This document, about the problems facing UK construction companies ahead of London 2012, was written for the headhunting company, Benchmark.
THE BENCHMARK OLYMPIC BRIEF
On the predicted shortage of staff to service all projects anticipated for London 2012
Infrastructure Executive Search and Selection Specialists
Benchmark Search has undertaken a series of briefs which aim to provide clients, existing and potential, with an insight into the structure and issues affecting specific industries. This brief explores the London 2012 Olympic project, identifying key personnel issues, and ways the industry might address them.
"Without precedent, this is one of the biggest construction jobs in the world."
A commitment to the London 2012 Olympic Games and beyond
By the time the Olympic torch reaches East London in June 2012, five local boroughs, some of the most deprived in the UK, will be redeveloped, their urban decay cleared; the biggest urban park in Europe (at 500 acres, 25 per cent larger than Hyde Park) completed; and the capital’s transport network transformed. A successful Games will bring significant socio-economic and environmental benefits - it is estimated that the total UK GDP in the period from 2005 to 2016 will be increased by £1.9bn. Hundreds of high-profile projects have been, and will be, put out to tender in order that the Olympic infrastructure and venues will be completed to deadline. However, according to senior industry professionals, UK companies bidding for Olympic projects may find they lack employees with the necessary experience and skills.
Olympic construction timetable
Mar 2009 - Underground power lines installed and pylons removed
Dec 2010 - Olympic park’s bridges, roads and utilities built
Jun 2011 - Main stadium, Aquatics centre, Velopark and other venues completed
Dec 2011 - Media centre finished and Javelin high-speed rail link implemented
Mar 2012 - Olympic Village built and furnished
Jun 2012 - Olympic transport plan implemented
"Careful and selective recruitment will ensure projects are completed on time and to budget"
Is the UK construction industry ready for the Games?
Several senior industry professionals believe that most UK construction companies do not have the required experience of such large-scale, complex projects. The recruitment of knowledgeable employees with specialist skill sets is necessary to make up for any shortfall. Athens (2004) encountered much publicised problems due to budget overruns and construction delays and in London, the Millennium Dome and Wembley projects were both significantly late and over-budget. The industry must learn from these mistakes. Industry professionals have identified that construction companies will need to:
· Keep clear financial control at all stages;
· Use a vetting/quality control process when sub-contracting/employing; and
· Have clear recruitment and budget plans set out well in advance.
For companies who have undertaken similar large-scale projects, recruitment has been a major problem where demand for skilled labour exceeds supply. To resolve this, companies are considering outsourcing, employing from abroad or from other industries, or even fast-track training of junior staff to a senior level. Each option has its advantages and disadvantages, which are explored in greater detail later in the brief. Other concerns are the mobilisation / demobilisation of projects, an under employed workforce and the problems of persuading skilled employees to commit to relatively short term projects.
One immediate dilemma for companies bidding for future projects is the skills shortages for such jobs, ranging from civil engineers to project managers. As there is uncertainty as to which projects will be won, and concern that competitors may poach employees, it may be difficult to decide whether to employ specialist staff before bidding. Conversely a full team, able to provide a clear plan with definite time-scale, would be more attractive to the client, and could make the difference between a successful or unsuccessful bid.
"The industry as a whole needs to be realistic and pragmatic in affording special skill set salaries for Olympic projects."
Scope of recruitment plans and budgets
It has been identified that some companies have appointed, or plan to appoint, an Olympic coordinator, or persons with knowledge of previous Olympic projects, to manage the expected increase in large-scale projects, and cope with the problems arising. Ahead of the Olympics, when demand for specialists will be at a premium, it is expected to take much longer than usual to fill senior positions (estimated between 100 and 250 days). To identify where specific skill sets will be needed, it is essential that there is good communication between the Olympic coordinator, the project managers and the human resources / resourcing department. The current feeling, however, is that HR departments may not be fully aware of the extent of potential human capital problems.
Olympic budgets are difficult to predict. Industry professionals have already voiced concerns over budgets spiralling. As the final Olympic deadline is fixed, with an ever increasing desperation to complete projects, costs could overrun severely. The use of consultants, risk assessors, progress managers, and regular budget reviews, will help to combat rising costs. In turn, it is important for the industry to act in a responsible manner when budgeting and affording salaries. There needs to be a collective realism and pragmatism if targets are to be met, to budget, within the Olympic project.
To accommodate the need for specialist skill sets, companies seem willing to allow some flexibility on salaries. Offering incentives, such as relocation packages or travel benefits will help to attract employees. Salary flexibility could, however, cause short-term conflict between similarly qualified individuals on disproportionate salaries, as well as long-term organisational and financial problems. The industry should be wary of an increased demand for certain skill sets, a lesson learnt when IT experts were employed, at great expense, by those wishing to protect against the greatly exaggerated effects of the "millennium bug".
Companies may feel pressured into employing under-skilled, overpaid personnel, whilst others may wish to sub-contract or participate in joint venture schemes. A drive to cut costs could attract large numbers of inadequately skilled yet cheaper and potentially fraudulent workers.
Labour turnover is expected to increase as a result of the Olympic project. Senior professionals within the industry have identified that strategic Olympic plans and budgets need to be put in place. Salaries, budgets and labour turnover (normally circa 12 per cent in the construction industry) look set to increase. Companies may need to identify procedures to keep budgets under control and ensure labour turnover remains steady.
"Manpower planning is a dark art, but the Olympic Games - a golden project - should be incentive enough to attract and retain skilled personnel."
Skill requirements and human capital strategic plans
The major problem on previous large-scale projects has been acquisition of skilled employees at the right time, and for a fixed duration. It is likely that in order to complete Olympic projects successfully, companies will find the following human capital shortages:
Multi-discipline project / contract managers, able to cope with large-scale projects, with a good knowledge of environmental issues;
Commercial managers, quantity surveyors and estimators;
Civil and design engineers;
Transport congestion managers;
IT, electronic and technology managers; and
Carpenters and electricians.
There are a number of options available to fill these gaps:
(i) Local employment
To improve East London in terms of skills, education and health, public sector bodies will create training and employment opportunities for 50,000 people before, during and after the Olympics, though only a fraction will assist in construction. In order to complete project requirements and fulfil all specialist positions, however, companies may have to look further afield to find relevant personnel.
(ii) Employment from within the UK, but outside East London
To be able to work on something as exciting as London 2012 is a great incentive. As well as contributing to a worthwhile project for the improvement of the nation, the ability to include such work on a CV increases personal approval and is attractive to future employers. The cost of accommodation or increased transport costs can be met to encourage temporary relocation or movement within the UK.
(iii) Overseas Employment
The lack of talent and experience in dealing with large-scale construction projects within the UK may prompt some companies to outsource work abroad. However, outsourcing or investing in overseas workers could be expensive and has attached risks due to potential communication problems and differing work ethos. Furthermore, the Criminal Records Bureau (CRB) have made their security checks more stringent, potentially making it more difficult to employ foreign workers, on UK Olympic projects.
(iv) Internal movement
Owing to the expected inflation of salaries at a senior level, a number of companies are considering fast-tracking talent to provide a greater resource of project managers. This, however, could prove just as costly: trainees may drop out, be poached by competitors, or simply not reach a satisfactory level. Competitive salaries and other incentives should be in place to encourage trainees and ward off competitors. In the long term, training and education would be a way to combat skills shortages in the industry, but as there is less than five years until London 2012, all gaps may not be filled in time.
(v) Employment from outside the construction industry
In an attempt to diversify working dynamics, companies are considering hiring employees with expertise in other industries such as aerospace, MoD and the forces, and energy sectors. They will bring with them transferable skills that could be easily trained into effective industry sector skills.
Whichever recruitment strategy is employed, communication between senior professionals and HR is of paramount importance. Human capital shortages need to be realised and resolved as soon as possible. Companies may need to work in partnership with recruitment agencies, to ensure there is a realistic and pragmatic approach across the industry.
"Security checks will be much more rigorous for the Games - buildings will be expected to be as secure as the people building them."
A note on security
In the current international climate, CRB checks are to be more stringent. Histories - both employment and criminal - will be scrutinised. Some companies have improved their own employment checks, mindful of fraudulent or incompetent employees.
A potential terrorist target, the Olympic Delivery Authority has assured there will be adequate security at the Olympics. During the Games, however, the police may be overburdened, and companies may have to consider providing additional security. Outsourcing security is one option, although a number of senior industry HR professionals have discussed the appointment of chief security officers.
Construction companies may need to focus their security plans on resources and timelines for vetting labour forces and contractors/sub-contractors. When preparing security plans, companies will have to balance the practical needs of the construction programme against the need to maintain appropriate anti-terrorist measures. Selective recruitment and good communication will ensure that Olympic projects are secure.
"There may well be unforeseen problems for the construction industry on the path to the Olympics, and beyond."
Additional issues to consider
Although it is difficult to identify all potential problems five years before the Games, companies should be aware of the following:
Government controls
Government regulation and legislation could affect the Olympic construction processes. There may be, for example, equal opportunities legislation that encourage companies to fulfil a certain quota, or parts of the diversity agenda that have implications towards local employment.
Post-Olympics
(i) In the period immediately after the Games there will be clean-up projects for tender.
(ii) Foreign workers with specialist skills, recruited on a contractual basis for the Olympics may, in 2012, feel they can command a premium salary. Some may stay on in the lucrative London market. Since demand for construction will be significantly less, UK workers, as a result, may find they have limited work.
(iii) By 2012 therefore the number of skilled construction workers available to UK companies is likely to outweigh demand, being the reverse of the present dilemma.
Conclusion
· Senior industry professionals have identified that there will be a significant demand for certain skill sets. If UK companies are to successfully complete London 2012 projects on time they may have to address these shortages now.
· With many UK companies lacking the experience of major large-scale projects, or the necessary senior staff to fulfill all future Olympic projects, companies may need to have multiple recruitment plans in place.
· In order to minimise the expected increases in salaries, budgets and labour turnover, companies may need to have specific Olympic recruitment plans in place as soon as possible.
THE BENCHMARK OLYMPIC BRIEF
On the predicted shortage of staff to service all projects anticipated for London 2012
Infrastructure Executive Search and Selection Specialists
Benchmark Search has undertaken a series of briefs which aim to provide clients, existing and potential, with an insight into the structure and issues affecting specific industries. This brief explores the London 2012 Olympic project, identifying key personnel issues, and ways the industry might address them.
"Without precedent, this is one of the biggest construction jobs in the world."
A commitment to the London 2012 Olympic Games and beyond
By the time the Olympic torch reaches East London in June 2012, five local boroughs, some of the most deprived in the UK, will be redeveloped, their urban decay cleared; the biggest urban park in Europe (at 500 acres, 25 per cent larger than Hyde Park) completed; and the capital’s transport network transformed. A successful Games will bring significant socio-economic and environmental benefits - it is estimated that the total UK GDP in the period from 2005 to 2016 will be increased by £1.9bn. Hundreds of high-profile projects have been, and will be, put out to tender in order that the Olympic infrastructure and venues will be completed to deadline. However, according to senior industry professionals, UK companies bidding for Olympic projects may find they lack employees with the necessary experience and skills.
Olympic construction timetable
Mar 2009 - Underground power lines installed and pylons removed
Dec 2010 - Olympic park’s bridges, roads and utilities built
Jun 2011 - Main stadium, Aquatics centre, Velopark and other venues completed
Dec 2011 - Media centre finished and Javelin high-speed rail link implemented
Mar 2012 - Olympic Village built and furnished
Jun 2012 - Olympic transport plan implemented
"Careful and selective recruitment will ensure projects are completed on time and to budget"
Is the UK construction industry ready for the Games?
Several senior industry professionals believe that most UK construction companies do not have the required experience of such large-scale, complex projects. The recruitment of knowledgeable employees with specialist skill sets is necessary to make up for any shortfall. Athens (2004) encountered much publicised problems due to budget overruns and construction delays and in London, the Millennium Dome and Wembley projects were both significantly late and over-budget. The industry must learn from these mistakes. Industry professionals have identified that construction companies will need to:
· Keep clear financial control at all stages;
· Use a vetting/quality control process when sub-contracting/employing; and
· Have clear recruitment and budget plans set out well in advance.
For companies who have undertaken similar large-scale projects, recruitment has been a major problem where demand for skilled labour exceeds supply. To resolve this, companies are considering outsourcing, employing from abroad or from other industries, or even fast-track training of junior staff to a senior level. Each option has its advantages and disadvantages, which are explored in greater detail later in the brief. Other concerns are the mobilisation / demobilisation of projects, an under employed workforce and the problems of persuading skilled employees to commit to relatively short term projects.
One immediate dilemma for companies bidding for future projects is the skills shortages for such jobs, ranging from civil engineers to project managers. As there is uncertainty as to which projects will be won, and concern that competitors may poach employees, it may be difficult to decide whether to employ specialist staff before bidding. Conversely a full team, able to provide a clear plan with definite time-scale, would be more attractive to the client, and could make the difference between a successful or unsuccessful bid.
"The industry as a whole needs to be realistic and pragmatic in affording special skill set salaries for Olympic projects."
Scope of recruitment plans and budgets
It has been identified that some companies have appointed, or plan to appoint, an Olympic coordinator, or persons with knowledge of previous Olympic projects, to manage the expected increase in large-scale projects, and cope with the problems arising. Ahead of the Olympics, when demand for specialists will be at a premium, it is expected to take much longer than usual to fill senior positions (estimated between 100 and 250 days). To identify where specific skill sets will be needed, it is essential that there is good communication between the Olympic coordinator, the project managers and the human resources / resourcing department. The current feeling, however, is that HR departments may not be fully aware of the extent of potential human capital problems.
Olympic budgets are difficult to predict. Industry professionals have already voiced concerns over budgets spiralling. As the final Olympic deadline is fixed, with an ever increasing desperation to complete projects, costs could overrun severely. The use of consultants, risk assessors, progress managers, and regular budget reviews, will help to combat rising costs. In turn, it is important for the industry to act in a responsible manner when budgeting and affording salaries. There needs to be a collective realism and pragmatism if targets are to be met, to budget, within the Olympic project.
To accommodate the need for specialist skill sets, companies seem willing to allow some flexibility on salaries. Offering incentives, such as relocation packages or travel benefits will help to attract employees. Salary flexibility could, however, cause short-term conflict between similarly qualified individuals on disproportionate salaries, as well as long-term organisational and financial problems. The industry should be wary of an increased demand for certain skill sets, a lesson learnt when IT experts were employed, at great expense, by those wishing to protect against the greatly exaggerated effects of the "millennium bug".
Companies may feel pressured into employing under-skilled, overpaid personnel, whilst others may wish to sub-contract or participate in joint venture schemes. A drive to cut costs could attract large numbers of inadequately skilled yet cheaper and potentially fraudulent workers.
Labour turnover is expected to increase as a result of the Olympic project. Senior professionals within the industry have identified that strategic Olympic plans and budgets need to be put in place. Salaries, budgets and labour turnover (normally circa 12 per cent in the construction industry) look set to increase. Companies may need to identify procedures to keep budgets under control and ensure labour turnover remains steady.
"Manpower planning is a dark art, but the Olympic Games - a golden project - should be incentive enough to attract and retain skilled personnel."
Skill requirements and human capital strategic plans
The major problem on previous large-scale projects has been acquisition of skilled employees at the right time, and for a fixed duration. It is likely that in order to complete Olympic projects successfully, companies will find the following human capital shortages:
Multi-discipline project / contract managers, able to cope with large-scale projects, with a good knowledge of environmental issues;
Commercial managers, quantity surveyors and estimators;
Civil and design engineers;
Transport congestion managers;
IT, electronic and technology managers; and
Carpenters and electricians.
There are a number of options available to fill these gaps:
(i) Local employment
To improve East London in terms of skills, education and health, public sector bodies will create training and employment opportunities for 50,000 people before, during and after the Olympics, though only a fraction will assist in construction. In order to complete project requirements and fulfil all specialist positions, however, companies may have to look further afield to find relevant personnel.
(ii) Employment from within the UK, but outside East London
To be able to work on something as exciting as London 2012 is a great incentive. As well as contributing to a worthwhile project for the improvement of the nation, the ability to include such work on a CV increases personal approval and is attractive to future employers. The cost of accommodation or increased transport costs can be met to encourage temporary relocation or movement within the UK.
(iii) Overseas Employment
The lack of talent and experience in dealing with large-scale construction projects within the UK may prompt some companies to outsource work abroad. However, outsourcing or investing in overseas workers could be expensive and has attached risks due to potential communication problems and differing work ethos. Furthermore, the Criminal Records Bureau (CRB) have made their security checks more stringent, potentially making it more difficult to employ foreign workers, on UK Olympic projects.
(iv) Internal movement
Owing to the expected inflation of salaries at a senior level, a number of companies are considering fast-tracking talent to provide a greater resource of project managers. This, however, could prove just as costly: trainees may drop out, be poached by competitors, or simply not reach a satisfactory level. Competitive salaries and other incentives should be in place to encourage trainees and ward off competitors. In the long term, training and education would be a way to combat skills shortages in the industry, but as there is less than five years until London 2012, all gaps may not be filled in time.
(v) Employment from outside the construction industry
In an attempt to diversify working dynamics, companies are considering hiring employees with expertise in other industries such as aerospace, MoD and the forces, and energy sectors. They will bring with them transferable skills that could be easily trained into effective industry sector skills.
Whichever recruitment strategy is employed, communication between senior professionals and HR is of paramount importance. Human capital shortages need to be realised and resolved as soon as possible. Companies may need to work in partnership with recruitment agencies, to ensure there is a realistic and pragmatic approach across the industry.
"Security checks will be much more rigorous for the Games - buildings will be expected to be as secure as the people building them."
A note on security
In the current international climate, CRB checks are to be more stringent. Histories - both employment and criminal - will be scrutinised. Some companies have improved their own employment checks, mindful of fraudulent or incompetent employees.
A potential terrorist target, the Olympic Delivery Authority has assured there will be adequate security at the Olympics. During the Games, however, the police may be overburdened, and companies may have to consider providing additional security. Outsourcing security is one option, although a number of senior industry HR professionals have discussed the appointment of chief security officers.
Construction companies may need to focus their security plans on resources and timelines for vetting labour forces and contractors/sub-contractors. When preparing security plans, companies will have to balance the practical needs of the construction programme against the need to maintain appropriate anti-terrorist measures. Selective recruitment and good communication will ensure that Olympic projects are secure.
"There may well be unforeseen problems for the construction industry on the path to the Olympics, and beyond."
Additional issues to consider
Although it is difficult to identify all potential problems five years before the Games, companies should be aware of the following:
Government controls
Government regulation and legislation could affect the Olympic construction processes. There may be, for example, equal opportunities legislation that encourage companies to fulfil a certain quota, or parts of the diversity agenda that have implications towards local employment.
Post-Olympics
(i) In the period immediately after the Games there will be clean-up projects for tender.
(ii) Foreign workers with specialist skills, recruited on a contractual basis for the Olympics may, in 2012, feel they can command a premium salary. Some may stay on in the lucrative London market. Since demand for construction will be significantly less, UK workers, as a result, may find they have limited work.
(iii) By 2012 therefore the number of skilled construction workers available to UK companies is likely to outweigh demand, being the reverse of the present dilemma.
Conclusion
· Senior industry professionals have identified that there will be a significant demand for certain skill sets. If UK companies are to successfully complete London 2012 projects on time they may have to address these shortages now.
· With many UK companies lacking the experience of major large-scale projects, or the necessary senior staff to fulfill all future Olympic projects, companies may need to have multiple recruitment plans in place.
· In order to minimise the expected increases in salaries, budgets and labour turnover, companies may need to have specific Olympic recruitment plans in place as soon as possible.
