Recently, both the American Fuel & Petrochemical Manufacturers and the Construction Users Roundtable have made note of the issue of rising demand across multiple industrial sectors and the potential impact this will have on the limited pool of domestic merit and union craft labor.
Multiple sources that track industrial project activity, including Industrial Info Resources (IIR) and the National Academy of Construction, have highlighted the challenges of an expected increase in the number of capital projects to be undertaken in 2014.
As 2013 drew to a close, IIR reported a 9-percent increase in active capital projects in North America, and a 37-percent increase globally. An upturn in the investment cycle brings concerns over rising material and labor costs, as increased demand stretches material, equipment and contracted services supply chains.
But perhaps the chief concern owners and contractors are facing today is the limited availability of trained craft resources. A skilled work force is required to complete new capital projects while also ensuring the uninterrupted operation of existing facilities. Without an adequate work force, project costs and scheduling can be seriously affected.
This isn’t the first time a labor shortage like this has been encountered. In 2007, as investment in capital projects was nearing a record-setting peak, the National Petroleum Council released “Hard Truths: Facing the Hard Truths about Energy.” Among the challenges to ongoing project activity addressed then was the limited availability and pending retirement of experienced craft labor.
In 2007-2008, scheduled expansion and rising labor and material costs prompted delay or cancellation of several projects as the economics of new and expanded facilities no longer achieved the level of return required by owners. While the subsequent economic downturn shifted the focus to other issues, the underlying supply and demand concerns remain largely unchanged as the next investment cycle begins.
But now, labor productivity, craft training and the declining number of entrants into the construction field are once again presenting critical challenges for the industry. The potential impact is magnified today by the breadth of project activity, which is not confined to one or two sectors. Because of the span of the anticipated activity, the shortage of merit and union craft labor is expected to be particularly acute.
Forward-thinking companies are already identifying and engaging innovative solutions to mitigate the risks of executing in tighter labor market conditions. Among these novel approaches is consolidation of services with a provider offering multiskilled craft labor.
Consolidation + multicrafting
Consolidation is not a new trend. Businesses and consumers alike have been moving toward utilization of service providers where core competencies support a competitive offering. Consolidation has become a norm in business today.
The best owners and operators look to trusted service providers to execute aspects of key projects and ongoing operation and maintenance activities. The best service providers work in lockstep with owners and operators to ensure effective and efficient completion of projects and operation of facilities.
Companies with the foresight to contract for services across multiple sites see further advantages: the added benefits of standardization, elimination of work duplication, and consolidation of performance metrics and reporting result in lower costs and higher profitability.
But beyond those benefits, companies are also looking for an even more flexible labor strategy. With a goal of improving project performance while better utilizing the current pool of skilled workers, many owners and operators are turning to service providers that offer cross-trained craft resources. They’ve discovered a multiskilled work force that can fluidly move among multiple activities minimizes idle time while effectively performing work, thereby optimizing craft labor. New capital projects are progressed more quickly toward completion, and existing operations experience minimal interruptions.
Referred to as “multicrafting,” this flexible labor strategy engages workers who possess a range of skills applicable to multiple work processes. Companies employing this technique benefit from overall labor cost savings, decreased project work force requirements and increased average employment duration.
For owners working with a craft service provider, multicrafting is an added value activity, providing fiscal and operational relief as demand rises.
The potential benefits offered through this approach may lead some owners and operators to seek an expedited engagement, with the purpose of reaping those benefits as quickly as possible. Companies that intend on pursuing multicrafting should seek an established provider that can demonstrate a strong history of successes.
Multicrafting: Key competencies
To be most effective, the company contracted for multicrafting services and the facility owner or operator should develop a solid relationship built on mutual trust. The process for evaluating and engaging a multicrafting contractor should consider certain key competencies that, taken together, indicate an owner or engineering, procurement and construction (EPC) contractor will benefit significantly from the relationship. These competencies include:
• Safety — Regardless of project owner, parameters, requirements, location or completion timeline, safety is a cornerstone of every engagement. Any capital project or maintenance activity must have safety as a top priority, and a multicrafting contractor should have a safety record that demonstrates an ability to execute to the required safety standards.
• Quality — A notable advantage of the consolidation and multicrafting model is the opportunity to leverage a single point of contact to drive quality standards and continuous improvement programs. Successful contractors are able to provide proof of such programs and the ultimate benefits customers derive from such an execution model.
• Training — To ensure a capable and prepared work force that can easily transition between tasks, regular and sustained training must be a part of the culture of the contractor. Multicrafting requires continuous education to ensure team members are well versed in the details of each type of craft service. Effective contractors offer results-based, replicable training programs to develop and maintain work force capabilities.
• Resources — Resources refers to both the labor and equipment required to perform the defined tasks and achieve the stated goals. Some contractors may have management-level resources but lack the field craft needed to complete the work, which may then lead to a subcontract arrangement. Service providers that have the resources to self-execute are better positioned to fully leverage the value of the multicrafting approach.
• Processes — A strong emphasis and culture around process-driven execution underlies all key competencies. Without demonstrable procedures and processes, execution can be inconsistent, whether from project to project or site to site. Strong contractors have developed processes to promote achievement of project requirements within defined metrics, minimizing variability across sites and customers.
Making multicrafting work for you
Engaging a multicrafting contractor offers the promise of significant savings in cost and schedule, particularly in an environment in which demand exceeds supply of the very craft labor required to complete a capital project.
The multicrafting model combines the benefits of a single point of contact with a trained work force able to move efficiently from one task to another. The result can be a significant competitive advantage, ensuring the timely execution of a project within a defined budget.
Owners and EPC contractors are right to seek a partner that can offer the kinds of services and solutions necessary for their execution paradigm, but specialty services provider selection should take into account the service company’s safety, quality, training, resources and processes to establish an environment that best promotes success.
For more information, visit www.brockgroup.com or call (866) 280-7601.
