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

The post COVID-19 Impact: Material & Labor Supply Update first appeared on Consigli Construction.

The post COVID-19 Impact: Material & Labor Supply Update appeared first on Consigli Construction.

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

The post COVID-19 Impacts: Subcontractor and Supplier Survey Results first appeared on Consigli Construction.

The post COVID-19 Impacts: Subcontractor and Supplier Survey Results appeared first on Consigli Construction.