While the novel coronavirus pandemic has sent shockwaves through the United States and the world, the construction industry remains strong. Many projects have been accelerated to take advantage of the unusual opportunity afforded by the fact that people are staying at home, which in turn reduces traffic and other human-driven factors that can delay projects. New projects continue to be planned and started, while ongoing projects continue.
But that doesn’t mean that the construction industry won’t see impacts from the global pandemic, in the short- and mid-term. One of the biggest impacts contractors, owners and developers must plan for is potential supply chain disruptions.
Here’s how that’s likely to impact construction, and what you should do about it now.
The construction industry, like most other industries, has grown increasingly global over the past decade and more. Materials and components are manufactured all over the world and shipped to warehouses to be distributed.
Under normal conditions, these supply chains are stable and most contractors and subcontractors don’t always even know where their materials and supplies are manufactured.
All that has changed with the Coronavirus pandemic.
Every country and region is experiencing the pandemic differently, and unpredictably. Some countries are shut down entirely, while others are still operating more or less as usual. Likewise, some countries are limiting travel and trade while others are not, and there is a lot of variation in the middle.
This means that some materials, supplies, and equipment that are available today, might not be available a week or a month from now. It also means that prices may fluctuate wildly, and some prices are likely to go up substantially.
For a construction project, even a small delay in the arrival of materials or components can have cascading effects. For instance, if the plumbing sub can’t complete the work because of a missing component, then electrical, drywall, flooring, and/or finishes may also be delayed.
If materials or components are unavailable for extended periods, plans may have to be reworked to make accommodations, which can increase architecture and engineering fees, and contribute to further delays.
Owners, developers, architects, engineers, contractors, and subcontractors should all be thinking about potentially volatile supply chains at this time, and taking measures to mitigate risk on their projects.
Architects and engineers should be thinking about how to build resilience into planning. Where possible, choose materials and components that can be sourced from multiple locations and suppliers.
Contractors and subcontractors should be buying materials earlier, even if it means storing off site. Try to build this into contracts so that the costs can be borne by owners.
Owners, in turn, should be prepared to either pay for storage, pay more up front, or potentially for increased materials costs and/or to experience delays due to supply chain disruptions.
For current projects, all stakeholders should be prepared to come to the table together and discuss the best approach to mitigate potential risks on the project. This may mean renegotiating payment terms and/or long term storage.
At GLE, we conduct monthly construction inspections on hundreds of construction projects around the United States. On every project, we consult with all stakeholders to develop and share best practices for adapting to these uncertain times. We’re here to help all our clients get their projects completed on time and within budget, no matter what.