The supply-chain effect on our business and yours
Updated: Oct 6, 2021
Global disruption is how we can describe what the COVID-19 pandemic has done to our lives and businesses, with some more impacted than others. The construction industry took a hard hit, but it also has shown incredible resilience and potential.
Many sectors within the construction industry, like metal, are re-writing their 2021-22 forecast as they realize they got it wrong. This year’s construction starts are strong, and it looks like many sectors will finish the year with growth that will trickle into 2022.
What has not changed for the construction industry is a material and product supply shortage. Some contractors are stockpiling materials to make ends meet, but there are other bidding-related strategies that might help.
Supply and Demand
We can keep this really simple from the Flex-Ability Concepts’ perspective: We are OK. We are filling our orders, meeting demand and even shipping on the same day. Yes, same-day shipping still exists around here because our suppliers continue to send us the materials we need to make Flex-C Trac, Flex-C Arch and Flex-C Angle.
We have had some modest price increases, but this is very common in today’s economy. You do not have to stockpile our products. Please reach out to our distribution network or speak to a product representative if you need any assistance.
We have heard it is not as easy to get your hands on some materials as it is to grab Flex-C Trac. If you are waiting a few weeks for materials or products, how can you guarantee your price? Construction law firms recommend addressing pricing and time limitations with your bid.
The Construction Law team at Kegler, Brown, Hill + Ritter, Columbus, Ohio, says the following clause limits the duration of bid pricing: “This bid price is limited to 30 days from the date of this bid proposal and may not be relied upon after that date.”
A price escalation clause might also be needed, such as: “In the event of a significant price increase in materials between the date of the bid and delivery, there shall be an equitable adjustment in the contract price or Subcontractor shall be released from its obligations.”
ConsensusDocs has an additional option for contractors. ConsensusDOCS 200.1 Amendment spells out where cost increases could occur if both parties agree to the amendment. “Rather than guessing to price out cost fluctuations, owners and builders would be wise to consider a best practice price escalation clause that is tied to an objective index agreed upon ahead of time, that allow prices to go up, or down. Hope and a contingency fund don't qualify as a risk management strategy,” says Brian Perlberg, executive director and senior counsel for ConsensusDocs.
Contractors who operate with a low-bid strategy should reconsider this method because of subcontractor variability. Electrical, HVAC, carpentry and every construction segment has seen a price increase in their specific material categories. For now, the days of relying on standard base prices on every project are over.
Scheduling also should be protected in a bid because job completion is dependent on material delivery. Kegler, Brown, Hill + Ritter says language like this is effective: "This bid is conditioned upon an acceptable schedule, and the availability of labor and materials to satisfy that schedule."
A Re-Emphasis on the Positive
People ask us how are we getting the materials that we need without delay. Our reliability and positive nature might have something to do with it. We have always paid our bills on time. We treat our customers with respect, and we are committed to the success of both our vendors and distributors. We do not cancel orders.
Kindness and respect can get you pretty far in life. Throw in a lot of hard work with quality practices and products, as well as strong contracts and good negotiation routines, and we believe we have created a positive combination that will see us through to the end of the pandemic and beyond. Give it a try!