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Best Practices for Applying the “Measured Mile Method” in Loss-of-Productivity Claims

April 29, 2019

Construction claim practitioners face many challenges in settling productivity claims due to the complexities involved in quantifying damages. Since a worker’s productivity is influenced by an infinite number of factors, discretely measuring the effect of a select impact is impossible. However, methods do exist to estimate loss of efficiency on construction projects – the most reliable of which is the “measured mile method.” This method, which requires the availability of reliable, contemporaneous project-specific progress, resources, and performance data, isolates a non-impacted period — the “measured mile period” — and compares it to an impacted period. In other words, the measured mile compares the impacted period (or portion of the work) with a reference period from an efficiency standpoint.

When should the Measured Mile Method be used?

A measured mile analysis is most reliable when the method relies on verifiable planned efficiency rates. The planned efficiency rates, which should be representative of the productivity rates regularly achieved by the contractor in performance of its work under normal working conditions on projects similar to the impacted project, are compared with the actual productivity achieved (non- or least- impacted vs. impacted efficiency). Despite industry-wide recognition that the measured mile is the optimal method of quantifying damages attributable to productivity impacts, the measured mile is not used in all productivity claims. While there are many issues that could preclude the use of the measured mile, the most common hurdle is the lack of available reliable production data.

As labor inefficiencies are not commonplace for most (solvent) contractors, tracking the production output of labor crews throughout a project’s duration may seem like overkill for most contractors. However, slight changes to a contractor’s project controls plan can yield tremendous benefits in the event of a claim. If a contractor can track its production output over regular intervals it will provide them with the data needed to use the measured mile in the event of a claim.

Benefits of Detailed Monthly Reporting

Almost every contractor tracks the number of labor hours expended during a month. If the monthly reporting process is expanded to include the recording of output achieved over the period (LF of ductwork installed, SF drywall hung, etc.) the contractor will be better positioned to use the measured mile. Claims benefits aside, regularly tracking the production output of labor crews provides the contractor with valuable data that can be used to validate the planned productivity rates used by its estimators, as well as serve as a system to alert the contractor of impacts to labor efficiency as they occur.

How Production Data Can Help

The availability of such production data will not only serve to better position a contractor in pursuit of an inefficiency claim but will also alert the contractor to potential labor productivity impacts contemporaneously. Oftentimes contractors do not identify impacts to its labor productivity until they look at the job cost report at or near the end of the project and see an overage in labor hours or cost. Sifting through the entire project record to identify potential impacting factors is much more laborious than if the impacts are noted as they occur. Identifying impacts to labor efficiency as they occur simplifies the identification of potential causes. This will also save considerable effort (and money) in the event of litigation.

Additionally, the collection of actual production rates can provide the contractor’s estimating department with valuable data to verify/validate the planned productivity rates used by its estimators. In the event the contractor’s productivity rate is challenged by an owner or subcontractor during cost negotiations, a collection of productivity rates achieved on other projects will serve as compelling backup.

Collecting Production Data is a Best Practice

While contractors may feel regularly tracking production output is an unnecessary burden on its project management staff, the collection of such data will result in significant savings in the event of a claim. Better dispute positioning aside, implementing such tracking into a company project controls plan will alert the contractor to impacts as they occur as well as provide the estimating staff with valuable data.

To learn more about VERTEX’s Construction Claims Consulting services or to speak with a Construction Expert, call 888.298.5162 or submit an inquiry.

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