Chapter II
Review of Related Literature This chapter includes foreign literatures and foreign studies taken from the internet, other unpublished thesis, and studies conducted by other research groups. This chapter also includes local literatures, taken from local published books and materials, and local studies, taken from research works and studies related to the subject matter. Related foreign and local literature and studies that dealt with theories, principles, concepts, approaches and techniques are reviewed which contributed a lot towards the enrichment of knowledge, deeper understanding and insight of the researchers.
Foreign Literature One of the more significant economic statistics to be released of late concerns labor productivity. This is an interesting topic and widely non-understood concept -- very few people understand either what it is or why it really matters. Simply stated, labor productivity measures the amount (or value) of output generated per hour worked. Why does it matter? Greater labor productivity enables firms to produce a given amount of goods or services with a smaller number of labor hours. And, since payroll cost is related to the number of hours they use, this helps firms control their costs, making their enterprises more profitable. Wages are not the correct measure the cost of labor to a firm. In economics, it doesn’t just focus on the costs of an activity, such as wages here. It looks at both costs and benefits and their relationship to each other. What are the benefits from hiring more labor? The output this labor input creates, in terms of labor productivity. So, the correct measure of the cost of labor to firms is what economists refer to as unit labor costs (ULC), or wages adjusted for productivity: the ratio of wages to productivity. If wages are “low,” but productivity is also “low,” these can offset each other in terms of their effects on ULC, potentially making labor “expensive” when wages are “low.”
With regard to Labor Theory of Value: "Both Ricardo and Marx say that the value of every commodity is (in perfect equilibrium and perfect competition) proportionally to the quantity of labor contained in the commodity, provided this labor is in accordance with the existing standard of efficiency of production. Both measure this quantity in hours of work and use the same method in order to reduce different qualities of work to a single standard." The calculation or estimation of labor productivity impacts is one of the most contentious topics in the construction industry. Disputes related to labor productivity often lead to dispute resolution forums such as mediation, arbitration, and/or litigation because labor productivity losses are often difficult to distinguish contemporaneously. Additionally, labor productivity rates and other related data are often not tracked on construction projects with any degree of precision. As a result, substantiating a cause-and-effect relationship between project disruption issues and resulting labor productivity losses and establishing entitlement to recovery for lost labor productivity often requires analysis by a qualified construction labor productivity expert. Construction labor productivity is typically measured as labor hours per quantity of material installed. Labor productivity loss is experienced when a contractor, or a particular crew, is not accomplishing the anticipated or planned production rates. In other words, a loss of productivity is when it takes more labor and equipment to do the same amount of work, thereby increasing project costs. There are many common causes for labor productivity impacts on a construction project, stemming from owners, contractors, and construction managers. Common causes include, but are not limited to, mismanagement and maladministration, site access restrictions, differing site conditions, defective plans and/or specifications, changes in the work; labor availability, turnover, rework, testing/inspections, overtime and/or shift work, interferences, changes in construction means and methods, over crowding, out-of-sequence work, and inclement weather.

Productivity at the Job Site

Contractors and owners are often concerned with the labor activity at job sites. For this purpose, it is convenient to express labor productivity as functional units per labor hour for each type of construction task. However, even for such specific purposes, different levels of measure may be used. Lower-level measures are more useful for monitoring individual activities, while higher-level measures may be more convenient for developing industry-wide standards of performance. While each contractor or owner is free to use its own system to measure labor productivity at a site, it is a good practice to set up a system which can be used to track productivity trends over time and in varied locations. Considerable efforts are required to collect information regionally or nationally over a number of years to produce such results. The productivity indices compiled from statistical data should include parameters such as the performance of major crafts, effects of project size, type and location, and other major project influences. In order to develop industry-wide standards of performance, there must be a general agreement on the measures to be useful for compiling data. Then, the job site productivity data collected by various contractors and owners can be correlated and analyzed to develop certain measures for each of the major segment of the construction industry. Thus, a contractor or owner can compare its performance with that of the industry average.

Four levels of influence over a worker's productivity: López-Ortega and Saloma-Velazquez, Hershauer and Ruch considered it impossible to measure the factors of human behavior and business management in a quantitative manner to feed a simulator.
The López-Ortega and Saloma-Velazquez model takes into account four levels of influence over a worker's productivity: 1. Personal Factors—Responsibility, learning capacity, and satisfaction 2. Work Team Factors—Leadership, work team organization 3. Technology Factors—Training, working methods 4. Organizational Factors—Qualitative incentives, quantitative incentives, productivity indicators

Productivity Influences Personal Factors. Among the personal factors that influence a worker's productivity are responsibility—the worker's commitment to the task at hand; learning capacity—the ability to learn, which is tied to the worker's education level and the willingness to learn; and satisfaction—a complex factor that motivates the worker's display of responsibility and learning capacity.
Work Group Factors. Leadership is important. Appropriate leadership helps create a satisfying work environment conducive to high productivity. Good relationships and organization within the work team provide a balance of effort—no one member shoulders an unfair load—and motivates team members to excel. Technology Factors. Employees must receive adequate training. They also must work in an appropriate environment in terms of safety, comfort, and physical capabilities.
Organizational Factors. Incentives, both qualitative (nonmonetary, such as rewards and honors) and quantitative (monetary compensation based on performance and productivity), go a long way toward motivating workers to be more productive, and they increase job satisfaction. Measuring productivity and communicating with the employee about his or her performance are critical elements in achieving optimal productivity. According to Accel-Team.com, worker productivity will improve if employees are properly motivated, coached, receive the right information at the right time, use simple productivity improvement tools and techniques, and are rewarded in the appropriate way. Both productivity models focus on the same factors: motivation, training, communication, tools, techniques, and rewards. Assuming the employee is a fit for the job, much of the responsibility for worker productivity rests with the employer. Organizations must look closely at the workplace culture for ways to incentivize and help workers, and ultimately the company, achieve optimal productivity.

Factors Affecting Job-Site Productivity

Job-site productivity is influenced by many factors which can be characterized either as labor characteristics, project work conditions or as non-productive activities. The labor characteristics include: • age, skill and experience of workforce • leadership and motivation of workforce The project work conditions include among other factors: • Job size and complexity. • Job site accessibility. • Labor availability. • Equipment utilization. • Contractual agreements. • Local climate. • Local cultural characteristics, particularly in foreign operations. The non-productive activities associated with a project may or may not be paid by the owner, but they nevertheless take up potential labor resources which can otherwise be directed to the project. The non-productive activities include among other factors: • Indirect labor required to maintain the progress of the project • Rework for correcting unsatisfactory work • Temporary work stoppage due to inclement weather or material shortage • Time off for union activities • Absentee time, including late start and early quits • Non-working holidays • Strikes
Each category of factors affects the productive labor available to a project as well as the on-site labor efficiency.

Local Literature
Department of Labor and Employment One of the main agencies responsible for ensuring the welfare of the Filipino worker is the DOLE (Department of Labor and Employment). DOLE’s responsibilities include setting the minimum wage, ensuring safe working conditions, and creating occupational safety and health ( OSH) standards. It also has a “Productivity Improvement Program” to increase workers’ productivity in select manufacturing industries through improved working and living conditions. The department is in constant dialogue with workers, employers, and their organizations with regard to social and economic concerns, including environmental issues. DOLE and its close links with the well-established NGO (Non-Governmental Organizations) network promote greater bilateral participation in enhancing safety and health in the workplace while both entrepreneurs and workers are encouraged to implement low cost improvements in work conditions which can eventually lead to improvement in productivity and the general well-being of the workers.
Workers have been urged to increase productivity rather than demand for higher wages in this time of economic difficulty. "Higher wages are unsustainable unless you increase productivity. If factory raises wages and productivity remained low, it will close its shop in the country and move to other countries where wages could be smaller," Socioeconomic Planning Secretary Romulo Neri said. He said it is difficult to demand for wage adjustment without increasing productivity in view of the current global economic slowdown.

Foreign Studies According to the study of Preston H. Haskell (2004), two independent methodologies demonstrate that total construction productivity has increased during the past 37 years, on the order of 33 percent, or 0.78% per year. We are receiving more building for less money than we did 37 years ago, and moreover, the product is qualitatively superior. These improvements are the result of increased productivity made possible by mechanization, automation, prefabrication, less costly and easier-touse materials, and lower level of real wages (which, unlike the other drivers, is not a good thing). Moreover, productivity gains in construction can and must continue. In the his view, the potential for further productivity enhancements falls into five categories which are information technology, project delivery, workforce development, materials, and automation and prefabrication. Also, on June 2007, a study concerning the building projectsa in the Gaza Strip in palestine done by Adnan Enshassi found out that productivity is considered the main value-addingfunction within the construction sector. A total of 45 factors were identified in this study, with identification of factors influencing construction productivity being based on a careful review of literature and suggestions from local experts in building construction. Furthermore, this factors considered in the study were divided into 10 groups, which were ranked according to their importance index: Materials/tools factors group, Supervision factors group, Leadership factors group, Quality factors group, Time factors group, Manpower factors group, Project factors group, External factors group, Motivation factors group and Safety factors group. In addition, a study done on United Kingdom (1990) concerning the Profitability of UK construction contractors showed that there is the existence of a positive correlation between the size and percentage of turnover profitability of the construction companies in the sample. Evidence was also found to suggest that larger contractors were more consistent in their profitability levels. Investigation of the possible reasons for differences in profitability between companies showed the degree and type of diversification into different activities, particularly housebuilding, to be major factors associated with enhanced profitability. The apparent stability of profitability at about 3% of turnover per annum found in this, and other similar studies, suggests the presence of some underlying homeostatic mechanism of which diversification may be a part.
Local Studies On 1991, Josephine Tuble of the University of Santo Tomas Graduate School made a study that concerns the productivity and job satisfaction of workers in construction company in Metro Manila. These results to productivity level that was rated on the whole as “good” due to the following dimensions: quantity of work, quality of work, supervision required, attendance, and conservation. Also, the respondents of this study were neither satisfied nor dissatisfied because of low ratings made on promotion and pay aspects. In connection with this, the level of productivity is correlated with job satisfaction with regards to the nature of work, supervision, co-workers relationship and pay aspects. Moreover, sponsored by the American Studies Association of the Phils. - Baguio Cordillera Chapter, Antonia Corinthia Naz accomplished a study regarding the factors that influences the labor Productivity of miners in Benguet. With this, it has been found that the the productivity level vary according to mining methods and was significantly affected by technical factors followed by economic factors and personal factors. Major problems on labor productivity are: the need for more involvement in decision-making; thorough discussion on miners’ concerns; that the company adopts a variety of training methods; the need to be informed of the policies; the desire of workers for management to be more sensitive and responsive to workers’ concerns and the necessity for more and better quality of tools and equipment for underground work.