Is there a Demographic Craft Labor Cliff that Will Affect Project Performance

RT-318 Topic Summary
RT 318

Overview

This research team analyzed craft availability in the United States and Canada and its impact on the construction projects performance focusing on cost, schedule, and safety.

At the strategic level, RT318 followed two parallel paths to investigate the labor cliff. Following a literature review, the first track sought to identify the location of the labor cliff based on an extensive analysis of secondary data sources. The second track constructed a database of completed projects using data from an RT318 survey and the CII Benchmarking and Metrics Database. Statistical regression analysis was used to develop the Craft Risk Availability Forecasting Tool (CRAFT) which quantifies the risk posed by labor availability on project safety, cost, and schedule performance. These parallel research paths derived the following conclusions and recommendations:

  • The demographic craft labor cliff is here, and it is impacting project performance.
  • The cliff varies by trade and region. The Southwest and Southeastern United States are currently experiencing skilled craft shortages, particularly among welders, pipefitters, and electricians.
  • There are significant declines in real wages and widespread use of per diem to attract the needed craft. Construction craft workers feel less pride in their work and are increasingly focused on higher wages at a time that the wage gap between construction craft labor at all other industries has shrunk.
  • The average age of the U.S. construction craft workforce is increasing four times faster than all other U.S. industries during the last decade.
  • Lack of educational attainment among the Hispanic workforce serves as a barrier to Hispanics moving into higher skilled trades where there is great demand such as welding, pipefitting, and electricians.
  • Decline in career and technical education among high schools across the country and the emphasis on 4-year degrees as a path to career success.

Key Findings and Implementation Tools

1 : Regional Craft Labor Shortages

Some regions of the U.S., especially in the Southwest and Southeast, are expected to experience severe pipefitter shortages while other areas will experience surplus labor conditions. Projections for welders and electricians are in the RT318 Research Report. (RS318-1, p. 3)

The figure below shows Future Pipefitter deficit/surplus for First Quarter 2018.
Reference: (RS318-1)

2 : Construction Real Wages

The gap of real wages almost shrunk by half in 2014 when compared to 1974. The construction industry’s workers in 2014 earned $5.53/hr. less real income than in 1974, while the total private industries’ workers in 2014 earned $0.67/hr. less real income value as in 1974. (2014 Dollar Amount – Inflation Adjusted) (RS318, p. 10) 

The figure below shows this gap for 2014 inflation-adjusted wages.
Reference: (RS318-1)

3 : Project Performance

RT318 developed a model to predict the impacts of craft labor shortages on project performance. Analyzing survey data and CII BM&M database enabled the research team to define 5 severity levels for craft labor shortage:

(RS318-1, p. 21)

  • Very severe – Staffing difficulties led to project delay
  • Severe – Staffing difficulties led to delay of completing project milestones
  • Moderate – Staffing difficulties led to delay of completing project activities on time
  • Slight – Staffing difficulties led to consumption of schedule float and/or contingency
  • No difficulty – There was any shortage. Able to staff the project with no delay on construction.
Reference: (RS318-1)

4 : Implementation Tool #1

IR318-2, Impact of Craft Labor Availability on Project Performance (CRAFT)

This resource provides a CRAFT five-step process for quantifying the risk posed by labor availability on project safety, cost, and schedule performance. CRAFT is a risk analysis tool and decision-making aid focusing on heavy industrial projects in the U.S. and Canada.
Reference: (IR318-2)

Key Performance Indicators

Improve safety, Improved cost, Improved schedule, Improved craft productivity

Research Publications

Is There a Demographic Labor Cliff that Will Affect Project Performance? - RR318-11

Publication Date: 08/2016 Type: Research Report Pages: 346 Status: Reference

Is There a Demographic Craft Labor Cliff that Will Affect Project Performance? - RS318-1

Publication Date: 09/2015 Type: Research Summary Pages: 30 Status: Supporting Product

Craft Risk/Availability Forecasting Tool - IR318-2

Publication Date: 09/2015 Type: Implementation Resource Pages: 7 Status: Tool


Supporting Resources

Presentations (CII Annual Conference & Workshops)

Plenary Session - Is There a North America Craft Labor Cliff That Will Affect Project Performance?

Publication Date: Presenter: Number of Slides: 16 Event Code: AC2015

Implementation Session - Is There a North America Craft Labor Cliff That Will Affect Project Performance?

Publication Date: Presenter: Number of Slides: 48 Event Code: AC2015


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