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Out-of-the-Box Thinking
During a recent conversation with a regional multi-family housing developer regarding supply chain delays, he described a large project where the completion date was delayed by six months. In another instance, Paul Moffett, Vice-President of Preconstruction at Barton Malow of Michigan, an ENR Top 400 general contractor, said: “Unfortunately, it’s just gotten progressively worse. It seems like every month there’s some new material that is a problem.”
Challenges related to supply chain issues require contractors to think out-of-the-box. Indeed, at Standard, after landing a multi-million dollar reroofing job in Alabama during the second quarter of 2021, we were faced with the very real possibility of substantial price increases and shipping delays on the construction materials required over the extended duration of the project—which could have severely impacted our gross margins and potentially the promised completion date on the project.
Fortunately, by working with our contacts and spending some additional time on negotiations, we were able to secure a large storage warehouse in proximity to the project for a nine-month lease term. By securing the warehouse, we were able to purchase, receive and store all of the materials for the entire job before price increases (and unanticipated delivery delays) were imposed.
We did incur the unexpected cost of renting the warehouse, however, that cost paled in comparison to the price escalations that ensued and the potential for material delays that we could have endured had we not rented the warehouse to receive and safely store the materials. Bonus: because we were able to properly store all the materials indoors, we were able to return and receive credit (at a higher price than we initially paid) for some unused materials from the job that had become scarce/in high demand from the time we received them.
So, the lesson is some out-of-the-box thinking and maintaining good contacts can pay off in challenging times.