In a typical construction project, a contractor may often find that the time normally expected to perform the work has been severely reduced. The reduction of time available to complete a project is commonly known throughout the construction industry as schedule compression. Schedule compression is a problem because it negatively impacts labor productivity in various ways, and it becomes a source of dispute between the owners and contractors. This paper investigates how schedule compression affects construction labor productivity and provides a model that quantifies the impact of schedule compression on labor productivity by analyzing 66 mechanical projects and 37 sheet metal projects collected from across the United States. The model can be used in a pro-active manner to reduce productivity losses by managing the factors affecting productivity under the situation of schedule compression. Another useful application of the model is its use as a litigation avoidance tool after the completion of a project.