KEMBLE CONSULTING
Construction Workforce Delivery and Development, Labour Relations, and First Nation Relations
"A STUMBLED-UPON VERDICT:THE LOW-COST ELECTRICAL OPTION FOR BC, AB & SK"
Dec 16, 2014
Recently we arrived at a conclusion that was most unexpected.
Direct experience in different scenarios from multiple vantage points have provided separate data sets with the same, repeating result. Analysis of that repeating result leads us to a conclusion for construction purchasers of major industrial capital assets in Western Canada, regarding their electrical scope.
"The IBEW and partner contractors are both the high quality and the low-cost electrical execution option at this time for major industrial projects in British Columbia, Alberta and Saskatchewan. "
That is not the conclusion at which we expected to arrive. Frankly, for one client we opted to develop just the opposite strategy...in order to achieve what was thought to be a competitive advantage.The competitive advantage sought did not reflect in the resulting bid estimates...because it does not exist.
Rotational transportation costs in another Western Canadian remote-site scenario also revealed a travel premium attached to alternative labour supply strategies. This travel premium far out-weighed any real or perceived difference in labour-posture efficiency (Note: this was in a scenario for which the Parties achieved a negotiated remote site schedule that excluded double-time from the base schedule). This was the most profound example as the project began with two distinct labour postures on the same site with similar size and scope.
Another scenario was within the context of significant demand from concurrent competing projects in Western Canada. The IBEW were able to supply while three mega-projects were well into their respective electrical phases of their project life-cycles. Western Canadian supply (complimented by varying degrees of sourcing from the rest of Canada) has been stress-tested on multiple occasions. Each time, the IBEW and partner contractors have de-risked supply with proportional and escalating responses to the supply/demand crisis.
Most recently, estimates in respect to another mega project in close proximity to a major centre widened the gap even further. In addition to the rotational transportation premium, for alternate supply strategies there was a need for camp or subsistence...a burden not present at any where near the same order of magnitude for IBEW providers and their contractor partners. In contrast to alternate labour supply strategies, for the IBEW most if not all of the required workforce was available within daily commute of the needed tradepersons' primary residence. Modelling alternate supply strategies resulted in substantial increase to transportation and housing costs that IBEW providers and contractors would not anticipate encountering.
The driver is a lack of a local/regional following in Western Canada for alternate-to-IBEW industrial supply strategies in the numbers required to support major projects. For alternate-to-IBEW labour postures, the result is precocious skilled workforce sourcing escalation that bypasses too quickly, tradespeople otherwise available in local/regional proximity to the project.
"What's worse, the model is self-perpetuating; a regional workforce not engaged is a regional workforce not developed."
If a robust Western regional industrial electrician following is developed for alternate labour supply brokers and their contractors, this dynamic could change.
This analysis could just be the edge of more inclusive and similar statements, in respect to other trade designations...or the precursor to more broad conclusions. We have had exposure to data conclusive enough to support such a pronounced conclusion for electricians only at this time. Inferences and extrapolations might be made in respect to other trade designations, however, the Western Canadian IBEW supply-performance has been witnessed to be the most robust. Hence, electrical scope is what the writer is prepared to comment on so conclusively in public forum at this time.
"For now we are confined to the numbers we have seen and say to purchasers of industrial construction in Western Canada, use IBEW for major electrical work to lower costs and increase your value-proposition."
"We did not intend to jump to this conclusion. We were just doing our jobs...securing, mobilizing and managing required project workforces; and managing the all too common hemorrhaging of the project spend."
Nevertheless, we have seen the numbers again and again. We have scrutinize the numbers. We undertook to understand the drivers behind the numbers. And, it comes down to the old adage, there is power in numbers.
If there is a lower cost option of comparable skill and quality, to date through our small window into the industry we have not seen it; we have seen it promised...but not delivered. One last observation. Given the above, the industry should in fact behave opposite to what it has generally done in the past.
"During times of extreme demand the cost gap between supply strategies narrow. All parties are applying extraordinary sourcing strategies and tactics. However, the relative cost gap widens during periods of slower industrial activity. This is because a greater proportion of the workforce required can be satisfied by accessing pools of labour in regional proximity to the project."
Hence, during slower periods of industrial activity in Western Canada, IBEW sourcing should make up a greater percentage of total workforce sourcing in each province, and during peak periods, complementing alternate sourcing strategies should be increased to ensure all available pools of electricians are accessed.
Submitted by,
Samuel Kemble,
Labour Relations Practitioner @ Kemble Consulting