Could construction companies experience supply chain issues?

Could construction companies experience supply chain issues?

Construction companies had to face many challenges during 2020 and this year is likely to be no different.  Not only have businesses had to cope with the COVID-19 pandemic, but many are now facing supply chain issues following the UK’s exit from the EU.

Even before the pandemic hit, supply chains were already very fragile.  The construction sector is widely known for having systemic weaknesses, including fragmentation, multi-tiered structures, low profit margins, poor cashflow and generally weak balance sheets.

The slow adoption of digital technologies and other factors within the sector has left many businesses poorly equipped to handle disruptions in the market.  This has proven to be the case for a number of construction companies towards the end of 2020.

After lockdown restrictions eased and workers returned to site, supply chains were met with an abnormally high level of purchasing triggered by a backlog of new orders. Consequently, supplier delivery times started to delay project completion dates and impacted on productivity on site.

Construction companies with volatile supply chains or cashflow issues had to hastily suspend activities or delay works; this was particularly pronounced with SME developers.  Larger construction sites can often store sufficient materials, whereas SME projects tend to require a more careful approach to Supply Chain Management.

How to prevent supply chain issues from impacting your construction project?

Prior to works starting on site, our team undertakes an extensive research and development phase to identify any potential risks that might impact the success of a project.  The R&D phase not only looks at the site conditions, but also any potential risks in supplying materials and sourcing a skilled labour force.

We know how critical Supply Chain Management is to the success of a project which is why this is incorporated within our contingency plans.  We make sure materials are procured early, and wherever feasible, container units are placed on site so that materials can be delivered ahead of schedule to mitigate any risk of delays.

We believe in supporting the local communities in the areas which our developments are located.  Therefore, we prefer to use local suppliers and labour for our projects.  This ensures the economic benefits of our projects are felt by the local businesses and communities we aim to support.  Sourcing locally also reduces any risk of disruption to the supply chain or further costs; this is particularly relevant when importing materials from overseas.

In addition, we have established procedures and protocols with our subcontracts that will alert us if they are experiencing any delays or are unable to meet delivery dates.  This allows us to adjust our programme of works before the issue impacts other areas of the project.

In the unlikely event a supplier is unable to meet a deadline, we work with our clients to source alternatives early in the procurement process.  Our Project Managers are well rehearsed in change management and have an extensive network of contacts to locate suitable suppliers.

Through adopting an agile strategy such as this, we are equipped to manage the risk of material shortages, supplier insolvency and contract liabilities.  This ensures projects are delivered seamlessly and can continue without impacting agreed completion dates.

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