Applying Learning Curve Theory in Construction

Cost Estimating
We are all familiar with the expression learning curve or practice makes perfect and
probably have used it many times without thinking about the science or math behind it.

The basis for the learning curve theory has stemmed from the observation that experience makes
repetitive tasks easier to perform. When a particular task or sequence of work is repeated without
interruption, subsequent operations require reduced time and effort. The principle of learning curve,
which has been used effectively in manufacturing, can also be used in construction as labor
productivity and equipment operations affect the cost of many repetitive activities. Estimators can use
this theory in cost estimating. Contractors can apply it in productivity studies and productivity
improvement and for future bidding of similar activities. Owners may utilize this theory in evaluating
bids or change orders and subsequently for negotiating prices.
The theory of Learning Curve (LC), sometimes also called experience curve or dynamic curve was
first developed by T.P. Wright in 1936 [1], while studying time required to make airplane parts. He
observed that, as the workers gained more experience, less time was required to manufacture these
parts. This effect was not linear, but seemed to have a constant decrease. To be more precise, he
observed that the labor required for producing doubled quantities, decreased by a constant factor in
relation to the original quantity.
The rate of improvement is referred to as the learning rate and is expressed in terms of slope of a
curve. If it is a 70% curve, it represents a 30% reduction in effort with every doubling of experience.
Similarly, an 80% curve corresponds to a 20% reduction in effort. This percentage varies with the type
of industry, from 60% to 95%. Normally an 80% curve is used in construction. The effort required by
the fourth unit will be 20% less than the second unit will; the hundredth unit will require 20% less effort
compared to the fiftieth unit.

Table 1 (Partial) [2] - Method 1 Unit Value declining by 80%

UNITS

UNIT VALUE
COLUMN A
1
2
3
4
5
6
8
10

Table 2 (Partial) [2] - Method 2 Cumulative Average declining by 80%

UNITS

UNIT VALUE
COLUMN A
1
2
3
4
5
6
8
10

In the actual application of learning curve, two methods may be used as indicated in the above two
tables (Using Log-Log plots).

Method (1) states the unit value (labor per unit) declines by a constant percent with doubled
quantities [2] (Refer Column B in Table 1)

Method (2) states the cumulative average labor (the average direct labor hours for all units
produced up to any particular point) declines by a constant percent with doubled quantities.
[2] (Refer Column D in Table 2)

Though Method 2 is suggested for statistical reasons, if one wants to be conservative, Method 1 may
be used.

Applications in Estimating
There are many repetitive tasks like construction of high-rise buildings with typical floors, erection of
Structural framing, precast concrete unit installation, repetitive welding or drilling and so forth. For such
activities, experience curves can be used in estimating and for productivity study and improvement. In
construction, there are also many specialized activities that may involve an initial LC duration - for
example tunnel boring with a TBM (Tunnel Boring Machine), complicated structural or equipment
erection, etc. Using the LC theory, it is possible to calculate the right cost \ time allowances for the
learning curve period.

Change Orders
For some change orders, a contractor may be asked to proceed with the work and the cost will be
negotiated later based on data that is developed during the execution of the change. This will be a
practice especially if the item is new and repetitive. Using Table 1 or 2, the reduction of man-hours can
be incorporated in estimating the unit prices for such items.
Table 3 shows an actual estimate where LC theory was used for a miscellaneous metal change order
estimate in one of the projects.

Table 3 Hours are Tabulated using Method 1

LOT

UNITS

HOURS

LC FACTOR

001 to 100

160.00

1.00

101 to 200

128.00

0.80

201 to 300

112.00

0.70

301 to 400

102.40

0.64

Total

0.33

502.40

The contractor originally submitted a proposal for a total of 640 hours ((quantity = 400) x 1.60 hrs/ea),
based on his initial performance for the first 100 units. Using LC theory the total hours required were
projected as 502.40 (Table -3) in our change order review. It is interesting to note that this is only
78.5%% of the original proposal. It was possible to convince the contractor to accept the reduced
hours based on the learning curve principle for the balance work.

Learning Curve Quantity

Estimators often ask the question what quantity should be considered for applying the LC theory.
Experimental studies show that the application of "Learning Curve Theory" on a construction site
should be limited to the first 25% or so of the total production under consideration [3].
The LC theory is applicable in construction just as in manufacturing. Besides cost estimating, it can
also be used for projecting labor requirements, productivity study and schedule analysis. The users
have to pay attention to some caveats but still it is a valuable application that can be increasingly used
by owners as well as contractors.

References:
[1] Wright, T.P., Factors Affecting the Cost of Airplanes, Journal of Aeronautical Sciences, 3.4 (1936): 122-128
[2] B. R. Elder, Learning Curves Theory and Practice, AACE Transactions, 1963
[3] AEW Services, Vancouver, BC2001,p 20 of 26, Originally published in the Canadian Journal of Civil Engineering,
Vol 21, 1994 pp 939-953 under the title A Pragmatic Approach to Using Resource Loading, Production and
Learning Curves on Construction Projects.

Recommended Reading:
Stewart R et al, Learning Curves and Progress Functions, Cost Estimators Reference Manual (CH 5, P-176), John
Wiley & Sons, Apr 1995
Technical Note 2, Learning Curves, from www.ateneonline.it/chase2e/studenti/tn/6184-7_tn02.pdf
Predict Fututre Failures From Your Maintenance Records, from
http://www.barringer1.com/pdf/PredictFutureFailures.pdf