Skills aplenty

It’s been a pretty eventful year, so there’s lots to talk about. I could talk about the development of the Fire and Security Association – now the largest representative organisation in fire and security. Or Elecsa, now growing at the rate of 120 new applicants a month. Or, simply, the overall rise in ECA membership to the record level of more than 2800.

But I’m not going to. This is covered in the ECA 2007 Annual Review. I am going to be covering just three points, each of which is looking more to the future. These are: our plans for convergence with the HVCA; recent developments on fair payment practices; and skill shortages, and what we are doing about them.

The first subject, then, is closer co-operation and convergence between the ECA and the HVCA.

Last year’s president, Alan North, spoke about the sort of things that the ECA and HVCA were already doing together, and that, of course, has been carrying on. This year, for instance, we have been working together on the framework for a single m&e working rule agreement, and also on sustainability.

Both associations do recognise, however, that clients are looking to their contractors for more than this. They are looking more and more for joined-up m&e solutions, a ‘one-stop shop’ to deal with the complete building services package. And this demand will only increase as clients look to our industry for the expertise to deliver on the technical solutions to reduce carbon emissions from buildings.

It is against this background that the officers of both associations think that the time is now right to look at more than just co-operation, and to start looking seriously at the prospect of convergence to create a single organisation to represent both mechanical and electrical contractors.

It is not only client demand and sustainability that leads us to this conclusion. We have to keep up with the times in other ways. The sector is already represented by a single trade union and a single Sector Skills Council (SummitSkills), and between us we have many common interests where we need to be co-ordinated and be able to exert more influence.

At the moment, we are in the early stages of consultation with the members, and in particular we need to be absolutely clear on how we can ensure that any new converged organisation will better serve the needs of small, single-discipline contractors, who make up the majority of the membership of both associations, as well as the larger m&e contractors. But the overall benefits for everyone of better co-ordination, improved efficiency and greater influence should be self-evident

One immediate example of where we need to make sure we are communicating effectively as a joined-up industry, is the 2012 Olympics.

This is a huge construction project, an enormous challenge as well as a great opportunity, and the dangers of cost overrun, late delivery and disruption through industrial action are very real. Do we want to see a repeat of the Jubilee Line, or would we rather see the project delivered on time, without a single day lost through industrial action, like we saw with T5?

At this moment, we have both the employers and the trade unions making the case for some form of site working agreement, along the lines of the Major Projects Agreement that operated on T5. Hopefully the Olympic Delivery Authority (ODA) will agree with us.

The Olympic project needs our industry to be working in harmony. And that means a joined-up m&e sector, working as a full partner, with a skilled and stable workforce, and the full involvement of the trade unions.

One of the key things we have to do is give greater encouragement to those who don’t train to start training

Which brings me on to my second topic: partnership and fair payment practices.

A few years ago I had the privilege to be the m&e delivery partner on what I still believe to be one of the best examples ever of true partnership in construction – the Andover North Project for Defence Estates. It was a £40 million project. We had one project target price, which we each had a predetermined share in, we had a fair and effective pain/gain mechanism, and the scheme was one of the first examples of a project bank account.

The project was completed on time, on budget and without a single contractual disagreement. The client was delighted with it, and we all made our target profit. It was a joy to work on.

What it really brought home to me is that, if you are using people with the sort of expertise that we have in this room, working in true partnership, building a building is technically relatively easy. They can certainly make it look easy.

What makes it difficult is arguing over money. Take the conflict over money out of the way, and most projects can be delivered on time and on budget by this industry.

One thing in particular that can make a very significant difference here is the use of project bank accounts.

Poor payment practices have bedevilled us for years. But at last, after long and sustained lobbying, we have a glimmer of hope. This is the newly published Guide to Best Fair Payment Practices, issued by the Office of Government Commerce for use in the public sector – the use of project bank accounts is one of its recommendations.

It’s not perfect, but you need to know about it, and you need to encourage your clients to work to it, because it can help.

Now to my third subject, the one that has been my main mission during the past year: the skills shortage and what we do about it.

My big concern here is that, as an industry, we are sleepwalking into a major crisis. We used to have the electricity boards training thousands of electrician and engineer apprentices every year. Since privatisation, that no longer exists. It’s gone, and will not come back.

We used to have most of the major contractors training. Now many of them, for good business reasons, have changed their business model so that they no longer directly employ craftsmen. They subcontract or use agencies, so they don't have the infrastructure to train.

That leaves the SMEs, who are now carrying far too much of the burden, and are finding it increasingly difficult. There are now only 20% of contractors training for 100% of the industry.

One thing in particular that can make a very significant difference in conflicts over money is project bank accounts

The trouble is, we are in danger of not noticing the full impact until it’s too late because of the availability of skilled labour from eastern Europe. It can take care of today’s problem, but what about the future?

The immediate shortage that is being noticed already is the lack of project engineers, contracts managers, quantity surveyors and the like. But where did most of these come from in the past?

The answer is, they started as electricians! So when the migrant labour has taken its skills back home, and we have stopped planting the seed corn for home-grown skills, where will the skilled engineers and managers of the future, let alone the skilled craftsmen, come from?

There is an alternative, of course. A recent article in the Daily Telegraph was headlined, ‘Retirement rules eased to plug skills gap’ – you can all stay at work longer.

We have to do something. The problem needs to be recognised and addressed in the main by the government. Will it stop wasting money on six-week ‘overnight electrician’ (or plumber) college courses that might suit its social agenda, but produce people who are of no use to industry, and start investing more in the training schemes that the industry really does need?

That would be a major step forward. But we have to do more to help ourselves.

In the short term, one of the key things we have to do is give greater support to those who do train, and give greater encouragement to those who don’t to start.

To this end, I am pleased to announce that the ECA has set up a £10 million fund to support increased training by members.

The intention is that the earnings from this fund will be used to support training in areas where there is currently no funding available. This will include, for instance, adult trainees and support for higher qualifications in contract management.

This is a major initiative from the ECA, but it will be a drop in the ocean if we as an industry – government, clients, main contractors and subcontractors alike – don’t start recognising the problem and be prepared to work together, either to do something about it, or support those who do.

Would clients be prepared to have training as a prequalification requirement?

The ECA is taking a lead. Now, who will join us?