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Cost control

Overtime decisions: when paying more saves the job

By Review.LivePublished 3 min readHow we write

At 4:30 on a Thursday the painting foreman stops at the site office: his crew is ten working days behind. The contract sets liquidated damages for late completion, and the superintendent wants 10-hour days and Saturdays until the gap closes. You need to know what those hours will cost and buy.

A building interior under construction lit up at night, with scaffold towers and two workers in hard hats walking through.
Photo: Nguyen Phan Nam Anh on Unsplash

Overtime costs more per hour, and each extra hour can also produce less. A 2005 study of electrical and mechanical trades, based on questionnaire data from 88 US projects, found productivity fell as weekly hours rose; treat it as a warning, not a rate for your crew. Long hours can also cause fatigue, which slows reaction time and impairs concentration. Overtime pays only when the delay it prevents costs more than the premium and lost output combined.

  1. Price a day of delay: liquidated damages, the amount the contract sets for finishing late, plus time-related costs like supervision and rentals. Check whether the contract counts calendar or working days.
  2. Price the overtime honestly: the premium on each extra hour, plus a margin for falling output per hour.
  3. Aim it at the constraint: overtime pays only on critical path work; elsewhere it buys float you do not need.
  4. Set limits before you start: an end date, a maximum day length, a weekly review, and the point at which you will rotate or add a crew.
  5. Measure output per hour before and during, and change course when the extra hours stop closing the gap.
  6. Manage fatigue: keep heavy or high-attention work out of the longest days where you can, and add rest breaks or vary the tasks.

Common mistakes

  • Putting every crew on overtime, not just critical-path crews.
  • Starting overtime with no end date or review.
  • Forgetting that longer days also need supervision, hoisting and inspections.

Checklist

Before you approve overtime

  • The cost of one day late
  • The weekly premium
  • Overtime only on critical-path work
  • An end date and weekly review
  • Output per hour, before and during
  • Long days kept off the heaviest work
  • Each crew's overtime and hours rules checked

Check your understanding

Two weeks into long days, the crew works 50% more hours but paints only 10% more area. What should you do?

Show the answer
Find the cause before extending: the extra hours are buying little, and fatigue or crowding may be why. Weigh the small gain against the premium, and consider a second crew in another area, which adds output without lengthening anyone's day.

Sources

  1. Your guide to the Employment Standards Act: Overtime payGovernment of Ontario · Ontario, Canada · accessed
  2. Your guide to the Employment Standards Act: Hours of workGovernment of Ontario · Ontario, Canada · accessed
  3. Overtime payProvince of British Columbia · British Columbia, Canada · accessed
  4. Impact of extended overtime on construction labor productivity (Journal of Construction Engineering and Management, 2005): abstractArizona State University research portal · accessed
  5. FatigueCanadian Centre for Occupational Health and Safety · accessed
  6. Extended Workday: Health and Safety IssuesCanadian Centre for Occupational Health and Safety · accessed
  7. Recommended Practice 10S-90: Cost Engineering TerminologyAACE International · accessed

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