Increasingly, business operations are getting “back to normal” following the COVID-19 pandemic. But three years later, the construction industry is still struggling with the after-effects of the pandemic: supply chain disruptions.
Many construction projects are stalled, delayed, or uncertain as materials are in short supply. More than three-quarters of the contractors in North America report in a 2022 Global Data survey that they have been impacted by supply chain disruptions.
What’s Causing the Disruptions?
There are many causes of supply chain disruptions. Soaring global shipping costs and an ongoing backlog of domestic freight operations are resulting in shortages of many construction materials that were easy to source before 2020; this includes lumber, steel, and copper. These materials now often have long lead times – if they can be sourced at all.
Volatile energy costs are also exacerbating supply chain issues, which has an impact on logistics. For example, the logistics of transporting materials remain challenging due to rising fuel prices and ongoing driver shortages. The American Trucking Association recently reported a shortage of 80,000 truck drivers, and expects that number to double by 2030.
Geopolitical instability is also playing a role in supply chain disruptions. For example, Russia and Ukraine are both major producers of copper and other metals; their ongoing conflict is resulting in shortages and price increases. Import prices for some building materials are rising faster than export prices due to factors like higher U.S. tariffs on Canadian softwood lumber.
And despite the United States lifting the national COVID-19 emergency declaration in April, the construction industry continues to grapple with the effects of pandemic policies on supply chains, especially outside of the U.S. This includes labor shortages as many contractors are still struggling to bring skilled workers back to jobsites.
Associated Builders and Contractors, a national construction trade association, estimates that 1.2 million construction workers will leave the industry in search of new careers. The industry will need to hire nearly 600,000 workers this year to meet pent-up demand.
Impact is Ongoing
Some industry experts predict that supply chain disruptions will continue to impact the construction industry through 2023 and beyond. Here are a few strategies that can help you minimize the impact of these disruptions on your projects:
1. Consider using substitute materials. If substitute building materials of equal or near-equal quality and price are more easily and quickly available, using them instead of originally intended materials can help projects stay on schedule and on budget.
2. Communicate early with suppliers. The sooner you communicate with suppliers about your material needs, the better your chances may be to get what you need when you need it and avoid costly project delays.
3. Source materials locally. Local suppliers may have the materials you need and can get them to your jobsites quicker than suppliers who are out of the area.
4. Order materials with long lead times as soon as possible. This requires careful long-term planning by project managers, who should work closely with partners up and down the supply chain early in the project life cycle to lock in costs and delivery windows for critical materials .
5. Collaborate with engineers and architects. Work closely during the design phase of a project to try to avoid choosing materials that might be difficult to procure.
6. Be flexible with project scheduling. Some phases of a construction project that usually start early might need to be pushed out to coincide with anticipated material delivery dates.
Supply chain disruptions are adding complexity to already-complicated construction projects and leave little room for error. But careful planning and flexibility can help keep projects on track, on time, and on budget.