UK public sector projects facing rising costs and delays says new report
Large UK public sector projects run the risk of rising costs and delays unless the issue of a regional skills gap is addressed, according to a report published by EY.
Costs are likely to rise due to projects having to pay a premium for commercial, financial and project management labour, where demand for these skills significantly outstrip supply.
In addition, a lack of skilled labour will lead to delays and projects running over budget.
According to EY analysis, the East of England is facing the biggest project management skills deficit in the UK – with five times as many roles available in the region than skilled labour.
Over the next few years, one of the main drivers of demand here is for offshore wind farms.
The South West follows closely behind with three times as many roles than labour to fill them, with continued demand for project management skills from the Ministry of Defence now competing with the Hinkley Point construction programme.
On the other hand, London has the biggest project management skills surplus in the UK with just over twice as many skilled professionals available to work than projects.
According to the National Infrastructure and Construction Pipeline data, there will be an estimated £500 billion of projects across the UK to 2021 – including Crossrail and Hinckley Point.
Given the scale of the planned investment, demand for project management talent is set to increase significantly. In addition to project management skills and experience, demand for complementary competences such as in commercial and finance are also likely to rise.
Joe Stringer, Partner for EY Government and Public Sector, comments: “We’ve never seen such an increase in demand for project management, commercial and financial skills across infrastructure and government at the same time.
“Combined with the geographic nature of infrastructure programmes, decision makers in most regions can’t assume the skills are there and need to think creatively and embrace better ways of working to ensure that they can deliver projects in a way that provides value for money.”
EY has set out several recommendations to tackle this impending ‘talent crunch’:
Share resources across departments and programmes
As projects develop, we expect to see a growing case for departments and programme managers to track talent requirements needed at certain stages of the project timelines. These should be shared with other teams as early as possible so that talent can be allocated across projects at the appropriate time.
Where resources are limited, organisations will need to think about reassessing project timelines to avoid creating false competition for the same talent. This model should build on the work started by the Government Commercial Organisation to include more junior staff and incorporate a rapidly deployable flexible resource pool.
Be more flexible on skills sets
Project leaders should seek to be more flexible when considering the suitability of specific skill sets for certain roles. This will help reduce the barriers to entry from similar professional competencies. For example, the skills offered by quantity surveyors may, in some cases, meet requirements for procurement programmes with the right training in the specifics of government procurement.
By building flexibility into the requirements of a project, leaders will be able to respond more quickly and effectively to resource challenges. The Ministry of Defence, for example, are taking on commercial and procurement talent from the infrastructure sector for many of their capital-intensive procurements.
Consider new approaches to finding talent
Changes in the UK labour market may provide an opportunity to implement new recruitment approaches and move away from traditional employment contracts. For example, some employees are weighing up their changing needs over time and are foregoing long-term or fixed-term employment contracts in favour of shorter and more flexible agreements.
Building elements of this ‘gig economy’ into the talent acquisition process could be a key step in terms of providing flexible resource across a range of projects.
With increased use of remote working, mobile technology and collaboration tools, the location of employees should become less of a factor. Project leaders should be promoting remote working wherever feasible, and enable talent to engage with more than one project simultaneously or from another part of the country.
Using commercial talent in this way means they can be deployed more efficiently, and is likely to improve long-term retention. In addition, the development of enhanced commercial specific technologies, such as the upcoming Crown Marketplace tool, contract management artificial intelligence and robotics will both reduce the overall labour demand, and will allow talent to focus more on decision making.
Collaborate with the private sector and professional bodies
To work successfully, changes in commercial resourcing cannot work in isolation. Instead they need to be applied collaboratively across public and private sector projects. Professional bodies including the Chartered Institute of Procurement & Supply (CIPS), unions, recruitment consultancies and advisors all have an important role to play in the process as very few entities have the visibility across multiple sectors demanding the same skills.
They can help facilitate collaboration, provide platforms to share best practice, be sources of innovation, share industry-specific knowledge, and help attract and manage the flow of talent so that the right people are matched to the skill sets required for specific projects.
Recognise the importance of taking pre-emptive action
Outsourcing and procurement programmes are set to increase in volume and complexity over the next decade, particularly in the public sector where there is a clear shift from large one-stop-shop contracts to government taking on more responsibility to integrate outcomes across a wider number of suppliers. Tracking the complexity of projects in the pipeline is important in order to ensure that you recruit and retain the right people.
Joe Stringer concludes: “Waiting until the talent shortage is staring us in the face next week shouldn’t be an option. It will take time to implement the necessary changes so it is vital to act now to mitigate the potential impact.”