Project management is now a critical component of the development of the Indian economy. Sectors like railways, roads, power, electronics, all are in need of huge investments. Today’s news is that the Indian businesses plan to invest $850 billion over the next five years. From the current level of $4 trillion, to reach a level of 8 trillion GDP will mean at least an expansion of some 50 to 60 per cent assets in various industries, and this asset creation has to be done by managing projects. However, while the demand for capital is being met by FDI and local investments, project management in India is facing several challenges, which can drag down the rate of assets creation, and hamper growth.

The Indian construction sector, the second-largest employer after agriculture and a critical driver of economic growth, is experiencing an acute shortage of skilled manpower. This crisis has severely affected not only the project timelines and profitability but also the broader national development goals.

In the Indian scenario, with the rapidly growing Indian economy, there is a need for sustainable growth and continuity of infrastructure sector. However, the timely satisfaction of this need is getting hampered by a critical bottleneck: the availability and retention of a skilled construction workforce. The construction sector employs 51 million people in India, despite this, reports indicate that up to 61 per cent of project delays are attributed to labour shortages. Workforce turnover and dependency on subcontractors for skilled workmen mobilisation are two key operational challenges in construction.

Many Indian construction giants, like L&T Construction, Afcons, S&P, Tata Projects, are facing severe difficulties to complete their projects in time and under budget. L&T, with approximately 60,000 direct employees and 3,50,000 workmen (majority from subcontracting firms), is experiencing this challenge acutely. Similar is the case with others, too. The management and retention of this huge workforce is paramount for project success and profitability.

The core issues that have been identified from an industry study are as listed below:

Mitigation of these challenges are necessary for a structured approach to workforce management which can align with organisational goals. The prevailing belief that “more the workmen, the more the progress” underscores the labour-intensive nature of the industry. However, the tendency of subcontractors and workmen to leave projects at any time poses a huge risk to project continuity.

The elements that play a pivotal role in the success of any construction project are listed below: 

Needless to say, while there are many other reasons too, for project delays and cost overruns, the above factors are critical in labour intensive projects, which is often the case in infra and industrial projects. Recently, the Chief of Air Staff expressed his concern that ‘not a single project gets done on time’. He was referring to defence projects, where the delays are more due to technology and design adherence challenges. However, even here, subcontractor development and engagement are important.

The question then is: how do project management companies and EPC companies, deal with these issues and still deliver on the objective of speedy asset creation? Many companies use the principles of ‘continuous improvement’, made famous by the TQM and Business Excellence movements across the globe, leading to the practice of the Deming Cycle: Plan-Do-Check-Act or PDCA. As a result of such practices, these companies have devised a number of ‘mitigants’ to overcome the problems. These efforts begin with the identification of the key areas for improvement. To gain the advantage of plucking the ‘low hanging fruits’, immediate interventions have been taken up.

Workmen turnover reduction: The goal is to reduce the turnover ratio from approximately five to six workmen leaving for every new workman joining, to just one or two. This improvement will be driven by enhanced retention efforts through better facilities and targeted incentive programmes. As a result, the workforce supply will remain stable, ensuring that project requirements are consistently met without any shortage of workmen.

Improved ROLE: Increase the ROLE from about Rs 2 lakh per man month to Rs 3 to 5 lakh per man month or more through enhanced productivity and skill development.

Project delay reduction: Achieve a 15 per cent reduction in delays by ensuring adequate skilled manpower and streamlined processes.

Subcontractor satisfaction: Increase subcontractor engagement (e.g., 10 to 15 per cent working on more than three jobs of the company simultaneously, from the current lower levels) through faster payments and stronger partnerships.

ESG impact: Enhance resource efficiency (environmental), workmen welfare (social), and risk management (governance).

Other benefits expected are:

Customer satisfaction: Timely project delivery due to reduced delays from workforce issues. Enabling the customer to start realising the value of the investment made in the project as soon as possible.

Operational excellence and increased profitability: Timely completion of the project will lead to timely invoicing, reduced overhead costs, and improved project site productivity.

Societal improvement: Skill development will enhance individual workmen's living standards, contributing to broader economic and social outcomes and fostering a resilient society.

Employee satisfaction: Timely resource allocation creates a positive workspace, motivating employees.

Competitive edge: Addressing a critical industry-wide problem will give the project companies a significant advantage.

In conclusion, skilled workforce deficit in construction is a complex challenge that requires a multifaceted approach. Targeted process improvements—centred on vendor management, skill enhancement, and stakeholder engagement—can significantly help to mitigate workforce shortages and improve project outcomes. Through targeted process improvements and skill development, the skilled workforce shortage can be mitigated. By reducing workmen turnover, enhancing ROLE, and minimising project delays, project companies can accelerate value-accretive growth, operational excellence, and ESG sustainability. This mixed-methods approach ensures robust data collection and analysis, offering actionable insights for the construction sector. Future research can explore long-term impacts of technology adoption and cross-industry collaboration to sustain workforce improvements.

By fostering a culture of continuous learning and partnership, project companies can enhance their operational efficiency and also contribute to broader societal goals of employment quality and economic development. The lessons learned here provide a replicable model for all construction firms facing similar challenges in India and beyond.