Impact of Skilled Labor Availability on Construction Project Cost Performance

The North American construction industry began to experience a shortage of skilled labor in the 1980s, which has continued as a repetitive cyclic trend over the last three decades. Although this issue has received significant attention from researchers, less attention has been given to quantifying the impact of skilled labor availability on project performance. This study contributes to the body of knowledge by filling a gap in the existing literature by quantitatively modeling and elucidating the influence of skilled labor availability on construction project cost performance. Data from 97 construction projects completed in the United States and Canada were collected from two industry databases. The primary analysis shows that projects that experienced craft shortages underwent significantly higher growth in cost overruns compared with projects that did not. Further analysis on both databases returned two robust multiple regression models that demonstrate similar patterns of the risk that a skilled labor shortage poses to cost performance. By using data-combining techniques, two data sets were combined to obtain more reliable informative models. The primary benefit of this risk estimation is to enable project management teams to determine whether mitigation strategies are warranted to prevent potential shortfalls in project cost performance. Understanding the level of impact that craft shortages have on project performance can serve as a primary step in developing motivation for industry leaders, communities, and construction stakeholders to address the challenge of skilled labor shortage in construction industry.