As the global economy heats up, labour shortages are becoming ubiquitous in the UK and abroad.
We need to incentivise investment in new models and methods if we are to create a higher-performing, more resilient sector.
Talk of a labour shortage or even a skills crisis is omnipresent in UK construction. However, we are not alone – the problem is both systemic and global. Across the 46 markets covered by Turner & Townsend’s International Construction Market survey, more than half are suffering from skills shortages.
As the global economy recovers and new projects come online, the construction sector is grappling with the challenge of delivering more work with fewer workers.
In London, labour costs – including pay and benefits – have hit an average of £34 an hour, helping to maintain overall construction cost inflation of 2.8 per cent. Our cost data places London as the fifth most expensive place to build globally, at £2,677 per sq m.
The rest of the country is not immune either.
Cities including Manchester and Birmingham have benefited from the devolution agenda, using new mayoral powers to drive investment and, ultimately, new construction. However, these schemes are competing with infrastructure projects for labour, particularly certain specialist trades, which has the potential to create significant regional bottlenecks.
New tech and skillsets
An over-reliance on traditional techniques and a sluggishness in embracing technology means construction can be overlooked as a career path. The effects are being felt in lengthening project timescales, inconsistent performance and low productivity.
We need to move towards a better industry structure – one that is more resilient, less cyclical, more automated, and which adopts the best of global expertise and innovation. In the US, the creation of SAM – a semi-automated mason – is one example of what the future may look like.
Other tools such as blockchain have the potential to expedite payments and contractual negotiations, while investment in offsite manufacture and component-led design will be essential to improve performance and avoid the likely cost escalation under skill and labour-reliant models.
In the UK, change has been discussed and disputed for decades. Clients argue that the industry does not bring innovation to the table; contractors cite low margins as a barrier to investment in the tools they need to improve productivity.
Between government policy-makers, major clients and industry leaders, there needs to be recognition that the size of the industry, with its social and economic impact, means we must work together to bring about behavioural change, so new technology and skills work alongside what we already have.
“An over-reliance on traditional techniques and a sluggishness in embracing technology means construction can be overlooked as a career path”
Continuous improvement everywhere is more likely to deliver change than waiting for a big bang solution from someone else.
In the public sector, the government has mandated the use of BIM on centrally procured projects and will soon contain a presumption in favour of offsite manufacture.
Private sector clients now need to start adopting progressive procurement and management models using data to set realistic benchmarks – and then incentivise contractors to out-perform them.
Without this step, the much-heralded digital revolution in construction can’t happen.
Reward within a contract needs to be based on performance, not simply the allocation and management of risk. Otherwise, the industry has every excuse not to change, and we’ll continue to struggle to deliver more output with fewer workers.
Steve McGuckin is global head of client programmes at Turner & Townsend