The disruptions and unpredictability of the current supply chain environment have been well documented, and unfortunately, the forecast is that these disruptions will remain with us for the foreseeable future. While there is no silver bullet to insulate a construction project from the potential impacts, strategies can be deployed to mitigate delays caused by this problematic supply chain market. For these strategies to be effective, though, they need to be planned early in preconstruction.
Your General Contractor should be surveying material and equipment lead times during the preconstruction process so the entire development team understands the risks and a plan to deal with them can be formulated. One way to build around the excessive and unprecedented long lead times the industry is currently facing is to procure the materials and equipment subject to excessive long lead times earlier than typical, even before execution of the construction contract. This will ensure the materials will be put into fabrication and delivery queues in time to hit the job site and keep the project moving forward. Materials and equipment like trusses, steel, site utility components, windows, fixtures, HVAC equipment, switchgear, and emergency generators, to name a few, come to mind.
Another strategy that should be discussed in preconstruction is the use of onsite and offsite stored materials. The tried and true approach of Just-in-Time delivery is not possible when fabrication and delivery schedules are unpredictable. By making a plan to have materials delivered and stored onsite in advance of when they are needed, removes the risk of delays should they not arrive just in time for installation. Jobsite logistics, inventorying, accounting, and billing of these stored materials need to be discussed in preconstruction to understand the plan. Many developers are exploring leasing offsite warehouses and laydown yards to help mitigate the supply chain challenges, which is proving to be effective. Costs for warehousing materials and the additional handling should be understood in preconstruction and captured in the budget. Also, developers should engage their lenders in these strategies so all parties can understand their requirements for payments for stored materials.
As you can see, strategies can be deployed to help solve the difficult supply chain environment. However, to have the most significant impact, the early procurement and storage of materials should be developed, reviewed, and implemented during the preconstruction process.
Vice President of the Southeast Region
The Douglas Company
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