2014 AACE® INTERNATIONAL TECHNICAL PAPER
EST.1497
Factors Affecting Labor Productivity
in Saudi Arabia
Dr. Ali Ali Shash and Abdullah A. Alsagoub
Abstract—Productivity is an important key component in estimating the cost and the duration
of any construction project. The accuracy of these estimates depends heavily on the reliability
and precision of productivity estimates. For these reasons, estimators usually manipulate and
modify productivity values, which are available as averages in their company historical records
and/or commercial databases, to account for possible effects of anticipated factors. This study
was conducted to determine the factors that affect labor productivity in Saudi Arabia. The
required data were collected through a closed ended structured questionnaire from
construction contractors in the Eastern Province, Saudi Arabia. The results indicated that poor
labor supervision, lack of labor motivation, inadequate labor skills, and unclear technical
requirements are the most severe factors affecting labor productivity in Saudi Arabia.
Researchers from different countries have reported in the literature similar factors affecting
labor productivity in their construction industries but with different severity levels. It is
anticipated that contractors will appreciate the outcome of this study and consider the
reported factors in the preparation of cost and time estimates for future projects.
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Table of Contents
Abstract .......................................................................................................................................
List of Tables ................................................................................................................................
List of Equations ..........................................................................................................................
Introduction ................................................................................................................................
Objective of the Study .................................................................................................................
Literature Review ........................................................................................................................
Research Methodology ...............................................................................................................
Results Analysis and Discussion ..................................................................................................
Characteristics of the Respondent...............................................................................................
Factors Affecting Labor Productivity ...........................................................................................
Contractor’s Head Office Related Factors ...................................................................................
Project Management Related Factors .........................................................................................
External Related Factors ..............................................................................................................
Conclusion ...................................................................................................................................
References ...................................................................................................................................
1
2
2
3
3
4
5
6
6
6
8
9
10
10
11
List of Tables
Table 1 – Rank Order of Factors Affecting Productivity ............................................................. 7
List of Equations
Equation 1 ................................................................................................................................... 6
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Introduction
The Saudi construction industry is the second largest industry after the oil industry. This
industry employs several millions of labors who mostly come from the Middle-East South and
Southeastern Asian countries i.e., Egypt, Yemen, Philippines, India, Bangladesh, etc.
Unfortunately, this industry could be characterized as inefficient. The project development
process, especially during the construction phase, takes long time to complete and many
projects are completed beyond their schedules. Al-Khalil and Al-Ghafly (1999) reported that
almost 70% of the projects in Saudi Arabia are completed beyond their expected delivery dates.
Delays of projects are considered a serious problem which negatively affects the country
infrastructure and the financial aspects of other stakeholders. A contractor not only encounters
extra unnecessary expenditure in terms of direct costs (labor and job overhead) and indirect
cost (general overhead) but also loses opportunities to bid for new projects due to capacity
limitations and/or poor reputation. Delays also deprive owners from collecting expected
revenues from their projects and cause them to pay more for projects supervisions. Labor
productivity has been cited beside other factors as the prime reason for projects delays (Saadi,
2006). Therefore, improving productivity is essential to shorten durations of projects and to
reduce their costs (Abdul Kadir, 2005). Most contractors focus on labor cost, which constitutes
30% to 50% of a project cost, to reduce the overall project cost (Jarkas, 2012). The importance
of labor productivity is increased when a contractor desires to improve efficiencies and
effectiveness of labor resource to generate more production and, hence, more profits.
Improving labor productivity in projects necessitates contractors to identify various factors
which affect its value with great severity. Unfortunately, it seems that the industry does not
have a recent list of severe factors that affect labor productivity in Saudi Arabia. Consequently
contractors seem to struggle at the time of estimating duration and cost of projects to find the
proper applicable factors affecting their labor productivity. Identifying the factors that affect
labor productivity in the construction industry in Saudi Arabia is essential toward improving
labor productivity. Contractors can eliminate the effect of severe factors or at least master
them to reduce their consequences on productivity.
Therefore, it is imperative to identify and measure the severity of the factors that affect
productivity in the Saudi Construction industry. This study is an attempt to reveal the factors
which affect labor productivity in Saudi Arabia.
Objective of the Study
The objective of this research is to study the factors affecting labor productivity in Saudi
Arabian construction industry.
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Literature Review
Productivity is an important ingredient for any contractor success and prosperity. Planners,
cost estimators, and project managers realize this importance and consider productivity very
seriously to maintain effective and efficient execution of projects. The construction industry
researchers identify the importance and significance of productivity on contractors’ businesses
and, hence, productivity has been of a great concern to many of them.
Many researchers in different parts of the world have performed productivity studies which
were aiming at revealing factors that affect labor productivity. All of the performed studies
have depended on collecting the necessary information via structured surveys. Those
researchers have reported various factors that hinder labor productivity. Kaming et al. (1997)
investigated the factors affecting labor productivity in Indonesia. They were identified and
reported the five most significant factors affecting labor productivity in Indonesia. These are
related to poor material management, shortage of equipment and tools, reworking the job,
attendance issues, and work interference by superiors. Soekiman et al. (2011) found that the
most severe factors affecting labor productivity in the Indonesian construction industry are
related to supervision, material, execution and planning, and design. It seems that the severity
of factors affecting productivity changes over time. Thomas et al. (2004) revealed that the
most severe set of factors that demotivate labor in Hong-Kong construction industries are
rework, overcrowded working space, work interfacing, shortage of tools, late work inspection,
shortage of material, and poor foreman competency. Kazaz and Ulubeyli (2007) studied the
drivers affecting the Turkish construction industry’s labor productivity. They classified and
ranked the factors affecting productivity into economical and psychological groups. They found
timings and amount of the required basic needs and social required insurance were the highest
among the economic related factors and affecting labor productivity. They also found job right
fit was the most severe factor that belongs to the socio-psychological factors that drive the
labor productivity in Turkey’s construction industry. Kazaz et al. (2008) conducted a study
focusing on the organizational factors affecting labor productivity in the Turkish construction
sites. They found that a site management related factors, poor management of materials, and
work systematic flow were the top significant organizational related factors affecting Turkish
construction labor productivity. Ailabouni et al. (2009) conducted a study in the United Arab
Emirates (UAE) to determine the factors affecting foreign labor productivity. The study
indicated that foreign labors are influenced by many factors such as experiencing different
management styles, language variations obstacles, culture differences, lack of family nearby,
and delays in receiving monthly salaries. Jiukun Dai et al. (2009) identified and ranked order an
aggregated 83 factors affecting the US construction industry. They found that availability of
power tools and design errors were the most severe factors that affect US construction
industry’s labor productivity. Materials shortages, incomplete drawings, delayed site
inspections, and lack of competent supervisors were the most important factors affecting labor
productivity in Thailand (Makulsawatudom and Emsley, 2001). Abdulkadir et al. (2005)
conducted a similar study in Malaysia and found that material shortage, poor financial
management to pay the suppliers on time, change work orders, delays in receiving drawings,
poor management of the construction site, late progress payment to the construction
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contractors, poor material supply, shortage of competent labor, sub-contractors poor
coordination, lack of required equipments and tools, and consultants poor coordination were
the most severe factor leading to low labor productivity. Gidado and Karimi (2012) studied the
factors influencing labor productivity in Afghanistan and found design related factors, project
conditions factors, required material and tools factors, purchasing related factors, external noncontrollable factors, management related factors, and manpower resources factors were
responsible for productivity significant deterioration. Overall, the most severe factors that
negatively affect Afghanistan labor productivity are security factors, economic corruption, lack
of proper scheduling and coordination, way of the construction, poor quality of raw materials,
late payments. Jarkas and Bitar (2012) identified 45 factors affecting labor productivity in
Kuwait construction industry. Poor supervision, percentage of subcontracted work, and lack of
incentive, poorness of the technical specifications, change orders, lack of motivation programs,
and lack of skilled labor are the top factors affecting productivity.
It is interesting to note that the same factors affect labor productivity in different parts of the
world, however, their intensity and severity vary from one country to another and from one
point of time to another. The general finding is that contractors themselves and their projects
managements affect productivity dearly. The researchers made direct recommendations to
contractors to improve their managerial practices if they desire to improve productivity in
construction sites.
Research Methodology
This section presents the steps that were followed to achieve the objective of the study. The
first step was conducting a comprehensive review of published relevant literature. This step
was necessary to determine the various factors affecting the labor productivity and to develop
the necessary tools for collecting the needed data. The second step was to collect the necessary
data via a structured questionnaire from contractors. A total of 212 questionnaires were hand
delivered to 212 randomly selected contractors in the Eastern Province, Kingdom of Saudi
Arabia. Twenty nine contractors completed and returned the questionnaires. This means that
about 14 percent of the population participated in the study which is considered an excellent
sample for representing the population.
The third step was to analyze the collected data using simple statistical tools such as frequency,
mean, and standard deviation. Simple mathematical techniques such as percentage and
average were used in analyzing the data. However, in addition to these techniques, importance
and severity indices were calculated to reflect the relative and severity of the relevant factors
over the others. The indices were calculated as follows:
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Equation 1
Where:
= Constant expressing the weight given to i; xi = variable expressing the frequency of
the response for i = 1, 2, 3, 4, 5.
Results Analysis and Discussion
The section presents and discusses the obtained results. The first part presents the
characteristics of the participating contractors and subcontractors; the second part describes
the subcontracting process; and the third part discusses the type of relationship between the
two parties.
Characteristics of the Respondent
The results indicated that the respondents were project managers who have, the majority
(90%), bachelor degrees or higher. The majority (66% of the respondents) have more than five
years of experience in the construction industry. These characteristics of the participants
provide reliability and credibility to the obtained data. The results indicated that the
participants are employed in organizations which the majorities (86%) of them have been in
existence for more than 10 years. This of course ensures that the respondents represent well
established firms. Head offices of all organizations are located in the Eastern Province of Saudi
Arabia. The majority (64%) of these organizations have more than 10 millions Saudi Riyals (1
US$=3.75 SR) as their financial capital. These organizations are classified, based on their
number of employees, small, medium, and large contractors. The results indicated that 48%,
17%, and 35% of these organizations have less than 1000 employees, more than 1000
employees but less than 3000 employees, and more than 3000 employees and, therefore, they
are classified small, medium, and large organizations, respectively.
About 67%, 17%, and 16% of the participants are building and residential contractors, utilities
and infrastructure contractors, and industrial contractors, respectively. The results indicated
that 17%, 14%, and 69% of the participating contractors provide their services only to private
clients, only to government clients, and to both government and private sectors, respectively.
Factors Affecting Labor Productivity
The participants were asked to assess on a five point scale the importance of many factors
potentially affecting labor productivity. The importance indices, shown in Table 1, were
calculated to reflect the severity of the factors.
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Factors
Poor labor supervision
Lack of labor motivation
Inadequate labor skills
Unclear technical requirements
Labor's payment delay
Low labor available time
Materials shortage
Rework
Project construction manager’s poor leadership
Humidity Level
Contract documents mismatching
Level of temperature
Poor coordination between construction parties
Poor communications between labor and management
Poor activities scheduling
Owner’s representative project involvement
In safe site location
Late response to Request For Information
Low number of experienced labor
Lack of appropriate tools
Poor training of labors
Management poor inspection
Coming after working-hours (overtime)
Transportation problems
Crew size
No recognition ceremonies
Labor's poor rest areas
Tough engineer's inspection
Difficulty level of the design
Labor fatigue
Poor scheduling and high expectations of labor
Change orders
Improper storage location
Difficulty of accessing the site
winds Speed
No management meetings with crew group leaders
Poor working space
Lack of motivation incentives
Way of construction
Project's site layout
Sandstorms
Rainy weather
Labor’s work intervention
Percentage of subcontracted work
Scale
5
4
14 8
13 7
11 11
10 13
11 10
8
11
12 5
9
11
7
13
10 8
9
10
12 4
8
9
11 7
9
10
11 7
6
10
8
9
7
6
8
9
7
8
6
10
8
4
7
7
8
5
5
8
7
5
5
10
6
7
4
7
7
6
6
7
6
4
3
9
2
12
4
9
5
7
2
11
5
6
4
9
3
9
7
6
1
8
4
4
3
6
6
4
2
5
9
8
6
6
9
6
9
9
6
6
5
11
8
13
8
10
7
13
7
10
11
11
7
9
12
7
9
11
11
9
9
10
10
13
8
9
6
14
9
2
3
2
3
1
1
4
2
1
2
3
3
1
3
1
2
1
2
2
1
4
4
7
2
3
4
5
6
5
8
5
7
4
3
6
6
5
2
7
4
5
6
8
1
1
1
1
2
1
1
1
1
1
1
2
3
4
1
2
3
3
1
1
4
2
2
2
1
1
2
1
2
1
1
1
3
1
3
5
4
Score
4.17
4.03
4.00
3.97
3.93
3.90
3.86
3.86
3.86
3.80
3.79
3.79
3.79
3.76
3.72
3.66
3.66
3.66
3.64
3.62
3.57
3.57
3.55
3.41
3.38
3.38
3.38
3.38
3.38
3.36
3.34
3.34
3.32
3.32
3.32
3.31
3.31
3.28
3.28
3.28
3.18
3.17
3.14
2.86
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
Table 1 – Rank Order of Factors Affecting Productivity
For understanding the factors and their effects on productivity and for making proper and
effective recommendations to remedy and improve productivity, these factors were
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categorized into project management related factors, contractor home office related factors,
project related factors, and external factors.
Contractor’s Head Office Related Factors
The results indicated that contractors’ head offices have significant contribution to the
deterioration of labor productivity through various operational factors. The results indicated
that contractors do not apply any incentive program to motivate labors for productivity
improvement. Lack of labor motivation was found to be the highest ranked factor in this
category and the second in the list of all factors affecting productivity. It is found that
contractors not only provide no incentive programs to motivate labors but rather aggravate the
situation by delaying their salaries which appears as the fifth major factor affecting
productivity. Delays of labors payments, of course, affect employees’ morale and enthusiasm
negatively which in turn affect their production level. It is believed that labors have financial
commitments in their countries and any delay in their salaries put them in psychological
situations driving them to be less productive. Contractors in Saudi Arabia seem to be
experiencing financial crisis causing unpunctual payments to labors. The results indicated also
that labors skill is the second important factor in this category and the third in the list of the
overall factors. The prevailing new labor law in the country, which makes it very hard to import
labors and at the same time encourages illegal aliens in the Kingdom to correct their legal
residency status, may have forced contractors to employ labors for their projects from within
the country regardless of their qualifications. Unfortunately, contractors do not provide, as
indicated by the results, the necessary training to labors before sending them to construction
sites. The results indicated that contractors not only provide unskilled labor to projects but also
fail to provide the required materials and appropriate tools. Lack of appropriate material when
needed was found to have a very significant effect on labor productivity. The influx of many
projects may create great demands on construction materials and equipment and sometime
make their availability in the market scarce. Contractors may fail to recognize the previous
market conditions in the risk analysis, if any, for materials availability. The results indicated that
contractors assign unqualified project managers who possess no leadership kills which is ranked
the 9th in the list of factors. It seems that there is a great shortage of qualified project managers
and contractors may be forced to assign project managers without proper screening and
training. The effect of this factor is explained fully in the next section. Also, the results indicated
that poor communication between labor and management is a factor affecting labor
productivity. The communication channels between labors and management seem to be
blocked and, therefore, labors have no access to management to present their problems,
suggestions, and/or concerns. This factor may cause labors to believe that they are part of the
company which affect their loyalty and commitments to productivity and efficiency
improvements. The results also indicated that contractors schedule projects activities poorly. It
seems that most of the planners are not qualified to plan project execution. It was found also
that many contractors jeopardize labor productivity by not providing proper site transportation,
poor rest areas, and lack of programs to recognize outstanding performers.
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Overall, the average score of all the factors which are related to a contractor head office is 3.75.
This score shows clearly that a contractor head office affects site productivity significantly
through the above factors.
Project Management Related Factors
This category contains all factors that are related to contractor project management. The
results indicated that project management contributes heavily to the sour productivity through
many poor practices. The results indicated that the project management provides very poor
labor supervision which is the highest ranked factors among all the factors affecting
productivity. It is not unusual to find labors from different parts of the world in one
construction site in Saudi Arabia. It is a usual practice that a supervisor from one nationality is
assigned over a crew consisting of labors with other nationalities. Communication, attitude, and
work ethics may have great deal in characterizing labor supervision as poor. Also, the nature of
the expatriate workforce may require close and continuous supervision. These labors may do
unproductive work when supervision is poor. Also, low achievement rewards labors through
overtime schedule which will contribute to the deterioration of productivity because of fatigue.
The second ranked management related factor is the “unclear technical requirements” which is
ranked 4th in the list of factors affecting labor productivity. This significant level of severity on
productivity may be attributed to incompetent projects managements and to untrained and
low experienced labors, who lack the ability to understand the technical requirements. The
results indicated also that “the mismatching of the contract documents” affects labor
productivity severely. The engineers in the contractors engineering departments and in the
construction sites seem to be incompetent and inexperienced. Also, the results indicated that
low labor available time is a factor severely affecting labor productivity. It seems that the poor
labor supervision and fatigue factors have great impact on the amount of labor time dedicated
to the assigned work. All the above factors may lead to rework which is highly ranked in the list
of factors affecting productivity. The results indicated also that the project management hurts
productivity through poor coordination between construction parties. Because of lack of proper
planning site managements tend to move labors from one activity to another causing great
interruption to the continuity of labors performance. This phenomenon may cause labors to
lose confident on management leadership and qualification beside the loss of productivity due
to activity interruption. The results indicated also that project managements pay little attention
to safety requirements. Labors may interpret this practice as management cares less about
their safety and consequently affect their attitude toward productivity and work. The results
indicated also that labor fatigue has significant impact on labor productivity. Most of the
contractors execute projects under overtime schedule in an effort to complete the project on
time. Unfortunately, contractors work under overtime schedules for long period without
enough breaks. In addition, it has been a practice for many contractors to assign labor to work
overtime heavily due to the lack of skilled labor and overall shortage of manpower. Expatriate
labors favor this type of schedule also to compensate for the low pay. Late response to request
for information, poor inspection, inappropriate crew size, improper storage location, and poor
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working spaces are other practices which project management was found to commit and hurt
productivity dearly.
The overall score of this group of factors is 3.54 which indicate that project management hurts
productivity significantly through the above factors.
External Related Factors
This category contains factors that are caused either by the weather and owners. The highest
ranked factors in former were humidity and temperature levels which characterize the
environment of the Eastern Province of Saudi Arabia especially during summers. This type of
weather has a direct impact to productivity where on some days of the summer productivity
goes to zero because of the heat and humidity. Wind and sandstorms, which are quite common
in the summer time in the Eastern Province, are another weather factors which were found to
affect productivity. Winds gusting and sandstorms sometime force contractors to stop work at
construction sites.
Owners' representation in the construction site was found to have great impact on labor
productivity. The presence of an owner’s representative at the site has many advantages such
as application of safety measures and tidiness of the construction sites which have positive
impact on labor productivity. It seems that contractors in the absence of owners’
representative tend to relax safety requirements to save some money. However, this practice
makes labor feel like they are not considerate about their safety and hence reduce their
productivity. It is also found that change orders affect productivity especially when they are
excessive and lead to rework which was found to be a major factor affecting productivity. The
results indicated that the toughness of engineers’ inspections has great impact on productivity.
It seems, as a consequence of poor contractor's inspection, the owner's engineering office,
becomes more vigilant and consequently rejects works leading to rework which affect
productivity. It was also found that the difficulty level of the design has great impact on
productivity. Owners were also found to affect productivity through change orders. It looks like
owners make many changes in the scope of work causing massive reworks which inversely
affect productivity.
The overall score of this group of factors is 3.60 which shows that weather and owners
contribute and affect productivity negatively and significantly.
Conclusion
It was possible to identify and rank order 44 factors affecting labor productivity in Saudi Arabia.
The contractors themselves are found to be responsible for the majority of these factors. A
contractor’s head office has a significant contribution to the deterioration of productivity
through lack of incentive programs, delay of labors’ monthly salaries, hiring of unskilled labors,
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assigning incompetent project managers, poor planning and scheduling, and lack of
communication with labors. A project management affects productivity severely through poor
labor supervision, unclear technical requirement, mismatching of the contract documents, poor
coordination between construction parties, activities interruptions, poor safety measures
implementation, and poor inspection. The weather and owners have their shares also in hurting
productivity. Lack of owners' presence at construction sites encourages contractors to relax
safety and work supervision measures.
Contractors are advised to reevaluate their head office practices with regard to planning and
scheduling, project managers and labors hiring criteria, cash flow management, and labor
training. Contractors are also advised to consider the results of this study when they estimate
costs and durations of future projects. They are also advised under the current labor hiring
situations in Saudi Arabia to get their foremen and middle management into intensive training
programs to enhance their supervisory, communication, and guidance skills; on job training for
their labors to increase the number of skilled labor in construction sites; and use incentive
programs to motivate labors to improve their productivity and to increase their loyalty and
dedication to projects. The contractors are also advised to be prompt in paying salaries to
labors and in cases of inabilities to pay salaries due to owners’ delayed payments contractors
shall communicate the situation to labors. The contractors are required also to improve the
way they communicate technical requirements to labors by using standardized forms and
accurate information. This will not solve the problem of unclear technical requirements but also
reduce the rework which has significant adverse effect on productivity. Although the weather
factors are beyond control, contractors could schedule activities to be performed in the
evenings of hot days and provide all necessary equipment to protect labors from adverse
weather conditions.
Owners are advised to frequently visit construction sites of their projects to enhance safety and
site tidiness and, hence, improve productivity.
The ultimate aim of this research was to emphasize the important factors to increase the
awareness of construction contractors to consider these factors that affect labor productivity in
the construction sites. Moreover, these factors’ importance and significance keep changing and
never be stable. Therefore, a study to identify the factors that affect labor productivity should
continue to be performed in order to find the up-to-date applicable severe factors affecting
productivity.
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EST.1497.12
Copyright © AACE® International.
This paper may not be reproduced or republished without expressed written consent from AACE® International
2014 AACE® INTERNATIONAL TECHNICAL PAPER
Dr. Ali Ali Shash
King Fahd Univeristy of Petroleum and Minerals
[email protected]
Abdullah A. Alsagoub
King Fahd Univeristy of Petroleum and Minerals
[email protected]
EST.1497.13
Copyright © AACE® International.
This paper may not be reproduced or republished without expressed written consent from AACE® International