Construction Skills Initiative:SSC workshopWorkshop typeDocument documentApril,Date 2012CONFIDENTIAL AND PROPRIETARYAny us...
TRACKERAgenda for SSC workshopUnit of measure        Topic                                                         Time   ...
TRACKERObjectives of our discussion todayUnit of measure                  Title                  Unit of measure          ...
TRACKERAddressing the issue of skill gap in the construction sector could add $20Bn to the GDP, and prevent value loss for...
TRACKER… However, the skilling landscape currently is nascent and challengingUnit of measure No clear ‘owner’ for skill de...
TRACKERWe now envision a large scale initiative to build construction skills forIndiaUnit of measure                     T...
TRACKERThe initial push is being led jointly by NCSD & NSDC, however, SSC isUnit of measure step up and lead the effort in...
TRACKERObjectives of our discussion todayUnit of measure                  Title                  Unit of measure          ...
TRACKERThe construction SSC proposal works well on several dimensions,however, there are opportunities for improvementUnit...
TRACKERBREAKOUT 1: Standards, Accreditation and CertificationUnit of measure                         ▪ Target population: ...
TRACKERBREAKOUT 2: Delivery/OperationsUnit of measure                         ▪ What key activities can the delivery group...
TRACKERTHEME 3: GovernanceUnit of measure                  Title                  Unit of measure    ▪ Are there any addit...
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Construction SSC

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Workshop on SSC for the Construction Industry

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  • MUM-LMR001-20120301-(WA)(kp)
  • MUM-LMR001-20120301-(WA)(kp)
  • MUM-LMR001-20120301-(WA)(kp)
  • MUM-LMR001-20120301-(WA)(kp)
  • Construction SSC

    1. 1. Construction Skills Initiative:SSC workshopWorkshop typeDocument documentApril,Date 2012CONFIDENTIAL AND PROPRIETARYAny use of this material without specific permission of McKinsey & Company is strictly prohibited
    2. 2. TRACKERAgenda for SSC workshopUnit of measure Topic Time Title Key aspects of current proposal (by SSC proposers) Unit of measure 10.00 – 10.30 Background and vision of skills effort 10.30 – 11.00 What they have done well, and opportunities for improvement 11.00 – 11.30 BREAKOUTS 11.30 – 14.00 Breakout 1: Standards, Accreditation and Certification Breakout 2: Delivery and Operations LUNCH 14.00 – 14.45 Plenary presentations by Breakout groups 14.45 – 15.45 Governance 15.45 – 16.45 Wrap-up and next steps 16.45 – 17.151 FootnoteSOURCE: Source | 2
    3. 3. TRACKERObjectives of our discussion todayUnit of measure Title Unit of measure ▪ Share context for this discussion ▪ Discuss opportunities for improvement in the SSC proposal1 FootnoteSOURCE: Source | 3
    4. 4. TRACKERAddressing the issue of skill gap in the construction sector could add $20Bn to the GDP, and prevent value loss for individual companies…Unit of measure APPROXIMATE Title Individual companies starting to experience significant Under-performance in infrastructure due to skill gaps value loss, onlyUnit of which is quantified part of measure could cost ~US$ 200 billion in GDP by FY ’17 POWER SECTOR EXAMPLE Opportunity cost, US$ billion; 2008-17 Average delay on a project Tendering 100 attributable to skill gaps1 (e.g., ~2-3 months high pressure welding) Engineering 20 Loss per day of delay for a 1 Rs. 2.4 crore GW project2 Procurement 10 At least ~20 of this Construction 50 attributable Loss due to 3 months Rs. 220 crore or largely to of delay US$ 50 million skill gaps Financing 20 ~12-20% of Average cost of re-work Total 200 contract value1 Based on a few sample projects. Average total delay on such projects: ~6 months2 Footnote1 Assuming a minimum margin of Rs. 1/unitSOURCE: Source McKinsey; secondary research | 4
    5. 5. TRACKER… However, the skilling landscape currently is nascent and challengingUnit of measure No clear ‘owner’ for skill development has emerged so far Developers & Material/ End customer Title developers’ Construction Sub-contractors equipment Workforce companies Unit of measure associations manufacturers ▪ May hold construction ▪ Dependent on ▪ Unorganized ▪ Act only as ▪ Limited interest company to quality and time, sub-contractors ▪ Short-term material/equipme as no wage but no standards exist for labor orientation nt suppliers – no upside for skills ▪ Far removed from problem of ▪ Recognize need ▪ Hire & fire labor, stake in skill ▪ Cannot afford skilled labor for skill building limited interest in building loss of daily wage skilling Current training models are small scale; no universally recognized certification exists Captive training Others Government bodies Private providers ITIs/ITCs centers (e.g., L&T (Indian Welding (CIDC, NAC) (e.g., CREDAI) CSTIs) Institute, etc.)Scale ~2 lakh1 ~50,000-80,000 ~6,000-7,000 ~2,000-5,000 <1,000 ▪ 1-2 year courses ▪ Short-term ▪ Short-term ▪ Short-term ▪ Short-term ▪ Select trades courses (3-6 courses (3-6 courses (<3 months) (surveyors, months) months) (3 months) ▪ 1-2 specificModel masons, etc.) ▪ Multiple trades ▪ Multiple trades ▪ Multiple trades trades (basic- ▪ Center-based (basic-advanced) (basic-advanced) (basic skills) advanced level) ▪ Center and on- ▪ Center-based ▪ Center and on- ▪ Center-based site siteCertificatio NCVT/SCVT Own/MES Own certification Own/MES ISO/Internationaln1 Footnote relevant to construction For tradesSOURCE: Source | 5
    6. 6. TRACKERWe now envision a large scale initiative to build construction skills forIndiaUnit of measure Title Unit of measure Annual output of 25-30 lakh skills per year in a 3-year period High quality Well Strong Highly Strong standards, established demand for distributed emphasis with world certification skills, from key delivery on “train-the- class thinking processes, for customers model, trainer” and & ▪Skilled labor (developers, ▪Largely “on technology, customization ▪Training builders & site” training incl. rural to the Indian providers construction with strong broadband context ▪Contractors companies) sourcing links as important multipliers Use of technology, with UID linkages, to monitor training outcomes & build LMIS Advocacy to bring together key stakeholders with tangible commitments, & mobilize trainees Funding of new training capacity & per-trainee training costs1 FootnoteSOURCE: Source | 6
    7. 7. TRACKERThe initial push is being led jointly by NCSD & NSDC, however, SSC isUnit of measure step up and lead the effort in due courseexpected to Objectives of NCSD-NSDC interactions with industry leaders Title ▪ Clear targets for skilling: 2.5 lakh people in year 1, 10 lakh in year 2 and 25 1 Unit of measure per year by the end of Year 3 lakh people 2 ▪ Set up the construction Sector Skill Council (SSC) as a “model SSC” – Create standards & certification for 6-7 high demand trades – Create curriculum for priority trades as an industry resource to facilitate rapid ramp-up of trainings – Train ~750 trainers to conduct training in these trades 3 ▪ Get commitment from top customers (developers, builders, construction companies, state & central govts.) and EPC players to mandate 20%1 skilled labour in their top real estate and infrastructure projects for 2012-2013 4 ▪ Develop a set of premium labour suppliers with certified labour on rolls 5 ▪ Build a network of 35-40 training partners to carry out skilling in an on-site manner, leveraging technology to increase scale 6 ▪ Run advocacy campaigns to mobilize trainees 7 ▪ Build UID-linked technology platforms to monitor outcomes of the effort (incl. creating skill repository) 8 ▪ Mobilize all available resources for skilling (from government schemes,1 Footnote construction cess contributions, contribution from industry, credit window)1 Increasing to 40% and 60% in subsequent yearsSOURCE: Source | 7
    8. 8. TRACKERObjectives of our discussion todayUnit of measure Title Unit of measure ▪ Share context for this discussion ▪ Discuss opportunities for improvement in the SSC proposal1 FootnoteSOURCE: Source | 8
    9. 9. TRACKERThe construction SSC proposal works well on several dimensions,however, there are opportunities for improvementUnit of measure What works well Opportunities for improvement Title ▪ Ensures representation from 4 key Unit of measure ▪ Ensure faster scale-up to address sec-tor’s industry associations in the sector needs, leveraging NCSD-NSDC push ▪ Identifies main challenges to skill ▪ Have greater clarity on operating and roll- development in the sector out plan for key functions of the SSC (standards, certification, accreditation, close ▪ Identifies key roles and skills needed industry collaboration) across the value chain ▪ Prioritizes SSC activities for the first 3 ▪ Re-align the “delivery” group to focus on specific initiatives that can truly catalyze years to maintain focus large scale training – including advocacy to ▪ Adopts an “incremental” approach to mobilize individuals and existing training standard creation, rather than an capacities (ITIs, polytechnics, private ab-initio one providers) ▪ Pro-active leadership (by the SSC ▪ Ensure participation from all parts of the working group) of priority initiatives value chain (e.g. material and equipment identified in the December workshop has suppliers) to make the SSC truly ensured convergence of the two efforts representative of the sector ▪ Opportunity to leverage the NCSD-NSDC ▪ Have greater clarity on working level joint push in construction structure, including role and capabilities needed for CEO and function heads1 FootnoteSOURCE: Source | 9
    10. 10. TRACKERBREAKOUT 1: Standards, Accreditation and CertificationUnit of measure ▪ Target population: What mix of unskilled labor (for scale) and semi-skilled labor (e.g. foremen, that can have greater impact on productivity)? 1 Operating Model Title ▪ Methodology: Which standards/certification and accreditation framework could form a starting point? Blend of current industry standards or industry-cum-international? Unit of measure ▪ Implementation model for standards, certification and accreditation: ▪ What is in-house vs outsourced? ▪ Laying down protocols for accreditation, assessments and certification ▪ Approval of assessment and accreditation bodies ▪ Physical activity of assessment and accreditation ▪ Certification by SSC ▪ How can we ensure industry collaboration and acceptance? ▪ Revised ramp-up plan to achieve target of 30 lakh skills per year by end of Year 3 Implementation 2 plan for desired – What activities can be covered in the initial start-up stage of the SSC? scale-up – How to crunch timelines to release standards and certification for one new trade every 2-3 months (for example)? – How to maintain Standards and QA during ramp up stage? ▪ Internal team structures and key sub-units within the standards, certification and Internal team accreditation groups in the SSC 3 composition ▪ Roles, key qualifications and possible sources for function heads for the groups ▪ Possible revenue streams (per candidate, total) 4 Revenue model ▪ Costs incurred (per candidate, total)1 FootnoteSOURCE: Source | 10
    11. 11. TRACKERBREAKOUT 2: Delivery/OperationsUnit of measure ▪ What key activities can the delivery group perform to truly catalyze large scale skill development? (co-develop a best practice delivery model with 1 Operating Model Title NSDC partners, develop curricula as industry resource, create train the trainer Unit of measure mobilize existing training capacities) capacity, ▪ For each of the above, what is the operating model? (e.g., joint venture with industry player for train-the-trainer, tweaking of best existing curriculum and making it available for all providers for a license fee) ▪ Implementation model: – What is in-house vs outsourced? – How can we ensure industry collaboration and acceptance? Implementation ▪ Revised ramp-up plan to achieve target of 30 lakh skills per year by end of Year 3 2 plan for desired scale-up – What activities can be covered in the initial start-up stage of the SSC? – How to crunch time-to-market for each trade once standards have been set? ▪ Internal team structures and key sub-units within the delivery group in the SSC Internal team ▪ Roles, key qualifications and possible sources for function heads for the group 3 composition ▪ Possible revenue streams (per candidate, total) 4 Revenue model ▪ Costs incurred (per candidate, total)1 FootnoteSOURCE: Source | 11
    12. 12. TRACKERTHEME 3: GovernanceUnit of measure Title Unit of measure ▪ Are there any additional members of the construction value chain who should be represented on the Board of the SSC? ▪ How can individual sub-units with the SSC ensure close industry participation (e.g. in creation of standards, outlining best practices)? Is there a need for Advisory Councils for key sub-units of the SSC? ▪ What competencies should the CEO of the construction SSC have? What are the possible sources for such competencies? ▪ How do we ensure neutrality while constituting the Board of the SSC? ▪ How can we ensure fair processes for recruitment of the working team (CEO and function heads)?1 FootnoteSOURCE: Source | 12

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