The Saskatchewan Construction Association (SKCA) is asking the construction sector to work together as supply chain disruptions and material cost fluctuations continue to impact the industry.
The SKCA’s advisory council held an emergency meeting in May to discuss the current challenges in material supply and price escalation. The group put together a living document of best practices they believe can help all parts of the industry make in through.
“I wish this was a short-lived problem, but we will be feeling the ripples of it for some time to come,” said Megan Jane, SKCA’s communications manager.
First, the SKCA is calling on its members and other stakeholders to resist the urge to panic and cancel projects.
“Cancelling projects because of fluctuations would hurt everyone at every level in the chain,” said Jane. “Don’t slam on the brakes.”
She also encouraged resisting the urge to push risk onto contractors by using contracts that lock them into prices that are subject to wild fluctuation. During a normal year, prices might have been good for 30 days, but the industry is now seeing major shifts after just 72 hours.
“That contractor doesn’t have control over shipping delays or price fluctuations,” said Jane. “It’s not fair to contractors. Consider a materials payment adjustment clause to allow for this.”
Jane said this should go both ways and contractors should adjust for owners if prices decrease.
The group strongly discouraged bidding wars for supplies, which they said will only continue to create problems in the market.
The group also asked owners and designers to remove any extensive negotiating periods and to instead consider awarding contracts in seven to 10 days.
“Let’s not have 30 day awards or longer,” said Jane. “By the time it is done the price of materials may have drastically changed. That’s enough time for it to go up 50 per cent. Engage contractors early. These are frontline people making these decisions on a daily basis.”
Jane said contractors can also provide intel on what components of a building are critical and could disrupt scheduling if not found. She encouraged owners and designers to talk to builders about alternative products and methods that may be more available.
Jane added the association has long advocated for a “best value” procurement model instead of the lowest bid.
But current economic conditions make taking the lowest bid even more risky.
“If one bid is drastically lower, there is probably a reason for it. It’s probably not realistic and we would caution against it,” said Jane. “If it’s too good to be true, it probably is.”
Furthermore, she advised contractors to not underbid.
“I hope this all doesn’t come across as doom and gloom,” said Jane. “It won’t be this way forever. Reach out if you see something and please let us know.”
More information about supply issues can be found on the SKCA website here: https://www.scaonline.ca/news.html?id=494
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