The watchword for industrial contracting projects in the current climate is “delay.” A perfect storm of unprecedented events has caused disruption across every phase of heavy construction around the world. The appearance of COVID-19 in early 2020 quickly led to factory shutdowns and material shortages in everything from steel to computer chips, resulting in delivery and project delays and outright stoppages. While there were the brief beginnings of supply line restoration, most industrial contracting companies are seeing a return to long lead times for project materials.
The cycle continues
Industrial contracting projects are caught up in a new and vicious cycle of extended material delivery times and continued cost increases, according to Deloitte’s 2022 Engineering and Construction Industry Outlook. The lack of materials, equipment and workforce (often due to COVID-related absences) contribute to the shortage of raw materials, parts and components, because most industrial contractors are installing the equipment that is manufacturing parts for the components required for other construction projects. In a nutshell, any delay at any location in the supply chain ripples throughout the industry like never before.
Delays can also put budgets and deadlines in jeopardy. As a result, the challenge of keeping projects on track now often comes down to how well the contractor can execute work out of sequence. Even though installing work out of the originally planned workflow adds labor and other costs in the short term, the loss of production time, and any other significant delays, can cost much more in the long run. While not a perfect solution, out of sequence work enables projects to continue moving forward and allows deadlines to be met.
Top causes of delays
When starting a project, think about parts of the project where delays are likely to occur. This can give an industrial contracting company the opportunity to address those problems in advance. Here’s a list of the most common pitfalls:
- Material lead times: Even with expected delivery-by dates, those dates are often compromised by material shortages and delivery delays.
- Lack of components: Many projects are delayed because the equipment to be installed is waiting on missing components to complete manufacture.
- Labor shortages: Industrial contracting was already far behind in the workforce numbers needed for successful projects before the pandemic. COVID-19 pushed that problem through the roof.
- Change orders: Projects that discover problems not addressed in the planning phase must now stop while change orders are issued and plans to address the change order are devised. At that point, contractors are late to the game in ordering materials and equipment which further delays the project.
Just so you know—there will be delays
Schedule delays put contractors in jeopardy by threatening the critical end date. Most customers are looking to be first to market or have major sales commitments, so if the contractor can’t commit to the project timeline, it’s difficult to win projects. Fortunately, most customers understand the problems in the present environment and take that into account.
The ability to quickly offer alternative solutions is key to meeting project deadlines in the face of delays. Industrial contracting companies with in-house teams and vast construction experience can propose different equipment and methods that deliver a product that satisfies the customer’s needs and can usually meet the project deadline.
Single-source contractors have an advantage when faced with projects that have stalled for whatever reason. Because of their inherent flexibility and in-house capabilities, self-performing contractors can keep projects moving forward by working efficiently out of sequence and are able to recover from changes more quickly.
Prepare for a winning end game
Knowledge is power, and knowledge ahead of time is extreme power. Consider these steps to avoid or mitigate delays.
- Be diligent in early planning.
- Keep lines of communications open and flowing.
- Have a backup plan before one is needed.
- Include contingency funds to cover additional costs.
Knowing early on that there will likely be delays on any project empowers your team to be ready. Create schedules that include built-in time for delays and contingency funds to cover costs. With a plan to overcome these challenges, delays do not have to impact deadlines.