Skills shortage pushes up construction costs in the south

A  growing engineering skills shortage and a logjam of major infrastructure projects are hiking up construction costs in London and the south east, according to new research by Thames Water published today (Thursday).

A  survey  of the company's engineering contractors points to a slowdown of young  people entering careers in construction and engineering. At the same time a string of major capital investment projects in and around London are competing for a diminishing  pool of trained engineers. 

These projects include the Channel Tunnel Rail Link, Terminal Five at Heathrow, Crossrail, the new Wembley Stadium and Thames  Water's own plans to step up its programme of replacing Victorian water mains in London.

The research is reinforced by Thames Water's own experience of difficulties recruiting employees for leakage reduction work and other manual activities in the capital.

Rising  labour  costs across London and the Thames Valley are a key element of Thames Water's draft business plan, recently submitted to the water industry regulator Ofwat. This outlines the company's investment priorities from 2005-2010, focussing on the need to modernise ageing water mains and sewer networks serving the company's 13 million customers.

Specific issues raised by Thames Water's contractors in the survey include the spiralling costs of accommodation for employees in the south east, with workers having to be put up in hotels in order to meet construction deadlines, substantially increasing costs, and the need to look overseas to plug the skills gap.