Supply chain issues can lead to a whole range of problems that can increase costs, delay projects, and even result in projects being canceled. Supply chain issues are multifaceted, and they can catch you off guard and stack up really fast. This can be overwhelming, with project managers not even knowing where to start or how to resolve the issues they’ve never faced before.
What Causes Supply Chain Issues?
The last two years have shown us all how life can be disrupted without warning. This has not only affected our personal lives but has had a dramatic effect on the construction industry. Costs of construction materials such as lumber, steel, copper, and aluminum have risen dramatically, with some material costs more than doubling. Building materials pricing and availability issues resulted in an average 26% increase in construction project costs, according to the 2021 Construction Inflation Alert from the Associated General Contractors of America.
The cost of construction materials isn’t the only supply chain issue you should be prepared for. Freight has also been affected. There has been a shortage of delivery drivers for years, but additional regulations that differ from state to state have worsened the problems. Not only have deliveries been delayed, but the cost per mile has increased to as much as double in some cases. International shipping has also been affected for many of the same reasons and international trade tariffs like those between the U.S. and China.
These are just a few examples of issues faced in recent times. However, supply chain issues are as diverse as the projects they serve. A project may face supply issues with tiles, glass, flooring, or even raw materials like sand. The supply chain isn’t limited to construction materials either and can include construction hardware, clothing, workers, vehicles, PPE, and more.
The Effects of Supply Chain Issues on Construction Projects
Increased costs and shipping delays have been highlighted, but these are far from the only issues that your company should be prepared to face.
An unstable supply chain and shipping delays result in additional costs when paying construction workers to work for an extended period of time. It can be a problem to source workers for a fair price quickly to cover this extended period.
Increased costs can lead to insurance policyholders being left underinsured or additional insurance costs. Projects could go 20-30% over budget, and this can be disastrous to a construction project that cannot source that additional money from investors and bank loans. Ultimately, this can put projects on hold or canceled altogether.
LeanProject can help resolve supply chain issues, keeping project timescales on target or better while simultaneously keeping costs down. Let us show you a new approach. Click here to contact us today or call us on (612) 440-5326.