Ask anyone who recently needed to renovate their house or business, and they will tell you the exact same thing: the price of supplies has skyrocketed. Wood framing costs tripled, with lumber prices now starting to drop again after two years of uncertainty. Trying to get specialty tools or fixtures has become an art form in and of itself. Those problems all stem from supply chain issues that are currently echoing throughout the world.
What is causing supply chain issues today?
In 2020, the world as we knew it came to a screeching halt due to the COVID-19 pandemic. The pandemic’s start sparked several issues that still remain today:
- Staffing Shortages. One of the biggest supply chain issues is a major lack of staff members to create goods and also ship them. The loss of life, combined with decisions to change jobs due to the risk and low wages have multiplied delicate supply cycles. This issue, in particular, has impacted raw material supply chains—including lumber and petroleum-based products.
- Supply Chain Clogs. Due to a lack of staffing, border closings, quarantines, and more, supply chain disruptions became the norm. Many major ports, including several in California, are still experiencing massive backlogs. In some cases, ports and train yards have to re-route traffic in order to smooth things out.
- Cargo Ship Supply. The world went from having just enough cargo and freight ships to not needing any at all. This led to major layoffs as well as dockings that left many vessels in disrepair. This often means that fleets are not as large as they once were, increasing the price of transportation.
- Uneven Local Pricing. Due to the bottlenecks, the prices of supplies aren’t evenly spread throughout the country. Some areas have lumber and glass prices that are bottoming out, others still struggle with being able to obtain lumber or windows at a reasonable price. This is an issue that is fairly novel in many parts of the country.
- Border Closings. Most, if not all, countries had moments where they closed their borders entirely as a form of quarantine. This left warehouses filled with products that may rot or may be left undelivered while demand increased. Most industries (construction supply included) witnessed bottlenecks in supplies as a result of the closings.
Is this expected to change?
Processes have begun their return to normalcy, but there is no telling how stable things will be. To this day, there are entire supply chain routes that have weeks-long delays that are only just beginning to ease up. Multiplying issues, such as the war in Ukraine and refinery closures, have triggered embargos and sanctions making it difficult to keep oil-based products and gasoline within an affordable range.
Thankfully, many supply chain companies are starting to increase staffing and innovate with streamlined shipping methods. While changes are going to be difficult to implement, these problems are being heavily addressed.
How does this impact construction estimating in 2022?
Supply chains around the world are still reeling from the many major political, environmental, and pandemic-related issues that arose in the past couple of years. Construction estimating is a process that has to take the current costs of supplies into account.
In the past, the global supply chain was fairly constant, which meant that construction estimates were fairly easy to do by hand. More importantly, they were easy to do through the use of basic software like Microsoft Excel with minor updates on supply costs at the end of the month.
This is no longer tenable.
It’s not unusual for an estimate to lose accuracy within four weeks of its delivery, especially when it comes to materials that are extremely volatile in the market. Certain types of wood, glass, and even the price microchips can all change the price of a construction estimate.
Experienced contractors realize that bad estimates can lead to the severance of contracts—not to mention very customers who may not be able to afford or understand the new prices of construction.
You can make things easier on your construction business.
One of the biggest issues that has harmed the construction industry in recent years is the unpredictability of material and labor costs. Competitive bidding and undercutting costs to win a project are only beneficial if material costs stay steady. Annual cost books are not longer able to keep up in a new age run by real-time data.
In order to keep your business growing, even in the face of the supply chain roller coaster, your business needs to have a method to offer more accuracy in your estimates—and that often means that you will have to have tools that are made for times like these. In other words, you will need to have an estimating software platform that is able to offer the local data to keep your material takeoffs and estimates relevant.
If you are ready to level-up your construction estimates and grow your business, it makes sense to invest in a cost estimate service that can keep up. 1build's professional cost estimators can deliver an accurate and competitive cost estimate to you in just a few days.