Tackling the global skills shortage

22 February 2018

Skills shortages around the world threaten the successful delivery of construction projects. What can the industry do to counter this challenge?

During the summer in Hong Kong, many carpenters stop work altogether.

The weather is humid, many of them are over 50, and they earn enough during the rest of the year to be able to take three months off.

One of the reasons that wages are so high in Hong Kong – around HKD 2,500 a day for formwork carpenters – is that labour is in short supply.

Even now, when the Legislative Council is stalling on the approval of large infrastructure projects, activity in the commercial and residential sectors means that Hong Kong’s almost totally home-grown workforce is still over-stretched.

Construction industry must appeal to next generation

Compounding Hong Kong’s demographics is a younger generation that is not interested in construction.

“They see it as dirty, dangerous and demanding, a traditional industry that has not modernised,” says Tony Small, Director at Gammon Construction.

“Construction isn’t seen as a good career, despite the fact that wages are high.”

Failure to attract young people is one of several factors impacting on construction markets around the world.

An international construction market survey by consultant Turner & Townsend, published in May last year, revealed that 56 per cent of the markets in which it operates are experiencing skills shortages, among them North America, the UK, Australia, Asia, South Africa and parts of mainland Europe.

Tackling the global skills shortage

The impacts of skills shortages are wide-ranging: health and safety are likely to be compromised, the quality of the work could fall and, ultimately, projects will overrun on both time and cost.

“In my opinion, it’s not a question of whether projects will be delivered. It’s more about cost and cost inflation,” says Dave Cahill, JLT Construction’s Business Development Leader in the UK.

“That’s the first manifestation of skills shortages: needing to pay more money to secure labour.”

Compounding the lack of younger workers is the loss of people that came to the industry in the years immediately after the global financial crisis of late 2007, as projects were cancelled or put on hold.

“A lot of skills were lost to the industry because a lot of jobs were lost from the industry,” says Cahill. “There was a break in the curve.”

Transient workforce damaging global projects

Today, workloads are burgeoning around the world. As populations migrate from rural environments to cities, the need for new and renewed infrastructure has never been greater, with governments targeting infrastructure projects as a way to boost economic activity.

But the risk is that we don’t have the skills to deliver those projects successfully.

“It is becoming more and more challenging to find people who have experience in designing and planning construction projects,” says Joe Charczenko, Partner at Construction Risk Partners, a JLT Group company based in New York.

“Every single client we have is constantly looking to add that capability to their team.

“If a project is not properly designed or planned, it doesn’t matter how well-skilled the labour is – it’s hard for that job to go right.”

Where contractors are forced to employ less-skilled and less-experienced workers, there is an increased risk of accidents and injuries.

“The more transient the workforce, the less loyalty there is and the greater the risk,” says Cahill.

“As well as the risk of more accidents, we believe there’s a correlation between loyalty and likelihood of a claim.

“Someone working through a labour-only subcontractor is much more likely to claim than someone who is a salaried employee or on a wage.”

Importance of supervisors to the construction workforce

The role of supervisor becomes even more vital with a less-skilled workforce.

In addition to overseeing health and safety risks, the supervisor must keep a hawk’s eye on quality, details and finishes.

In turn, there can be a negative impact on the health of supervision staff as they work longer and longer hours with greater responsibilities.

The effect of immigration on skills shortages

Some markets are limited further by labour laws.

Hong Kong, for instance, keeps a tight rein on immigration.

In the UK, projects in the south-east are facing a mass exodus of workers post-Brexit as an estimated 200,000 European workers head home or to other markets. Some have already left, owing to the fall of the pound against the euro and fears of an uncertain future.

The US, too, is highly dependent on immigrant labour.

With a president who is keen to reduce the number of immigrants, skills shortages could be exacerbated, says Charczenko.

“In urban areas things are very busy and it’s hard to find skilled labour as it is.

“I look at the demographics on job sites and think that, if 25 per cent of these people go missing, we’ve really got a problem.”

Construction industry should reward workforce

Far-sighted owners and contractors already have strategies in place to help deal with skills shortages, in both the short and long term.

The first step must be to hang on to the resource and talent that you have, says Charczenko:

“Treat your people better and they won’t leave. There’s a lot of things companies can do to prevent that talent leaving when others come knocking.”

Charczenko suggests companies offer their employees clear career paths, communicate the goals and values of their organisation and make the best use of people’s particular skills sets.

Pay rises should come as people’s skill increase, not as a once-a-year percentage, and companies should look at how they give back to the communities in which they operate.

Diversity is key to construction sector

Some organisations are looking to recruit more people by fishing in a larger pool.

“There is a massive diversity issue in the UK industry – around gender, ethnicity and sexual orientation – which only adds to skills shortages,” says Cahill.

“Having a greater diversity of workforce is a good thing – you get diversity of thought too.”

The Tideway super sewer project in London, for example, has set itself an ambitious target to achieve gender parity among the client team and is encouraging its supply chain to follow suit.

Its recruiters are using several strategies to attract a more diverse range of people:

  • offering back-to-work programmes for lapsed engineers and other professionals
  • looking at flexible working and enabling technology for everybody
  • presenting the project itself differently – focusing on its environmental and social benefits, rather than enthusing about the civil engineering challenges of constructing a huge tunnel.

Construction industry must adapt

In the medium term, construction must become more akin to manufacturing.

“We need to move to design for manufacturing and assembly (DFMA), digitalising design, planning and procurement,” says Small.

“That makes the industry more attractive to young people too.”

Hong Kong’s Construction Industry Council is currently setting up a new Construction Innovation and Technology Application Centre (CITAC) to drive that change under the leadership of Gammon Construction Chief Executive Thomas Ho, a passionate advocate for modernisation.

In the UK, Consultant Mark Farmer drew similar conclusions in his 2016 review of the UK construction industry, pointedly titled ‘Modernise or Die’.

Farmer sees a future of pre-manufacture, underpinned by building information modelling (BIM) and collaboration.

Small sees the UK and certain states in the US as leaders in the move towards DFMA.

And in Asia, Singapore is ahead of the game, teaching robotics and programming in schools and making DFMA a mandatory part of civil engineering courses.

“The technical advances being made in Singapore are huge,” says Kieran Curtis, Divisional Director of JLT’s Construction team in Hong Kong.

“The industry has to adopt the same approach; it’s the only way.”

Technology the answer to global skills shortage

Alongside BIM and offsite manufacture is the emergence of on-site technologies that will transform the environment from dirty and dangerous to factory floor.

Robots are already used for some tasks, such as spraying concrete or drilling.

Virtual and augmented reality tools are helping optimise the skills of older workers, while reducing the physical toll on their bodies.

Experienced people can view the job site through a hard hat-mounted camera, accessing information from sensors and other monitoring devices and delivering instructions accordingly.

Connecting all these transformations is information: how it is collected, analysed and fed back to improve efficiency and outcomes.

As processes are automated through robotics and pre-manufacture, the collection of data also becomes automated. This, in turn, feeds artificial intelligence (AI) and the automation and continuous improvement of repetitive design activities.

Those firms that embrace these changes stand to benefit now.

For Gammon, a focus on innovation resonates not only with its clients but with its employees and recruits too.

“We want to recruit the best graduates from universities and to retain the talent we have,” says Small. “We still lose people, but at a lower rate than others. They like the journey that Gammon is on.”

For more information contact Dave Cahill, Business Development Leader on +44 20 7558 3482