Productivity is a measurement of output per unit of time and is important because it along with the hourly rate and the work quantity is one of the three components of labor cost. If productivity is impaired, project labor cost will increase. Because labor costs are usually large portions of projects' total costs, the increase of the labor cost will mean the increase of total cost as well.
One of the ways labor productivity maybe impaired is through change, which is any addition, deletion or revision to the general scope of a contract.
To successfully claim LOP damages a contractor must demonstrate what caused the change, why the owner is liable for the change, and that any claimed damages are reasonable. There are different methods for estimating such LOP including actual cost, total and modified total cost, project comparison studies, specialty industry studies and the measured mile approach.
However there is no generally accepted guidelines for the measured mile approach. Based on review and synthesis of the project management literature and court and appeal board decisions, this paper presents practical considerations in the identification and application of measured mile.