Thought Leadership // Strong Foundation
Leading Projects to Success Despite Global Supply Chain Disruptions
For months, economists have been predicting an end to supply chain issues, and with each new report that's released, the timeline for an end to the long lead times, high material prices, and a return to normalcy continues to be pushed out farther into the future. While supply chains continue to recover from the effects wrought by the pandemic, they're now facing the impact of rising inflation and rising global tensions, too.
To be a successful partner for developers and owners in an environment where the baseline seems to be constantly shifting, flexibility is proving to be the way forward. Delivering tangible solutions on projects and managing project teams to encourage innovation and collaboration are invaluable in the current building market.
Regardless of market tensions and supply chain woes, projects must still be completed on time and within budget. To ensure this is the result, adaptability must be present at every step along the project’s life cycle, and as the general contractor, there is an opportunity to lead the project to success.
Prices are escalating with unprecedented magnitude and speed in the current market. According to Associated General Contractors of America in its analysis of government data released at the beginning of this year, construction materials prices jumped more than 20% from January 2021 to January 2022. No one could have foreseen these price jumps when they began planning construction projects two to four years ago.
"Pricing is changing daily and our project teams are having to get commitments early. To do that, we must get them a contract so they can lock their prices in before the prices go up farther down the supply chain," says MW Builders Chief Operating Officer Jason Evelyn, "it becomes a domino effect. As soon as you're awarded a project, you need to get critical items ordered immediately, because there could be a significant increase if you wait even a day."
The work to manage costs and maintain the project timelines begins in preconstruction, where teams are finding ways to stay ahead of pricing increases.
"We are trying to identify long-lead items and volatile materials early and asking clients to release purchase orders and subcontract to key trade partners and suppliers so they can start shop drawings and procurement cycles," says MW Builders Preconstruction Manager Natalya Steinke.
She also points to materials sourcing to manage costs. U.S. and North American- based products are preferable, as anything coming from overseas adds multiple levels of price instability and procurement complexity. In such an increasingly unstable environment, the project team in charge of the materials buyout process is crucial. The dedication and hard work of the preconstruction and operations teams can make a difference in the overall cost of a project.
"Our teams are working harder than they've ever had to work to make sure a project is successful," says Evelyn.
He also mentions that the extra efforts that go into ensuring costs are kept as low as possible during the buyout process are a testament to MW Builders' dedication to fostering strong relationships with its clients, suppliers, and trade partners.
The dedication to a successful project doesn't stop once the materials are secured. Warehousing becomes an integral factor in the building process, as just-in-time delivery is no longer an option. It is not uncommon to see materials in need of storage until they're ready for use. On the other hand, it is also becoming more common to not have materials delivered when they're needed. A product or material that was purchased a year ago in an aggressive early buyout may face several supply chain disruptions before it reaches the jobsite and can delay the project schedule if not managed properly.
MW Builders encountered both supply chain challenges on its recent Woodstone at Metro North Apartments project in North Kansas City, Missouri. The project schedule required restructuring to build the garages first - a component of the multifamily complex that would traditionally come later in the building process. The MW Builders project team devised this solution to create “mini-warehouses” able to store the building materials that would be used to build the main structures of the project.
On the same project, the team was faced with the opposite problem, when one of their suppliers, the local electrical services company, faced a worldwide supply chain disruption of computer chips that were a key component of the electrical meters being used on the buildings. Without permanent power to the units, MW Builders could not establish conditions to complete the flooring installation. To work through the issue, the team re-sequenced construction activities and provided temporary power to the units to allow for its trade partners to continue their scheduled work with as little disruption as possible.
"Anytime you re-sequence, it is a disruptor and can negatively affect a project unless handled properly and done as a team, collaborating with both trade partners and clients," says Evelyn. "Our teams bring value in navigating not just a project, but relationships. We have to ensure we're all working together and not against one another," he continues.
Fostering these strong relationships with clients and trade partners is essential now more than ever. With strained supply chains and volatile pricing, communication and teamwork are the keys to success, and general contractors like MW Builders can rise to the top to facilitate the team's relationships to navigate the group to a successful product.
"We rely on every aspect of the team to find solutions, as no single individual will have all the answers," says Steinke. "All team members need to be willing to adapt and pivot to make a project successful."
From prioritizing what features of a project take precedence, and creating more flexibility and adaptability in spaces, to sharing supplier forecasts and industry updates, it takes every player working towards a common goal to achieve project success in the current market environment.
The trust that's developed between trade partners, general contractors, and owners has never been stronger than it is now because all parties must work together to make the best decisions on behalf of the project and the working relationships involved. MW Builders has been and continues to be a leader in ensuring this for its clients.