2012CIQS AGM Presentations Construction projects’ risks – Achieving successful fiscal results in a stressed labour market
By Natalie Dione Alexander, PQS
The following is an excerpt from a presentation given at the 2012 CIQS AGM.
Negative impacts of a stressed labour market • Fast pace economic recovery can erode the pool of skilled workers • If the demographic trend is not increasing at the rate of the continuing demand • Increase in project delays due to shortage of skills to complete the works • A country failing to meet the global competitiveness of the market. • Failing to meet the needs of investors • The rate of growth for labour and capital is the most important determinant of economic expansion. What Is a Quantity Surveyor? • A Quantity Surveyor is a professional person working within the construction industry. The role of the QS is to manage and control costs within construction projects and may involve the use of a range of management procedures and technical tools to achieve this goal. (Source: QS of BC Website) • A Quantity Surveyor is the person responsible for figuring out what a building is going to cost and in some cases making sure that construction costs and production are managed as efficiently as possible. A Quantity Surveyor identifies and collate the costs involved in order to develop an overall budget for any project. They can then undertake cost planning which aims to help members of the design team arrive at practical solutions to stay within the project’s budget. (Source: New Zealand Institute of QS Website) Taking a look at the areas Quantity Surveyors are involved in within the Construction Industry: Type of projects: • Commercial • Private • Government • Institutional
Services: • Estimating and Cost Planning • Contract Procurement • Project Monitoring • Contract Administration • Project Coordination and • Value Analysis/Value Management • Contract Management Understanding where the market is heading In March 2012, the Canadian Construction Association reported that Canada is projected to become the fifth largest construction market in the world by 2020. By 2020, according to a recent PricewaterhouseCoopers report, Canada’s boom in infrastructure should make this country the fifth largest construction market in the world, up two spots from its current seventh place. Construction activity in Ontario will help drive that improvement. For example, the report cites construction related to the 2015 Pan Am games in southern Ontario, as well as major transit projects in Toronto and Ottawa. Construction outlook 2011 – 2019 Newfoundland is driven by current and proposed major projects. The construction labour markets in Newfoundland and Labrador will encounter volatile cycles across the outlook scenario between 2011 and 2019. Looking forward from 2011, the construction scenario consists of a dramatic ramping up of non- residential trades and occupations for major industrial and utility/resource projects. Managing these labour markets will be complicated by limited population and labour force growth. In this environment, labour markets reach extreme high and low conditions. (Source: Construction Sector Council January 2011) Ontario: 120,000 new workers by 2020 In total, the Construction Sector Council reports that the province will need a total of 120,000 new construction workers between now and 2020. This figure
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includes 43,000 new workers to meet growing demand and 77,000 more to replace existing workers who are expected to retire during that time. Ontario’s northern region is expected to be a key driver of activity, with large mining and infrastructure projects in the pipeline, as well as mining construction projects scheduled underway in the Sudbury area and north eastern part of the province. Greater Toronto Area (GTA) will also be a driver of construction growth, as activity ramps up on labour-intensive construction projects such as the Pan Am games and the Eglinton transit line. (Source: The Construction Sector Council February 2012) The bottom line It is worth looking at how Canada will strategically position itself to handle such a growth. How will construction grow in Canada over the next decade? Construction Employment by Trade: Construction Estimator/Quantity Surveyors Data Type 2006
2011
2012
2013
2020
Employment (Total) 9,470 10,643 10,795 10,857 11,655 (Source: Construction Forecasts website of the Construction Sector Council (CSC) (Feb. 2012)
Construction growth in Canada over the next decade (%) 2006 - 2011 > 11.02% 2011 - 2012 > 1.41% 2012 - 2013 > 0.57% 2013 – 2020 > 6.85% ____________________ 2012 - 2020 > 7.38% 2011 - 2020 > 8.68% Is Canada’s construction industry really experiencing stress on its labour market? The BIG Question Answer ... YES In February 2012, The Canadian Chamber of Commerce has predicted that over the next decade, we would see shortfalls of 163,000 in construction ALONE.
