HCSHQ_102021

October 2021 — Health Care & Senior Housing Quarterly — Page 3 www.crej.com HEALTH CARE — OUTLOOK I t’s the hot button topic that has impacted nearly every industry for the past 18 months – supply chain disruption. As the pan- demic continued to unfold and the deep freeze in the South added new complications, the supply chain issues became more prevalent and seemingly impossible to resolve. In the construction and development sectors, supply and demand have struggled to find equilibrium, with builders facing an increased demand for construction but a delay in receiv- ing the necessary items to put these builds together. In the health care sec- tor specifically, patient demand is on the rise and telemedicine is front and center, and health care systems have been forced to adjust to the uncertain nature of this time. As a result, the flow of building needs also has been in flux, triggering challenges for health care facility construction. This poses the following questions: How does the industry adapt from here, and what can we expect as we look ahead to 2022 and beyond? Through flexibility, solutions-orient- ed thinking, communication and re- evaluating project timelines, key play- ers in this industry can remain nimble as they work through supply chain disruptions. n Navigating the unknown: Common supply chain issues. According to the Associated General Contractors, anoth- er round of costly pricing increases and supply chain disruptions have perpetuated further hardships on proj- ects, not only driving up construction costs but also slowing down progress on projects. With these emerging challenges, construction industry experts must remain ahead of the curve. As materials rise in cost and become scarce, the use of alternative materials is more ubiquitous than ever. Project owners, design professionals and contractors should remain open to the use of alternate materials and sourc- ing options and create contract provisions that allow for the same. For example, if lumber supply is unpredictable and the cost is too high, consider the supply and cost differential of alternative materials, assuming they satisfy code require- ments and performance specifications for a project, according to a report by J.D. Supra. In these circumstances, commu- nication is a key factor in setting up a project for success. A collaborative approach allows project owners, design teams and contractors to communi- cate freely while focused on a common goal and vision. By establishing clear communication, the different entities play integral roles in the construction development, finding unique solutions to disruptions and executing projects successfully. Along with discovering creative solutions to material shortages and remaining in constant communication with their teams, those in the industry must ensure that contracts are clear, and account for the possibility of the impacted prices of materials, delayed project timelines and disruptions. n From cradle to grave: How is the supply chain backlog impacting project timelines? The supply chain is a true domino effect.With material shortages come delayed and impacted project timelines. As suppliers work to regain balance, project timelines are facing the bulk of the issue. By re-evaluating project timelines, emphasizing local production and considering adopting autonomous solutions, which can result in higher productivity, lower operating costs and higher margins, project teams have various opportunities to build resilien- cy and achieve long-term success. Many health care and medical office building projects in the market have felt the impacts of supply chain disruption. Despite these interrup- tions, our teams have been able to successfully mitigate any hurdles by prioritizing our procurement schedule and ordering key materials early, and, when appropriate, disaggregating large equipment purchases. A good example of the strategy to disaggregate large equipment pur- chases would be packaged air-handling units. Current AHU delay times are driven by motors being backlogged. In some facilities where packaged AHUs need to be installed early during super- structure erection, teams are request- ing they be sent without motors so as not to delay the overall AHU being delivered and installed in sequence. This has proven to be an effective strategy to mitigate large equipment installation delays due to supply chain disruptions. It’s not a common practice, but right now, uncommon practices are leading projects in the health care industry to the finish line. n Taking a look into the crystal ball: What’s next for supply chain and labor? As the supply chain continues to fluc- tuate, so does the labor involved with it. As prices level out, labor has become the dominant source in driving con- struction costs. According to another survey conducted by the AGC, 39% of contractors have reported that project owners have paused or completely canceled current construction projects since the pandemic. 2021 has seen a dramatic increase in activity to make up for the postponed or canceled proj- ects of 2020. In addition, labor has become more expensive, and the construction indus- try unemployment rate is back below 5%, suggesting labor costs will contin- ue to rise “at an uncomfortable pace” among contractors into 2022. Con- struction Dive reports that, for this rea- son, some project owners have been postponing project start dates since they are no longer financially feasible. Per AGC, construction employment is unlikely to grow in many parts of the country until supply chain challenges facing the industry improve, further triggering the instability of checks and balances in construction. Nowmore than ever, it is vital to pro- mote skilled positions to supplement the ever-growing need of labor supply we face in our industry. A competitive wage, steady workflow and a reward- ing career are some of the benefits our skilled tradespeople see in our indus- try. By recruiting and retaining a skilled craft workforce, we can keep up with demand. s chris.stolzer@kiewit.com Navigating & overcoming the challenging unknown Chris Stolzer Senior vice president, Kiewit Building Group