Impact of Overtime

In response to an accelerated schedule, or to exploit the benefits of good weather, maximize equipment use, avoid penalty clauses or to achieve bonus clauses, beat strike or rate increase deadlines, in emergency rebuilding, or in outage work situations, contractors often implement overtime. Overtime is often preferred because it can produce a higher rate of progress without the coordination problems realized with shift work and the additional craftsmen needed for overmanning. However, overtime introduces additional problems including: fatigue, low morale, a higher cost per unit (typically a time and a half wage rate), a higher accident rate, increased absenteeism due to workers reaching 40 hours earlier in the week, and a phenomenon first described by the U.S. Army where workers tend to pace themselves to adjust for a longer work day or week. This phenomenon emerges because workers expend effort and energy at a rate established by a long period(s) of adaptation. When work hours are extended, it has been noticed that workers tend to adjust their pace (subconsciously) as to accomplish the same amount of work as would be completed in a typical eight hour day.

The listed problems reduce labor productivity, presenting contractors with the problem of increased costs. When overtime is owner mandated or necessitated by job conditions beyond the control of the contractor, compensation is justified not only for the direct costs of a time and a half or double time wage rate, but also for the costs incurred from the lost productivity caused by the overtime schedule. Hanna Consulting Group can help you recover these lost costs from overtime using a variety of techniques, many of which our consultants have developed and published with major contracting organizations, leading journals, and in technical reports. We have the experience to select the correct method of overtime evaluation for the specific attributes of your claim and the expertise to prepare the results of our analysis to recover the costs you deserve.