Navigating Construction Supply Chain Challenges

 In Industry, Insights

Navigating Construction Supply Chain Challenges

Charlie Haas, AIA, MBA
Director of Preconstruction
CG Schmidt

Navigating Supply Chain Disruptions

As both consumers and professionals, you are attuned to the dramatic swings in both supply and inflation affecting virtually every industry worldwide. Fluctuating prices due to labor shortages, elevated demand for raw materials and looming concerns of a recession are consistent challenges stemming from lingering effects of the pandemic. While domestic suppliers and importers of these products and end customers are finally experiencing some relief from longer lead times and increased prices in some areas, the Federal Reserve’s pursuit to control inflation is still forcing investors in capital building projects to proceed with caution.

These economic stressors are reflected in the Producer Price Index for Nonresidential Building Construction, an aggregate of material, labor and equipment data for nonresidential construction costs developed by the Bureau of Labor Statistics, which models overall relief and stabilization of material costs for the first time in over two years—a welcomed change since 2020. However, the status of today’s economy is not preventing clients from investing in facility building and renovation plans. Many CG Schmidt clients are pursuing capital investments in construction and renovations simply because the need for updated facilities has not subsided—whether to
maximize organizations’ performance, elevate production to meet increasing demand or to create an inviting space to support employee engagement, collaboration and productivity as people return to physical office space.
CG Schmidt offers our clients proven mitigation strategies to combat high demand, longer procurement lead times and price uncertainty, allowing for facilities investments that support their company’s future.

Strategy 1: Innovative Delivery Methods and Intensified Early Planning

Now, more than ever, proactive and precise planning is critical for cost control, schedule control and the overall long-term success of your project. Engaging in preconstruction and procurement activities earlier will
ensure the best path forward in mitigating supply chain and inflation concerns is identified. CG Schmidt specializes in driving early collaboration with owners, subcontractors and major suppliers while leveraging innovation, technology and our vast experience to mitigate risks to delivering your project.

Alternative project delivery methods like Integrated Project Delivery, Design-Build and Construction Management at Risk are better choices for the current environment since they involve key builders early in the design process.3 Through collaboration with CG Schmidt, our clients and design teams explore innovative, more sustainable ideas to overcome these present challenges. As a result, material decisions and delivery methods are addressed early on and smoothly implemented throughout the duration of the project.

Strategy 2: The Power of Trade Management Partners

Trade Management Partners (TMPs) are key trade contractors and suppliers who are engaged early in a project and integrated into the design process on a Design-Build or Design-Assist basis. This replaces the typical approach of subcontracting, where skilled trades like electricians and plumbers are contractually subordinate and hired on a hard-bid basis after drawings are complete. Instead, the TMP model of engagement brings valued experts into the discovery phases earlier, and TMPs enable the team to make value-based decisions, maximize scheduling efficiency, expedite long-lead procurement and ensure systems are designed in a way to maximize investment. Utilizing these partnerships increases project quality, avoids expensive rework in the field and optimizes schedules—and with technologies like Building Information Modeling (BIM), where digital, interactive models are built prior to construction, these partnerships additionally increase communication and project understanding. The unique relationships between TMPs and manufacturers and distributors also aid the procurement process.

To expedite timely receipt of necessary materials and equipment while remaining on schedule, CG Schmidt employs a thorough process to integrate delivery times into the master project schedule. Early discovery with the project architect, TMPs and material vendors establish a cohesive team with diverse knowledge of product availability, construction methods, schedules and solutions to mitigate risk. The knowledge that each entity possesses benefits the project in terms of cost, schedule and productivity. CG Schmidt’s evaluation of project lead times and the preliminary master schedule determines the need for early bid packages. By aligning the project team early and understanding long lead times affecting the project’s critical path, decisions can be made sooner, optimizing project outcomes.

Strategy 3: Technology in Risk Mitigation

As industry innovators, CG Schmidt embraces new technologies to provide the best outcomes for our clients. The use of BIM allows us to review interactive build
models in controlled environments to drive collaboration, understanding and precision in our building solutions. By leveraging a connected, cloud-based construction management software suite that replaces outdated, legacy workflows, we are more agile and responsive in real time, allowing us to streamline material management and other operational processes and unlock cost savings to offset increased cost of materials and procurement. Technologies like these not only provide real-time tracking capabilities, they also synchronize real-time data on materials purchasing, assembles usage, inventory and other data, connecting directly back to project job costing capabilities and reporting.

Another way CG Schmidt explores customized ideas for clients is through the use of 4D modeling. 4D modeling simulates the construction sequence by linking a 3D BIM model with the project schedule, adding time as the fourth dimension. This allows CG Schmidt and our partners to proactively identify pain points or issues before they occur to reduce or eliminate impact. 4D modeling also enables construction managers and subcontractors to adapt quickly to changing procurement timelines without negatively impacting the overall project schedule.

Looking Forward

While no one can predict with exact certainty future material costs and supply chain evolutions, we are confident that our innovative preconstruction and construction methods, vigilant balance of technical ingenuity, industry knowledge and long-standing subcontractor and vendor relationships can minimize potential building delays and expenses. We view our role as an honest broker and business partner, and as such, we provide full transparency and aid you in navigating the current variability in our industry. We provide owners with reliable and timely information to make informed decisions on project investments. We track, analyze and provide insights related to market conditions affecting the construction industry to help you navigate supply chain and inflation challenges. Partnering with CG Schmidt early in the design process will enable you to meet your timeline and maximize the scope of the project with each dollar you spend.

CG Schmidt, a family-owned company since 1920, is a leader in quality construction management, general construction, and design-build services with offices in Madison and Milwaukee. The company serves the markets of education, healthcare, senior living, multi-family, corporate, industrial, community and religious facilities.

As a fifth generation, family-owned construction firm, CG Schmidt is a respected industry leader. The company has built a reputation for tackling the most recognizable projects in the state, helping to literally shape the Milwaukee skyline and create quality, state-of-the-art buildings in Madison, the state of Wisconsin and beyond.

Contact us to discuss the latest commodity price fluctuations and lead time projections and learn how to navigate supply chain challenges as you plan your next building investment.

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