Streamlining Front line Operations – Indian Construction Contractors

Three players Training Agency + Staffing Organization + Contracting Organization could play influential role in transforming the way the construction industry sources skilled workforce and carries out works at construction sites. Each of the big-time contracting organizations must only look at creating a win-win situation for the prosperity of the business and industry at large. Embracing the ‘Partnering’ concept is the only way forward to move ahead. If one success story could be built involving these three players, it could perhaps set the norm for other organizations to follow.

Background

Sub-Contracting is an inherent characteristic of the construction industry. While on one side if it has been the main reason for survival for today’s large organizations, it has also been the main cause for the perception that the industry has been carrying today in everybody’s mind. This perception has built around the entire ‘Complexity & Complications’ existing today in the Construction Industry. Complications arising from the ‘Fast Track Approach’ towards construction projects, out of networking issues within various stakeholders, difficult structures, difficult shapes & sizes etc., can still be addressed in one way or the other. However, ‘Complexities’ have gone deep down to be defined as the characteristic of the industry. Sub-Contracting nature of the industry has given rise to these complexities which has further given rise to the peculiar ways of handling construction works, sourcing the contract even if it is falling in to the trap of ‘L1’, causing delays, bias in selecting the right contractor, disorderly procurement of resources, inventory / stock management, piling up of disputes, disruption of works, running away from execution in-between, contract condition formulations, increasing academia-industry gap etc. Sub-Contractors have also been the cause for most of the wages being below minimum wage prescribed, non-compliance etc.

Traditional old-time sub-contractors clinging on to either large family owned contracting organizations or those who move along with well-wishers, have been the main cause of resistance to bring in change despite facing multiple concerns themselves.

Context

Availability of skilled workforce amidst greener pastures, their movement within the industry from say building to infrastructure or vice-versa depending upon which sector is performing better and offering more opportunities, organizations looking forward to working with less labour in a labour intensive market, bringing in more mechanized ways of construction or adopting pre-fabricated material or pre-cast material have been some of the causes for shortage of skilled workers.

But we have also realized that at the same time in a labour-intensive market / country, none of the organizations can do away with construction workers as it greatly impacts the cost. Percentage contribution of the labour costs in a project are consistently on the rise and are uncontrollable. Given this background, new ways of worker sourcing are finding their ways into the construction sites. It is negligible in practice today and premature to conclude which works better.

While the government of today has been trying to reinforce the industry with more and more professional practices, wrong doings of the past few decades have been haunting, the way the industry used to operate till date etc., have only added to the woes of the construction industry. As a result, we have seen some big-time organizations almost on the way out, if not revived aggressively. Only the innovative, financially strong and with diversified portfolios are able to survive today in these difficult times.

So, how do we address the shortage of ‘Qualified Skilled Workforce’ available to the construction sites without any worries?

Three Players need to come together for addressing this concern. Contractor Organization + Staffing Organization + Training Organization. If all the three roles were to be emulated by one organization, then it is perhaps the most ideal scenario. However, many have tried hands at the same and failed. Also, practically it is extremely difficult to have workers under the contractor’s role for obvious reasons.

Unlearning + Embracing + Creation + Sustaining is the way forward.

Contracting Organizations (mostly family owned) must unlearn the way they have been working till date. They must recognize and move forward on the points below:

1.     Need for Qualified Skilled Workforce and therefore start deploying at construction sites.

2.     Need for adopting to ‘Minimum Wage Practice’ and Compliance is the only way forward. Paying extremely high for few trades and below minimum wage for majority of trades. This anomaly needs to be eliminated. Majority of the sub-contractors do not involve themselves in any statutory deductions. The show is entirely managed by their alma mater on their behalf. Huge amount of money, manpower resources get deployed in order to address statutory and compliance concerns in lieu of minimum wage bill.

3.     There is no pull factor from the construction industry for attracting a prospective individual to become a construction worker. Working at construction sites mostly is as last default option available. Contracting Organizations here need to understand the fundamental and basic needs of the construction worker who is ‘Key to the Construction Sites’. Contracting Organizations need to acknowledge the following fundamental needs of the construction workers:

a.      Hygiene Needs – Good Camping facilities with basic amenities and other logistical support.

b.     Timely payments

c.      Ease of Working at Construction Sites. This should be dependent on the client billing & payment cycles. Which organizations does hold up salaries of the construction workers in case of delayed client payment?

4.     Define ‘Labour Intensive’ works for and with every contract procured. Estimate the workforce required at various timelines. Form ‘Piece Rate Contracts’ or alternatively identify small end to end works that can be handled by sub-contractors. Define this and offer works.

All the ‘Three Players’ need to ‘Embrace’ the concept of ‘Partnering’. They need to recognize that each of them is partner to do business, therefore earn profits and fulfil larger objective of completing the construction project.

Training Organizations need to ‘Create’ a qualified skilled workforce which is acceptable to the contracting organizations to pursue their business objectives.

Training & Staffing Organizations can be one or multiple entity. If they are different then the ‘Staffing Organization’ needs to ‘Sustain’ this workforce in ways that the industry demands. Contracting Organizations can extend assurance of ‘Job i.e. Site Works’ provided the training agency matches churning out qualified skilled workforce to their expectations.

Major concerns of ‘Staffing Organizations’ would be reflected in the concerns as identified for workers. The only major point of concern to be agreed by the contractor organization would be the business interest of the staffing organizations. Their major role is restricted in facilitating this workforce demand & supply arrangement. Over a period, staffing organizations have all the opportunities to become full time contractor and come in the line of competition with large players of the construction industry.

It is only when these fundamentals are fixed that we could think of more matured ways of handling the construction sites, be it technology enabled project management ways of coordinating, monitoring and controlling or matured human resources practices, more safer ways to construction and so on so forth.