The great toilet paper frenzy of 2020 kicked off a perfect storm of panic buying and supply chain issues, and since then we’ve all undoubtedly experienced some level of product disruptions in both our professional and personal lives.
Construction materials are no exception and have also been impacted by Covid-related delays.
What’s an owner to do? Here are a few ways you can minimize disruption on your commercial construction project.
- Order early – In the pre-Covid days of 2019, if a glass supplier told you they needed two weeks to get your windows shipped, you could order 2-3 weeks in advance for a just-in-time delivery. That is no longer the case. You or your general contractor should be reaching out to suppliers once plans are finalized to place your orders, and your GC can store materials until they are needed.
- Talk to your Banker – Ordering materials before you need them can wreak havoc on your cash flow, so getting your finances organized in advance will help. Talk to your banker about your specific supply chain challenges, and plan ahead so your bank account is prepared for what’s to come. Prices on materials are going up quickly, so more often than not, the earlier you order the more money you’ll save.
- Acknowledge Your Risk Tolerance – There are risks and benefits associated with buying materials yourself versus asking your general contractor to make the purchases for you. You might save money buying it yourself, but you also accept the risk if the order arrives incomplete. On the other hand, if your general contractor makes the purchase and the materials are incorrect, your GC is financially responsible for making that right. There’s a lot to consider including lien waivers, the interconnectedness between materials and labor, and the size of your project. Check out our blog post on Hiring a General Contractor vs. DIY for more details to consider. Either way, rising material costs alter the risk/benefit analysis here, so you’ll want to recognize and acknowledge where you stand.
- Be Prepared to Pick Up – We’re seeing that sometimes the timing issue isn’t with production but rather with shipping. If the materials are ready but sitting in a factory, be prepared to go to great lengths to pick it up. We’ve run into this situation several times in recent months and our best solution to meet an opening date might be sending a truck to go get the materials.
- Tracking – Staying on top of where your materials are physically located is more important than ever before. Checking on the shipment tracking can help you determine if you need to make a change. For instance, if a supplier continues to push back your expected arrival date, you might need to seek out a new supplier or change your plans entirely.
- Pivot As Needed – If there are materials that are so backlogged you know it will delay your opening, you’ll have a choice to make: pivot or halt. In many cases, you can switch out materials and stick with your timeline if you make the decisions early enough. Work with your architect and general contractor to source different materials that will still meet your needs.
- Read the Fine Print – Costs are rising so quickly that often your general contractor’s bid is only good for a certain number of days. They might also include a clause in the bid that if the cost of a material rises by more than a certain percentage, you will be responsible for the difference. Read the bid carefully so you are aware of the fine print.
- Be Proactive – Everyone in the construction industry is working through material shortages and supply chain challenges right now. Talk with your GC early and often about your project. Can you work together to switch out materials now? How soon can orders be placed? Your GC should be securing lien waivers as you go, but this is especially important if you are ordering materials this far in advance. As always find a general contractor you trust and work together to find solutions.
When Covid hit in 2020, it quickly became evident that the ramifications would be far-reaching. Eighteen months into this pandemic we are still seeing the virus’s associated financial costs. But the owners and commercial construction managers who are keeping up momentum and working closely with their general contractors have been able to meet opening dates, even if it is requiring creative solutions.
