The labor shortage within the construction industry started many years ago and there is no end in sight and no simple solutions.
A recent survey conducted by the Associated Builders and Contractors (ABC) of its members showed 59 percent of them classified the labor shortage as either severe or very severe.
This problem isn’t new to people in the construction industry; the industry could see the problem from a mile away but has been unable to correct it.
Awareness programs, career fairs, apprenticeships, and internships have not produced the workers we need today, which, according to ABC, is 546,000 people for the year 2023.
Baby boomers are retiring from the workforce, and the construction industry can’t recruit enough people to replace them. They can’t hire them, because many young people are attracted to careers in other industries. Because of this, the construction industry is currently experiencing a technological renaissance to become more efficient throughout a project’s lifecycle and to make up for skilled labor shortages.
“What do college graduates want to do? They grew up in the digital world. They can’t remember a time before the internet. They’re looking for careers that allow them to advance those skills, and construction offered them so little for so long,” says Phil Carpenter, Chief Marketing Officer of construction technology company ALICE Technologies. Taking labor into account, ALICE optimizes the bidding, planning, and building processes on large-scale projects, which helps streamline the project lifecycle. Using artificial intelligence, the ALICE platform helps general contractors easily create, explore, and update construction schedules while reducing risk.
“Many people hold the belief that a college degree is the definitive pathway to career success and high schools need to do a better job of making students aware about career opportunities that don’t require a college degree,” says Tim Mongeau, Director of Workforce Development, ABC—a U.S. construction trade association with 22,000 members and 68 chapters. “There are misconceptions about job safety and salary, even though the construction industry is above average on both metrics compared to other industries.”
“We found in our research, construction has a reputation that’s not very favorable,” says Dr. Sarah Buchner, CEO of Trunk Tools, a construction industry technology startup created to solve the skilled labor shortage. “It has the reputation of being heavy, physical work, although, in some trades, that’s not the case anymore. And, there has been a big push for decades for people to go to college, and once someone has a college degree, they tend to see working on a construction site as going backward in their career.”
So, perhaps the construction industry needs to stop looking at the labor shortage as a labor issue and start thinking of it as a public relations issue.
If construction’s labor problem is also a public relations problem, then the construction industry has to come up with other solutions.
“Engagement is most critical,” says Mongeau. “When young people engage in multiple, hands-on, career-exploring activities, it generates interest, which will translate into a higher number of entrants. Our workforce desperately needs more qualified, skilled workers from multiple workforce development pipelines. To address this need, ABC developed a workforce development framework, which targets key entry points, such as veteran organizations, reentry programs, colleges, and high schools.”
And, although ABC has been a leader on this issue for years, Mongeau encourages individual companies to get the word out about the great career opportunities in construction. “Construction companies need to lead the charge and promote opportunities in the construction industry whenever possible. People don’t know what they don’t know, and becoming aware can make all the difference,” he says.
Although addressing misconceptions about the construction industry and making people aware of opportunities in the field is a noble task, that effort will take years to attract enough people into the construction workforce.
“We tried to turn Uber drivers into construction workers but, it’s a difficult task and really difficult to scale. People have a lot of reasons for wanting to not work in construction. Even if we go into high schools and direct students into construction, it’s going to take 10 to 20 years before we have enough laborers,” says Buchner.
Maximize your current workforce
Technology companies are seeing the skilled shortage as an opportunity for digital solutions.
Trunk Tools researched the labor shortage and came up with three possible solutions, each with a different timeline. The solution with the shortest timeline doesn’t involve recruiting new people to the industry; it involves making the current workforce more productive. Construction’s labor issue may actually be a productivity issue. Trunk Tools incentivizes productivity and safety with the existing workforce and aligns the project management team with shared cost savings.
“In construction, baseline productivity is between 20 and 30 percent,” says Buchner. “Our company helps clients incentivize output, so they can increase productivity. If a task is scheduled to be completed Friday, you can approach the crew working on it, and offer each person an additional sum of money for completing the job on Thursday.”
Consider the following scenario. A task takes five days for 10 employees to complete and you pay each employee $30/hour ($240/day). Completing the task in five days will cost you (10 employees x $240/day x 5 days =) $12,000 in labor. If you give each person a bonus of $100 for completing the task in four days, and they complete it in four days (and according to specification), then the labor cost for completing the task is (10 employees x $240/day x 4 days + $100 x 10 employees =) $10,600.
So, the company in the above scenario would save a little money on labor, and they would also shave a whole day off their schedule.
“We work with the project manager on site. They give us a data dump of project information and then we use our sophisticated algorithms to merge it all together. From there, we suggest daily targets and goals, taking into consideration the project budget,” says Buchner. “The project management team can then agree to implement the suggestions or not.”
Improve worker productivity
Construction companies can also enhance the productivity of their current workforce by improving scheduling.
Construction companies use the ALICE Technologies platform to improve the utilization of their workforce. They populate the platform with project data, so they can create multiple schedules and perform what-if analyses. They can ask questions, such as: If I add a second shift, how much faster would we build? And, is it worth the cost? How will speeding up one part of a project affect other parts?
“That exploration results in shorter build schedules and lower project costs, as well as maximize employee productivity,” says Carpenter.
If you have difficulty finding general laborers, for example, you could run a couple of scenarios using different pay grades to determine what is the ideal pay that will attract enough laborers and result in the job being completed at a low cost and on time. You could also run a scenario where you replace some labor with a machine.
“With ALICE Technologies, you can make the most of your resources, which will help address the labor problem, because you use your labor in most efficiently,” says Carpenter.