Ep.273 - The Truth about Overtime - Flow Series

Are you more confident in working overtime than you should be? In this episode, Jason unpacks the truth about overtime based on a Construction Industry Cost Effectiveness Task Force report from November 1980. You'll learn why overtime disrupts the local economy and reduces productivity (60+ hours/week for 2+ months delays completion beyond what 40-hour weeks could achieve with same crew), the productivity decline timeline (starts immediately, recovers briefly, then steady decline, at week 6 working 60 hours you're at 75% capacity, week 12 at 62% capacity), why light work takes 3 hours to produce 2 additional hours of output and heavy work takes 2 hours to produce 1 hour, the auction atmosphere created when one project goes to overtime, and why the return on investment disappears after 6-9 weeks depending on hours worked.

What you'll learn in this episode:

• Overtime extends projects: 60+ hours/week for 2+ months causes decreased productivity that delays completion beyond what could have been realized with same crew size on 40-hour week; disrupts economy, magnifies labor shortage, creates excessive inflation without benefit to schedule

• Productivity decline is brutal: Light work, takes 3 hours to produce 2 additional hours output; Heavy work—takes 2 hours to produce 1 hour additional output; 8-hour day = 120 pieces/hour, 9-hour day = 100 pieces/hour

• Timeline of decline: Productivity drops initially, recovers by end of week 1, holds 2-3 weeks, declines next 2-3 weeks, further drop at 5-6 weeks, hits low point at 9-12 weeks; Working 50 hours/week: Week 6 at 85% capacity, Week 12 at 72%; Working 60 hours/week: Week 6 at 75%, Week 12 at 62%

• Auction atmosphere: When one project goes to overtime, other projects go to overtime to hold labor creating bidding process; local labor supply constant but additional capacity of transient workers offset by reduced productivity of all workers on overtime

• Return on investment disappears: 60+ hours/week = no ROI after 6 weeks, 50-60 hours/week = 7.5 weeks, 40+ hours/week = 9 weeks; at 65 hours/week you pay twice as much per unit hour; all negative conditions still happen within those weeks

"The current condition is we throw money and manpower at things to try and fix them. All of the negative adverse conditions still happen. After 9 weeks there is no return on investment even from a productivity or completion standpoint. When we increase manpower and overtime, it increases costs, safety issues, fatigue, and in most cases we're extending the overall project duration."

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