2. A lack of skilled management.

Asked to rate the top challenges, the shortage of quality labor and management finished a very close 1-2, followed by increased competition in the third spot. (See Figure 1.)

Attempting to explain why the shortage of skilled personnel remains a problem, FMI related that the numbers tell part of the story.

The construction industry is seeing record employment, more than 5% over last year. At the same time, the unemployment rate is a low 7.2%. Thus, there aren’t enough people to meet market demand.

Too good an economy

But the construction industry isn’t the only one experiencing a shortage of workers. There is a demand for labor across the board. With a solid economy, qualified people are needed for all types of jobs.

Because of the construction industry’s image, however, firms often find it difficult to compete for new workers.

The report also states that traditional sources for employees are no longer yielding as many workers. Not as many young, white males are choosing a construction career. Guidance counselors, teachers, and parents most often encourage a college education over a trade. Vocational skills are rarely taught in public schools.

The size of the responding companies also had an influence on whether a firm chose skilled management or labor as the top challenge. Companies with over $100 million in annual revenue picked the management shortage as No. 1; those earning less than $100 million selected the labor shortage.

Managing the challenges

The respondents were also asked to identify the challenges to management at the field, project, and senior management levels. As in 1998, effective planning and scheduling is the most important issue at the field and project management levels.

FMI notes that, for field management, leading and motivating is ranked higher this year than last, particularly in larger firms. It is suggested that this may be due to the lower quality of labor that must be must supervised. It may also be due to a lack of supervisory training for field managers.

Leading and motivating likewise is seen as a major issue for project managers.

For senior management, leading and motivating is ranked as the top challenge, the same as last year. Selling and marketing are next, with effective communications third. Customer service also rates high, especially for larger companies.

Mastering both technical and people management skills remains a top challenge to firms of all sizes, FMI stated. Technical skills are affected by the lack of training and less qualified labor.

Although those in management are assumed to have proper skills, there is an apparent need for further development of people management skills.

Productivity

Respondents to the FMI survey list poor pre-job planning as having the biggest impact on field productivity. (See Figure 2.)

The success of a project requires planning and execution, the report points out, and many workers lack either the time or ability to plan and schedule their projects.

The declining skill level of labor is ranked as the second major factor impacting productivity. The larger the company, the bigger the impact.

Changes in design or scope of a job was the third leading issue, while lack of coordination with other contractors was fourth. Thus, FMI reported, internal issues and coordination apparently are greater challenges in the industry than external issues.

Regarding what single factor has the greatest impact on productivity, 77% noted the skill level of labor.