Medium-sized construction firms are seeing an upturn in work with tender opportunities on the rise, but a shortage of skilled labour lingers as a real concern.
Despite the fact that two-thirds of mid-sized construction companies are feeling optimistic as a result of increasing tender volumes, a number of issues continue to put them under growing pressure.
A shortage of skilled labour is the single greatest factor limiting activity for contractors and housebuilders in today’s market, according to research carried out by Zurich.
Out of the 200 mid-sized construction companies Zurich spoke to, 53 per cent reported that this lack of skilled labour was constraining their ability to meet growing demand in the construction market and 77 per cent said that it was affecting their ability to effectively manage projects.
Holding business back
A shortage of skilled workers completing and managing projects increases a firm’s vulnerability to risk on a number of levels, from lacking the skills needed to service certain projects to a greater propensity for accidents.
“Shortage of skilled site and project management staff is forcing one in 10 businesses to limit their workload”
The trade industries experiencing the greatest pressure are bricklayers and carpenters with 40 per cent and 31 per cent respectively saying that skills shortages were their greatest challenge.
One respondent anonymously said: “There are not enough people in the market; it is now very difficult for us to find the people out there.”
Yet only 6 per cent of mid-sized construction companies expect to reduce their employment levels, with over a quarter (28 per cent) expecting to directly employ staff in the next year rather than subcontract.
Ensuring that the current skills shortage is minimised across the industry is vital not only for the long-term stability of these businesses, but also for the short-term productivity too, as it ensures a workforce that is familiar with protocol and able to reduce the likelihood of short-term risk such as personal injury.
Rise and rise of apprenticeships
It is no surprise that apprenticeships are the most common initiative that mid-sized construction businesses have in place to tackle issues around skills shortages; 35 per cent say they currently have a scheme in place and expect to take on apprentices in the next 12 months.
Additionally, another 31 per cent of respondents said that they have training schemes in place, with a few even mentioning they have built long-term partnerships with local colleges to ensure a consistent flow of staff.
Both apprenticeships and training schemes are effective ways of ensuring that businesses are able to guarantee staff who are compliant with working methods and health and safety regulations, both of which are vital in mitigating risk.
For those unable to invest in such schemes, they are still putting measures in place to reduce their vulnerability to risk with 27 per cent putting quality assurances on staff and 23 per cent focusing on finding the right staff and retaining them.
This is compounded by the fact that 33 per cent of mid-sized construction businesses are now looking to existing staff, rather than recruiting externally, for solutions to their shortage of skilled site and project management staff and are increasingly implementing new training schemes.
For many, guaranteeing that work on major projects continues seamlessly and is delivered to a high standard from all employees on site is vital for sustained business performance.
Promoting staff within the business is an effective way of ensuring that the standards and practices which define a business within a busy marketplace never slip, keeping customers happy and mitigating the risk associated with the breakdown of relationships.
Despite these positive signs for many firms, this shortage of skilled site and project management staff is forcing one in 10 businesses to limit their workload or, in some cases, refuse to take on further work.
For many mid-sized businesses, which do not necessarily have access to the same levels of capital as many larger contractors, this could have potentially severe consequences.
“More than half of companies expect insurance claims to increase”
London is leading the way on growth compared with the rest of the country, with respondents expecting significant upturn in sales of 7.9 per cent in the next six months.
Despite this above-average optimism on sales among firms in the capital, this is not reflected in Zurich’s findings when it comes to skills shortages, with London-based contractors as concerned about skills shortages as firms in the rest of the UK.
A national issue
On average, over half (52 per cent) of mid-sized construction businesses believe that skills shortages will become a significantly greater challenge in the next five years.
Our survey showed that 75 per cent of respondents believe shortage of skilled staff is a problem that is only set to increase.
What’s more, 57 per cent of respondents expect insurance claims to increase in the next two to three years.
Therefore, perhaps it’s no surprise that businesses are taking steps to ensure that risk is averted well in advance of any problems.
However, it’s very important for firms who deal with employees in high-risk environments - such as construction sites - to continue analysing the risks and taking decisive action to protect their business.
By doing so, they can mitigate both skills shortages and overall business risk in the long term.
Stewart Walker is head of construction at Zurich