Manpower shortage likely to push construction costs

CEBU, Philippines — European digital SaaS (Software as a Service) platform, PlanRadar, recognized that the ongoing shortage of construction workers could jeopardize the otherwise promising construction sector if not properly addressed.

“The outlook for the Philippine construction sector remains positive, but addressing the

reduced supply of skilled labor is crucial. This gap is likely to push labor costs higher,

affecting the bottom line for many companies,” said Vitally Berezka PlanRadar regional spokesperson in an email interview with The Freeman.

To offset these issues, Berezka suggested that construction firms may seek partnerships with vocational schools and technical training institutes to build a stronger pipeline of skilled workers in the future.

“We understand that companies are increasingly investing in upskilling programs to train workers in specialized trades and emerging technologies, ensuring they can adapt to

modern construction practices. Additionally, automation and prefabrication are being

explored to reduce dependency on manual labor. By enhancing workforce training and

embracing more innovative technological tool sets, the industry can mitigate these labor shortages while maintaining high project quality and efficiency,” Berezka said.

Contractors can also mitigate the high increasing cost of raw materials and shortage of manpower by adopting strategic procurement practices and improving project planning.

“Bulk purchasing agreements or hedging strategies can lock in material prices and help avoid sudden cost fluctuations,” suggested PlanRadar’s Avtandil Mekudishvili adding that constructors should also evaluate their resource allocation practices carefully, utilizing labor where it’s most needed and incorporate automation and technology where possible.

Significantly, investing in risk management frameworks, such as contingency planning for labor shortfalls, can help mitigate disruptions and keep projects on track, added Mekudishvili.

Both Berezka and Mekudishvili expressed confidence that a mix of government / PPP (public, private partnerships) adoption and sustainability is a key driver of technology adoption among construction stakeholders in the Philippines.

They observed that green building technologies, energy-efficient designs, and materials

tracking software is gaining traction as more companies align with global sustainability goals.

“Technologies like prefabrication, modular construction, and smart sensors help reduce waste, lower energy consumption, and ensure compliance with environmental regulations. These tech solutions not only enhance sustainability but also position the local construction industry to meet the growing demand for eco-friendly infrastructure, while technology adoption in the Philippine construction industry is growing, challenges remain. Many small to mid-sized firms can still face barriers like higher upfront costs,” Berezka emphasized.

“We’re seeing that larger companies are leading the way by integrating technologies such as BIM, digital site management, and IoT [Internet of Things] but industry-wide adoption is still picking up. Training and education programs are essential to bridge the digital skills gap and ensure that technology is implemented effectively across all levels of the industry,” added Berezka.

In a separate interview with Cebu Contractors Association (CCA) president Kevin Sean Lim, he said that technology has saved contractors from the worsening lack of manpower in the construction sector, saying “[CCA] members are now slowly shifting towards investing in technology such as machinery, tools, and software.”

Southeast Asia’s construction industry is poised for a major transformation, driven by a surge in upcoming projects. The construction market is projected to reach US$230 billion by 2025, driven by increased infrastructure development and digital adoption.

According to PlanRadar report, the region’s construction industry is expected to invest US$ 7.6 billion in digital transformation technologies by 2025, reflecting a strong shift towards modernization. — (FREEMAN)