Measures for Productivity: Part - I

Introduction

It is well known that to be a world class leader in any business, one need to keep the different paraphernalia of the business well managed. The most important paraphernalia in a Design or Engineering Services industry is the manpower. The productivity of this manpower is the vital criteria which need to be given a good focus. We should know what the current productivity levels are and plan for how to improve them and get better results. There is truth in saying that what gets measured gets done.

Customers have become more and more demanding. On time Deliveries are must, zero defects are expected standard, and short lead times are becoming norm in many projects.

Productivity

Essentially, productivity is a ratio to measure how well an organization or individual, industry, country converts input resources like labor, materials, machines etc. into goods and services. This is usually expressed in ratios of inputs to outputs. That is (input) cost per (output) good / service.

Productivity is the amount of output (what is produced) per unit of input used. Productivity is difficult to measure because outputs and inputs are typically quite diverse and are themselves hard to measure. They have different contributors which affect the measure. Contributors could be either physical or psychological, physical contributors are tangible for measure, and including those gives out the weighted measures. Psychological contributors are not tangible and mostly are related to human behaviors and attitudes; they cannot be measured with any scale.

Traditional Measures

• Standard Manpower Cost, cost to produce one measured unit of output.
• Standard Manpower time per Unit output, time to produce one measure of output.
• Earned Standard Manpower cost, unit price per unit produce irrespective of changes.
• Productivity index, output to input ratio on same scales.
• Efficiency index, output per individual over allocated input.
• Utilization, used inputs for a given availability.

The Three major measures traditionally covered are

Productivity is defined by the "the ratio of a volume measure of output to a volume measure of input"

Efficiency rates only involve two variables; standard working hours, and actual Billing hours.

Utilization is usually measured in hours billed per head of available time

Though the basis of calculation for all the three are same as output to input, the scenarios and purposes makes the difference in the terms used and conditions prevailed. The terms also can be mixed in different situation and used synonymously.

Productivity measurement

Measurement is the process of quantifying levels of resource utilization and results achieved at specified times. Measurement begins with a baseline (or first) reading which is then used as the point of comparison to determine whether there have been increases or decrease in productivity time to time. The Intervals of measurement depends on the needs, measurable-class / frequency and the consistency of the outputs. Examples of Inputs, Outputs and Contributors from an Engineering Service Industry are as below.

Inputs

• Man Hours / Cost
• System / Software Hours / Cost

Outputs

• Billable Hours / Cost

Contributors

• Infrastructure / Environment
• Training & Support
• Input adequacy / quality of inputs
• Employee’s Attitude

In a Design house, Utilization is the proportion of available time to the billable hours a designer is producing which can be defined as,

Actual Billable Hour (Hours per day) / Total Time available in office (Hours per Day)

It is vital to collect the right measures to calculate the productivity. An effective Project management software helps in collecting and compiling the right data to give an accurate measure, time to time. It is very important to have the current data ready to be measured any given day. For reference; we can use the Office Connect software for effective project management and measures. More details of this software can be viewed at

https://20technologies.com/Retail/Office%20Connect.html

Productivity is the relationship of inputs to outputs expressed as an index (PI) or ratio. Visually, this relationship is expressed as follows:

Productivity (PI) = Output / Input

There are five ways to improve productivity considering quality as a constant.

Case 1: Hold outputs constant, decrease inputs (hour’s control, no impact on deliverees). Achieving same output from lesser inputs.

Case 2: Decrease inputs and outputs proportionately (hours control with slight impact on delivery time). Getting slightly less output for much less input.

Case 3: Increase outputs, hold inputs constant (efficiency). Achieving more output for the same input.

Case 4: Increase both inputs and outputs, but disproportionately. achieving much more output for slightly more input.

Case 5: Increase results, decrease resources (heroic efforts).

The Possible sixth way assumes only quality is increased:

Case 6: Inputs and outputs remain the same as in the baseline example but quality increases. Here the quality of Output is considered as an intangiable measure.

Limitations of Traditional Measures

• Rely on Single Input / Output measure
• Emphasis on financial Criteria
• Dependence on pieces of the system
• Assessment on the past and present

The modern industry needs a different approach for the measures to view the business in different perspective and take timely vital decisions. These enlightening measures will be discussed in Part-II of this Post.

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