Covid-19 has led to challenges we never imagined the architecture, engineering and construction (AEC) industry would face. One such challenge is the near- and long-term ambiguity of the material and labor supply chain. During this time, construction managers (CMs) must provide stability and safety for our people, partners and owners. We can keep the industry in Florida moving forward and help owners seize new opportunities.
Find the original article at: https://www.bizjournals.com/southflorida/news/2020/12/07/how-construction-managers-can-provide-stability-an.html
Leverage national resources for local support
At the start of the pandemic, economic repercussions in China led to some material delays. While overall impact to Skanska’s supply chain has been nominal, we are still paying careful attention to the global response, specifically South America and Europe.
This minimal impact to materials isn’t universally true across sectors, the country, or even Florida. Either way, it’s important we acknowledge that even small impacts can negatively affect a project’s success.
To avoid schedule delays or lack of materials, our team has leveraged our internal national strategic supply chain group. This group helps us mitigate risk and get projects to budget during design and construction through their direct relationships with major equipment and material manufacturers. By surveying national and international companies, our supply chain team provides tangible and comprehensive data so we know material and equipment lead times in advance and can plan accordingly. For example, earlier this year we were aware that the lead time for HVAC equipment was extended due to a combination of higher demand, domestic plant shutdowns and plant shutdowns in Mexico.
With a rise of Covid-19 cases throughout our state, it’s critical that CMs make safety a priority. Having to remove an entire crew from a project can have serious implications, especially if you cannot add shifts to make up for the loss.
Skanska began communications with employees in February, sharing recommended guidelines from the Centers for Disease Control and Prevention (CDC), such as hand washing and sanitizing frequently used objects. We then launched protocols on our jobsites in March that covered social distancing, hand washing, and sanitizing materials, equipment and spaces. These were soon followed by jobsite temperature testing and facial barrier requirements as well as development of a national best practices website where our teams share efficient and safe ways of working.
These proactive measures have led to positive results. Our partners know we’re providing them with a safe work environment and are continually reviewing the most effective ways to work. Though we have had a few cases, they are far less than what has occurred on some other projects in Florida, and our response guidelines allow us to manage the situation efficiently and keep our projects going.
During this time, we’re adding value by sharing Covid-19 best practices with the subcontractor community so they can implement the guidelines across their own businesses. Because our projects are safe and subcontractor partnerships now are even stronger as a result of this show of good faith, we’ve seen an influx of bids on our work. This value is being translated to our owners in terms of increased productivity and reduced cost.
Stay engaged with local partners
Along with safe jobsites, subcontractors want stability: a backlog of projects and early engagement on current projects. While the future is uncertain, CMs can provide stability now by involving subcontractors in the design process early. This allows them to commit resources months in advance, provides them an opportunity to share their own expertise and gives them a full understanding of the project.
Though cost prediction has become difficult, strong partnerships with local trade partners has helped us stay informed of impacts to the Florida market. Early on in the pandemic, our project planning team began surveying subcontractors in Orlando, Tampa, Miami and Ft. Lauderdale to understand the impacts they’re seeing, their bid approach, their general field productivity and their overall sentiment — are they concerned about the pipeline, and are these concerns leading to aggressive pricing or not?
This information is compiled into a dashboard, which presents a larger picture of the market and how it changes and adapts over time in response to Covid-19.
For now, there is concern over potential volatility in commodities, prices and labor rates. In response, some subcontractors are bidding aggressively while others are more conservative about the jobs they’re chasing. Having this information is valuable, allowing us to speak with owners about risk management, strategies for timing to market, potential escalation and future cost of subcontractor work.
Be shovel ready
My advice to owners is to have shovel ready projects. Continue planning for and designing your project even if there is uncertainty around construction funding. With the design phase completed, when the market does pick up, you’ll be prepared to start construction immediately before pricing increases. Additionally, there is Federal pandemic funding available, and projects that are designed and shovel ready are far more likely to receive such funding.
It’s still a good time to build. Subcontractors want to work, and we are seeing an overall decline in prices with projects coming in eight to 10% under budget compared to 2019. Bidder activity is also high — we opened bids on a university project in Miami and had 173 bidders as compared to our typical response, which is in the 100-125 bidder range. Additionally, a virtual outreach event for a project in Tampa garnered 200 subcontractors, a significant number compared to past in-person events.
As a general manager overseeing Skanska operations in Florida, the most important thing I can ask of my teams is to work safely, use our resources and partnerships to anticipate the near-term future and be proactive and innovative so we are prepared — that is the key to thriving during the coming months. We’ll move through this, get to our new normal and Florida will remain a vibrant place to live and work.
Skanska has been building in the South Florida region for decades and our priorities have always aligned with what is important to our clients. Learn about more about Skanska and our projects.
Skanska is a leading global construction and development company. In the U.S., Skanska’s core operations include building construction, civil infrastructure and developing self-financed commercial properties. An industry leading innovator in safety and project execution, Skanska offers competitive solutions to help build a more sustainable future for our customers and communities.
Michael C. Brown serves as executive vice president and general manager overseeing Skanska’s Florida building operations. As a 34-year construction industry veteran, Brown has delivered more than $2 billion in construction projects across the Midwest and Southeast. He has been involved in the pre-construction and construction of complex projects for a range of clients, including K-12, higher ed, commercial, health care, aviation, retail and residential.