“Analysis of Supply & Demand”

2. “Analysis of Supply & Demand” Moderator: Harvey Bernstein, Vice President, Industry Analytics, Alliances & Strategic Initiatives, McGraw-Hill Construction Panelists: Robert M. Gasperow, Executive Director, CLRC Construction Labor George Gritziotis, Executive Director, Construction Sector Council, Canada

3. Panel Discussion:Analysis of Workforce Supply & Demand Harvey Bernstein, F.ASCE Vice President, Industry Analytics, Alliances & Strategic Initiatives, McGraw-Hill Construction

4. Why Do We Need Labor Forecasts? • Helps with big picture understanding of trends and worker migration • Provides insight into changes over time of workforce • Provides a springboard to answer some questions about the distribution of trades by building type and geography

5. Challenges to Creating Demand & Supply Forecasts • Understanding exactly how much labor, by trade, flows into different kinds of construction types • Differences in construction practices by geography • Understanding the supply of labor by trade & across geographic areas

6. Examples of Existing Major Information Sources • Department of Commerce’s Economic Census of Construction Industries • Bureau of Labor of Statistics Occupational Employment Surveys • McGraw-Hill Construction Dodge Construction Project Data • SEMTA’s* Southeastern U.S. Open Shop Craft Census Study • Construction Labor Research Council’s Database of Labor Costs • * Southeast Manpower Tripartite Alliance (SEMTA) has been organized to determine the magnitude of craft labor demand and supply in the Southeast, including the impact of Hurricanes Katrina and Rita; identify ways to minimize potential labor shortages; and develop appropriate action plans

7. Specific Outcomes of Demand & Supply Forecasts • Projection of overall demand and supply for each of the skilled trades during the intermediate (up to 5 years) and long-term (more than 5 years) • Geographic concentration for each skilled trade • Determination of the impact that changes in construction practices, building products and worksite management / training may have on skilled trade

8. Elements Needed in Labor Demand & Supply Forecasts • Understanding the relationship between different craft hours for different project types • Construction activity trends, nationally, regionally and by state • Construction industry project forecasting methodology and expertise • Number of people with occupational skill sets • Mobility of labor force

9. Current Demand & Supply Forecast Models • Construction Sector Council (Canada) Construction Labour Market Information (LMI) Program • Workforce supply demand forecasting • Canadian national, provincial, metro • Construction Labor Research Council • Analysis of labor supply through 2015 and specific studies • Quantify needs in the Southeast and Midwest • McGraw-Hill Construction Labor Demand Forecast

11. Data’s Role in Assuring Adequate Supply Robert M. Gasperow, Executive Director, CLRC Construction Labor

12. To Be Covered Volume Demographics Wages Government

13. Volume Mix Change SEMTA BCTD Other

15. SEMTA Data Entry http://www.surveystoday.com/sedemand.html

16. Demographics Aging New Entrants Composition

17. Labor Force Growth Rate Total Male 16-24 90 – 00 1.3% -0.1% 00 – 10 0.9 -0.2 10 – 20 0.6 -1.0 20 – 30 0.4 1.0

18. Wages Relationship to Supply Relationship to Demand

19. Track Record Past Success Evaluating Entrants

20. Government BLS Projections Apprenticeship Voc Ed

21. State Projections http://www.projectionscentral.com

23. McGraw-Hill Construction’sConstruction Labor Demand Forecast Harvey Bernstein, F.ASCE Vice President, Industry Analytics, Alliances & Strategic Initiatives, McGraw-Hill Construction

24. MHC Construction Labor Demand Forecast • Focuses on creating a demand model for skilled trades in the construction sector • Over the intermediate term (5 years) • Calculates local skilled trade utilization mix • Covers U.S. at national, state and local levels • The geographic and building type detail in MHC forecasts means projections of demand for the skilled construction trades by building type extends down to the local geography • Links building activity with labor demand in ways that are consistent with federal data and McGraw-Hill Construction forecasts and Dodge project data

25. MHC Construction Labor Demand Forecast Methodology • Uses proprietary Dodge database of construction starts along with projects in the planning stages • Uses MHC forecasting models to determine sector forecasts and scale to regional and state level forecasts • Uses U.S. government data to determine skilled trade hours in different building types • Creation of national, state demand coefficients for state and local forecasts

26. MHC Proprietary Project Information • Dodge Project Network Database: • The most comprehensive source for construction starts data for the entire U.S. • Used by U.S. Department of Census for Put-in-Place, which feeds GDP calculation • Time series data monthly back to 1967 • 600,000 active projects • 60,000 plans and specifications per year

27. MHC Proprietary Forecasting Methodology • Analytic Analysis: • Forecasting models based on the most comprehensive historical database available • Econometric models for 22 major construction industry sectors at the national and regional levels • State and metro area models • Expertise in determining thepercentage of projects that will ultimately reach start (within 5 years) • Expertise in determining the length of time to start for projects construction analysis, forecasts and trends

28. Uses Government Data to Create National Demand Coefficients • Create national “demand coefficients” by drawing on two major government information sources to create a table of skilled trade employment per thousand dollars of construction value by building type • Department of Commerce’s Economic Census of Construction Industries: Contributions of each construction industry to building activity by building type • Bureau of Labor of Statistics Occupational Employment Surveys (OES): Occupational employment for the skilled trades by industry

29. Creating State & Local Demand Coefficients • Adjust national demand coefficients to fit state and major metro areas • Use OES data & MHC Dodge project data • MHC data allows for impact from large projects • These calculations are performed to produce trade hours per $1000 of construction by building type

30. Creating Local and State Skilled Trade Forecasts • Multiply the demand coefficients by the corresponding McGraw-Hill Construction forecast by building type for a state or local level • Sum each skilled trade across building types • Note: The construction mix is crucial in forecasting demand for the trades, since utilization rates vary significantly by building type

31. Labor Demand Forecast Deliverables • Forecast out labor hours for five years • By building type • By geography • National, state and local levels • Information by project type • Information by skilled trade • Information on large project impact on labor demand

32. Electricians in Albany-Schenectady-Troy, NY • Anticipated spike of labor demand in office construction sector in 2007 • Driven by several large office projects in the planning stages Actual Forecast

33. Electricians in Albany-Schenectady-Troy, NY • MHC examines large projects in the planning queue • And evaluates whether projects will go to start • This allows for clarity on labor demand forecasts • More large projects means the forecast will be more stable versus dependence on one very large project

34. For More Information: Contacts: • Harvey Bernsteinharvey_bernstein@mcgraw-hill.com • Ralph Gentile, Economistralph_gentile@mcgraw-hill.com MHC Resource Websites: • www.construction.com • www.analyticsstore.construction.com • www.analytics.construction.com

36. Labour Supply and Demand George Gritziotis, Executive Director Construction Sector Council, Canada