Labor makes up the largest variable cost in building construction and numerous other industrial applications. Fragmentation of labor operations, frequent starts and stops, ramping up and ramping down of a workforce are recognized as having a negative impact on labor productivity. Several methods have been developed to estimate the impact of work fragmentation; however, these methods generally do not work well in projects where severe systemic fragmentation occurs. This paper proposes a theoretical method based on a production function model and tests this model using data from a highly fragmented office building project. The analyses found that the use of a production function can provide evidence of the impact to labor productivity resulting from work fragmentation; however, some statistical methods still appear to provide a more accurate estimate of the actual impact to labor productivity and its cost.