Infrastructure is a key priority for the NSW Government. Investment in infrastructure is continuing at record levels.
The Government committed $72.7 billion to capital works in the 2017/18 budget. In addition, the Government is contributing $4.3 billion to major projects such as WestConnex Stage 3, Sydney Metro Northwest and the CBD and South East Light Rail. Capital grants to non-government bodies and local councils accounts for a further $2.1 billion.
This investment in infrastructure creates jobs and stimulates the economy. It also provides an opportunity to create an ongoing legacy for the community. Infrastructure investment can develop skills in local communities and provide opportunities for disadvantaged groups to participate in the workforce. It also creates opportunities for the construction industry to improve its productivity and capability.
The infrastructure program provides wonderful opportunities, but it also presents some risks.
The NSW Procurement Board is aware that the construction industry is experiencing ongoing skills shortages. The Commonwealth Department of Employment has identified shortages for all construction trades in New South Wales and for some building professions including surveyors, architects and architectural draftspersons.
The Board is concerned that these shortages may potentially impact on construction costs across the industry, affecting the cost of private construction work in addition to the cost of government construction. Skills shortages may also contribute to project delays and may increase the risk of lower quality work being completed.
NSW Government agencies must ensure that construction procurement provides value for money on a whole of government basis over a longer term, and not just look at individual contracts. The infrastructure program should contribute to overcoming the skills shortages rather than contribute to making the problem worse.
The Board encourages the construction industry to work with NSW Government agencies to implement strategies to address these skills shortages. Agencies will expect contractors to make a contribution to developing a sustainable skills base in the industry.
Planning for the future
The NSW Procurement Board has asked every NSW Government agency with a major construction program to publish and maintain a Construction Skills Development Plan. This plan will identify the strategies or programs that the agency is using to address skills development. Each agency will be expected to periodically report on the outcomes of their plan.
Opportunities for apprentices and trainees
The NSW Government set government agencies and construction contractors a target of creating 1,000 apprenticeships through the infrastructure program. The NSW Procurement Board is pleased to note that this target has already been exceeded.
Training Services NSW reports that by June 2017, the NSW Government infrastructure program had created 2,600 new apprenticeships and traineeships.
The NSW Procurement Board welcomes the commitment that the construction industry and NSW Government agencies have made in achieving this outstanding outcome.
The Board wants to ensure that further opportunities are created. NSW Government agencies will continue to include a target for employing apprentices and trainees in all construction contracts over $10 million.
Infrastructure skills legacy program (ISLP)
The NSW Government’s $73.3 billion infrastructure investment program provides a once-in-a-generation opportunity to develop the skills of the State’s existing workforce and provide a sustainable legacy of skills and employment for the future.
The ISLP is a key strategy to support the Premier’s priorities for jobs and skills, and includes:
- a staged implementation commencing with three demonstration projects, with at least one in metropolitan Sydney and one in a regional area, with a further staged expansion to other projects;
- the application of minimum targets for the employment and training of NSW residents in project contracts, with proponents’ plans to meet or exceed these targets being considered in tender assessment
- targets which recognise the particular needs of different types of construction, including the special training needs and opportunities of the civil construction industry.
The NSW Government worked closely with industry and government agencies to establish training and employment targets for major infrastructure demonstration pilot projects. The targets allow existing workers to learn new skills on the job and increase the representation of young people, Aboriginal and Torres Strait Islander people and women in the construction industry. It will also ensure that local people are targeted for employment and skill development opportunities.
Under the ISLP, the Department of Industry, through Training Services NSW (TSNSW), negotiates with government agencies involved in infrastructure investment to include targets prior to the agency going to tender.
As soon as the successful tenderer is known, TSNSW negotiates with the Principal Contractor/Joint Venture to establish a Memorandum of Understanding to meet the ISLP targets. Once there is agreement by the agency and the Contractor, a Funding Agreement is arranged for a Project Officer to be placed within the project.
Each project varies as to where the Project Officer sits. With Sydney Metro it is with the Delivery Office, with WestConnex the position sits with one of the Joint Venture partners, with Lismore Base Hospital the Project Officer sits with the Principal Contractor.
Training Services NSW works closely with the Project Officer, the agency and Principal Contractor/Joint Venture to assist the project achieve the targets. This includes using Smart and Skilled funding for full and part qualifications, working on innovative models for skill development and using TSNSW programs for Aboriginal participation.
Improving training completion rates
The Premier has set a goal of increasing the proportion of people completing apprenticeships in New South Wales to 65% by 2019.
Training Services NSW is implementing strategies to increase the completion rate of apprentices and trainees in NSW. These include better engagement with careers advisers in the schools, trade readiness programs in schools, pre-employment programs and supervisor workshops to lift the capability of supervisors of apprentices. Progress to date has shown that completion rates are trending upwards, currently hovering just below 60%, with a longer term strategy in place to bring completion rates up to 65%.
The completion rate for apprenticeships and trainees in the construction industry have tended to be lower than average completion rates across all industries. This is likely to be due to a range of factors, including the short to medium term length of projects in the industry. Access to ongoing employment opportunities for apprentices and trainees is important. Making sure that training builds on and recognises exiting skills is also necessary.
The NSW Procurement Board considers it important to improve the completion rate for occupational training in the construction industry and will monitor progress during 2018. The Board encourages the construction industry to work with NSW Government agencies to identify innovative solutions to improving completion rates.
Related requirements and policies
Procurement Board Direction: PBD 2017-05 Construction training and skills development
Construction Leadership Group Guideline: Skills and training in the construction industry