Where’s our people power?

Although the skills crisis is not so acute outside the South-east and Midlands, Britain is in the throes of a nationwide house and schoolbuilding programme, and those in the regions fear the glitter of the Games will draw their workers to London. Added to this, the capital has projects such as T5 and Crossrail soaking up the industry’s human resources. So where are the required 88,000 extra people a year going to come from? It seems there are five key questions that need to be answered …

How bad is the problem?

The short, and rather worrying, answer is that we don’t know. CITB–ConstructionSkills is the body responsible for compiling statistics on the scale of the problem, but it says it cannot make a firm prediction until details of the Olympic plans are clear – the materials used for building the stadiums and the exact number of affordable homes, for example. It expects to have an estimate by the end of October.

The CITB has said that the construction industry needs to recruit 88,000 new people every year to replace leavers and to cover existing work commitments. Doing some quick maths, Barry Stephens, chief executive of the National Federation of Builders points out that the Olympics, which are set to cost a total of about £12bn, are likely to more than double the industry’s annual total turnover growth, from 1.5% to 3.5%. And this doesn’t include the speculative projects that will follow as developers rush to capitalise on the property uplift effect.

The Chartered Institute of Building also has evidence that the shortage is acute. When the institute asked its members in August if they were having difficulty recruiting, it found that four-fifths had experienced problems in the past year and that nine out of 10 expected the skills shortage to last beyond 2005. Most in demand were those in the crafts and trades, and semi-skilled manual workers – more than half of the members surveyed said they’d experienced difficulties recruiting site and contract managers.

“The Olympic Games, as a flagship project, will probably be able to attract the people that it needs. It’s what’s going on around it that could be hit very badly. Crossrail is the big unknown,” says Michael Brown, the deputy chief executive of the CIOB. He points out that whereas the Olympic park is likely to come in at £3.4bn, the Crossrail project is expected to cost £16bn - more than four times as much.

The dearth of project managers

Without project managers, the fear is that accident levels will soar, costs will rise and the successful completion of the Olympic facilities will be marred by what had to be done to achieve it – that and the stalling of hundreds of other projects up and down the country.

Graham Watts, chief executive of the Construction Industry Council, says this is where the real shortage will be. “The industry is gearing itself up to recruit people in the trades, and even if we don’t, economic migrants will fill the void. If there are problems, it’s going to be in the professional skills where it takes much longer to train people. It takes seven years before you’ve got someone who’s a useful member of the team. If people aren’t entering universities now, they won’t be there by 2012. There’s no point pretending that we can fill the vacancies unless people migrate from similar industries.”

According to Jason Smith, director of contractor Haymills, this is the really worrying aspect of the skills shortage. “It’s not just the labour, it’s the management of it. Trades are available and coming in from Eastern Europe but I worry more about who’s going to manage them, so we don’t have the accident levels they do in places such as Dubai where you get this kind of influx.”

The Olympic effect has already kicked in says Smith, as firms intending to bid for work assemble their project management teams and try to poach staff from smaller companies with 10% salary increases. “It started within two weeks of the announcement. It used to happen before but not in these numbers.” Smith has seen offers of £15,000 more than the going rate. Other firms report offers of up to 20% more than their employees’ current salary.

“Good quality project managers are in such short supply that very good ones can command exceptionally high salaries,” says Ted Runciman, HR director at cost consultant Currie & Brown. He believes project managers with experience of stadium projects will enjoy a similar status to that of IT consultants in the run-up to the millennium, when companies feared their systems would shut down on the stroke of midnight. “Those who have that very specific experience could hawk themselves around looking for high fees. You may find many go out and set up their own consultancies.”

Who’s to blame?

“The industry used to be used as an economic flywheel for government policy,” says the NFB’s Stephens. “If it wanted to inflate, it would invest through the public sector, and if it wanted to deflate, would do the opposite. This meant the industry had difficulty planning its resources in a sensible way.

“The standing of the industry in the eyes of the public was low – it wasn’t looked on as an industry where careers were secure; the conditions didn’t stand comparison with other industries. There was a migration out of construction.”

There is also widespread bitterness within the industry over the current government’s target that 50% of all young people go on to university. “It’s fatally flawed,” says Peter Rogers, chairman of the Strategic Forum. “Going to university is seen as a panacea when it’s not. We need a highly skilled, professional workforce on site and we make the mistake of thinking that a plumber or a carpenter is in some way inferior to a project manager. Yes, we do need more graduates in areas of the industry, but QSs aren’t going to build anything.”

But the industry itself must accept some of the responsibility for not providing the training places for those who do decide to join the industry. Careers advisers are much maligned within the industry for their apparent failure to enthuse school leavers about construction, but they often argue that it’s not lack of interest but a lack of opportunities that holds potential new recruits back.

Can the industry attract enough new people?

At first glance, it seems doubtful. Only 49,000 apprentices enter the industry in 2003/04 – a far cry from the CITB’s views that 88,000 are needed. A drop in the birth rate means that there are fewer young people coming out of schools, and Britain is presently operating at near full employment. What’s more, construction is in a highly competitive market for new recruits and those involved in drawing young people into a career in the industry say there is a fundamental mismatch between their aspirations and the perception, even perhaps the reality, of a career in construction.

“The education system is gearing people to have expectations of a cleaner lifestyle,” says Charles Lee, general manager of the construction division at City & Guilds, the awarding body for vocational qualifications. “It provides young people today with a vision they find more appealing than having to lay bricks in the rain on a building site in winter. Building isn’t that well paid either – you can earn more in the media or being an office worker.”

Even when young people have chosen to do construction-related degrees, the industry is losing them to more glamorous or better-paid rivals such as management consultancy, banking or IT. “There are quite a lot of people who do QS degrees but don’t go on to become qualified in the industry,” says Greg Russell, managing director of consultant Blake Newport. “There’s a lot of pressure on students in terms of loans and that puts a significant pressure on salaries. QS degrees are one of the few truly commercial degrees you can get in the UK, and graduates are probably finding other opportunities with a better income that don’t have the same training requirements.”

So far, so gloomy, but City & Guilds’ Lee believes the industry could be doing a lot to help itself. “Companies are going to have to rethink the way they employ people. Money and job security is only part of it; they need to put together an offer that looks attractive to people. Training and development is a recognised way forward. People might train to do brick laying but they don’t necessarily want to do that all their life, they want to go further.”

Peter Sharp, resourcing and development director at Skanska UK, agrees that the industry has failed to offer an attractive career path to those who do join. “In the past, people have not moved fast enough within the industry and the onus is on us to recruit people of the right calibre and move them on as fast as we can.”

The CIOB’s Brown says the industry could also do much more to attract women and ethnic minorities. “The workforce is overwhelmingly white and male – if we’ve got skills shortages, we need to address that. There’s a huge opportunity there.” Stephens at the NFB suggests construction companies could retrain experienced workers from industries such as car making and steel, where there have been big redundancies in the UK. There are also many UK professionals who have taken advantage of opportunities to work overseas, particularly QSs. Luring them back home could be another route out of the shortage.

Can foreign workers fill the gap?

It looks like they’re going to have to. Fortunately the attractions of the Olympic boom should be enough to draw all the workers we need from overseas, believes Graham Watts, chief executive of the Construction Industry Council, and that’s nothing new in an Olympic building programme. “I visited the Athens site six times in the run-up to the Games and I don’t think I spoke to a single Greek citizen – there were French architects, Hungarian workers … all drawn by the Olympics. I don’t think we’ll have any difficulty finding the workers,” says Watts.

Michael Brown of the CIOB agrees that little of the actual building work will be carried out by homegrown workers. “The Olympic facilities are going to have to be finished. If we’re unable to use our own labour force, we will increasingly see international contractors and labourers filling the places we can’t fill. Given the right opportunities, other firms, from the Far East for example, would be only too happy to build it.”

Foreign talent is also the only way to fill the gap in professional skills in time for 2012, believes Stephen Gee, managing partner of consultant John Rowan & Partners. For the past five years, Gee has had difficulty recruiting quantity surveyors and project managers and has resorted to employing qualified professionals from Australia, New Zealand and South Africa. “It takes a considerable period of time to bring more graduates into the industry, and this is the only way London will deal with the Olympics and everything else in what is an already stretched market.”

Where are the required 88,000 extra people a year going to come from?

Are there other ways around the problem?

Although the traditional skills will always be in demand, for the Olympic Park itself and many of the spin-off projects the emphasis will increasingly be on modern methods of construction and logistics. That means filling current skills gaps will be less important than training people in new techniques and processes.

“One big message for the Olympics is that we have to do it differently from traditional ways of construction,” says Peter Rogers. “If we get it right, it will be built mainly off site using the biggest components possible and we’ll have as few people working on site as possible. There’ll be loads of people working around the country, but the fewer man-hours on site the better, from both an efficiency and health and safety point of view. The nearer we get to Meccano, the better it’ll be.”

Rogers says existing tradespeople should be trained in the skills that modern project management will require. Gary Sullivan, managing director of construction and aviation services at logistic specialist Wilson James, agrees. “For modern methods of construction you need a different style of tradesman who can do many things, and can read drawings and understand what goes where. I think that using modern methods of construction and logistics you can also mitigate the skills shortage. If you have skilled logisticians to improve, say, material delivery, you don’t need as many skilled tradesmen as you used to. If they are multiskilled, you have a more mobile and effective workforce.”

Sue Rossiter, the CITB’s area manager for Greater London, says the institute recognises that it is new skills that will be most in demand. “We’re identifying skills and adding training as the new materials and techniques that will be used are decided on. We work with local colleges to develop things like specialist welding courses very quickly.”

And indeed, there is no time to waste. “Unless we get to grips with it now, there’ll be a huge problem,” says Rogers. “There’s only one logistics course in the country at the moment and these things take time. Things are moving in the right direction, but we can’t spend years or even months debating it.”

Alan Ritchie, general secretary of union UCATT, wants to make training mandatory in Olympic construction contracts. "That way, young people in London will be trained in skills that will be of use to them and the industry far beyond the Olympic programme. There is so little direct employment that it is easy for firms to avoid their responsibilities on training. There are some responsible contractors who comply with their obligations, but unfortunately they are the minority. This has to be a mandatory requirement, and the Olympics is the ideal opportunity for that."