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Material Delays: A New Normal

Around the year 2019, the Construction industry started noticing a trend. Construction materials began to rise in price. This was mostly a non-issue as we see a rise and fall in material prices every few years. However, In 2020, COVID-19 reared its ugly head, compounding the issue. Essential building materials were suddenly in short supply and hard to obtain, and then, because of the supply chain issue, the price of materials shot up even more. For example, by 2021, lumber prices had more than quadrupled, going from $400 to around $1500 a foot. The compounding factors eventually drove residential and commercial construction to a slow crawl. Seemingly overnight, it seemed impossible to source materials, and when it could be found, the wait times were outrageous. As countries started shutting down and putting restrictions on their citizens, it changed the way construction would work, not just for the three years COVID-19 took over the world, but seemingly for the long term. In the United States, Construction work was considered essential, and although many suppliers were still producing, new restrictions made efficient production all but impossible. They had to apply the new government-mandated guidelines to continue to manufacture materials. This often meant laying off some employees, rearranging schedules, moving or changing equipment, and getting around travel restrictions. This slowed the entire industry down to the point some materials had a 6-month or more lead time. For example, in the masonry industry, it was difficult to obtain even the basics of materials; Brick and block, in particular, were all but impossible to get in a timely manner, if at all. Many brick companies quit producing specialty brick, and homeowners and architects were left scrambling to find replacements. School remodels trying to match brick or block suddenly found their new buildings at a standstill. Before the pandemic, my company could order block and have them delivered the same week. Now, we have an 8-12 week lead time on the plain grey block, and the quality is nowhere near what it was before. Specialty blocks such as splitface, burnished, or a specialty color are still in the 12-14 week range! Many trades rely on materials or equipment manufactured overseas. Places like China had completely shut down, so parts for broken equipment, computer chips, etc., were impossible to obtain. A building here in Texas waited over a year for the part they needed for an air conditioning unit. Unfortunately, they cannot close on the building until all trades are done. This building, slated to be done in six months in 2021, is still not completed in November of 2023. Long Lasting Effects Unfortunately, the long-term outlook for construction costs and build lead times will remain volatile. From 2021 to 2022, materials, on average, were 30% higher. The forecast is that in the next year, materials costs will be 5.4% higher. After the brunt of the pandemic, people started building again, which made demand go up, and the manufacturers of materials suddenly had more orders to fill after struggling to fulfill orders already. And while lead times have steadily improved from months of waiting to weeks, they are still out there in some cases. Houses that should be built in 9 months take 18 months, and Commercial buildings sometimes take a year and a half to two years. Sticker shock has many owners reducing the size of their buildings, removing extras from a build, and, in some cases, altogether abandoning their projects. There is no real end in sight for construction costs to steady or lead times to improve much. This means builders and owners must adapt to these seemingly endless problems. What Owners and Builders Can Do We can do some things to mitigate some of these problems as they come up or even before they come up. Remembering that the construction industry, while stable for the most part, is going through changes that may affect a build will help everyone to understand when problems arise. The Architect- The Architect must learn to be more vigilant when planning a build. Communication with the owner of the building, whether commercial or residential, is critical to this. The Architect should know the owner's budget and seek to keep it as close as possible to it. While it may not be possible to foresee all financial or logistical problems that may come up, planning for potential difficulties may help him decide on materials, design choices, and even the layout of the building. A little research will help them determine what may or may not be in the best interest of the build.

The Builder and Subcontractors- Honesty is the key here. If a builder knows it takes him two extra months on average to finish a build, he should push his timeline forward and explain the reasons clearly to building owners. He should add the average time to his bid for those not started. It looks better to add the time and be early than to say it will take nine months and it took 12. Review your contract and change it where needed. You may need to add a clause with no guaranteed timeline or that change orders may be required if a material goes above a set price. Subcontractors should also be honest with a builder regarding their timeline to start a job and lead times for materials. Since costs are changing on materials consistently, subs should review the templates used for proposals and their contracts to reflect those possible changes. For example, we added that our proposal was only good for 30 days (during COVID, we took it down to 10 days) or we would need to rebid. This has come in handy if your material supplier does not lock you into a price for your materials.

Building /Homeowners- You will need patience. There are going to be delays. Some may move your timeline, and some may not. There may also be change orders for time, materials, or costs. These things do happen. Learn the difference between an excusable and an inexcusable delay. Most of the delays mentioned here will be excusable, and patience will help you get through them—plan for delays. If you plan for any delay you think might come up, you will not be surprised when they do, and you will be happy when they do not. Planning will also help you not to panic when something does happen. Communicate and keep in touch with what is happening on your build through your builder and if you are acting as your own GC, your subs. However, be careful not to micromanage them either.

If you would like to learn more about types of delays and when they are excusable or inexcusable, check out the following blog posts:

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