After being devastated by the recession, the U.S. construction industry has bounced back in a big way. But while private sector and government investments have sparked projects across the country, many skilled workers laid off years ago haven't returned to the industry. That means remaining workers command a higher wage, complicating project owners’ efforts to cost-effectively assemble skilled teams.
"When you can't adequately man your projects, it puts you in a very hard spot for time. …There are very big consequences for not meeting the deadline."
–Doug Dohn, Dohn Construction, Fort Collins, Colorado, USA, in The Coloradoan
In January, 65 percent of National Association of Home Builders (NAHB) members said the cost and availability of labor was one of the most significant problems they would face in the coming year—up from 30 percent two years prior. It's become particularly difficult to fill project teams in oil-rich areas like Texas and North Dakota, says Ken Simonson, chief economist at the Associated General Contractors of America (AGCA), Arlington, Virginia, USA. “There are lots of companies competing for the same project skill set in those states,” Mr. Simonson says.
To retain skilled labor and avoid project delays, managers of the US$1.3 billion Parkland Memorial Hospital construction project in Dallas, Texas, USA gave workers pay raises mid-project this year. “Houston and West Texas are taking labor away from many of our projects,” Lou Saksen, a senior vice president overseeing construction, told The Dallas Morning News. “It's a very difficult market out there.”
The talent crunch isn't limited to skilled trade workers, however. A January survey of AGCA members shows that almost half (48 percent) were having trouble filling project manager/supervisor roles, Mr. Simonson notes. The problem is that these positions require skills and experience that can't be developed in a vacuum. “It takes years to become a skilled project manager,” he says. As the industry continues to grow at a modest rate, talent shortages will likely only intensify in the near term, Mr. Simonson adds.
FROM BAD TO BETTER
Millions of workers were laid off from the U.S. construction industry when the recession hit. Things have improved, but a serious skills gap makes the industry's project outlook uncertain.
NUMBER OF U.S. CONSTRUCTION JOBS
7.7 million average throughout 2006, prior to the recession
5.4 million in January 2011, the industry’s lowest point
6 million number of U.S. construction jobs in April 2014
27% unemployment rate of construction industry in February 2010
8.2% unemployment rate of construction industry in June 2014, its lowest in six years
2 million number of skilled worker positions the industry will be unable to fill by 2017
Sources: U.S. Department of Labor, Construction Labor Market Analyzer's 20/20 Foresight Report
Putting Out Fires
For construction companies dealing with labor shortages—plumbers, ironworkers, masons and electricians, for example—the scarcity of skilled workers is adding time, cost and risk to their new projects. In the short term, many are responding to the shortage by executing projects with teams that are too small, working people overtime or just turning down projects.
“When you can't adequately man your projects, it puts you in a very hard spot for time. ...There are very big consequences for not meeting the deadline,” Doug Dohn of Dohn Construction, Fort Collins, Colorado, USA told The Coloradoan. “We're taking from one job to put a fire out on another job.”
Such a reactive approach makes it much more difficult for project owners to meet quality, cost and schedule goals, which is a big risk that comes with talent shortages, says Stephen Melman, director of economic services for NAHB, Washington, D.C., USA. “If you can work faster, you are more profitable, but only if the quality is there,” he says. If you cut quality to save time or money, the surge in new work won't last long. “Word of mouth is big in this industry, so you can't afford to have problems with quality.”
Long-Term Solutions
As a lasting fix to the industry's problem, many construction companies have begun implementing strategic programs to close skills gaps and limit their future labor risks. These include on-the-job training, mentoring and apprenticeship programs, and working with community schools and organizations to develop the next generation of construction workers.
Kim Burnsworth, senior vice president of human resources for McKenney's, a mechanical construction and service company in Atlanta, Georgia, USA, says her organization partners with local trade schools and universities, running up to 40 co-operatives and internships annually, through which students work at McKenney's for three to four semesters. “We hire a lot of those co-op students once they graduate, which minimizes the impact of the talent crunch on us,” Ms. Burnsworth says.
Industry organizations like NAHB and the Associated Builders and Contractors also offer training and apprenticeship programs for workers looking to build their skill set. But these sorts of programs won't be much help for companies in search of project managers with leadership skills and higher education levels. “From a project management standpoint, there is a much smaller pool of candidates,” Ms. Burnsworth says. Her company's project managers also need a mechanical engineering background, which makes filling these positions even more challenging.
To minimize the impact on project outcomes, companies should incorporate risks related to shortages of both project managers and skilled construction trade workers into project plans and devise appropriate contingency plans if positions can't be filled. “Access to talent is a risk for any project,” Ms. Burnsworth says. “The best thing you can do is plan in advance, so you have time to get people in place before the project begins. That's just good project management.” —Sarah Fister Gale
