Building Systems Thinking: Why the workforce is undersized, ageing and short on expertise

Projects are being delayed and costs pushed up by the lack of skilled professionals, the Institution of Civil Engineers warns in its 2026 ‘State of the Nation’ report, published on 5 March.

The Institution of Civil Engineers’ (ICE) annual State of the Nation reflects the issues causing ICE members greatest loss of sleep. A shortage of engineering professionals and skilled workers has been dogging architecture, engineering and construction (AEC) industry productivity for at least three decades – a significant side note in the 1994 Latham Review, a central concern in the 1998 Egan Review, and a focal issue in the 2016 Farmer Review.

But what has been a chronic condition is now becoming acute as the industry tries to work out how it will deliver the government’s 10-year infrastructure strategy. Valued at £725bn, the strategy represents 50% more workload in the decade to 2035, compared to 2015-25. It’s a welcome but “formidable” challenge, the ICE says.

It offers an opportunity for the AEC industry to show clients, investors and government that it can perform better – mobilise faster, deliver efficiently to time and budget, and make a decisive contribution to national productivity. If it can do so, it will restore confidence dented by the poorly performing projects and systems that have dominated industry news for a decade or more.

However, with an “undersized and ageing workforce that’s running short on expertise”, there is a high risk of failure, the ICE warns. A growing number of organisations share the concern (see below: ‘Skills in their crosshairs’).

Building Systems Thinking invited industry experts to put the issue under the microscope, to better understand its pathology and potential cures.

Signs of trouble

“The industry faces a structural paradox,” said Mark Johnson.“Demand for construction output is rising, the national pipeline is increasingly visible, and labour cost inflation is running at 4.1%. Under normal market conditions, that combination should attract workers and grow the workforce. It isn’t. The workforce is declining anyway, which is precisely what makes this a crisis rather than a temporary shortage.

“The ambition to rapidly scale-up major infrastructure delivery, across all sectors, is constrained not by investment appetite but by the industry’s structural inability to respond to demand at pace and scale.”

Marie-Claude Hemming noted that the pressure on skills is likely to intensify as multiple national infrastructure programmes converge. “We are approaching a ‘mega-pipeline moment’, where grid expansion, nuclear new build, rail programmes, water infrastructure, data centres, housing, hospitals and defence projects will all compete for the same skills pools both of professionals and construction workers.”

The situation calls for workforce planning across sectors to reduce the near-term “risk of bottlenecks that slow delivery across the entire infrastructure portfolio”, she added. And it requires innovation in education, training and recruitment to strengthen the skills base in the longer-term.

We need an integrated approach that spans infrastructure programmes, education providers, and employers, supported by aligned procurement and regulatory frameworks

Marie-Claude Hemming

“Addressing the shortage requires a holistic, cross-sector strategy,” Hemming argued. “We need an integrated approach that spans infrastructure programmes, education providers, and employers, supported by aligned procurement and regulatory frameworks.”

Attention must be paid to the industry’s shifting skills needs, she added: digital delivery and AI, systems thinking, sustainability and client-facing skills, alongside asset management. “Without these capabilities, even a fully staffed workforce will struggle to meet the demands of complex, integrated programmes, putting large parts of the national infrastructure pipeline at risk.”

Skills shortages are manifesting in harmful ways. Mike Reader reported that the Excellence in the Built Environment select committee has heard evidence that 90% of home energy efficiency retrofits are failing, with inadequate design, specification, workmanship and inspection as root causes.

If skills shortages compromise the industry’s competence to build and operate safely, then we have a clear-cut cause for action

Paul Morrell

In December, the National Engineering Policy Centre warned that maintenance, repair and modernisation of the UK’s vast portfolio of existing buildings and infrastructure have been neglected for decades, presenting an increasingly significant, though unquantified, risk to service resilience and public safety.

Safety regulations provide a potential lever to address the issue, said Paul Morrell. For buildings, “the Building Safety Act imposes a statutory obligation to deliver projects safely”. A patchwork of regulations set safety obligations spanning project delivery, operation and maintenance in other sectors. “If skills shortages compromise the industry’s competence to build and operate safely, then we have a clear-cut cause for action.”

Are we on the cusp of a market failure?

A market failure represents opportunity for change, if the problem and risks can be clearly articulated, a pragmatic course of action mapped, and clear benefits set out, said Morrell.

Looking at tunnelling demand from Crossrail, HS2, upcoming road projects, power and water, it was clear that demand for tunnelling capability would outstrip supply

Peter Hansford

Looming “market failures” drove creation of the Tunnelling and Underground Construction Academy in 2011 and introduction of the BIM mandate a decade ago. “Looking at tunnelling demand from Crossrail, HS2, upcoming road projects, power and water, it was clear that demand for tunnelling capability would outstrip supply. The industry mobilised to create the academy in order to unlock projects, avoid competition for resources and minimise labour cost inflation,” recalls Peter Hansford.

Morrell notes that the right conditions for launching the BIM mandate were created by ongoing fiscal austerity and the UK’s commitment to cut carbon to curb the effects of climate change. “BIM is a good example of choosing the moment. It wasn’t hard to make the case, because there were two big issues, too much carbon and not enough money. You could demonstrate that using BIM improved performance on both.”

Today’s skills challenge is harder to tackle, as it sprawls across the whole, vast, fragmented AEC industry.

Yet there may be applicable lessons from the Tunnelling Academy and BIM mandate.

Create pull

“The one thing that guarantees supply is reliable and continuous demand,” said Morrell. As chief advisers to government, both he and Hansford recommended the publication of a pipeline of projects. Last summer the government produced the latest version – the national infrastructure pipeline. It lists social as well as economic infrastructure projects that have been screened to verify the need and business case.

“Never think that projects won’t get cancelled, but a pipeline shows what’s probably coming. If you’re in the supply chain and tool up to do that kind of work, there’s a reasonable prospect of winning a role that will justify your investment – and a published pipeline may cause politicians to pause before trashing that investment.”

Mike Reader noted that the pipeline is primarily of interest to the tier one contractors who will bid for and win contracts. But much of the actual work will be done by subcontractors, who also need an improved picture of upcoming opportunities to incentivise upskilling themselves. “Tier twos and threes should be asking: ‘Why aren’t the tier ones publishing their pipelines to us?’ The T-ones need to show the T-twos and threes the opportunity in the pipeline for them – the demolition, site investigation, preliminary works, piling, fabrication, facades, M&E and the fit-out contracts, etc.”

Major clients could write that into contracts, said Johnson. “What’s to prevent us mandating pipeline sharing and setting KPIs for it?”

As adviser, Morrell encouraged the government to use its buying power to achieve change. It could do so again now, he argued.

However, Johnson warned that even when programmatic objectives are set, piecemeal procurement is a barrier to achieving them – a pattern he said is common across major infrastructure programmes. “As clients, the ambition is to get organisations in the supply chain to invest in order to better meet long-term needs. But procurement happens project-by-project. You end up looking for a macro outcome from micro interventions.

Suppliers are focused on the project in hand. They have no reason to over-invest, as they see it, in developing skills they don’t immediately need to get that project completed

Mark Johnson

“Suppliers are focused on the project in hand. They have no reason to over-invest, as they see it, in developing skills they don’t immediately need to get that project completed.”

This could be changed by approaching procurement differently – setting skills development within a programme’s purpose, vision and targets, supported by commercial incentives and effective contract management.

Hemming added that client collaboration is “critical in supporting workforce development, building long-term, cross-project capability across the supply chain, and avoiding the challenges associated with boom-and-bust.”

Hansford suggested that smaller investments and projects could be aggregated, enabling a similar programmatic approach to be applied. He cited grants to housing organisations as an example. “Each one might build only 30 to 40 homes, which isn’t enough to exert any real influence. But if they could be coordinated it’s a different story.” The Social and Affordable Homes Programme could be an effective vehicle, but does not set out any skills requirements.

Regional coordination by a powerful combined authority should also be explored, suggested Reader.

A joined-up, long-term focus on skills would potentially deliver useful savings. “On a £500m project, the 4.1% pay inflation we’re paying is the equivalent of a £23m skills premium,” noted Johnson. If collectively we were to invest 1% per project, say, to close the skills gap, we’d counterbalance the inflationary premium over time.”

Ineffective levers

Section 106 agreements under the Town and Country Planning Act were designed to secure better social outcomes for communities affected by new development. They are routinely used to set local social value requirements that encompass education and apprenticeships, training and development. Many consultants and contractors have self-determined internal training levies to meet clients’ social value requirements.

However, those requirements are often poorly defined and reinforced, or don’t work as intended.

Alison Watson noted that many apprenticeships – particularly at advanced and higher levels – are heavily over-subscribed. School exam grades are used for applicant screening and selection, with the result that some firms set a higher bar for becoming a degree-level apprentice than is required to study for the equivalent end qualification at an Oxbridge university. In any case, the number of apprenticeships available falls well below what is required to fill the entry-level skills gap.

At other firms, training levies are channelled into courses for management.

In many instances, firms are engaged in social value activities that Watson described as “tick box”. Social value directors or champions have selected “heartstring causes” such as supporting children with learning disabilities and special educational needs, but that offer no dividend in terms of future recruitment. “It’s not the wrong choice by any means. The employees of those companies are making a valuable contribution and the corporate commitment is sincere. However, there are other ways they could direct the financial and human resources to achieve social value impacts that feed back into their business, their industry.

“Helping disadvantaged young people to develop an interest in engineering and construction, and to shape a career in it, packs a real, measurable social value punch too. And it contributes to a more sustainable industry.”

It’s enjoyable all-round, but there’s very little evidence that one-off careers talks or ad-hoc design and construction challenges encourage any additional interest in joining our profession

Mike Reader

Reader quipped that he’d ban “spaghetti and marshmallow” school visits. “It’s enjoyable all-round, but there’s very little evidence that one-off careers talks or ad-hoc design and construction challenges encourage any additional interest in joining our profession,” he said. “Visits take resources, and there are better ways they could be deployed.”

Hemming suggested the creation of shared apprenticeship schemes to distribute training responsibilities and provide experience across a number of firms and potentially clients. It would reduce the burden on small and medium-sized firms, enabling them to become more active in developing new talent.

Education – the elephant in the room

The Construction Industry Training Board and Construction Skills Mission Board are seeking to recruit an additional 100,000 workers a year by the end of this Parliament, pulling in many of the nearly 1 million young people currently not in employment, education or training.

They envisage a combination of accelerated training “bootcamps”, apprenticeships and local recruitment drives, plus “upskilling and multi-skilling” of existing construction workers and transfers from other industries. The government has put up £650m of skills funding. Last August it designated 10 existing colleges as Construction Technical Excellence Colleges, expected to train-up 40,000 skilled tradespeople by 2029.

“But at what point are we going to start looking upstream, at the teaching and learning of design, engineering and construction in secondary education?” asked Watson.

“Much of the focus is on post-16 training, yet the foundations for career choices are laid much earlier. If we want young people to pursue careers in engineering, construction and the built environment, they need exposure to these disciplines before they reach 16. That means investing in curriculum development and specialist teacher training across secondary education, using project-based learning. When students reach their post-16 decisions, they should already understand the sector and be motivated to pursue it.”

Watson designed and developed the Design Engineer Construct! (DEC) learning programme in the 2010s. Its suite of technical qualifications achieved recognition as academic equivalents to GCSEs and A levels and, at its peak, the programme was taught in more than 100 UK schools. It connected academic subjects to real world challenges and demonstrably strengthened students’ numeracy, literacy and oracy.

However, education reforms in 2018 prevented schools from counting the DEC qualifications when reporting performance. Unable to earn recognised league table points, many schools discontinued the syllabus.

DEC nevertheless produced a generation of students with a strong understanding of the built environment and clear progression routes into apprenticeships, further study and professional careers.

“If we could have continued and aligned school education with the ambition of modernising the AEC industry, I wonder if we’d have the same skills gap we have today?” Watson questioned. “I honestly don’t think we would.”

Despite ongoing lack of support for DEC from the Department of Education (DfE), around 60 UK schools continue to teach the curriculum. “Schools recognise that it helps many of their students to understand core subjects better, benefiting their overall academic performance, and sets them up for greater success when they transition into post-secondary education or employment,” she said.

Several large AEC employers are probing the programme’s potential for strengthening the flow of “industry-curious” school-leavers. But they can’t leave it to others to do the preparatory work, said Watson. What’s needed is long-term, committed investment in schools that deliver the DEC programme, linked to recruitment.

We need parity between academic and ‘advanced’ vocational subjects

Alison Watson

Demand from industry coincides with the DfE’s ongoing reform of school accountability measures and review of technical qualifications. “We need parity between academic and ‘advanced’ vocational subjects,” Watson said.

Hemming said that by connecting the curriculum and careers advice with the real world of architecture, engineering and construction, we can give school-leavers a tangible view of opportunities and industry demand.

“Regulatory reform would also be beneficial,” she added. “Ofsted rewards schools for getting students to university, which makes that the focus. If Ofsted also rewarded schools for enabling students to progress to a meaningful job or post-secondary training, our industry would benefit.”

There are strong grounds for the DfE to re-evaluate DEC, the panellists agreed.

Piloting a different approach

Growing the industry’s skills base depends on the capacity of local suppliers to support it. This varies widely from region to region.

“Some have a relatively well-developed supplier ecosystem with the technical capabilities that modern construction demands. Others are starting from a much weaker position.

“It would be useful to pilot a comprehensive approach to the skills challenge, to demonstrate its value to others,” said Hansford. “We need to see what different looks like and how it works.”

The New Hospital Programme (NHP, which will deliver 40 new hospitals by 2048) has forged a partnership with Watson’s enterprise, Class of Your Own, and a local secondary school in Cheshire, to run the DEC curriculum. Cheshire has better-developed capabilities than many other regions, and the partnership is part of a wider initiative to strengthen the local supply chain as the NHP gets under way.

Hansford suggested that the NHP would be a strong pilot study candidate – with a long-term programme, aggregation, standardisation, variation across regions, and focus on achieving social value that accrues benefits both for local communities and the programme itself.

“Supporting the teaching of DEC in areas with stronger existing foundations, such as Cheshire, makes sense. It would be a good early demonstrator,” agreed Johnson.

He said he’d seek to explore this through his advisory work.

Hemming noted that there is growing employer demand for graduates with non-traditional skill sets, and that universities are not keeping up. Hansford highlighted the MBA in major infrastructure delivery that is offered by University College London. It was developed in collaboration with industry, and is co-delivered by senior industry leaders and academics. The model could be widely replicated, he said.