The skills challenge isn’t about attraction but absorption

The launch of the government’s ambitious 10-year infrastructure strategy last summer cranked up architecture, engineering, and construction (AEC) industry anxieties about delivery capability and capacity. Imbalance between demand for skills and supply has been a longstanding issue. For years, the focus has been on attraction and retention.

But would-be apprentices find that opportunities are in short supply, and graduates have increasingly struggled to find roles.

Despite declaring a “skills crisis”, companies are reluctant to hire. The industry’s challenge is not so much one of attraction but of absorption. 

Why? Higher minimum wages and employer national insurance contributions, along with mandatory pension contributions, have hiked the cost of taking on new recruits by 20%-40%. The Employment Rights Bill has also made it burdensome and risky for employers to hire. 

Educators and trainers are over-producing skills in some areas and under-producing in others, guided by historical industry data that doesn’t reflect present and future requirements, and sometimes influenced by vociferous specialist interest groups (see box, below – “Skills mission”). 

And repeated social, economic and political shocks – the credit crunch, Brexit, covid, mini-Budgets, and wars in Ukraine and now Iran – have deepened the industry’s tendency to work project-to-project, rather than think and plan for the longer term.

Inspiring change 

The Built Environment Futures Assembly (BEFA) turned a searchlight on the workforce challenge on 15 April, at its most recent INSPIRE conference. 

“Strategic workforce planning is particularly important now, with the volatility we currently face,” said Mark Farmer, chair of BEFA, member of the Construction Skills Mission Board and founder of construction consultancy Cast. “It is easy to be defensive and reactive. The challenge to our industry, in conjunction with government and other stakeholders, is to think beyond the horizon, to make sure we don’t end up in a hole.” 

There is a high risk that the industry will become still worse-equipped to deliver future projects, he warned. That would harm the economy, society and environment. And it would harm the industry itself, by creating a “long-term, negative legacy” of workforce shortages and dented client, government and investor confidence in the industry’s ability to deliver. 

Strategic workforce planning involves working out, in detail, what competencies and capacity will be required, in what numbers, where and when. Skills initiatives have to date been dominated by “the supply side” – what contractors, consultants and trade associations think is most important. Strategic workforce planning involves looking instead at demand – what’s required to deliver specific projects and programmes. 

“It sounds simple, but is obviously far from it,” Farmer warned. 

Inference, not evidence 

The Construction Industry Training Board’s annual Construction Workforce Outlook (CWO) report and the UK infrastructure pipeline, published by the National Infrastructure and Service Transformation Authority (NISTA, a Treasury unit) illustrate the challenge.

CWO draws on two datasets: 

• On the demand side, construction output data from the Office for National Statistics (ONS), industry sources such as Glenigan, and planning and project start data 
• And on the supply side, construction workforce data showing the numbers and occupations of workers in the built environment, derived from the ONS labour force survey.

These don’t correlate. Output data doesn’t capture the numbers, occupations or locations of workers employed. Labour force survey data doesn’t capture projects. The specific competencies and numbers required to deliver different types of project have to be inferred; gaps and surpluses are interpolated and extrapolated. 

NISTA’s UK infrastructure pipeline lists £718bn-worth of projects for which there are both a demonstrated need and a business case. The second edition, published this March, included analysis on workforce and skills demand broken down by region and sector. It was hailed as a substantial improvement, and yet still does not provide the confidence companies need to invest in up-skilling, to bid more competitively and deliver more effectively if they win. 

Dr Doug Forbes, director of forecasting specialist Whole Life Consultants, co-ordinated the analysis and crunched the data. Current forecasting is based on broad occupational groups but lacks detail, he says, and is hampered by a lack of standardised terms and descriptions across the industry. This makes overlaps and competition, synergies and opportunities hard to identify. A common taxonomy is required.

1,200% capacity increase 

When a fine level of granularity can be achieved, the insights are startling and useful.

In 2022 energy regulator Ofgem announced the Accelerated Strategic Transmission Investment framework for 26 major projects. Consultant Arcadis assessed the workforce requirements, itemising them for specific assets and activities.

Arcadis next calculated how workforce demand would be distributed across the programme and checked whether skills were available.

“Nobody knew how many people in the UK were qualified and capable,” said Simon Rawlinson, Arcadis’s head of strategic research and insight, at the INSPIRE conference. “The programme overall represented a doubling in the transmission sector workforce,” with “very large” increases for many specialisms.

Analysis showed increased demand, measured against the sector baseline, of 600% for construction, design and engineering, and 1,200% for tower erection.

Rawlinson warned that the scale of programmes such as ASTI will create competition for resources internally. There will also be competition between programmes and sectors. “Nobody really thinks about how you co‑ordinate electricity, water, nuclear, transport… We put programmes out to the market and just hope they get delivered.

“This is a really easy-to-foresee problem which doesn’t appear to attract [a] strategic response.” 

Avoiding skills choke points 

Forbes stresses the value that would be brought by developing an inclusive and collaborative approach to workforce demand forecasting and analysis. It would require clients, supply chain organisations and training providers to share detailed data at a local, regional and national scale, using a common taxonomy and methodology – a huge undertaking, but essential to co-ordinate projects and programmes, and limit the severity of skills choke points.

The NISTA pipeline is a helpful departure point, at least for public sector and regulated projects, Farmer said. “It’s starting to tackle workforce modelling. It’s not the finished article but is taking shape.” He challenged conference delegates, representing clients, government, contractors, consultants and suppliers: “How do we move this on into a live, dynamic modelling tool that also embodies private sector workload?” 

For an industry continually bemoaning skills shortages and in need of confidence to invest in its future capability, it’s a challenge that should be taken up.