Prior to, and exaggerated by, COVID-19, the problem among the construction workforce has been described as a “shortage.” However, the construction industry has not changed how its skilled tradespeople perform the work that does not explicitly require their skill, knowledge, or experience, resulting in a stagnant $0.38 of labor cost for every $1 spent on construction while industrialized industries (farming, automotive, manufacturing, banking, etc.) experience $0.09 to $0.15 on the $1.
If skilled tradespeople continue to be the only option for the installation of work, then the perception of workforce “scarcity” will not change.
To change the perception of a skilled labor “shortage” in construction, skilled workers must start planning, scheduling, and managing work that is to be performed by alternative sources, including nonskilled workers and technology.
This article will lay out the transformation required at the industry, company, and project levels. A case study from Staff Electric is included and shows how such a transformation multiplied the company’s net worth over the course of five years and how Staff Electric transformed from a traditional operational model to transitional and, ultimately, to a professional model.
Changing the Perception
Industries are rooted in specialized skills born out of the desire to meet basic human needs; that is, the more a skill is available, the more humanity prospers. However, to get “more skill” requires transitioning from a controller/worker approach — passing on the specialization tacitly — to an industrialized approach, which protects and expands on the skilled tradespeople’s knowledge and experience more than it does on their work.
In turn, this allows for more consumption of the skill; transformed industries expand on their workforce of individual skilled tradespeople to a spectrum of non-specialty skilled workforce.
As you can see in the case study at the end of the article, Staff Electric has achieved the shift at the project and company levels. However, the change in perception at the industry level starts with a comparison to other industries that have experienced industrialization1 and requires a data-based method to distinguish between an industrialization-ready supply chain company and one that is not.
The approach to selecting qualified subcontractors is traditionally driven by price and relationship. Relying on price only and equating subcontractors as labor and commodity providers has underserved the industry and its customers. In an industrialized environment, the relationship must be based on time, cost, and quality, which must rely on planning and work management over price. The more complex a subcontractor’s responsibility is, the more planning and use of its skilled trade in work management is required.
Industry Perception Change: An Abundance of Resources
For five decades, construction labor productivity has continued to stagnate (Exhibit 1). Now, with fewer labor “inputs” (workers), this will result in less construction put in place (CPiP). If skilled tradespeople are the only option for installation, then the perception of workforce “scarcity” will not change.
So, how does the industry get there? Through the steps of industrialization:2
- Management of Labor
- Management of Work
- Lean Operations
- Modeling and Simulation
- Feedback From the Source
Although some steps may be able to run parallel, the Management of Labor and Management of Work must be performed sequentially. This process starts by understanding the work performed by the skilled trade that does not require their skill (Exhibit 2).
As companies embrace the concept of industrialization, they will begin to see the new ways in which human resources in construction are — and will be — used. In transferring from being content with the know-how of skilled tradespeople to the know-why of resource management, companies will begin to experience a change in how efficiently work gets completed.