Demand strong for contractors

By Jo Studdert

Things are looking good for contract professionals in the resources sector.

A recent survey conducted by Resources Global Professionals, providers of such contractors to the industrial, resources and financial sectors, has found demand is up for temporary, project-specific workers, as are expectations of continued strength in demand.

The annual survey tracks trends in the contracting and project-based sectors, examining the thinking of project professionals on current issues and how those issues affect employment. It also tracks reasons why project professionals opt to work on a contract or project basis.

The survey indicates the economic landscape after the global financial crisis means more companies are reducing their overall workforce numbers and hiring professionals on contracts for specific projects.

“When the economy is in a downturn, there is still work to be done around cost savings, efficiency and process improvement projects,” the survey says.

“Additionally, in a downturn there are fix-it projects where anomalies have occurred in the business due to poor business decisions or lack of control. In order for a project to get board approval over the past 12 months, the return on investment had to be within a much shorter time frame than in other phases of the business cycle.”

RGP managing director Jacinta Whelan says 30 per cent of the company’s work comes from the mining, resources and energy sector. “Our business model allows them to bring in expertise as and when required while keeping a lean core team,” Whelan says.

The survey notes that for many companies business conditions have been the toughest they have experienced, but despite this, 57 per cent of RGP’s consultants say their skills are in greater demand; in the 2009 survey, 78 per cent reported a fall in demand.

The top three reasons project professionals gave for clients engaging them were: clients’ lack of in-house expertise (53 per cent); staff shortages causing an inability to execute projects (43 per cent); and demand for interim/backfill roles (20 per cent).

The 2009 results showed contractors were working on projects focused on cost-cutting initiatives; this year, companies are engaging project professionals for process-improvement projects.

“Companies are realigning to reflect the new business environment. Redefining or improving processes is the first step in this new reality,” Whelan says.

“An ongoing trend towards very lean core teams with a freeze on permanent hires means companies do not have spare capacity when a project need arises, so they bring in consultants as and when they are needed.

“Forty-eight per cent of respondents said they’d worked on process-improvement projects over the past 12 months. This supports anecdotal evidence that we are in a realign phase of the business cycle — since the GFC first hit, companies have gone through great change, be it downsizing, evaluating core business, consolidating or divesting.”

Despite the positive outlook, consultants were split on the state of the economy: 49 per cent thought things would improve in July-September this year, 26 per cent in October-December, 26 per cent in January-March next year and only 6 per cent believed the economic upturn would not occur until after June next year.

The survey asked if the contractors’ clients had withdrawn any projects they had worked on because of fears of an economic downturn, and a strong 68 per cent said their projects had not been withdrawn, although 20 per cent had experienced the withdrawal of projects. Of those, 43 per cent believed the withdrawal was due to the GFC and a further 32 per cent said companies were not undertaking projects but did not link the reason to the economic situation.

Only 43 per cent of project professionals attributed a change in demand for their services to the GFC (compared with 68 per cent last year).

Whelan says the resources sector in particular has demonstrated an insulation from the GFC. “In the past few years, miners have taken a long-term view; they haven’t put projects on hold. The global financial crisis was an inconvenience for them but did not stop the flow of projects.”

As for what motivates project professionals to undertake such contractual work, the survey finds “work-life balance continues to be the key motivator for people choosing a project-based career”. In fact, it is the main motivator for 67 per cent of RGP’s consultants and, the survey notes, “this trend continues upwards from 66 per cent last year and 55 per cent from the 2008 survey”.

Other leading factors are new or different challenges (67 per cent) and personal achievement (53 per cent). The percentage who find salary the most important factor has risen by 9 per cent to 50 per cent (41 per cent in 2009, 35 per cent in 2008).

Finally, the two key industry sectors that provide the best opportunity for projects over the past year are financial services and mining/resources.

“Our consultants believe these two sectors will continue to lead the way for project work over the coming 12 months,” Whelan says.

“One quarter of respondents believe government has been active in the procurement of consultants over the past year, which confirms last year’s prediction that the government sector would be the best opportunity for project work.”

Article from The Australian, September 18, 2010.