Relative factors aid labor cost estimates Estimating the productivity of construction labor is becoming more complex even as the need for good estimates gets more important. This makes it increasingly necessary for cost estimaters to put more science than art into the techniques they use for determining construction labor costs, according to Charles H. Edmondson, president of Hydrocarbon Construction Co. of Houston, Tex. The pressure of demands by labor to keep wages rising in pace with inflation and by customers to get work done rapidly only adds to the problems faced by a construction industry now working at capacity. Meanwhile, the forces that can influence the availability of labor and its productivity have multiplied, Mr. Edmondson noted at a recent seminar of the American Association of Cost Engineers in Houston, as such relatively new external forces as energy short-
Construction labor productivity varies by area Factor*
Houston Baton Rouge Beaumont, Tex. Chicago Corpus Christi, Tex. Denver Kansas City, Mo. Los Angeles New Jersey (northern) New Jersey (southern) Ohio Valley San Francisco
1.00 0.85 0.85 0.80 1.10 0.85 0.80 0.90 0.75 0.80 0.90 0.90
a Houston arbitrarily set at 1.00.
ages, international finance, ecological considerations, and the actions of various government agencies have entered the picture. To get a better fix on productivity, Mr. Edmondson has developed a number of relative factors for evaluating how productivity is affected by such variables as a project's geographical location, the availability of labor at various levels of skill, the type and size of the project involved, overtime needs, and the like. These can be used to compare or relate productivity from one project to another. For example, he explains, if productivity in the Houston area is set as the base (equal to 1.00), productivity in other areas will range from 10% better in Corpus Christi, Tex., to 25% worse in northern New Jersey. Similarly, the number of craftsmen available in the area where a project is being undertaken also influences productivity. If the number is twice what will be needed for the project, Mr. Edmondson sets the relative impact
Du Pont instruments can: Measure surface characteristics to tell if children's pajamas are durably flame retardant. New Federal laws require children's sleepwear to be "durably" flame retardant, through repeated washing. Generally durable flame retardant treatments have been achieved by empirical experimentation. Now Du Pont's Electron Spectrometer can provide a more definitive analysis of these treatments. ESC A (Electron Spectroscopy for Chemical Analysis) is highly sensitive to surface chemistry; it non-destructively analyzes organic and polymer substances, detecting chemical bonding characteristics of the uppermost layers. For example, THPOH* is a common flame retardant for cotton. When applied to fabric, and treated with a nitrogenous material (NH3, etc.), it is still "non-durable." Figure 1 shows a mixture of phosphorus + 3 and + 5 species in a THPOH/ NH3-treated sample measured by ESCA. Figure 2 is an ESCA-measured sample further treated with H 2 0 2/ indicating predominantly phosphorus + 5 species, in the more durable finish. Flame retardancy is just one of many applications for ESCA. If you need to know more about the composition and characterization of surfaces you deal with—catalytic, polymeric, metallic.
Help prevent $100,000 shutdowns of black liquor furnaces. A major impetus for continuous monitoring of SO2 is the need to record sulfur emissions, to comply with existing and proposed State and Federal Regulations. But a significant benefit in using on-line photometric monitoring lies in keeping furnace equipment operative. Process monitoring with the Du Pont 460 Photometric Analyzer System enables you to control operating conditions more effectively, avoiding downtime. The Du Pont 460 System uses the UV absorption technique. It is highly selective and reliable, with minimum sample conditioning, responds rapidly, and is sensitive to ± 1 ppm. If S0 2 control is a problem in your process, look into the Du Pont 460. It could save you a lot of costly downtime. Du Pont Instruments—a growing line of scientific, process, and biomedical instrumentation. Du Pont Company, Wilmington, DE 19898. tetrakishydroxymethylphosphonium hydroxide
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May 13, 1974C&EN
9
para-cresol gives you more bounce to the ounce. Para-Cresol is a versatile and economical building block chemical. Para-Cresol is used to build hindered phenol type antioxidants. These non-staining antioxidants are widely used in the production of plastics, foods, animal feeds, fuels and lubricants. In rubber products, like your automobile tires, these Para-Cresol derived antioxidants are used to retard oxidation deterioration; means more tire bounce and longer rubber life. The Para-Cresol building block can be used to build other useful compounds like dyestuffs, color pigments, pharmaceutical preparations and various chemical intermediates. Para-Cresol, an economical building block chemical is ideal for the development of commercially valuable chemicals . . . maybe it could put a little "Extra" sales bounce (and life) in your products, too. Samples?Technical Literature? Write to: Sherwin Williams Chemicals, P. O. Box 6520C, Cleveland, Ohio 44101.
on productivity at 1.00. If the number is only 50% more than what is needed, the factor drops to 0.95; if the number is just equal to what is needed, the factor goes down to 0.80. The maximum number of a given craft that will be required also affects productivity. For example, Mr. Edmondson gives a project that will require a peak of 50 pipefitters a base rating of 1.00. If the peak will be 100, the factor drops to 0.98; if it will be 200, to 0.85; if it will be 500, to 0.75. In considering the influence of the type of job, Mr. Edmondson gives a project that is starting from scratch a relative rating of 1.00. If the project involves overhauling an existing plant, if it is work in a congested area, or if it has to be done on a crash basis, the productivity factor falls to 0.90. Overtime also has an impact on productivity. Mr. Edmondson rates a standard workweek of five eight-hour days at 1.00. Raising the workweek to five nine-hour days or to six eight-hour days drops the factor to 0.95. Five 10hour days or six nine-hour days drops the factor further to 0.90. At six 10hour days, it goes to 0.85. If other contractors working nearby are scheduling overtime, the factor declines to 0.90 as well. All these various factors working in combination can lead to a significant increase in labor costs. As a "horrible" example, Mr. Edmondson cites a hypothetical case involving pipefitters with a base wage rate of $10 an hour in the Houston area. If the project on which
International
Akzo, DSM plan massive plant spending Akzo and DSM, the two major Dutch chemical companies, are backing their optimism for the future of the chemical industry with plans for massive new investments in the Netherlands and elsewhere. Akzo's capital spending this year and next will top $800 million. For this year alone, DSM has earmarked more than $211 million, double last year's level, and expects to spend more than $1.6 billion during the next five years on new plants and acquisitions. The two companies turned in excellent 1973 results. Akzo's sales rose by more than 14% from 1972 to $3.76 billion, while net income spurted 34% to more than $116 million. DSM's gross income last year, at $1.84 billion, was 35.5% ahead of 1972; net profit gained almost 26% to $56.4 million. Nevertheless, Akzo president Gualtherus D. Kraijenhoff and DSM president Willem A. J. Bogers, though generally pleased with the upturn of their companies' fortunes, are not completely satisfied with the results. They would like to see overall profitability improve to the point where return on their own investments at least matches
C&EN May 13, 1974
they are working were shifted to southern New Jersey, where the relative productivity factor is 0.80 compared to Houston, the increased cost to get the same work done would rise to $12.50— a cost differential of $2.50. If the number of pipefitters available in the area is only 50% more than what is needed on the project, an additional cost differential of 50 cents (costs are rounded to the nearest 10 cents) would be added. If the peak number of pipefitters needed on the job is 200 (with a productivity factor of 0.85), the cost differential is increased by an additional $1.70. If the project is both in a congested plant area and is being done on a crash basis (each condition has a factor of 0.90), $1.10 would be added to costs for each. If overtime brings the workweek to six eight-hour days (a factor of 0.95), another 50 cents is added to costs, and if neighboring contractors also are working overtime (a factor of 0.90) the cost differential goes up $1.10 more. Taken together, all these conditions in effect add $8.50 per man-hour to the project's labor costs. Such an 85% labor cost differential could increase the total cost of the project by 8 to 10%, assuming a normal mix of labor and materials costs. This example does more than indicate the impact of changes in productivity on costs, Mr. Edmondson points out. It also emphasizes the need to look at what influences productivity, as well as the need for accurate information, so that steps can be taken to improve it.
the 12% or higher interest rates on commercial loans. Mr. Kraijenhoff points out that Akzo's 1973 net income, although its highest for the past four years, is still below the almost $130 million Akzo earned in 1969. "Even in absolute terms we have not yet reached the 1969 income level," he says. "And if we also take into account the decrease in purchasing power since 1969, we can only conclude that we should not be satisfied with our profitability before net income has shown a further substantial increase." A return of 12% last year would have lifted Akzo's net income to $160 million, he notes. Akzo's 1973 pretax operating income of $305.6 million, after taking into account operating costs and depreciation, amounted to 8.1% of total sales. Although this is a percentage point improvement over the 1972 level, it is still well below the 12.6% registered in 1969. Likewise, DSM's pretax operating income of $143 million last year was 7.7% of total sales, almost identical with what it was in 1972. Like chemical companies elsewhere,
