Funding and demand for infrastructure continues to increase but delivering projects is increasingly difficult.
The challenge to meet these new demands is heightened by an aging workforce, tight labor markets, new sustainability criteria, and pressure from a wave of non-infrastructure capital investments. At its peak in 2027-28, the US Bipartisan Infrastructure Law alone could demand 345,000 more jobs than the market will provide, both on and off the jobsite.
On November 15, McKinsey’s Global Infrastructure Initiative (GII) hosted a roundtable with senior leaders across the infrastructure value chain to discuss these issues and potential actions. Participants represented owners, engineering and construction players, technology suppliers, and policy makers. In exploring the solution space – retention and attraction, workforce productivity, digital enablement and improved collaboration – the following key themes emerged, with the resounding agreement that they be taken together rather than looking for any one “silver bullet”:
- Improve the industry value proposition. Infrastructure is the foundation for the economy and communities, and, done correctly, can have a dramatic impact on reducing climate change. To date, the industry has undersold this value proposition as a way to attract and retain talent. Communicating this consistently to the talent pipeline could contribute to growing the talent pool.
- Develop specific, targeted programs to give clear pathways to new talent. Hiring and training can be risky to small and medium-sized companies in the infrastructure value chain. Agencies can partially alleviate this risk by creating regional partnerships with large pipelines of projects against which industry can underwrite specific, tangible train-to-work programs and incentives. These programs are also an opportunity for the experienced generation who is approaching retirement to leave their legacy by capturing what they know and sharing it in a structured way with early career professionals. This transfer of institutional wisdom will help with onboarding and retention during labor transitions.
- Shift current industry policies and cultural norms to open doors for more potential applicants. Participants discussed the current culture of maintaining conservative hiring practices. The industry needs to review current requirements to expand the potential pool. In one example that surfaced in the discussion, creating opportunities for previously incarcerated individuals and decreasing the barriers to entry would increase the number of individuals that are eligible to enter the industry at various stages of the project life cycle. Additionally, involving the local community in the project and fully leveraging diversity can also expand potential workforce.
- Improve tech integration on job sites to increase productivity and open doors to workers from more tech-advanced industries. Investment in expanding technology use can drive opportunities for faster decision making, decreasing risk and improving productivity during the project delivery cycle. Additionally, the more technologically integrated the project life cycle becomes, the more organizations will be able to pull labor from outside of traditional infrastructure careers. Technology can also open doors to increase diversity on and off the jobsite by making roles more inclusive, allowing for the industry to cast a much wider net than currently available. Guiding contractor technology choices may be the responsibility of owner’s organizations who need to integrate the technology stack across a portfolio of projects.
- Experiment with more collaborative contracting methods to balance risk allocation. The prevailing contracting environment disproportionately pushes risk onto the contractor. This model is difficult to sustain in an environment of such significant exogenous risks to the material supply chain and labor market and necessarily results in risk premiums being added to bids. Using collaborative approaches to apportion risk to match today’s realities can reduce these risk premiums and give contractors shared incentives to invest in long-term solutions.
- Step-back and tackle the strategic challenge. Workforce shortages presents a serious strategic challenge to the industry delivering on the demand. Leaders need to create roles to tackle this challenge who have budgets and responsibilities separated from the day-to-day management of any individual project. These roles should be focused on cross-agency collaboration, learning from global best practices, and driving strategic initiatives across the organization.