In job shop estimating where does efficiency play a role? When you are estimating generally ask yourself how many "Man Hours" are required to producing the part or performing a specific operation.Lets define some terms first
Man Hours
Man hours is the total time to accomplish a given task. This does not mean that if a task if 40 man hours it will take five 8 hour days. You could potentially accomplish the task using more then 1 resource and therefore you can finish the task with 5 people working 8 hours in 1 day.
Direct Hours
Amount of time that an employee is performing a task specific to a work order.
Indirect Hours
Amount of time that an employee is performing a task that is not being applied to a specific work order. This includes sweeping, cleaning, accounting, etc.
Estimated Hours
Amount of time an estimator puts towards a specific task or job that is an educated guess.
Actual Work Hours
The actual hours an employee spends performing a specific task
Efficiency
Efficiency is the ability to accomplish a given task with the minimum expenditure of time or effort.
Worker Productivity or Effectiveness
Worker productivity is the time spent on a task versus the time they are actually getting paid for.Worker productivity will never be 100% because of the time interferences a worker keeps from doing their assigned assignments. These include things like using the restroom, meetings, e-mails, chatting, break time, etc. The time between direct hours and indirect house is the effectiveness rate. This is not the the same as efficiency where it’s calculated as the measure of ones performances performing a given task.
The next blog post will go into more detail and examples of job shop efficiency and effectiveness.
Source: https://www.mie-solutions.com/founders-blog/estimating/job-shop-man-hours-defined
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