Case Study: Cost Overrun from Labor Productivity Issues on Houston Ship Channel Expansion (Houston, TX, 2012)

Project Overview
• Name: Houston Ship Channel Expansion
• Location: Houston, Texas
• Year: 2012
• Project Size: $500 million
• Scope: Widening and deepening of ship channel including dredging and infrastructure improvements
• Lead Agencies/Contractors: U.S. Army Corps of Engineers /

Category of the Issue, Problem, or Challenge
• Labor Productivity
• Cost Management

Summary of the Issue, Problem, or Challenge
Lower-than-expected labor productivity due to coordination issues and workforce skill gaps led to prolonged construction and cost escalations.

Root Cause Analysis

• Coordination Challenges: Multiple subcontractors and shifts led to inefficiencies and rework.
• Skill Gaps: Shortage of experienced dredging operators and specialized trades slowed progress.
• Communication Deficiencies: Lack of real-time communication between crews caused delays.
• Overly Ambitious Scheduling: Unrealistic productivity targets put pressure on workers, reducing efficiency.

Impacts Due to the Issue, Problem, or Challenge

• Labor costs exceeded estimates by approximately 20%.
• Schedule extended by nearly 4 months.
• Strained contractor-client relationships due to disputes over performance.

Corrective Actions Taken

1. Implemented improved project coordination and integrated scheduling.
2. Provided additional training and certification programs for workforce.
3. Enhanced communication tools and protocols on site.
4. Adjusted productivity targets to realistic levels with stakeholder consensus.

Lessons Learned

• Accurate productivity assessments and realistic scheduling are key to cost control.
• Workforce skill development improves efficiency and reduces delays.
• Effective communication mitigates coordination-related productivity losses.

Audit & Prevention: Project Control Questions to Ask on Future Projects to Help Control the Situation

• Are productivity estimates based on actual site conditions and workforce capabilities?
• Is there ongoing workforce training and certification?
• Are communication and coordination mechanisms effective and actively used?