A skill crisis is about to savage Australia’s construction industry impacting severely on new projects, according to a global survey released yesterday by KPMG.
According to KPMG, the skill shortage of qualified contractors is the single greatest barrier to new construction projects in
Australian contractors work globally and enjoy an increasing high profile in
“The demand for Australian contractors domestically and offshore is growing and they are increasingly able to be more selective over which projects they take and the terms, conditions – and margins – they negotiate,” KPMG partner Steve Gatt said yesterday.
Gatt believes that with the demand for construction expected to increase significantly over the next five years, the problem looks set to intensify as the pool of qualified contractors able to bid for projects is reduced and the wider shortage of skilled labour impacts the ability of teams to deliver projects on time and to budget.
KPMG’s Global Construction Survey 2007 sought the views of senior executives at some of the world’s largest and most frequent procurers of construction services; for instance looking at their take on the current state of the industry, their levels of satisfaction and the key issues facing future project planning and the appointment of contractors.
KPMG partner Steve Gatt
“In 2005, our survey of contractors revealed that they believed clients were transferring inequitable amounts of risk to the contractors; that is now changing,” Gatt said yesterday.
“Highly regarded contractors will be in a powerful position when negotiating contracts and will be able to transfer more risk back to the procurer.”
Survey respondents are satisfied with the quality of services they receive from contractors with 79% stating they would use the same contractor on their next project that they used on their last and 83% stating they would enter into the same contractual arrangements.
“Given that you’re only ever as good as you’re last job, this is a big tick for the construction industry,” Gatt added.
Gatt said the ‘war on talent’ has for a long time been recognised by the construction industry as an issue with more and more firms seeking to tackle the apparent dearth of qualified workers.
“However, there is a clear threat that as this finite pool of skilled contractors get pulled in ever-increasing directions, projects are at a greater risk of not being delivered on time or to budget.
This may have an adverse effect on both the quality of work being delivered and the reputation of the contractors themselves.
“Many of the companies we surveyed said that they had seen contractors put forward one team as part of their bid to win work, only for them to supply a totally different, and often less experienced team, in order to deliver the project without a commensurate change in costs.
“Contractors do have to look within and question whether they are equipped with the right people.”
Gatt concluded that Australian companies are training a global workforce and as such, are well placed to take advantage of this next surge in growth.
Australian Property Journal
Key findings of the survey:
- Almost half of respondents (42%) voiced concerns that the availability of qualified contactors and the rising costs of construction pose a serious risk to the success of future projects
- A total of 75% of respondents expect growth in demand for construction services to increase significantly over the next five years, with 39% foreseeing a substantial increase in expenditure on construction projects
- Owner confidence in their selected contractor appears to remain very high, with almost 80% of owners claiming they would work with the same contractor on their next project
- Additionally, on-time project delivery seems to have improved in recent years, with 84% of those surveyed indicating their last project was delivered to schedule. Disappointingly, however, more than a third (35%) of projects were not delivered on budget
The issue of fraud appears to be hitting firms hard, with 20% of organisations claiming to have fallen victim to fraud as part of the delivery of recent projects.
