A number of factors need to be considered when determining how to construct a large capital project. The Construction Management Team needs to determine: if execution will be done horizontally or vertically; what components should be prefabricated off-site and / or built in modules; how should packages of work be put together for bidding (size, mix of trades); etc. The choices will depend on things like costs, availability of material and equipment and, of course, the availability and cost of labour.
Labour supply is one of the most important determinants of project cost and schedule. Too often Project Teams do not understand how decisions they make impact labour supply and therefore impact construction costs and schedule factors.
What we see is not so much poor choices but rather a failure to make decisions at all. There may simply be an assumption that there is always enough people to get the work done or that it is the contractors’ problem and not a factor the project owner can control. However, decisions regarding engineering design, constructability and labour strategy are dependent upon knowing about the availability of skilled labour and nature of the various labour pools in Canada and ultimately will have a huge impact on labour supply, project cost and schedule.
Too often project teams limit their research and risk analysis to only the concern for labour supply. It is not solely the supply of labour however that needs to be considered. In Canada, there are different “labour models” that dictate how labour is employed that can impact on project execution and productivity. However, let’s first discuss supply.
When there is a good supply of trades people ready and able to work on capital projects across regions in Canada, all is well. However, as the economy cycles and it can swing in a matter of a few short years major projects can face a significant labour supply risk. In any given region, the local supply can change quickly with the introduction of just one or two other significant projects. It is therefore important for the project owner do their homework to figure out precisely what is happening in the trades labour market. This includes conducting a study on current and projected labour supply to determine the degree of risk faced by the project during the planned construction period. Armed with this information the Project Team can make better choices about the construction options available to them.
Engineering design, the ability to modularize, and the size and nature of bid the packages are all examples of constructability decisions. Labour supply and labour costs should influence these decisions. Why? The answer is simple; these constructability decisions impact the size of the required labour force, the type of labour pool available to build and labour costs. Let’s look at modularization and pre-fabrication as an example.
Prefabrication of components and modularization are options that should be considered. The decision to modularize is dependent on having an up-to-date the labour market study to determine local and regional labour supply. If the study indicates that there is a shortage of labour in the region where the site is located, there may be a need to accept the transportation costs of modularization. Offsite building of components offers a number of advantages:
- Factory type environments or yard specific facilities are more controlled and may be manufactured to higher quality standards than site built due to the environmental advantages;
- Regardless if the construction site itself is exclusively unionized, components can be constructed by non-union or alternate union labour workforce at lower costs;
- Modular and pre-fab builders have skilled labour for their area of expertise with dedicated workforces;
- With appropriate lead time this approach can shorten the build schedule.
These advantages can be realized if the project is near an urban center where there is a capability to manufacture components and to build modules or where the site is easily accessed by sea (i.e. on a coast). In some instances, though, where the project is too remote or otherwise inaccessible, the cost of transportation could negate any potential savings. In this case “stick-building” (i.e. building on site) may be the preferred option.
Simply put: There is a need to investigate the labour market and determine what, if any risks exist early in the project so that important decisions about how to build can be considered.
Studying the labour market early in the feasibility stage should be a standard practice, not simply to identify the supply risks but also to understand the nature of the contracting community and local workforce so that decisions can be made to develop a labour approach and to design construction plans that are informed by the labour market and the project’s decision about its labour strategy.
The chances of a project being on time and on budget are greatly enhanced when the Project Owner understands the marketplace and makes informed decisions early in the project planning about its chosen labour strategy.