When I started working in the industry as a pupil quantity surveyor in the north of England, my employer – in common with most if not all main contractors at the time – employed a large number of direct employees for all of the traditional building trades, such as bricklayers, scaffolders, steelfixers, concrete gangs, carpenters and joiners. The packages that were sublet at that time were the specialist mechanical and electrical works, structural steelwork, plastering and decorators.
At the start of every project the debate about “self-delivery” or subcontracting for these traditional trades was fiercely contested; direct control and skill sets were weighed against certainty of out-turn cost and risk transfer.
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Gradually, the economic burden of having a large “hungry mouth to feed”, irrespective of the availability of suitable opportunities in the marketplace, became irresistible and main contractors made the structural and cultural change towards subcontracting 80% of construction projects which is prevalent currently. This leaves only the balance of management, preliminaries and welfare, risk, overheads and profit in the direct control and influence of the main contractor.
It seems that the next challenge facing major contractors is already starting to bite: how to deliver major projects with management teams who are not directly employed – the construction nomad.
Employment trends have been changing gradually over the last 10 years. People are no longer looking for lifetime employment with a single company, and if they were these companies aren’t able to deliver that level of continuity. Young people entering the industry are pursuing career paths and are driven by gathering experience, knowledge and skills to meet emerging demands and opportunities. On the softer side, people want to take control and be independent and self-sufficient.
A growing trend
On projects with our contractor clients we are seeing 30-50% of construction teams across all disciplines of management, engineering, surveying and co-ordination being made up of freelance workers. This is a trend we can only see growing.
The management of major construction projects is complex – main contractors have always had the challenge of bringing groups of individuals together to form teams and to deliver one-off projects, then moving those individuals on to the next job to form new teams and begin the process again. With stable, directly employed work forces, trained in company systems and processes, this was difficult enough, but with no direct continuity of employment linkage this is magnified.
Main contractors operate on slender margins and it is vital to the successful delivery of these returns that their control systems and reporting are both effective and reliable. This reporting will increasingly be reliant on individuals who are not bound to the company by long-term incentives, pension schemes and other package benefits, and main contractors will need to establish new methods to satisfy and deliver their own governance requirements.
A major contracting risk is knowledge lost through breaks in continuity and loss of key individuals from delivery teams and this needs to be addressed. Company-specific systems and reporting methods will need to be capable of being readily communicated, understood and complied with by people who were operating under a different regime last month and will probably be operating under yet another once the project in hand is delivered.
Just as main contractors have become skilled at managing subcontract procurement and reliant on subsequent delivery of projects through specialist subcontractors, they will need to consider forming relationships with specialist companies and consultancies for the delivery of their project management functions on service level agreements. This would entail professional appointment relationships based on service level agreements, not “body shop” casual agency arrangements for unengaged individuals.
Securing commitment
Creativity in identifying the right individuals and organisations to perform these management functions, defining their terms of reference, incentives and securing commitment for the project duration will be vital to the future relationship between the main contractors and the nomadic construction professional for the future performance of the industry.
Main contractors will need to secure performance and commitment through incentivisation. For companies and consultancies this will mean frameworks and repeat business opportunities, and for individuals this will need to deliver experience and access to mentoring and lifelong learning. It is an imperative for their prosperity that main contractors deal with the challenge of delivering projects with staff they no longer employ and upon whom they are entirely dependent.
Jason Farnell FRICS is a director of CR Management
