While the pandemic might have moved into a new phase, it’s after effects on many industries remain tangible, not least in construction. In particular, materials and skills shortages remain acute, which has both short- and long-term consequences for individual projects, companies and the industry as a whole, requiring greater considerations in an increasingly risky environment.

How does a skills shortage impact construction projects?

By the end of 2020 the Office for National Statistics said construction employment had fallen to 2.1 million, down 4% since 2017. It’s a problem that’s been exacerbated and continued by events since then.

Skills shortages have an ongoing impact on projects, their costs, the amount of time they take and the parameters for things to go wrong. At the outset, there are higher recruitment costs when it comes to finding the right contractors and members of the team. In an industry where budgets rarely have the scope for excess spending, this sets the agenda for a fraught working environment.

The skills shortage also means that many companies are no longer working with people they are familiar with, which has its benefits but also means new teams need to learn to work alongside one another – something which generally takes time. There may be additional training or familiarisation involved not to mention generating trust – that too takes time and resources. This is all compounded by rapidly rising materials costs, which place pressure and risk onto contractors as well as clients – something which was already an issue pre-pandemic, and which we aimed to mitigate with our claims funding service.

Contractors are often faced with the challenge of turning down contracts or taking on projects they are not sure they have the capacity to fulfil, risking damage to their reputation if costs overrun or if hefty delays occur.

construction - skills shortage

Post pandemic construction opportunities

Despite the challenges that construction faces, there are also some big opportunities. We have seen a boom in construction and development, ranging from individual houses to large commercial projects.

In the UK alone, house prices rose around 8.8% in the year to June 2021. Infrastructure projects were also boosted by government announcements, including the launch of a £12 billion infrastructure bank and a £4.8 billion ‘levelling up’ fund aimed at regenerating town centres and high streets.

Meanwhile, the private sector has seen a growth in demand for expanded warehousing as businesses increase their home delivery capacity and as e-commerce grows. So the challenge is in overcoming the skills and materials shortage to meet the demands and opportunities that are available.

construction - skills shortage

Overcoming the skills shortage challenge in the construction industry

To our mind there’s a three-pronged approach to tackling the skills shortage in the construction industry.

Anticipate problems before they occur

Firstly, and something that should be done as best practice anyway, is to make sure that you identify the areas of risk at the start of the project and that wherever possible you work to make allowances for them.

While this seems obvious, risk is invariably only seen properly by someone who is familiar with the things that go wrong. For example, that might be a claims consultant with experience in tender planning as well as contract management and planning assistance. It is a greater cost upfront but ensures as many eventualities as possible are accounted for and that relationships start from a position of trust, awareness and transparency.

Ensure strong communications

From the specifications of your contract to your document management systems, communication is generally where things fall apart on construction projects. Someone didn’t receive an email, someone interpreted something differently to someone else… the bigger the project the greater the opportunity for miscommunication and misinterpretation.

It’s a fundamentally human problem with big financial consequences, but it’s one that can be managed very effectively. We recommend assuming that there will be things you don’t agree on at some point in the project and building mediation clauses and resolution processes into your contract from the start. We also suggest using a dedicated cloud-based document management system like QConzol to keep all communications clearly in one place.

Up your recruitment game for the long-term

The longer-term solution to staffing shortages is to up your game when it comes to recruitment – make the construction industry look like a place where people should want to build their careers. In short, we need to stimulate more talent coming into the industry.

This shouldn’t be a problem, there are some immensely talented young people out there, leaving both school and university. Within our own team at Tungsten Capital we have been privileged to be joined by a number of talented young people over the years, including the recent arrival of Ben Knowles, who recently completed an apprenticeship and has remained on in a full-time position.

Our team of management consultants are always happy to have a discussion about your projects and to help you address any existing disputes or help put procedures in place to prevent them from happening and escalating. If you would like to speak to us, please find your regional team on the link below and contact us any time.