How Supply Chain Disruption Affects Construction

The “supply chain” is a shorthand term for the symbiotic relationship of logistics, transportation, and manufacturing that exists to deliver a product to the customer who ordered it.

A well-functioning supply chain relies, in part, on human beings, silicon chips, raw materials, and electricity to help meet demand, all of which are still in short supply due to the pandemic’s impact on established systems.

Commercial construction is frequently supported by just-in-time manufacturing. However, with current lead times on materials being erratic and unreliable, some builders are now looking at traditional inventory strategies to help crystallize project timelines and moderate fluctuating costs. 

“It's a constantly changing environment,” says Hance. “More and more we're looking at getting materials in well before we start something so that we can work uninterrupted.”

From screw shortages to long lead times for paint, all aspects of construction have been challenged.
Metal builders may have the steel beams on site but be short on the fasteners and sealants required to complete assembly. 

“Gone are the days when you plan around the longest lead time item, namely the building; every component of your project now has a long and erratic lead time,” says Hance. For example, air conditioning units ordered in August promised in November are now delayed until late January.

Raw material shortages also directly impact a project schedule. Hance mentioned that a concrete contractor just called him to say some jobs may be delayed, as the concrete plants are out of concrete for at least another week.

Because of these erratic lead times, prices are volatile and short-lived; not locked in for weeks like they would normally be. “Planning materials and labor now require incredible skill, finesse and foresight.”

Hance adds, “We’re in a position now where we might tell the owner, ‘We don’t need your electrical panel or the switch gear right now, but it may take six months to get it, so we need to purchase it now to have it in time.’”

Financially speaking, when an owner is ready to spend a certain amount of money on a building, they typically come up with 50-75% up front for materials, and materials are ordered as needed over the course of the project.  But because it’s harder now to lock in a price, or to be assured of availability of materials, owners are investing more in up-front costs to get around obstacles for a project’s success.

How To Manage Supply Chain Disruptions

Despite the various challenges we face in work—and in life—with supply chain disruptions, there are a few things we have control over while we ride out the wave.

First, says Hance, “We prepare like we did for the pandemic. Take care of yourselves and your family. It’s hard to concentrate at work when you are stressed at home. Don’t hoard but make sure you have plenty of—yes—toilet paper, paper towels, cleaning supplies, canned goods, etc.”

Second, stay nimble and pay careful attention to long-range planning; we don’t currently have the luxury of instantly accommodating an idea with a physical solution. “Every project needs to be reviewed with a fine-tooth comb,” says Hance. “Get your orders in and consider those items that were not necessarily specified but you know will eventually be needed.”

Third, and this goes for everyone associated with a construction project: Communicate! “Your strength comes from your ability to plan, your tightly managed cash flow and your communication skills,” says Hance. “Bad news does not improve with age. We are all in this together. Manage expectations and keep your customers informed.”

Though nothing about our world is “normal” right now, know that you are not alone. To succeed, we must remain resilient, creative, and prepared for more of the unexpected. Hance adds, “Plan and communicate. We will get through this together.”