How have things changed?

Post-Pandemic Construction

To say that the Coronavirus has changed work and everyday life is a massive understatement. Heck, over 2 years have passed and a lot of municipalities and industries are just now (some reluctantly) dropping their mask mandates. No matter your view on the severity of COVID-19 & it’s variants, what is undeniable is that the lockdowns and precautionary measures we all had to take to flatten the curve slowed or temporarily halted operations in nearly every industry worldwide.

How can lockdowns that happened well over a year ago still impact things now? Well, international and local commerce are well oiled machines that are extremely difficult to shut down and fire back up again. From manufacturing to shipping products and materials to the various construction crews, having had to quarantine sick/potentially sick people for weeks at a time means the entire industry and supply chain wasn’t firing on all cylinders until recently. Even now, the industry is still stabilizing and it’s clear that some things have changed permanently.

Labor Shortages & Costs

On the job-site, when a construction worker tests positive mid-job, that part of the job is either put on hold (which delays so much more), or someone else is pulled in to substitute for them. When this happens their original job & crew is shorted and they often have to walk back the progress on the job they’re subbing on to find an appropriate starting point to ensure everything is done correctly.

To counteract the potential for delays and complications many contractors have had to expand their workforce to ensure they have the skilled personnel to cover all projects. For those hyper-vigilant employees that have worked hard through the storm, you can’t not pay them well. These are people that took every precaution, stayed isolated to make sure they never got sick, and worked that much harder to get the job done right when crews were spread ridiculously thin.

New Cost Standards Due to Labor Rates

From the folks overseas making hardware for many aspects of your project to shipping to your General Contractor, many changes have had to be made to adapt to the new realities of Construction and Supply Chain issues. Labor costs everywhere have increased due to the precautions everyone has to take to keep things rolling:

Paying existing employees well for sticking around and taking on more.
Accelerated training to bring new employees up to speed.
Making sure to have larger crews so quarantine protocols don’t delay/shutdown operations.

While we would like to believe that we are now post-pandemic, the truth is that we are not completely out of the woods yet. Not to mention, the virus isn’t the only thing that has had a significant impact on these industries or the world economy. Though, the ways in which we are working to adapt to the changes forced upon us by the Pandemic can help mitigate issues other disruptions cause. Unfortunately, that means labor costs, and therefore prices, have gone up.

Material Shortages and Increased Rates

Material and Product shortages have been a significant issue for well over a year now. From IKEA Kitchen Systems to high-end Appliances, manufacturing and shipping delays create scarcity, and the high demand drives up prices significantly. Of course, the increase in prices reflect the increase in costs for everyone down the line. A number of manufactures had to temporarily discontinue certain product lines over the last 2 years.

Alongside the issues Coronavirus itself presents, the global semiconductor shortage in Spring 2021 significantly impacted quality appliance manufacturing worldwide. While the semiconductor shortage was prompted in part by labor issues posed by COVID-19, other market factors that caused severe imbalance in supply and demand. The fact that the shortage started in the Spring of 2021 and isn’t expected to level out until Spring 2023, perfectly illustrates how difficult it is for industries and supply chains to find stability after being so thoroughly disrupted.

Increased Lead Times for Materials

Labor issues are essentially uniform throughout the industry and the supply chain. For instance, lead times on specialty items through Door & Window manufacturers went from 4-6 week lead time to upwards of 6 months. When a company like that has specialists that are out sick/quarantined and their 20 person shop now consistently has a crew of 10, lead times and production errors increase significantly. How can manufacturers really have 6 month lead times now? Well, all materials and parts they don’t fabricate themselves come from suppliers that face those same labor issues. And, the further away those suppliers are, the more shipping companies (with their own labor issues) there are between companies.

When your Contractors receive products, parts and materials that were made incorrectly, both of you can have a difficult choice to make, all of which will cost time & money:

Sending the products back to have it done correctly – risking unforeseen delays and costs.
Fixing production errors on site – adds direct labor costs and can void warranties.

Subcontractors & Project Scheduling

For both the Homeowner and Construction Company, scheduling has become quite a headache. The continued market instability and availability of materials and products to complete construction projects being the core stressor. Though, locally we are seeing the market stabilize as Coronavirus infection rates have dropped significantly and restrictions are lifted.

To avoid undue stress it’s important to realize that flexibility is still required. Construction is about the materials. The manufacturers, material vendors, and shipping companies aren’t yet able to provide the reliability they once did. Finding the right General Contractor that knows how to navigate the chaos and make sure it happens within a reasonable timeframe, is something you have control over.

When hiring your team it’s a good idea to take a look at who had the foresight to prepare and adapt to the changes we’ve seen. Who continued to complete their projects despite the chaos? Which subcontractors were and are they using? Making sure you hire a reliable Company to manage your project means they can take on and manage that additional stress with experience and expertise.

Increased Lead Time for Permitting

As is the case with so many businesses and government agencies, Permitting Offices had to start operating remotely during lockdown. While the average business and the quality of their products & services potentially benefit from some of their workforce working remotely the same can’t necessarily be said for more bureaucratic agencies. All of the red tape involved with state and local agencies issuing permits is made worse by having key personnel working remotely: the lead times needed for processing and approving permit requests has measurably increased.

Permitting: Where Supply Chain Delays & Bureaucracies Collide

If you are planning on starting a construction project in a municipality like Portland, OR, there are Permitting policy changes you need to keep in mind. Recently Portland shortened their project permit window from 1 year to 6 months. Considering all of the complications one can expect these days with material & product shortages and supply chain issues, projects clearly take more, not less time. So, it is important that you be prepared to renew your building permits at least once throughout the course of your project.

It’s not unlikely that we’ll see other large towns & cities that are experiencing significant growth making similar changes to their permitting standards. While it’s difficult to figure out exactly why cities are choosing to cut permit windows, we encourage folks to keep an eye on lead times, expiration dates, and to be prepared to renew your permits to ensure that your projects run smoothly.

Adapting to Industry & Market Changes

Some of these changes outlined here are indeed permanent. Many companies now have increased overhead to ensure there are always skilled personnel available to complete jobs correctly and as soon as possible.

What is causing projects to still take significantly longer are the supply chain issues. We do expect these issues to gradually improve, to one day return to normal. However, just as there are hundreds of important components in the appliances that are on backorder, there are literally trillions of moving parts in the well oiled machine we recently shut down and fired back up again.

Written by Todd Zimmerman

Producer of the John Webbccast