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Construction Advisory_Q2 2020

Q3 2021 Summary: Pandemic-induced supply chain interruptions continue to impact project schedules and costs. Given the current market conditions, staying on top of forecasts and implementing preventive strategies, like those we detail below, can help you maximize cost and schedule efficiencies.


Overcoming Supply Chain Disruptions

The construction industry continues to experience significant supply chain interruptions and factory shutdowns due to the pandemic and the winter storms. As a result, off-the-shelf items like fiberglass insulation, ceiling grid, and PVC pipe are no longer on the shelves. Manufacturers are unwilling to commit to delivery dates and they are rationing how much material trade contractors can receive each month. Following are a few ideas we've utilized to offset the effect of these disruptions on some project schedules:

    • Consider leasing warehouse space to store materials.
    • Have trade contractors issue submittals within the first week of obtaining notices to proceed.
    • Encourage design teams and trade contractors to identify alternate materials that are more readily available, such as high-density polyethylene pipe in lieu of PVC and domestically produced tile.

    The following table captures the lead time swings of more commonly used materials:

    Lead time by week Chart2-01

    Cone of Uncertainty in Cost Escalation Predictions

    Have you read conflicting reports on material prices lately? Perhaps you have read about plummeting lumber prices yet rising copper prices? Similar to the pundit’s hurricane path predictions, the inconsistencies in context and metrics among various sources make it difficult to anticipate project costs. Try not to get frustrated by this cone of uncertainty. These swings should not result in major bottom-line impacts to your project budgets, as long as they have been budgeted in the last few months.

    The sharp decrease in work during 2020 contributed to an intense buyer’s advantage. But in 2021, the construction industry roared back, with more and more work bidding every week. Our bid results indicate construction in Texas has returned to pre-pandemic volumes three months earlier than expected. We believe the total escalation will be six to eight percent by the end of 2021.

    Looking forward to 2022 and beyond, we expect escalation to slowly calm down, and then stabilize at four to five percent per year. It is always advisable to have a robust plan for add alternates so you can maximize the scope for your budget.

    Photo Credit: Maximized project scope for the University of Houston-Downtown, Student Wellness and Success Center project budget during preconstruction.

    Select the Right Type of Glass for Its Intended Purpose

    Did you know that eight in every 1,000 tempered glass panels can spontaneously break due to defects created during manufacturing or installation? Most designers specify tempered glass for guardrails, balconies, and other full-height interior glazing applications to meet code requirements. However, if it shatters, it may also unintentionally create a fall hazard because it evacuates the opening. Challenge your design team and trade contractors to consider the application of the glass and research options such as heat soaking or laminating. These treatments will still meet code requirements for shattering yet prevent the glass from evacuating the opening and creating a different type of safety risk.

    laminated glass
    Photo Credit: Tempered glass panels in the conference room window overlooking the high-bay area on the RELLIS Campus, Research Integration Center.

    About Vaughn Construction

    Vaughn Construction is a Texas-based construction company that specializes in new construction, renovations and additions to civic, healthcare, education and research facilities. The privately-held company has offices in Austin, Bryan/College Station, Dallas/Fort Worth, El Paso, Houston, Lubbock, San Antonio, and the Texas Medical Center (Houston).