

UNCLASSIFIED

20. SECURITY CLASS

(THIS PAGE)

UNCLASSIFIED

21. NO. OF

PRINTED PAGES

58

22. Price

$ 8.00

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