Tuesday, 14 July 2009

Employing Apprentices Reduces Labour Costs..

Labour costs can be reduced by up to 15% by employing apprentices according to new research published by SummitSkills, the Sector Skills Council for the building-services-engineering sector. The report ‘Apprentice cost-benefit analysis’ looks at the financial savings that can be made by employing apprentices and identifies the cost benefits for large- and small- scale projects.

The research clearly demonstrates that there are tangible cost savings involved in employing apprentices, alongside the other benefits for employers such as having highly skilled workforce.

For example, on a £1 million electrical contract, the cost saving of using apprentices as part of the team was £158 300. This figure incorporates the cost of sending an apprentice to college 29 days a year and a Government grant currently available to cover the course fees.
On a £1 million labour contract, the savings were as follows.

120man mechanical gang: 10% reduction in labour rate, a saving of £10 000.
8-man ductwork gang: a 13.48% reduction in labour rate, a saving of £134 800.
11-man electrical gang: a 15.83% reduction in labour rate, a saving of £158 300.

The report also demonstrates cost savings on smaller domestic-scale projects. In addition; to the actual labour-cost saving, it also calculated the displacement saving, where using an apprentice with the appropriate skills freed up the craftsman’s time to make the contract progress more quickly. Keith Marshall OBE, chief executive of SummitSkills, said, ‘We have known for many years that apprentices can benefit businesses by providing opportunities to develop and grow skills. This report now adds a sound financial argument to the wealth of evidence in favour of employing apprentices.

In these challenging economic times, it is critical to grow and develop new talent in the building-services engineering sector to help it recover quickly and ensure the effects of the recession are not felt as heavily in future years. Apprentices provide an important part of this solution.

Courtesy of Modern Building Services, Issue 3, July 2009

Femi Yusoof
Capital Engineering Personnel
part of Capital Group
020 8605 2800