In a skills-strapped construction sector, contractors can start to pick and choose who they want to work for. So public bodies better start playing nice
As the various political bandwagons at Westminster continue to spin their wheels waiting for the election campaign to move into top gear, the rest of us have got other things to worry about. And one key concern for my business and many other consultants was brought into sharp focus last month by an alarming report from the usually conservative Royal Institution of Chartered Surveyors. To put this into context, the terms “alarmist” and “RICS” are as likely to be found in the same sentence as the words “Cameron” and “sincere” or “Miliband” and “charisma”. It’s not the norm.
The fact is, the RICS is warning that over the next four years, 27,000 construction projects a year could be hit by the skills shortage in our sector. While we have all been aware of this issue, it is worth sitting up and taking notice when a trusted and usually understated body like the RICS puts a number on the bottom line effect - and a big number at that. Research published by the institution says that 43% of surveying firms are currently turning down new business due to a lack of skilled workers, with each passing up an average of five contracts per year. It goes on to predict that the problem looks set to peak over the next five years with a further 11% of the industry also turning down work by 2019. That’s over half of all surveying firms.
As the RICS says: “Without surveyors, projects do not get built”. So if only a select number of projects get built, the question is: which projects are going to be shelved and which will be prioritised?
Some 43% of surveying firms are turning down new business due to a lack of skilled workers
From my own random poll of talking to contractors, professional consultants and others who strive in the built environment, it would seem that those in the public sector have built up an unfortunate reputation for vacillation, delay and poor payment terms. So when those who build are looking at people to build for, public sector bodies may not be their first choice.
Firstly I should say that although my straw poll is completely unscientific, this negative view of the public sector is supported by research from the Specialist Engineering Contractors’ Group who sponsored a freedom of information request to see how many councils regularly delay payment and use retention cash to fund capital programmes. It apparently showed that 38% of public bodies still failed to pay within 30 days of invoice and 90% said they still deduct retentions, with most admitting they will take retention cash to supplement their working capital.
Some reading this will say they feel a sense of justified “payback” for contractors, who themselves have been notorious for the late payment of their own supply chain, pushing many a subcontractor into bankruptcy through poor cash liquidity. But the reality is that enjoying getting even with main contractors won’t actually help anyone.
There have been over 20 initiatives and reports from the government and parliament over the past 10 years or so to try to improve payment terms for those who work in construction. But still the problem persists. The public sector is supposed to be setting the example which others will follow. It is no good insisting on initiatives like BIM and better communication at the workface if at the end of the day the supplier chasing payment is told by his local authority employer that the metaphorical - and actual - cheque is in the post.
Nothing is going to get built for these newly empowered councils unless they are forced to abandon an old-fashioned and outdated way of working
As the RICS report shows, we are no longer in a demand-led construction cycle - we are in a supply-led situation where results are restricted by a lack of human resources, and projects are put on hold if they cannot be staffed adequately from the ever-shrinking pool of skilled workers.
Throughout the election we will hear of grand housebuilding targets, exciting school building programmes and utopian garden cities being the nightly dream of those who wish to get our votes. And there are apparently some plans in place to help achieve this utopian vision. Those at Westminster will say that more power is to be devolved from the centre to the regions. All the parties promise that we are going to see “beefed up” and energised local authorities with more planning freedom and greater autonomy.
That’s as may be - but, in a competitive market, nothing is going to get built for these newly empowered councils unless they are forced to abandon an old-fashioned and outdated way of working. If the current situation is maintained they could find they are putting out contracts that nobody with the capability to undertake the work wants. Why work for a client that won’t pay on time when you can work for someone else in the private sector who will?
With its new-found taste for a headline, the RICS put it rather well when it described the next few years as a “tipping point”. With construction set to grow, they said: “At this rate it’s very unlikely that we’ll have the capacity or capability to fulfil planned projects.”
Public sector be warned: Everyone wants to build, but not at any cost!
Richard Steer is chairman of Gleeds Worldwide