Supply Chain Challenges
With more than 25 years of experience as a licensed architect and entrepreneur in Charlotte, Ryan Carver has been closely monitoring the dynamic trends within both the U.S. and Queen City markets. Delving into market issues and developments, Ryan offers his insights on supply chain and skilled labor issues in the multifamily construction industry:
The pandemic has affected us in various ways, from a new perspective on world health to the evolving workplace and, prominently, the transformation of the multifamily market. This is because the private sector’s volatility is closely tied to factors like economic stability, stock market performance, macroeconomic conditions, interest rates, inflation, and more. Even today, we continue to grapple with the aftermath of pandemic-related supply chain disruptions and construction backlogs on a global scale.
Since the beginning of the pandemic in 2020, many construction projects have faced these challenges. In some cases, developers have struggled to make deals “pencil.” Common construction materials that were previously readily available before the pandemic have become more expensive and, at times difficult to find, which often results in extending lead times. We’ve all heard the expression, “time is money.” As a result, contractors must consider material substitutions to maintain project budgets and schedules, supplying materials locally or sourcing them from multiple manufacturers to meet timelines. As an industry, we have still not regained the availability of products like there was prior to the pandemic.
Contractors are also struggling to stay within their project budgets due to increased project costs (materials, schedules, labor, and insurance). Material cost escalations exceeded budgets. One way to limit this impact is to collaborate with engineers and architects during the design phase of a project to avoid selecting materials that are not readily available to them when it is time to jump into action. Maintaining communication and relationships with suppliers is also crucial to supplying the necessary materials to be on schedule.
Scheduling is the backbone of any project. This includes material lead times, coordinating disciplines, and labor. Current material-lead times play a significant role in causing project delays. Start dates and phases typically aligned with material deliveries may need to be scheduled later to coincide with material deliveries due to their delay. In other words, being on track and aware of potential delays will allow contractors to stay ahead of the curve. Utilizing software systems provides contractors with the ability to track material deliveries, material inventories, fuel surcharges, and automatic reordering of materials.
Research shows that supply chain management is at the center of manufacturing business success. To achieve business goals and create profitable operations, a supply chain strategy needs visibility, reliability, and predictability. The outlook for the next few years will be challenging for the construction industry, with the short supply of skilled labor, material delays, and rising costs directly affecting project schedules and budgets. Navigating these realities starts with understanding what they are and the areas of business they impact, collaborating with ownership and the design team to identify and execute alternative plans, and exploring options for training on critical skills. In terms of approach, the importance of remaining flexible even after the construction begins cannot be stressed enough; this relies on an experienced team, high accountability and everyone working towards the same clearly established goals. With the right planning and forethought, it is possible to mitigate the impact of these issues.
About Ryan Carver: Ryan Carver, Managing Director of SGA|NW, a GF design company, is a licensed architect with more than 25 years of experience in the multifamily industry. Many of these years have been spent consulting in private development, creating client relationships, managing design teams, offering advice on marketing trends & business, as well as mentoring team members. With an entrepreneurial spirit and design-build origins, Ryan Carver was the winner of the Traveling Fellowship Award and serves on the ULI Affordable Housing Committee. He received his Bachelor of Architecture from the University of North Carolina at Charlotte and is AIA, CDT, and NCARB certified.
For further inquiries or to learn more about SGA|NW, a GF design company’s multifamily design services, please contact Ryan Carver, managing director of multifamily at SGA|NW, a GF design company, at [email protected] or Danielle Barr, senior marketing manager at GF, at [email protected].