Last month, the utility Southern Co. sent its primary contractors a letter quizzing them on their level of worker training. The questionnaire is Southern’s first step toward prequalifying and hiring only contractors who invest in worker training. The Construction Users Roundtable recommended the initiative at CURT’s annual conference in Orlando in early February.
CURT’s Labor Risk Management (LRM) Program asks owner members to hire only contractors that commit to spending a percentage of the total contract value on recruitment, retention and workforce training, including through unions. CURT expects owners will help pay for the training. “We are owners, and we have an obligation to invest in people,” said Ed Luckenbach, manager of field execution for Air Products and Chemicals.
The proposal is based on safety efforts the industry uses to prequalify contractors based on their safety record.
“It’s not punitive, it’s collaborative,” said Daniel Groves, director of operations for CURT. “When the owner says you have to do certain things, it levels the playing field.”
The workforce training effort has been discussed since 1997 when it was proposed by the Business Roundtable.
But workforce development was hard to quantify. That has changed over the last few years with the development of the Contractors’ Workforce Development Assessment and the Construction Labor Market Analyzer. Those assessments will be used to provide standardized assessments of contractors under the LRM program. CURT says the staffing impact will be minimal and handled by the LRM team.
Research by the Construction Industry Institute has shown that for every $1 invested in workforce training, there is a return of $3. In one case study shown at CURT’s conference, $235,239 in training costs for one project led to a labor cost savings of $664,364.
Now, a small group of CURT members is proceeding to roll out the full initiative. The early adopters include Southern, Sabic, Air Products and about five other members, Groves said.
Eddie Clayton, workforce development manager for Southern, said the first survey that Southern sent out last month will help develop a second detailed questionnaire that will allow Southern to develop a scoring matrix for its contractors, which will be ranked. The next step will be for Southern to decide which projects will utilize the matrix. Key performance indicators will have to be established to measure contractor and project success. Along the way, Clayton said, the owner will be working with contractors to refine the system. “We want [them] to be part of that process.”
Groves said CURT believes the program will help address the persistent labor shortages in the industry by providing training, which in turn reduces turnover. “It’s being received very well,” he said. “Even though it’s taken many decades—the pain is sufficiently acute, there’s a willingness to take this step. It is a big step.”