A Disappointing year in Construction- where do we go from here.

All things considered residential building and construction had great sales numbers, but not much to be proud of otherwise.

Construction was not fun this year! With great sales in a contradictory time everyone should be happy – right? Not so fast, construction was NO fun this year and the year before as well. I’m sure you know where I am going with this. Yes, the far-reaching effects of COVID have caused this. Are we not sick of hearing that? Unfortunately, the early days of rampant COVID and it’s affect on our supply chain and available labor (which our government help subvert) are now coming back to bite us. Supplies are in short supply and delivery dates can be ridiculous. Take impact glass windows. If you place an order today with a popular brand your delivery date is mid to late December. How can you plan a schedule around that reality?

It’s not only windows- If only this was true – just windows. But, just about every supplier is having troubles:

  • Pavers out 8 weeks
  • Cabin out 8 weeks
  • Roof tiles and roof jobs- out 12 weeks
  • PVC pipe, Copper wiring, toilets, duplex lite fixtures- all in short supply. Our electrician is buying all of his shortages at Home Depot, which has limits on some products that a single purchaser can buy
  • Concrete blocks- varies as to availability.
  • Labor shortage- thanks to Uncle Sam and its lucrative unemployment benefits many workers elected to stay home and live off the dole. What happened to having to look for jobs during unemployed times three times a week. Pretty sad
  • Lack of quality workers in the skill jobs-plumbing, electric and air conditioning.

How can you schedule with these demons lurking every week? It’s impossible to keep a schedule when every week a new delay comes out of right field. We started a 50-unit townhome job about 9 months ago and finally closed our first five-unit building. The other 5 buildings will close slightly sooner than that interval due to our proactive launch. Here are some time saving steps:

  1. We pre-ordered manufactured exterior aluminum railings and stored them in our model garage.
  2. We pre-ordered all copper wiring 4 months ago saving $22,000 dollars and avoiding shortages
  3. We ordered all drywall 3 months ago to beat a large price increase and carefully stored on it site
  4. We just ordered pavers for all patios and driveways and are storing them on site.
  5. We placed multiple truss orders at once and stored on site, beating rising lumber prices and having trusses to move forward with.
  6. We ordered roof tiles all at once to lock in prices and assure continued construction
  7. We pre-ordered appliances far in advance.
  8. We changed paint brands from Sherwin Williams to a local manufacturer in Ft. Lauderdale after the big freeze in Dallas at SW ruined much of their supplies. I personally visited and toured the plant with the owner before committing.

I love what I do and realize we are lucky to be prospering while so many in other industries have had their life turned upside down during this COVID crises. Yet, after 45 years in this business, this is the worst and most uncertain supply chain and labor shortage I have seen. What results are we left with? In light of this very rocky time construction quality has taken a hit due to new inexperienced workers filling in. This means more punchout work for us and delayed closings. Because subcontractors are taking on more business than they should handle, a general malaise exists because of a tired work force. I cannot wait for things to return to normal. Construction used to be the fun part, but now it’s a grind.

Stephen Gravett has been a real estate developer for over 45 years and was most recently CEO of Kennedy Homes for the past 11 years and is still CEO of Kennedy Development Partners (KDP). He is also full time Director of Operations for 5 Star Developers. He is a state licensed broker and since 1980 a State licensed General Contractor Unlimited. Before becoming a real estate developer, he flew B-52’s in the US Air Force during the Vietnam War.

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