Supply Chain: The Never-Ending Saga
An ongoing headache for contractors, developers, and tradespeople alike, it sometimes feels like the supply chain challenges we faced very early in the COVID-19 pandemic are growing a “beard,” and the domino effect continues without any relief in sight. With increased material costs coupled with delivery delays, these are tough times for “getting the job done,” even when the work is there and plentiful.
In terms of construction projects, both big and small, it’s difficult right now to be able to give clients certainty on how long exactly a project will take, and in some cases, even how much it will cost due to supply chain and soaring material costs. With last-minute delays on when site materials will be delivered, to find out that you need to pay ‘X’ amount more for the same materials you used to get at a much lower price is enough to keep you up at night.
Furthermore, when you couple this with the staggeringly high cost of fuel due to the ongoing conflict in Europe, it only adds to the supply chain challenges. At the end of the day, it has a lot of us asking ourselves, “How on earth can I give my clients any type of well-defined schedule or cost estimate?”
If we take a look at just one area of construction, residential homes, for example. Home prices all across Canada, not just in Ontario, are rising, not only from growing demand, but also from the ballooning costs associated with building materials. Recent findings by the Canadian Home Builders Association (CHBA) showed that construction costs added about $80,000, or more to the cost of most new build, detached homes nationally.
Furthermore, the CBHA issued its Housing Market Index, showing that for the first 3-months of this year, that supply chain challenges, along with rising prices, pushed the overall cost of a single-family home to well over 18% more than at the close of 2021. Looking at one of the most common materials for new home construction, the cost of wood alone has jumped insanely to roughly about 30% year-over-year, making doing pretty much anything construction-wise a pretty pricey endeavour.
Are there ways to alleviate some of the stress for both you and your clients?
The first and most important thing to remember is to communicate, communicate, and communicate with your clients about any potential delays; this should always be done in any case, whether or not they are related to supply chain issues. This, coupled with honest transparency and flexibility on both sides, always helps a lot, with a focus on what has to be completed right away and what might need to be replanned, but all along the way, finding, and being open-minded to alternative solutions whenever they are required. The worst thing any contractor, developer, or tradesperson can do is try to ignore the issue or try to keep it quiet from your client.
Here are a few other tips for helping your business ride out the supply chain storm:
- Think several steps ahead of where you are at the beginning of a project, and be prepared with a solid plan for dealing with potential roadblocks.
- Share realistic project delivery dates to ensure that your clients clearly understand any given timelines from the start of the project.
- Review your overall project and associated supply chains and understand where the pinch points are, what materials are currently in highest demand, and if there are alternates. If steel prices continue to be variable and high, consider a foundation solution that makes use of more readily available materials.
- To minimize risk, consider signing contracts as soon as possible and purchasing materials well in advance. This will lock in your pricing and protect you from further price escalations.
One key thing to note when it comes to supply chains and foundations. Not all foundation systems are supply-chain critical right now. Aggregate prices have been relatively stable, making the Geopier Rammed Aggregate Pier® (RAP) system a great alternate for your next project. Concrete prices are much less affected than other materials such as lumber and steel, making GeoConcrete® columns a good choice with more stability than other foundation approaches that involve steel. These approaches can help reduce your costs and your risk.
You may not be able to predict, or stop the challenges that supply chain challenges pose, but you can always be better prepared to respond to how you let it affects you and your business in the long run by taking an organized approach to mitigating the risks associated with it.
Ben Dutchak is the Vice President of Construction at GeoSolv Design/Build and has been with the company for well over eleven years and has a wealth of experience and knowledge in the areas of both project management and the intricacies of ground improvement in Ontario. If you have questions for Ben, he can be reached at email@example.com