Engineering Today: the Supply and Demand for Engineers in the UK

The latest labour market intelligence report has been published by the Engineering Construction Industry Training Board. Titled Engineering Today: the Supply and Demand for Engineers in the UK, it analyses secondary data

collected from a range of sources to study the characteristics, demographics and education levels of the engineering workforce, from engineers, to technicians and the skilled trades. In addition, the report looks at the future demand and the extent to which the UK has a shortage of engineers. Unlike previous ECITB reports, this study considers the wider labour market for engineers, not just engineers employed in the engineering construction industry.

There are some interesting findings in the report, including:

  • Engineers in the workforce: In 2016, there were just under 465,000 engineers employed in the UK, a 9% increase since 2009.
  • Women in engineering: Almost 9% of engineers in the UK are women (2016), an increase from 5% in 2009.
  • Diversity in Engineering: The industry is over 90% white. There is also evidence that BAME graduates receive lower salaries on average and have fewer employment opportunities.
  • Earnings of engineers: In 2016, the average engineer’s income exceeded £42,000, 49% higher than the average earnings in the UK. Engineering graduates, from apprenticeships and higher education, earned £5,000 more than the average salary for graduates.
  • Engineers in Higher Education: In 2015/16, 38.5% engineering graduates went into engineering professions, the lowest figure since 2012.
  • Apprenticeships in Engineering: In 2013/14 over 90% of engineering apprentices sustained employment compared to an average of 75% for all apprentices.
  • Engineering retirements: By 2026, more than 91,000 engineers, or nearly 20% of the workforce, will have retired or be close to retiring.

This report follows a report the ECITB published in November on the Economic Footprint of the Engineering Construction Industry. Both reports are published as a part of our new Labour Market Intelligence and Research Programme. In 2018, the Year of Engineering, the ECITB will continue to study and analyse the UK Engineering Construction Workforce. Later this year we will publish reports on the future skills requirements of the ECI workforce and how the 4th industrial revolution is impacting skills needs in our industry.

If you have any questions about this report please contact Reuben Overmark, Policy Analyst at the ECITB, reuben.overmark@ecitb.org.uk.

New ECITB report reveals importance of engineering construction to UK Plc

A report into the engineering construction industry has revealed the importance of the sector to the UK economy both today and in the future.

The new research into the engineering construction industry (ECI) – a specialised industry responsible for designing, building and maintaining our critical national infrastructure – reveals an economic footprint that employs nearly 190,000 workers and contributes as much as £325 billion in turnover to the UK economy.

The research into the size and value of the ECI to UK Plc has been carried out by the Centre for Economics and Business Research (CEBR) on behalf of the Engineering Construction Industry Training Board (ECITB). Other key findings in the report show that it pays to work in engineering construction – where the average weekly wage is £631 compared to £439 across all sectors – and that despite a slowdown in the oil and gas sector in recent years, the industry as a whole has been growing – with employment figures rising by 26% between 2010 and 2016 compared to a rise of 15% in overall private sector employment. The study also predicts that this growth will continue, with the ECI set to buck national trends and expand by 17.7% in the next decade, despite broader economic slowdown.

Find out more and download the report here

Nuclear sector theme group

The nuclear newbuild sector faces some major challenges if its renaissance in the UK is to be successful. Therefore this year ECI and Constructing Excellence came together to progress jointly the latter’s theme group in this sector to ensure a cross-sector, construction/engineering response to these challenges. The group’s autumn meeting was hosted by EDF in Somerset last month and featured a site tour of the Hinckley Point C newbuild site. Key owners/clients in the UK, French and Swedish civil nuclear sector are participating, including EDF, Horizon, Sellafield and Vattenfall, as are the Nuclear Industry Association and the World Nuclear Association.

The theme group is led by Adrian Worker of CH2M, formerly of Amec and EDF, and is addressing the productivity challenge in this sector. It will be of no surprise to ECI members that the issues and opportunities being identified are not limited to nuclear. Indeed, when John Fotherby was consulted last week on the group’s draft first output, entitled ‘Factory Thinking’, he commented,

“While nuclear engineering / construction has its own peculiarities, the basic problems apply to all forms of major industrial / infrastructure projects – it’s a question of emphasis and focus. Further, while nuclear projects are major challenges, there are not that many of them constructed around the world – so if the problems are similar in other projects why not broaden the coverage to other areas…?”

We will be inviting some of the key players involved in the nuclear sector and specifically in this work to our event on February 21st in Amsterdam, so that joint exploration of the issues affecting industry at large and the possible solutions might be of benefit to all. Meanwhile, ‘Factory Thinking’ should be released in December, and to be added to the distribution list for the ECI/CE nuclear theme group, please click here. Don Ward

Sir Michael Latham

I and many ECI members were so sad to hear that Sir Michael Latham had died last week. He was the ECI’s first president, from 2001 to 2008. Sir Michael had been a Conservative MP in the UK Houses of Parliament. Widely respected across the floor of the House, he became a household name in the UK construction sector when in 1993 the government of the day asked him to conduct a review of the industry and its troubles. With typical assiduousness he met with hundreds of delegations from all parts of the industry, produced an interim report called ‘Trust and Money’, and then in summer 1994 his final report ‘Constructing the Team’ was published. It was extraordinarily well balanced – he didn’t use the term “win-win” but wrote that he preferred the dodo’s quote in Alice in Wonderland that “all have won and all must have prizes”. For me personally, this was literally career-defining. Soon afterwards I was seconded from BRE to join the implementation team for his review, and a year later I successfully applied to be the Chief Executive of the new Construction Industry Board under his chairmanship, charged with implementing the recommendations. Along with Sir Ian Dixon, Michael provided me with the inspiration to understand, evidence and promote partnering (later collaborative working), client focus and outcomes, collaborative contracts, fair payment, adjudication and so much more into our sector as the components of successful change. He went on to chair so many industry bodies, as well as Willmott Dixon, received many honorary degrees and titles, and was rightly held in hugely high esteem by everyone I ever met. He is survived by two sons, and we send them our very best wishes at this sad time. Don Ward

View from Chair – Nov 2017

What does 2018 hold for Engineering Construction. Is shareholder value likely to improve and will we be making more efficient use of capital? Probably not in 2018 but can 2018 be the year when we embark upon a revolution to fundamentally change the way we do business in Engineering Construction?

We are all investors in the industry – owners, contractors, supply network and service providers – but do we expect to enjoy the returns on our investments we believe to be commensurate with the resources, expertise and endeavours deployed and the risk taken?

For owners how certain are you that your new plant investments will be completed by the date, for the price and to the standard that justified the business case for the investment? Contractors how certain are you that you will complete your projects without incurring unbudgeted costs, be exposed to delay or performance liquidated damages or having dissatisfied clients? Vendors, suppliers, subcontractors will you be expected to deliver exceptional performance under difficult conditions for “break-even” prices?

The questions we must all address are:

Is this an industry in which we can thrive and prosper?

To do so what can and must we do differently as an industry?

What is to be learned from other industries that have undergone significant change eg, shipbuilding, aerospace, automotive etc ?

While research into and development of improved work practises have been taking place for some time, the focus has been on improving the accepted project delivery processes and practices model without considering whether that model is fit for purpose.

If we are to significantly improve shareholder value and capital utilisation so that the plants that the world requires are affordable for all stakeholders then we need a different project delivery model.

The Construction Industry Institute (CII) has embarked upon research into and development of a radically different delivery model – Operating System 2.0 (OS2). ECI/CE has the opportunity to work with CII on this venture.

As a first step ECI / CE and CII are holding a joint event in Amsterdam on 21 February 2018 that is being hosted by Fluor. While the programme detail is currently being developed the objective of the event is to bring together European Engineering Construction stakeholders – owners, contractors, supply network members and service providers – to consider the challenges confronting industry, explore the merits of OS2 and decide how to move forward.

Let’s not miss an opportunity in Europe to be part of an initiative that already has a great deal of support in the USA and growing interest around the world. So save the date, come and join the discussion – and invite your industry colleagues. The event is open to ECI members and their guests and is free of charge. We will be publishing programme details in the New Year.

When will the madness end?

The aftermath of the perfect storm created by the legacy of failing projects (Merrow 2014 et al) and the collapse of the oil price in 2014/2015 has left Engineering Construction in crisis across all industry sectors – survival, not growth and prosperity is currently the name of the game.

Uncertainty is driving reduced levels of investment meaning there is less capital available for projects.  Therefore, what is available must be used efficiently but Engineering Construction is notoriously poor at efficient capital utilisation.

Shareholder value relative to the risks taken is not being realised across the entire project supply network.  This is not sustainable.  Typically, expertise and experience is not being utilised effectively.  Save for some exceptional instances there is an absence of project leadership and management practices are far too often ineffective.

Engineering Construction is not well-equipped to deal with the crisis confronting it.

Other industries (automotive, aerospace, ship building, software etc.) have faced not dissimilar crises but they have survived and prospered after implementing radical change.  So why not Engineering Construction?  What can Engineering Construction learn from these industries?  Is Engineering Construction willing and ready to learn and make the necessary changes?

The way Engineering Construction projects are contracted is fatally flawed.  This requires a complete re-think. The target must be far more efficient and economic investments, vastly improved capital utilisation efficiency, applying experience and expertise far more effectively and economically and greatly improved shareholder value.

However, it is not all doom and gloom.  Industry institutions have recognised the crisis, improvement actions are being debated and implemented BUT so far Engineering Construction is not fully behind the initiatives being generated.  Nothing will change unless Engineering Construction makes the changes. This agenda is pivotal to the work of ECI with ECITB , CII and others.

Projects continue to be contracted on the same basis – typically lump sum EPC awarded to the lowest bidder which is often well below the next lowest bidder. This broken system is propped up by ever-more onerous conditions being imposed on contractors that increase risk when margins simply do not reflect the level of risk being taken – risk and reward is completely out of balance.  For example, recent “clever” lawyering interventions designed to preclude contractors’ entitlement to extensions of time where there are concurrent delays (owner / contractor delays running in parallel) simply mean contractors are unavoidably exposed to delay liquidated damages because it is virtually impossible to avoid concurrent delays on industrial plant projects.  This means serious losses for contractors and their suppliers. Contracting on this basis is pure madness and helps nobody in the long run.

So when will this madness end?  When will Engineering Construction get behind, adopt and implement the radical changes that need to be made so that capital is used efficiently and shareholder value throughout the supply network reflects the risks being taken and the value generated by investment in industrial plants that world economies need?

View from Chair – John Fotherby

It is now two months since ECI joined BRE. I am happy to report  that the transition is working well and the ECI, BRE and CE organisations are becoming well acquainted. While this has been happening we have not stood still and events planned for this year have been arranged. Please note that due to low numbers the Community of Practice Forum on 9 November 2017 has been postponed till the same day as the event on the use of technology in Engineering Construction on 7 December 2017 in central London. This event will be free of charge, but spaces are limited and therefore early registration is advisable to be sure of a place, find out more and register here. We are continuing to build our relationship with CII and we expect to be hosting jointly an event early next year in Europe  – more on this in the next Newsletter.

We have already canvassed ideas for next year – recent suggestions include further client/epc contractor round tables and developing a construction management training programme. Are these subjects that interest your organisation? What else would you like us to do? Please let us have your thoughts – remember, the ECI is there for you the members but we need your input as to what you want us to do.

Winning and executing projects that enhance shareholder value and utilise capital effectively and efficiently continues to be a major challenge  in the current market climate – at the date of writing the oil price remains below USD 60 per barrel. It is clear that there needs to be radical change to the way Engineering Construction conducts its business globally so that all stakeholders benefit from participation in projects that the world needs. The ECI, in collaboration with partner organisations can be the collective voice of industry that initiates and promotes the necessary change. But, it is you the ECI members, that are, in Europe, the industry – owners, contractors, vendors, suppliers, consultants – what change do you want to see …and what are you prepared to do to see the change implemented that you require? The next edition of the ECI Newsletter will include a regular item regarding changes that members want to see in the Engineering  Construction industry – are you and your organisation willing to contribute? Why not let us have your ideas to share with fellow members?

While it is early days, I am more than convinced that joining BRE was the right thing to do for ECI and BRE because this represents a significant opportunity for the ECI membership. However, it is for the membership to identify those opportunities and to contribute to realising them. The ECI is the catalyst and the membership is the active agent – neither can flourish without the other. I know everybody is very busy with day jobs that must take priority but, please, do take time to contribute, no matter how small, to help the ECI flourish for the benefit of you and fellow members.

Call to Arms

As the ECI transitions into BRE/CE it is important that the ECI establishes the necessary governance. This is at three levels – the CE/ECI Board of Management, the ECI Membership Steering Group and the Executive Working Group. The ECI Steering Group is open to all members, the CE/ECI Board Of Management and the Executive Working Group is limited only to those members who want to contribute to the development and implementation of ECI activity. Details of each of these governance levels have been circulated previously – if you require further copies please email eci@bre.co.uk.

Our strength as ECI is our diversity in membership across the entire supply network. We want to represent this in the above governance levels. Therefore please email eci@bre.co.uk who your organisation’s TWO nominations for the ECI Steering Group are and those interested/willing to be appointed to the CE/ECI Board of Management and the ECI Executive Working Group. To make the ECI the success the membership needs and deserves we need your experience and expertise in these areas.

Calls for Innovation!

The National Composite Centre in Bristol was host to the Materials and Manufacturing Roadshow on 17 October.  This was the first in a series of roadshows inviting companies from various sectors to get involved in addressing the challenges facing the UKCS oil and gas industry.  Dr Carlo Proccacini, head of technology for the O&G Authority, put out a call for innovation and collaboration.  There have been 44bn boe extracted from the North Sea so far and current estimates are that there are still between 10 and 20bn boe remaining.  Those remaining reserves are getting harder and harder to extract.  However there have been improvements in production efficiency and unit costs of development, mainly driven by the oil price crash in 2014 – so efficiency has increased since then from 65% to 73%, and unit costs have reduced from $30/bbl to $16/bbl. But the UKCS is still one of the most expensive places in the world to develop based on these costs.  His challenge to the gathered delegates – and us in the industry – is how to improve asset integrity, undeveloped discoveries, well delivery and decommissioning using the diverse expertise and experience available across many industries.  And the good news is that there is potential funding from various sources to help stimulate and support this innovation and research.  Presenting at the Roadshow were the ITF, OGTC, OGIC and Innovate UK – a lot of acronyms!  All have funding via industry or the government which is available to be used in this context.  One of the main purposes of the Roadshow was to get the message across to the delegates that the government is encouraging and supporting innovation in this area so if you get the opportunity, you may want to get yourself along to one of the other Roadshows being held in Glasgow on 28 November and Rotherham on 30 November.  For more information please click here.

Article by Karen Cherrill, Director, Kingsfield Consulting

European Construction Institute joins Project 13

Project 13 will be a step change for the future of the industry – based on an enterprise relationship that maximises performance rather than a transactional one which transfers risk.  The ICE report, commissioned by the Infrastructure Client Group; Transaction to Enterprises provides the insight into Project 13. Transactions to Enterprises ICG March 2017

Currently in development, Project 13 will move to the implementation phase in March 2018, supporting clients and suppliers to adopt this new delivery model. This will include advisory support, tools, guidance and peer review.

The ECI are sitting within one of the working groups, developing the notion of the Capable Owner, establishing the capabilities required by an effective owner organisation and a common approach for the recruitment, development & training of leaders.  This group is led by Programme Director for the Heathrow Expansion, Phil Wilbraham.  Phil participated in the ECI/ECITB Project Leadership workshop in January 2017 and sees clear synergies for what Project 13 is trying to achieve with issues and potential solutions for the process sectors.  Maximising performance in a globally competitive market is a clear mission for the ECI and something all members are seeking to achieve.  So far the Capable Owner group have been looking at leadership requirements to create an enterprise environment, the use of maturity grids to help define what good looks like in key areas of Capable Ownership.

The ECI would like to raise awareness of Project 13 and the opportunities it presents to our industry.  We also need members to come forward and support the team on taking some of these principles forward but also to add to the debate and work of the Project 13 team.

You can find out more and join the Project 13 community to keep informed through the website: https://www.ice.org.uk/news-and-insight/project-13

Additionally if you want to support the ECI in taking this forward please contact Andy Brown directly at: andy.brown@ecitb.org.uk or call 07973416149

ICE Director General Nick Baveystock says: “Our industry is often criticised for low productivity and concentrating too much on margins. Project 13 is the industry’s attempt to address these issues. The initial thinking has been done, derived by practitioners and clients, and now is the time to take this forward.

We can only make the bold move towards higher productivity, sustainable skills and long term, value driven enterprises with the active and continued support of the profession.”