Construction Supply Chain Challenges – How Construction Suppliers are Navigating the Ongoing Impact of COVID-19

Many essential construction materials are currently in short supply, including lumber, steel, cement, and paint. Manufacturers who cannot obtain the needed materials on time or at all face delayed or cancelled orders, meaning lost revenue, delayed payments, and potentially damaged business relationships. Builders face similar issues with their clients if they’re unable to procure the needed supplies from manufacturers. So how are construction suppliers and builders dealing with these setbacks?

At this point in the pandemic, “unforeseen circumstances” is rarely an acceptable basis to extend a contract due to COVID-related delays, as these supply chain disruptions have become well-known and expected. Instead, some businesses are drafting contracts that make allowances for delays that could not be reasonably avoided, providing some leeway in terms of time and money to construction suppliers facing industry-wide shortages. This can help build strong relationships with suppliers and acknowledge the current global uncertainties that are currently inherent in the industry.

This measure doesn’t itself help builders mitigate delays or losses due to material shortages, however. This can be a more difficult challenge to navigate, but there are ways to adapt and streamline processes in order to account for it. Transparency in the supply chain can help: building strong relationships with construction suppliers and sharing data with each other can help improve efficiency and scheduling. The sooner the other party knows about one’s needs or about specific supply challenges, the easier it is to adapt and make plans. Having sufficient data on the market to be able to distinguish between genuine demand and panic buying can also help companies determine how much of a given resource they really need and where best to focus their efforts.

Some businesses are changing the way they plan projects, deferring certain decisions and locking in others early. Contractors are ordering materials before a contract is finalized, so that the price and availability of those materials are known when the contract is made. They may also begin preparatory work — such as demolition or building foundations — before the final details of the main project have been settled, allowing them to progress the project and plan out resources in advance.

Another way to offset the impact of delays and price fluctuations is by making other aspects of the project more efficient. For example, many more builders are now sourcing prefabricated components in order to reduce the amount of time spent working on-site. Construction suppliers are looking to digitisation and automation to streamline manufacturing processes, saving time and expense in the long run.