Recognising the link between training and productivity

Wills_John.jpgBy John Wills
CEO, InfraTrain

InfraTrain is greatly encouraged by the government’s recognition that a world-class infrastructure is vital in achieving economic goals, such as increasing productivity, growing exports and narrowing the income gap with trading partners.

We are particularly pleased that investment in infrastructure has been identified by the government as one of six policy drivers, and by the prioritisation of key infrastructure projects such as the Roads of National Significance.

However, despite the emphasis on the role of infrastructure investment in developing the economy, there has been little discussion around the workforce capacity and skills required to ensure the best economic return from this investment.

InfraTrain believes that if it is to maximise the value of the current and planned investment in infrastructure, there needs to be a direct connection between this investment and development of skills.

Many companies have already recognised the link between training and productivity, and have made significant ongoing commitments to upskilling their workforce.

Yet the government still gives little or no recognition to the importance of skills development in the procurement process. Hundreds of millions of dollars worth of contracts have been awarded over the past few years, but InfraTrain is not aware of any where the government has included a requirement for workforce development.

We believe that national qualifications should be embedded into all government procurement attributes, and training made an integral requirement for all government and council contracts over a certain value. Qualified contractors can provide government and local councils with the assurance that work is completed safely, competently and productively. Using qualified contractors is an effective way to ensure the delivery of quality infrastructure and for the government to achieve value for money.

Such an approach has been adopted with great success in Queensland, Australia. The Queensland model specifies that 10 percent of the total labour hours on civil construction projects valued at over A$500,000, must be undertaken by trainees or cadets, and through the upskilling of existing workers to a maximum of 25 percent of the deemed hours. These workers must be engaged in training that has been approved and leads to a nationally recognised qualification.

In future, contractors undertaking government projects in Queensland worth $100 million or more will also be required to appoint a training co-ordinator to implement a skills development plan.

The Queensland model derives income through a levy of 0.1 percent, administered by the Building and Construction Industry Training Fund (Queensland), on all projects where the cost of work is AU$80,000 or more. The fund promotes career and training opportunities in the industry throughout Queensland.

The Australian Civil Contractors’ Federation (CCF) has gone a step further and has recently submitted a proposal to the Victorian government for a Provisional Sum model. This model is consistent with the Queensland model, but specifies that one percent of the total contract value of all government infrastructure projects is used to provide for industry training. The CCF anticipates that, through training-related efficiency enhancements, this model will generate a ten-fold return on the training investment to the state.

InfraTrain believes that these models could provide the basis for procurement programmes in New Zealand, which should be the shared responsibility of the government, local councils and industry.

Initial research conducted by InfraTrain indicates a widespread concern regarding long term skills shortages in the infrastructure industries. Current procurement policies exacerbate the skills shortage by favouring the lowest cost, which encourages companies to cut overheads, including staff development and training costs. Skills shortages tend to encourage poaching of skilled staff, rather than upskilling. To break this cycle we need to focus on long term value for money rather than just short term cost savings.

InfraTrain is pleased to see that the importance of training in government procurement is acknowledged in the Report of the Building and Construction Sector Productivity Taskforce. This report for the vertical construction industry recommends that the government introduce skill and training requirements for government procurement contracts, ranging from trainee through to management levels. The report invites the Treasury and the NZ Transport Agency to consider the inclusion of such a provision in their own contracts. We eagerly await their response.

Some councils in New Zealand have already introduced qualifications into their procurement attributes and are beginning to see the benefits. Last year InfraTrain worked with Nelson City Council, Tasman District Council and Marlborough District Council to provide advice on qualifications, which have now been embedded into their Engineering Standards. InfraTrain is very keen to see other councils follow this move, and is here to work with government, local councils and contractors to take the initiative forward and address the alarming prospect of long-term skills shortages.  

Contractor Vol.33  No.9  October 2009
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