Cautious optimism – that’s about the best way to describe the current mood in Alberta’s construction industry. Industrial construction has returned to early-2008 levels and commercial construction has gained momentum.
While short-to-medium-term prospects look promising, Alberta’s contractors are finding themselves haunted by an old bogeyman – a looming labour crunch. Manpower shortages emerged as a concern towards the end of the last boom and have resurfaced recently as the province’s economy has begun heating up again. A recent survey by Calgary Economic Development identified manpower challenges as the single biggest issue facing the city’s business leaders, with nearly a quarter citing it as a concern. Concern is growing about a looming labour shortage in construction as a result of economic growth combined with a gradual exodus of retirement-age workers, with experts estimating that some 320,000 new construction workers will be needed between now and 2019. Here in Alberta, a shortfall of some 40,000 workers over the same period is expected.
The cost of labour further compounds the problem. “Alberta has among the highest wage rates for tradespeople,” says Kent Dietrich, workforce manager with PCL Builders in Edmonton. “Many of the young people who have entered the trades in the last five to seven years have been able to pick and choose who they work for and where they work. Employers have a challenge ahead of them in providing incentives and programs in addition to the high wages necessary to attract and retain workers.”
While contractors across Alberta are bracing for increased competition for labour and steeper costs, many are optimistic that the industry has learned from past mistakes and is ready for the coming boom. “The industry is more prepared for another boom than it was five to six years ago,” says Dietrich. “We’ve got a lot more skilled tradespeople than we did before, and we are able to train a new workforce more effectively.” There also appears to be a consensus among contractors as to the best strategies for mitigating labour costs. All, ultimately, come down to flexibility, creativity and inspired leadership.
Link Costs to Commodity Prices
A landmark collective agreement reached in October 2011 between construction companies and the Building Trades of Alberta – an umbrella organization of provincial construction unions with a combined membership of more than 60,000 tradespeople – tied wages to both the price of oil and the consumer price index (CPI) for a four-year period. Over that time, workers will receive wage increases of between two and 14 per cent, depending on the underlying prices.
Some in the industry are now urging the provincial government to reopen the province’s labour code with a view to permitting bargaining units that include workers from a variety of trades, arguing that Alberta has fallen behind other provinces (notably Saskatchewan and B.C.) in cost control in the construction sector because it has failed to allow them.
Have a Good Game Plan
Out-of-control labour costs typically arise from overambitious construction schedules, duplicated duties and poor organization resulting in confusion and chaos on worksites. “If you don’t have a good game plan, labour is going to be far less productive and costs are going to go up,” says Don Muth, founder and president of Muth Electrical Management Inc. “Some of the factors are unrealistic schedules, too many bodies overlapping and poor organization on the sites.” Muth adds that problems often arise from discord among subcontractors with no history of collaboration. “In some situations, you have subcontractors who have never worked together before at odds with one another. If you don’t take these factors into consideration in your game plan, you’re going to have problems.”
The key to mitigating those sorts of problems is a thorough planning process that takes place before the first shovel goes into the ground. “You have to break down the project into specific tasks and set productivity rates,” Dietrich says. “You have to review historical data and set productivity standards accordingly. For general contractors, labour and man-hour requirements have to be reviewed and work plans developed by looking into various forming systems, so as to maximize productivity.” Following this stage, selecting the right crew blends and motivating them with productivity benchmarks is a vital component. “You have to know how to set your crews,” says Brian Lacey, vice-president of construction for Clark Builders. “You need good, adjustable crew blends that are conducive to labour efficiency. You also need to empower your field teams with milestones.”
Organize your Labour
Once a project has begun, an intelligently organized work site is a key element in maximizing labour productivity. “There’s a lot to consider when organizing your work site,” Dietrich says. “You have to think about the placement of materials, lunchrooms, washrooms and site offices. You need pictorials showing material storage areas and site plot plans that are posted.” Dietrich also says clear communication of roles and responsibilities is an equally important component of work site organization. Technological innovations may one day prove useful in keeping a work site well organized. One such innovation is the i-Booth (Information Booth), a revolutionary new on-site digital information kiosk developed by the University of Calgary’s Dr. Janaka Ruwanpura that covers everything from technical details to worker expectations. It’s still in the experimental phase, but the tool was employed on a trial basis by PCL in late 2009.
More conventional technologies like computers and stopwatches are already playing a role in helping contractors keep meticulous track of labour productivity. “If you’re not monitoring your labour, you really have to start doing it,” Muth says. “Once you’ve established realistic working hours, you have to build a system to measure the results. It doesn’t matter if you have a two-man crew or a 50-man crew. You need to be tracking your labour as closely as possible.” Dietrich shares this view and says daily and weekly evaluations followed by revised targets for crews are helpful in this process. He also says two-way communication is essential in setting realistic targets and evaluating results. “We always solicit feedback from crews. That way we can find new and better ways to complete tasks and exceed the productivity rates we set for ourselves.”
Motivate your Workers
An unrelenting emphasis on tracking “wrench time” can lead to worker resentment and result in slower production. Various studies on construction worksites have illustrated that setbacks in production are more often the result of unclear plans and supply chain interruptions than time-wasting by workers. Delegating responsibility to teams not only allows for greater flexibility in overcoming unforeseen challenges and signifies respect from the top.
“I’ve seen it happen where there’s not enough respect for the people swinging the hammers,” says Brian Lacey of Clark Builders. “Retention is critical. If people are underperforming, you don’t just cut them loose. Maybe they’re not being mentored properly. Maybe there are other problems. Maybe they don’t even know they’re underperforming. And more often than not, when you dig deep you find that a breakdown in communication is the source of the problem.” Don Muth emphasizes the importance of having quality leadership on-site. “Workers need to have a sense of ownership in a project,” he says. “And for that you need well-trained leaders with great people skills who can deal with never-ending changes and potential conflicts.”
Invest in your Workforce
With Alberta’s construction workforce among the most highly skilled anywhere, there is a growing recognition across the industry of the importance of continued training and upgrading at all levels.
Clark Builders has been widely praised for its commitment to ongoing learning through its internal training institution, Clark Builders University (CBU). PCL has long distinguished itself through its generous funding for construction training at the Northern Alberta Institute of Technology (NAIT) in Edmonton, the Southern Alberta Institute of Technology (SAIT) in Calgary and the British Columbia Institute of Technology (BCIT) in Vancouver, as well as through its own internal training institution, the PCL College of Construction.
For Brian Lacey, training is good for business across the board, from ensuring work-site safety to maintaining harmonious working relations that are conducive to productivity. “Our business is becoming widely recognized in terms of soft skills building,” he says. “I’m a firm believer in the fact that technology can never replace the human element and that it’s meaningless if you don’t have good working relations between people.”
Kent Dietrich also notes that training is an important aspect in employee retention at a time of tremendous labour mobility. “Wage incentives are important but not enough,” he contends. “You need to provide training and advancement opportunities.”
Land of the Rising Building
Secrets from Japan’s Construction Industry
When it comes to workplace efficiency, productivity and profitability in the construction industry, few countries do a better job than Japan. Evidence of this efficiency is ubiquitous in Tokyo and other cities, where new buildings are erected seemingly overnight, with very little disruption to civic life. In a 2008 article in the UK-based Building Magazine, James Clegg identifies nine elements that set the Japanese construction industry apart from its counterparts elsewhere.
Training – Workers train for a full year before ever putting their boots on a work site.
Morning briefings – Briefings are conducted every morning before the morning shift begins.
Warm-up – Workers typically start every morning with calisthenics.
Project board – An outline of the day’s schedule and production benchmarks is set the previous day.
Vertical hoist – A single hoist at the centre of a building transports workers and materials.
Waste control – Contractors typically segregate up to nine different types of waste for recycling on projects.
Health and safety – Sites are organized so there is virtually no debris, minimizing the risk of injury.
Customer service – Under Japanese law, contractors are held liable for defects for the first two years of operation.
Off-site building – Much of the construction takes place in off-site factories, with components prefabricated and transported to the site.