The construction industry has been experiencing several issues from minor inconveniences such as construction equipment shortage to major crises like supply-chain issues and labor shortage.
Despite its growth and the fact that it is one of the essential industries that keep the economy afloat, the construction industry created an adverse effect on one of its key elements: the construction supply chain.
Understanding the Construction Equipment and Supply-Chain Issues in Construction
The more construction projects there are, the more contractors need reliable construction equipment and stable supplies. The surge of demand for materials in both creating construction tools like hoists and lifts or the project itself has been weighing on the supply chain.
Here are some issues that come with the growing construction industry:
Significant Increase in Cost of Materials
The Associated General Contractors (AGC) released data indicating how costly pricing increases and supply chain disruptions have perpetuated further difficulties on contractors which drives up construction costs and slows down progress on projects.
Data also shows that due to the unavailability of materials, cost overruns, or lack of the right construction equipment— some projects had to be canceled or postponed. Things are even worse due to the COVID-19 pandemic.
The steep pricing of materials results in more expensive construction equipment and project bids with higher estimates. Some may think that the rise in prices for construction projects is all about trying to balance out the losses that they have incurred due to the pandemic. However, the truth is that contractors are trying to balance the surge in the need for construction services. They need to do this because of rising material costs, lack of good hoist and lift equipment, and labor shortages in the industry.
Construction companies need to come up with innovative methods to be able to meet expectations and targets while handling the obstacles mentioned above.
Modular construction is one of the innovative methods that is gaining some attention nowadays. Prefabrication of modules or the parts of a project off-site and assembling them on-site is a sustainable method that allows contractors to have better control of their materials while also managing the limited manpower.
This type of construction is sustainable in the sense that construction companies can reuse and recycle material that minimizes wastes. Since modules are premade in a factory setting, companies won’t need as many workers on site which solves the lack of manpower.
Disruptions in Supply Chain
The construction industry heavily relies on the global supply chains which makes it vulnerable to external factors and effects. For instance, there has been a major disruption in the supply chain due to the pandemic. These disruptions impact material costs and cause completion delays for construction companies.
Many local construction firms heavily rely on global manufacturers who are now heavily delayed or worse– unavailable. The supply chain disruption leaves local construction companies short on basic materials and specialty products like tiles, flooring, and more.
Although regional-based materials are available, there’s only so much such a limited supply can do for the industry. For instance, many supply manufacturers are only able to provide a small fraction of the materials needed for construction projects due to many other cash reserves, or up-front contractor demands.
The disruption in the supply chain causes issues with project schedules, material costs, and construction equipment availability.
Keeping the effects of supply chains in mind, the industry needs to navigate supply chain disruptions and work on building resilience into supply chains to avoid further problems.
All Things Considered
After realizing the obstacles supply chain disruptions pose to the industry, the obvious next step is to build a resilient supply chain. This solution, of course, is easier said than done.
Solving the disruption in supply chains can improve the industry as the world knows it. There will be much fewer delays concerning materials or construction equipment during projects.
Right now the construction industry is facing a dilemma and companies are caught between a pandemic-affected market that isn’t willing to pay more for construction equipment and a supply chain disruption that causes material prices to increase.
Industry leaders must take the time to reevaluate business models and consider restructuring value chains from end to end. Doing so can help build efficient industrial supply chains. Being prepared for possible future disruptions will help distribution facilities to help alleviate current and future vulnerabilities that unfavorable situations, like the pandemic, can bring in the supply chain system.