The Alliance of Sector Skills Councils

Apprenticeship cost-benefit analysis

The report Impact of the recession on the building services engineering sector estimates that up to 10% (in social housing) and 55% (in private housing) of work may be postponed or cancelled as a result of the recession, which could result in significant job losses.

With the majority of consultants interviewed expecting the current recession to last until the end of 2010, SummitSkills is hopeful that new research into the financial benefits of hiring apprentices will pose a solution that could help businesses on the road to recovery.

The report Apprentice cost-benefit analysis found that employing apprentices can save a company up to 15% in labour costs on large scale projects.  On a £1 million electrical contract the cost savings of using apprentices as part of the team were £158,300 – a substantial saving.

On a £1 million labour contract the savings were as follows:

  • twelve-man mechanical gang:
    a 10% reduction in labour rate – saving of £100,000
  • eight-Man ductwork gang:
    a 13.48% reduction in labour rate – saving £134,800
  • eleven-man electrical gang:
    a reduction of 15.83% - saving £158,300

These figures incorporate both the costs of sending an apprentice to college for 29 days per year and a government grant currently available to cover course fees.  All savings were calculated used English college fees and grants.

The research clearly shows that across various industries within the BSE sector significant labour cost savings can be achieved through the use of apprentices with minimal changes to the overall skills of the team.

The report also demonstrates cost savings on smaller domestic scale projects.  In addition to the actual labour cost saving it also calculated the displacement saving, where using an apprentice with the appropriate skills freed up the craftsman’s time to make the contract progress quicker.  It is, however, essential that health and safety issues are taken into consideration and the apprentice is properly supervised throughout.

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