Productivity

Lesson # 3: Misinterpretations of statistical data also lead to the misconception that productivity varies more between companies (or countries) than is really the case.

Let us suppose that your company is placing two construction contracts with two different companies. The weight of the two jobs is 5 tonnes and 10 tonnes respectively.

At completion it becomes known that the contractor doing the largest job spent 60 manhours/tonne on the job, while the other contractor finished at 100manhours/tonne. Normally we would now claim that the fabricator of the largest job was more efficient because he spent fewer manhours per tonne to do the job. But was he more efficient? Not necessarily at least not if we believe in the norm/quantity relationship as described in the figure. When comparing productivity we always have to base the comparison on the same quantity! Not doing so is a very common mistake and is crucial to the understanding of project cost.  To conclude this little article we would claim that, yes, the productivity - in the common meaning of the word - differ, but the efficiency is the same because the two resultant manhours/tonne figures are both on the regression line. In the future be critical if someone claim that a company, or indeed a whole country,  is more efficient (better productivity) than another. At least get the person to define what is meant by productivity.

 

 

 

                                              Edited May 2005