Market Outlook: June 2021

Peter Capone, Director of Purchasing & Jared Lachapelle, VP of Pre-construction

To access a full PDF of this information, click here: 2021 Market Outlook_06.01.21

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2021 Market Outlook: Material and Labor Supply Update

Insight from Peter Capone, Consigli’s Director of Purchasing

EVOLVING TRENDS

TECHNOLOGY ADVANCEMENT

The pandemic has motivated subcontractors and vendors to implement technological advancements into their shop and field processes. Cost saving material management software, tool upgrades and robotics are improving efficiencies which is allowing subcontractors the flexibility in managing on-site workforce restrictions.

PRE-FABRICATION

Surveyed participants are pre-fabricating 20%more than before the pandemic, assisting in managing workforce requirements in the field.

DESIGN-ASSIST

71% of our respondents noticed an increase in requests for design-assist proposals which further confirms the need for speed-to-market becoming a priority of many clients. Ensuring the construction manager has a defined process for properly implementing this approach will benefit project schedules. Vetting subcontractors for similar project experience, backlog capacity and financial wherewithal should be a focus.

WORKFORCE RESOURCES

72% of the surveyed subcontractors are not concerned with staffing projects in 2021. Based on work in the pipeline, we should continue to monitor workforce resources for 2022.

RECOMMENDATIONS

• Continue to keep a close eye on high risk materials.
• Lock in subcontractor pricing as soon as possible to avoid future price escalation.
• Hold contingencies for material escalation in estimates and budgets to avoid exposure.
• Watch for supply chain disruptions from products sourced overseas. We continue to receive delay notifications for products
  such as flooring, cabinetry, etc. so we suggest procuring from domestic vendors when possible.
• Identify long-lead materials and ask subcontractor and vendors about alternate materials and options.

To access a full PDF of this information, click here:
2021 Market Outlook_Material and Labor Supply Update

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Now more than ever, academic, corporate and healthcare leaders are faced with determining the appropriate facility adaptations to keep their buildings safe and sustainable for occupancy. These upgrades often come at a premium, and understanding key factors are paramount when making the investment.

Consigli’s Director of Sustainability Steven Burke moderated a virtual panel of construction, health and finance experts including Joe Allen (Harvard T.H. Chan School of Public Health), John Macomber (Harvard Business School) and Steve Trapp (Columbia Property Trust) for a discussion on The Business of Healthy Buildings, covering these topics and more:

• What defines a healthy building?
• Key health performance indicators associated with built environments
• Worthwhile health & wellness investments to stay competitive
• Strategies to “justify the spend” for funding support

Click the video above to view the webinar.

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COVID-19 Impact: Material & Labor Supply Update

Insight from Peter Capone, Consigli’s Director of Purchasing

The overall feedback implied market risk is subject to certain trades, but bid coverage is high and pricing is aggressive, indicating it is an ideal time to procure subcontractors for upcoming projects.

MATERIALS & LABOR PRICING

*Trade Percentage of Overall Project represents the percent of the trade compared to the overall project. The breakdown percentages were derived using historical data accumulated by Consigli over the years. It is an average of all project types, including new construction, renovations and other niche project types. Therefore, when using this chart to apply to a specific project, it is important to understand the project composition.

MATERIAL LEAD TIMES

According to our survey, about half of the subcontractors reported no major increase in lead times. The other half have reported slight to moderate increases due to COVID-19. Subcontractors are continuing to place focus on ordering materials as soon as possible to prevent schedule delays.

RISKS TO WATCH FOR:

• Glass & Aluminum. Small to mid-sized regional insulated and float glass suppliers appear to have struggled with COVID-19 and the
  

  

  result has been weak performance and unreliable deliveries. Delays have been two to four weeks on top of typical lead times. Subcontractors are advising to stick to larger, national manufacturers, in order to ensure schedule compliance.

• Lumber. Demand is high due to several factors in the residential market. The typical “off the shelf” items are now running two to four weeks for delivery. This includes pressure treated materials, kiln dried materials, OSB’s and plywood and structural framing materials. Suppliers should catch up as we move into the winter and residential building slows.
• Distribution & Transportation Issues. Materials typically running four weeks after approvals are now running six to seven weeks for delivery. Suppliers are having distribution and transportation issues with materials sitting on loading docks waiting for trucking companies weeks prior to shipment. This issue appears to be affecting delivery of flooring and other finished products.
• Electrical Lighting/Gear/PVC. Recommend adding three weeks to the typical four week lead time for switchgear and distribution equipment. Also, add four weeks to the typical lighting lead time, which typically varies from six to 12 weeks. PVC lead times have also increased by another two weeks.
• Custom Fabricated Materials. All custom materials sourced domestically or from oversees continue to be an issue. Expect an extension of four to six weeks on top of the typical lead times. This affects all trades, but in particular, HVAC, electrical, plumbing and flooring. When applicable, consider standard products.

LOOKING AHEAD

Now is a good time to finalize estimates, lock in pricing, and move forward with projects.
Compared to last year’s heated market, we are experiencing better than normal bid coverage and aggressive pricing in nearly every trade. Although subcontractors are reporting a healthy backlog, they are actively seeking to book work for 2021 and 2022 due to uncertainty of the future. Also, 93% of the subcontractors surveyed are confident, that if needed, they have the ability to acquire additional staff. They have returned to work and maintain current manpower demands. There is potential when the COVID-19 vaccine is developed, the construction market may start trending back towards pre-COVID-19 levels of activity, increasing the cost of construction. Therefore, now is the time to move forward with upcoming projects.

To access a full PDF of this information, click here:
Covid-19 Impact_Material and Labor Supply Update

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COVID-19 Impacts: Subcontractor and Supplier Survey Results

Insight from Peter Capone, Consigli’s Director of Purchasing

Below we summarize the trends and key takeaways:

MATERIAL SUPPLY

ITEMS TO CONSIDER:

• Watch for spikes in pricing. Due to a surge in projects coming back on line, there’s a potential that demand will increase in the short term. This could cause small spikes in pricing and further lengthen predicted delays.
• Shorten supply chain when possible. Eliminate the potential risk of increased shipping costs and potential delays caused by buying from distant suppliers.
• Understand fabricator lead times. Many fabricators have taken advantage of delays and project closures and fabricated everything in their pipeline. Fabricators are eager to begin new projects.
• Prefabrication of materials. Advantages include improved quality, expedited installation schedules, and lowering safety risk in the field. Consigli is currently prefabricating everything from doors preinstalled with hardware, to full bathroom pods in an effort to save time and reduce the number of on-site workers.

BACKLOG

ITEMS TO CONSIDER:

• Talent pool availability. Subcontractors are anxious to get key employees back to work. There is an open opportunity to obtain talented teams if subcontractors are provided with immediate opportunities to start work.
• Workload hesitations. Some subcontractors are uneasy about booking new work that coincides with the restarting of existing projects due to a potential heavy workload as they figure out the new guidelines.
• Price reductions only offsetting COVID-19 related costs. There are wide ranging costs from 0-15% due to lost time and inefficiency associated with new protocols that balance out near term price reductions. However, price reductions due to bidder aggression to secure backlog are resulting in reduced overall pricing.

COVID-19 COSTS

ITEMS TO CONSIDER:

• Scheduling is critical. Collaboration with subcontractors to create clear, coordinated work plans can minimize inefficiencies. Staggered start times to control the influx of workers entering sites should be considered. Our teams are working hard with our subcontractor partners to evaluate and mitigate the impacts of each project specific safety plan. These are then being communicated to our clients to help them understand potential costs and risks.
• Scrutinize/control COVID-19 cost. As time goes on, subcontractors are realizing the actual cost impacts of the newly applied safety protocols and procedures. During project buyout, we’re pressing subcontractors to define actual costs based on definable metrics. We are also leveraging trade package awards to eliminate or minimize these costs. COVID-19 related costs are properly defined as breakout or alternate prices, allowing us to revisit and reduce accordingly, if conditions change.
• Crew size and logistics drive cost. Subcontractors required to provide large crews working in close proximity may incur cost due to new protocols and safety requirements. Although the individual cost of these items may be minimal, they add up on large projects. Below are several items that are driving cost:
  • PPE materials
  • lost time due to testing and reporting
  • lost efficiency due to 6’ proximity restrictions
  • lost time due to job site logistics, travel restrictions and elevator capacity limits

Working with subcontractors and labor affiliations to stagger work time starts can be a solution and incorporated into contracts to loosen up workforce bottlenecks.

PREDICTED LABOR ISSUES

ITEMS TO CONSIDER:

• Staffing will be controlled upon return. In the short term as jobs reopen, COVID-19 safety requirements may limit workforce on project sites. Subcontractors are anticipating this will help avoid any spikes in manpower requirements, allowing for a controlled re-staffing plan.
• Stimulus impact. Several subcontractors have mentioned minor concerns over the stimulus package and unemployment benefits lowering motivation of workers to return to work. Percentages range from 5-15% of overall workforce. Some workers may also need to remain home to take care of family members or children.
• Potential trade labor loss. There is a risk that some of the trade labor that was laid off may not return to our industry, similar to past recessions.

This feedback and insight reflects the current situation impacting our industry. This information can be used as a resource as you navigate the recovery phase of COVID-19 and look for creative solutions to stay on track or begin new projects. Being nimble and adaptable as you work through the new environment will be key in progressing forward.

To access a full PDF of this information, click here:
Covid-19 Impact_Subcontractor and Supplier Survey Results_6.12.20

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Here are three M/E/P systems changes to consider making before end-users re-occupy your building.

Insights from Consigli’s Director of M/E/P Services Michael Culcasi & Sustainability Manager Steven Burke, LEED & WELL Faculty, CHPC

INCREASE BUILDING VENTILATION

Introducing fresh air into a building that has been minimally occupied or entirely empty for an extended period of time is a best practice with or without a viral pandemic. Before your building occupants return, consider conducting a building flush-out: open your outdoor air dampers to 100%, eliminate air recirculation, and temporarily turn off any heat exchange/energy recovery systems during COVID-19 episodes.

Open Outdoor Air Dampers: From a seasonal standpoint, timing is optimal for a building flush-out, specifically in the Northeast. With temperatures hovering around the 50º mark, temperature and humidity levels are moderate, meaning building systems will not require as much energy (and therefore, cost) to treat the air to bring it to an adequate level for the space.

Each building will have unique requirements and timing for an optimal flush-out, but in general, the following LEED flush-out calculation can be used as a guideline:

To achieve an optimal flush-out, HVAC operations settings shouldn’t be stopped, and adjustments shouldn’t be made until the full cycle has been completed.

If a full flush-out isn’t an option for your facility, ASHRAE recommends running your HVAC system for longer hours than usual—ideally, 24/7. For buildings that cannot commit to the energy costs associated with a full flush-out or peak air flow 24/7, systems can be switched to a higher speed at least two hours before occupancy and adjusted to a lower speed two hours after end-users leave. The system should remain operational at a lower speed overnight and on weekends.

For older buildings without modern HVAC systems, “flushing out” the space isn’t quite as simple. Building owners and operators should open all building windows and run bathroom exhaust fans for at least a few days in advance of occupancy, depending on your building size and how much exhaust can be pulled out via bathroom exhaust fans. Remember, this manual operation will require staffing commitments and an eye on the weather—open windows and rain/wind isn’t a good combination for any building.

Air Recirculation Systems: Air recirculation systems may reintroduce virus particles into buildings. For that reason, it is recommended that dampers are closed during COVID-19 episodes. This adjustment may result in thermal discomfort for occupants, but the importance of preventing contamination should be deemed priority over thermal comfort.

Heat Recovery/Energy Exchange: Under certain conditions, virus particles in extract air can re-enter the building, and heat recovery devices may reintroduce particles from the exhaust air side to the supply air side via leaks. Recovered air to air heat exchangers (i.e. rotors) may also be at
risk for substantial leaks in the event of poor design and maintenance. While we continue to learn about the spread and lifespan of the virus, exercising an abundance of caution should be considered a best practice.

CHANGE HVAC FILTERS

HVAC systems work by taking a percentage of recirculated interior air mixed with fresh air which, together, travels through a filter before being released into a building. These filters get dirty over time, collecting dust, debris and other airborne particles.

For most building types, changing your HVAC filters twice per year is considered a best practice. Installing new filters in your building won’t stop the spread of COVID-19, but dirty or ineffective filters can exacerbate underlying respiratory issues that make occupants more vulnerable to the virus. If you haven’t changed your filters lately, now is the time to do it (that goes for your home, too).

Additionally, consider increasing the Minimum Efficiency Rating Value (MERV) rating of your filters. The higher the rating, the more airborne particles it will capture. It is important to note, however, that these filters are more expensive and will require replacement more frequently.

FLUSH DOMESTIC WATER SYSTEMS

Domestic water systems that have sat stagnant for weeks or months during limited building occupancy can create ideal conditions for the growth of different types of bacteria such as legionella.

A flush-out of domestic water systems can help to combat the growth of legionella and other bacteria in your building’s water supply. These flush-outs should be conducted for a minimum of 15 minutes and within a few days of end-users returning to the building.

Fixtures to consider include (but are not limited to):

• Toilets
• Hand sinks
• Hot water heaters
• Water filtration systems (recommend changing filters, too)
• Ice machines
• Drinking fountains

There isn’t a one-size-fits-all solution to keeping your building healthy in the wake of COVID-19. Each building is different, and these tips should be used as guidance paired with knowledge of your own specific building systems. While these recommendations will help to minimize risk in your facility, they will not eliminate it. Encourage your end-users and occupants to follow CDC guidelines for hygiene and social distancing, which have proven to reduce the spread of the virus.

To access a full PDF of this information, click here:
COVID-19 White Paper Healthy Buildings_04.30.20

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COVID-19 Cost Implications

Insight from Jared Lachapelle, Chief Estimator, Consigli

We are connecting with hundreds of subs and suppliers each week through a strong workbook of pre-construction and bidding opportunities, as well as on-going project procurement for which we are awarding 30-40 contracts per week. We expect to learn a lot in April and May and will provide updates along the way.

  EXPECTATIONS

Our expectation is that the next few months will be turbulent, fueled by uncertainty at all levels of our industry. We therefore expect inconsistency related to cost, with some projects experiencing cost increases while others remain somewhat steady. We expect this pattern to continue as long as many construction sites and non-essential businesses are closed.

We expect stabilization relatively soon after construction broadly resumes. We expect costs to increase related to COVID-19 protocols as further described below but anticipate some or all those costs to be offset by de-escalation related to bidder aggression. We believe it unlikely that costs will rise as much as recent years where we saw as much as 7-8% escalation in some areas, comparing future costs to pre-COVID. We therefore expect, on average, to see zero to moderate per annum increases in the near-term, depending of depth and duration of a recession.

  EVIDENCE OF PRICING STABILITY

CURRENT PROCUREMENT

Procurement of subcontracts and materials purchases had revealed no trend change from recent awards through Friday April 3rd. The variance from budgets set by GMP’s remains typical. However, the COVID-19 safety protocols now being implemented industry wide and formalized into job specific plans have been deployed to subcontractors for inclusion in bids moving forward. We have some early impressions discussed below.

MATERIALS/EQUIPMENT PRICING

Supply chain issues do not appear to impact costs at this time, but this could change rapidly and meaningfully based on each manufacturer’s supply logistics, and whether or not and to what extent their workers and partners are directly affected by positive tests for COVID-19.

Subs and suppliers continue to consistently report minimal to no lead time impacts and no cost impacts. Most manufacturers/fabricators have reported operating at or near capacity and generally keeping up with demand. Subcontractors are consistently reporting that supply chains have been altered where needed mitigating any potential impacts. Cox Engineering CEO Jon Desmond reported in an industry roundtable hosted by Vermeulens, that supply chains are in-tact, with some Chinese supplies currently being procured elsewhere due to on-going trade tensions pre-dating COVID-19. Additionally, one manufacturer reported canceling a planned Spring price increase.

We anticipate a greater level of flexibility in material specification and selection, provided we do our part to source and present appropriate alternatives.

  POTENTIAL FOR VOLATILITY

BIDDING BEHAVIOR

In spite of general stability at this moment, things are evolving daily, and stability could begin to erode quickly, pending further economic news, COVID-19 surge and regulations. We expect at least some near-term volatility in bidding behavior as subs/suppliers scramble to determine and implement procedure and protocols, adjust to remote working conditions, react to evolving supply chain conditions, manage cash flow and book new work reacting to stoppages and economic news.

A greater level of vigilance will be required in evaluating proposals for completeness. As subs/suppliers’ anxiety rises they may feel compelled to bid more work but may not posses the resources to do so effectively, resulting in pricing that is artificially high or low. We will continue to scrutinize proposals to ensure that no undue risk is taken.

We could begin to see discounts offered, which may present risk as it could be a sign of cash flow problems. Discounts can be attractive and may well benefit the buyer, but with some potential cost increasing forces (described below), extra care must be taken to ensure viability of the offer and offeror’s financial stability.

QUALITY OF INFORMATION

We are concerned that apparent supply stability portrayed by suppliers may be overly optimistic. We do not have direct evidence of misinformation and we believe what we are being told (directly) is sincere. However, a race to book work could lead to artificially optimistic views of manufacturing capacity and lead times, requiring additional scrutiny and further verification if possible.

  SOURCES OF INCREASED COST

LABOR PRODUCTIVITY HINDERED BY COVID-19 PROTOCOLS

Productivity is being impacted by working restrictions and COVID-19 protocols, though it is not yet quantifiable. Currently we are not yet seeing this translate into increased pricing for sub/supplier bids, but this may change. It is unclear to what extent productivity for individual tradespeople has been compromised in terms of output per worker-hour.

As protocols become more widely understood and implemented, we expect trade productivity loss to cause some cost increases. Some sources of productivity loss are: additional non-working time for COVID specific tool box talks and temperature testing; more frequent cleaning of elevators/hoists and similarly constrained spaces; daily cleaning of tools and equipment; staggered trade workday starts; and 6’ distancing requirements. The distance requirements will undoubtedly affect some operations more so than others. For example, many siding panels are installed with two workers closer than six feet, with alternatives in some cases not immediately obvious. For projects still in design, alternative materials and sizing may offer effective solutions. On the other hand, operations such as installing light fixtures, setting tile and painting that can be accomplished with a single worker may not be impacted. Other operations performed by crews, such as utilities, concrete forming and steel erection so far seem generally productive while maintaining proper distance.

This week, with site specific safety COVID plans in place, we’re starting to see bidders reacting with cost premiums. Albeit a small sample size, we are seeing premiums ranging from 2%-3.5%, with one outlier at 6.8%. These range across multiple trades, multiple jobs and a broad range of trade dollar values. One bidder reported a cost range resulting in 2.9-8.6%, which highlights the uncertainty and challenges with quantifying lost productivity.

In future updates we will expand on the productivity loss more precisely and report on trends with broader information.

EXTENDED SCHEDULES/GENERAL CONDITIONS

Although individual worker output is not compromised in some cases, there is an overall project-wide daily output reduction due to fewer workers on site. Many activities on site that were previously scheduled with start-to-start lags are now start-to-finish operations. This will have an impact on schedules, requiring longer days, 6- or 7-day work weeks, or longer durations, which will increase Division 01 costs for staffing and temp facilities rentals, etc.

INCREASED PROJECT REQUIREMENTS

Other Division 01 costs will increase due to sanitation, monitoring and reporting protocols, such as additional cleaning of common areas, job trailers, more frequent emptying of trash receptables, hourly cleaning of high touch surfaces, hand wash stations with warm water, sanitation/hygiene signage, additional PPE, technology to support greater remote collaboration and job office size/configuration to facilitate distancing.

  SOURCES OF DECREASED COST

BIDDER AGGRESSION

Work stoppages and the prospect of further project postponements and/or cancellations represent a disruption to the cost model for many trade partners. Since the financial crisis recovery, we have seen sustained growth which came with higher margins for many subs/suppliers. We expect many of them to demonstrate aggression based on fewer opportunities, or at least a near term fear of few opportunities. One open shop electrical subcontractor conveyed that what had been 150 bid invites received per week has turned into 20 / week.

We expect this to result in greater subcontractor participation and therefore competition. If this occurs it will act as a counterbalance to the forces increasing cost, but as noted above, it is not clear what the net effect will be and will depend heavily on the duration businesses and jobs are closed and the speed of subsequent economic recovery.

CURRENT EVIDENCE OF FOCUS SHIFT

While we don’t yet have direct evidence of cost reductions relating to a strategic shift from margin to volume some subs are noticeably anxious. Some have specifically referenced holes in their schedules, and we’ve seen a broad increase in post-bid follow up from subs/suppliers.

To access a full PDF of this information, click here:
Material-Cost-Update_041420

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Market Watch as COVID-19 Evolves

Insight from Peter Capone, Consigli’s Director of Purchasing

GLOBAL

As time goes on, it’s becoming apparent that although we will see a lag in supply, China is in the process of recovery, therefore manufacturing has started to return to full capacity.

Constrained logistics, travel restrictions and a shortage of labor in China will most certainly cause some delay, although the slow-down in the construction industry in the United States (U.S.) will provide time for this major supplier of product to recoup.

According to a report from Construction Dive, Chief Economist for Dodge Data & Analytics Richard Branch estimated that 30% of building products in the U.S. are imported from China. While China seems to be slightly rebounding from the disease, its decreased manufacturing output is still expected to impact construction in the United States.

NATIONAL

• The differing State mandates from local governing authorities continue to make tracking the reliability of domestic supply chain a day to day challenge.
• The enforcement of mandatory protocols has caused drops in efficiencies in the manufacturing work force as well as the on-site installation work force. We expect to see these protocols become more stringent “IF” cases of the virus continue to increase. Receipt of Steel and Pre-cast Concrete from Quebec and other parts of Canada is also changing daily as fabricators apply for dispensation. Currently most fabricators are being allowed to deliver to the U.S. That being said, there is rumor that deliveries may be delayed due to driver quarantines.
• Many domestic fabricators in Pennsylvania, New York, Georgia and other states are shutting down and reducing fabrication plant activity, which will delay deliveries of millwork, aluminum windows, brick and now potentially flooring products. As the virus flows through each state, knowing where your materials are coming from, remains exceedingly important.
• Owner’s/Architects should prepare to be more flexible with material/equipment choices depending on schedule and cost risks and priorities.
• Electrical fixtures and Mechanical equipment – although parts and pieces may shortly be available, domestic fabricators will be required to assemble.
• According to analysis done by S&P Global Platt, China’s output of finished steel, a key export in American building projects, was expected to fall by up to 43 million metric tons year-over-year last month due to the Coronavirus outbreak.
• According to an article from Construction Dive on April 2, 2020:
  • COVID-19 exposed inefficiencies in the way the U.S. sources materials/merchandise/etc.
  • As a result there will be more focus on U.S. manufactured materials
  • This could be an opportunity to look at local or U.S.-based pre-fabrication to cut out the international supply chain for materials

REGIONAL

Concerns are rising about near term volatility and erratic pricing as subs scramble to work from home and figure out COVID impacts.

PRECAUTIONARY MEASURES

• Consigli has maintained focus on tracking products. Domestic fabrication is now under the microscope. Communicating with Vendors and understanding “What’s left on the shelf” is of vast importance, as fabrication plants reduce output due to labor reductions.
• We’ve continued to keep a close eye on “over saturation” of Subcontractors and Vendors. Spreading the work to minimize risk while at the same time keeping as many of our partners working, has become a very high priority.
• Early buyout of high dollar, long lead-time packages has remained a priority.
• Awarding packages with an initial commitment for payment of shop drawings and design services, prior to fully committing to material procurement has lessened the risk for all parties.

To access a full PDF of this information, click here:
Material Supply Update_040720

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Overview

On an ongoing basis, we continue to work closely with all our supply chain partners to better understand any current or potential impacts from COVID-19 on materials used in our projects.

We have already seen some early signs of potential impacts to our supply chain but truthfully, it is too early to tell the broader extent of these impacts. The hardest hit countries that supply materials for our industry are: China, Italy, South Korea, Germany, Spain and France. So far, we’ve found that select components used in electrical fixtures and equipment, mechanical equipment and elevator equipment are of the largest concern due to a mix of manufacturing shutdowns and port of call export restrictions. Consigli felt it was judicious to offer insight as to how the virus has already impacted, and may continue to impact, the supply chain of materials. Consigli’s Director of Purchasing Peter Capone offers some current thoughts as to what we’re seeing in the marketplace now, and we’ll continue to monitor the situation.

Scale of Impact

GLOBAL

Over the past few weeks (and likely weeks to come), global shipping has been one of the biggest casualties. More tonnage of container ships is idled around the world now than during the global financial crisis, according to Alphaliner, a shipping data service. China’s manufacturing sector has been hampered by efforts to contain the spread of the illness, and earlier this month, the Italian prime minister instituted a nationwide lockdown. Already, some lighting fixture components sourced from China that were ordered prior to the outbreak are back ordered. There are also longer lead times on finishing materials like glass office fronts and stone coming from Italy.

NATIONAL

About 30% of building materials imported to the U.S. come from China, making the country the biggest single supplier, according to Dodge Data. U.S. contractors are already seeing the impacts of the coronavirus on supply chains for building material—from shipping delays to a need to re-source products domestically. And the country is faced with uncertainties over how long countries will be on lockdown, how crews will be impacted and whether project deadlines will have to be pushed out. The American Association of Port Authorities also announced earlier this month that first quarter cargo volumes at U.S. ports could drop 20% or more from 2019 levels because of supply chain disruptions caused by the coronavirus.

REGIONAL

Supply of materials in the Northeast mirror what we’re seeing nationally with the exception of imports from Canada; however, of materials sourced from Canada (such as structural steel and HVAC equipment) are also starting to become concerning. Newly implemented travel restrictions have not blocked the import of materials, but Canada is ramping up its precautionary measures daily which will eventually affect manufacturing output.

POTENTIAL DELAYS

• Manufacturing Shutdowns | While factories in China are continuing to come back online as the spread of the virus subsides and materials will begin to flow again, there are still issues affecting cargo movement and back up delays.
• Port of Call Export Restrictions | COVID-19 is expected to create “a longer and larger impact” on imports flowing into major U.S. container ports than previously believed due to factory shutdowns and travel restrictions in China that continue to affect production, according to the National Retail Federation (NRF). There is still a lot of uncertainty as to the longterm impact on the supply chain.

PRECAUTIONARY MEASURES

Within the last several weeks, all of our project teams have, and will continue to, take the following precautions:

• Identify project specific “long lead time/high-risk” materials sourced abroad;
• Communicate daily with subcontractors to track these materials as they move through the process;
• Discuss contingency plans for sourcing “alternate” manufacturers, when prudent;
• Work with design teams, during design development, to avoid sourcing materials from high-risk manufacturers;
• Collect and share information daily through a centralized tracking portal;
• Expedite remaining buyout to avoid domestic material demand issues.

LOOKING AHEAD

To continue moving projects along both on time and safely, Consigli recommends teams evaluate their contracts and communicate with all project teams, subcontractors and vendors. Consigli is also now looking at sourcing materials earlier than it normally would and possibly looking to rely more heavily on domestic suppliers. More positively, we are seeing that Chinese manufacturers are back online and slowly returning to full capacity. We anticipate a portion of these potential supply delays will resolve in the coming weeks, and we will maintain open communication in the coming weeks as supply logistics play out and circumstances evolve. Stay safe and healthy, and rest assured we are all in this together.

To access a full PDF of this information, click here:
COVID-19 Impact to Construction

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