The Built Asset Blog
Safeguarding delivery for the residential sector – The ‘Human Resources Glass Ceiling’
As we continue to move into uncharted waters regarding the ability of the construction supply chain to deliver the new development volumes increasingly being released into the market, the concerns of developer clients are growing regarding how many of these projects will physically get delivered.
The pressure points around resource are already under stress at our current level of output delivering 120,000 units per annum, so meeting the government’s targets of 240,000 plus units per annum seems the ultimate challenge.
What is becoming increasingly evident is that the supply chain’s attitude to future work is hardening and that the terms and pricing are reflecting the buoyancy of the market. However, reinforced by the recent problems experienced by clients delivering residential, the make-up of contractor teams is also crucial, and scrutiny needs to go beyond the collective corporate identities of the project team to the individuals themselves.
Wrong decisions are frequently made based on price which has led to either inappropriate resourcing or in some more extreme instances, insolvency issues. Parallel to this, beyond price driven selection, there is the physical inability of certain parts of the supply chain to resource appropriately, at any price!
There is a race to secure the right expertise at all levels, from project directors to experienced site tradesmen. The finite pool of high quality resource in the construction market is potentially a greater issue than the much quoted pressure on materials supply such as bricks and steel.
Away from the urgency of training & developing new resource, the dangers associated with job market volatility are increasing and both contractors and consultants are having to work hard to retain the best people. Personnel moving around the industry has always happened but I sense we are going through a particularly volatile period. This in turn leads to continuity issues and the chance of inappropriate replacement of resource.
All in all, the development delivery risks associated with residential have never been higher and vigilance in ensuring promises made at point of selection of supply partners are adhered to is critical. It would appear however that we are approaching a point, especially in London, where certain projects that aren’t attractive enough may not get delivered at all, or if they do, their delivery risk profile is greatly heightened and they have a price tag which starts to threaten viability.
There is an obvious requirement to increase the number of new entrants into our industry and adopt different approaches to delivering residential construction. I think this will become an increasingly urgent consideration for government to underwrite such initiatives and also the required long term investment. The real issue though is what happens in the intervening period. While we grapple with the industry attraction challenge, an ageing workforce and whilst scalable off site production capacity is still being built, the skills shortage we are now facing is in danger of creating a real glass ceiling on the UK’s residential delivery capacity, whilst also ultimately impacting UK plc’s ability to deliver major infrastructure and respond to any wider commercial property market recovery.
Do you agree? To hear more about my view on this issue, please read my latest viewpoint Solving the Delivery Capacity Conundrum.
Mark Farmer
EC Harris, Head of Residential
The pressure points around resource are already under stress at our current level of output delivering 120,000 units per annum, so meeting the government’s targets of 240,000 plus units per annum seems the ultimate challenge.
What is becoming increasingly evident is that the supply chain’s attitude to future work is hardening and that the terms and pricing are reflecting the buoyancy of the market. However, reinforced by the recent problems experienced by clients delivering residential, the make-up of contractor teams is also crucial, and scrutiny needs to go beyond the collective corporate identities of the project team to the individuals themselves.
Wrong decisions are frequently made based on price which has led to either inappropriate resourcing or in some more extreme instances, insolvency issues. Parallel to this, beyond price driven selection, there is the physical inability of certain parts of the supply chain to resource appropriately, at any price!
There is a race to secure the right expertise at all levels, from project directors to experienced site tradesmen. The finite pool of high quality resource in the construction market is potentially a greater issue than the much quoted pressure on materials supply such as bricks and steel.
Away from the urgency of training & developing new resource, the dangers associated with job market volatility are increasing and both contractors and consultants are having to work hard to retain the best people. Personnel moving around the industry has always happened but I sense we are going through a particularly volatile period. This in turn leads to continuity issues and the chance of inappropriate replacement of resource.
All in all, the development delivery risks associated with residential have never been higher and vigilance in ensuring promises made at point of selection of supply partners are adhered to is critical. It would appear however that we are approaching a point, especially in London, where certain projects that aren’t attractive enough may not get delivered at all, or if they do, their delivery risk profile is greatly heightened and they have a price tag which starts to threaten viability.
There is an obvious requirement to increase the number of new entrants into our industry and adopt different approaches to delivering residential construction. I think this will become an increasingly urgent consideration for government to underwrite such initiatives and also the required long term investment. The real issue though is what happens in the intervening period. While we grapple with the industry attraction challenge, an ageing workforce and whilst scalable off site production capacity is still being built, the skills shortage we are now facing is in danger of creating a real glass ceiling on the UK’s residential delivery capacity, whilst also ultimately impacting UK plc’s ability to deliver major infrastructure and respond to any wider commercial property market recovery.
Do you agree? To hear more about my view on this issue, please read my latest viewpoint Solving the Delivery Capacity Conundrum.
Mark Farmer
EC Harris, Head of Residential
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