b'CHIEF OPERATING OFFICERS MESSAGEKEN LANCASTLE, MCAC Chief Operating OfficerSUPPLY CHAIN CHALLENGESREQUIRE A COLLECTIVE APPROACHFROM ALL STAKEHOLDERS The issues of shortages and price volatility affect all parties to a contract and must be addressed collaborativelyB eyond the immediate challenges broughtcan help owners and consultants understand current on by the global COVID-19 pandemic, themarket realities. Some materials have seen price issue of supply chain challenges and priceincreases of 35 per cent in weeks, with no indication volatility has hit the construction industry of stability anytime soon, while other materials may particularly hard.not even be available. Involving subcontractors and Regardless of the explanations behind thesesuppliers early on can ensure products are ordered challenges, whether it be pent-up demand forand available for the project.material, increased infrastructure investment toAllow for Material Pricesupport the economy, disruption to supply routesChange Clauses in Bids and the global supply chain or a myriad of otherGiven the worldwide uncertainty on supply and reasons, the issue has plagued the industry acrosspricing, the inclusion of price escalation and/or Canada and around the world.reduction clauses can provide confidence for bidders While price fluctuations and material delays are notand buyers that price increases and decreases can be a unique challenge to the mechanical contractingmanaged in a fair manner for all.sector, nor entirely unexpected, the current supplyConsider Reducing theissues seem much broader and more consequential.Award Period on Projects The challenge is further exacerbated by currentIn many cases, suppliers and mechanical contractors backlogs, stressing a supply chain not just now, butare only provided seven- to 14-day terms on their into the future as well.pricing. Some receive just two days or, even worse, Needless to say, the issue has reverberated throughonly up until the material arrives. Shortening the the entire construction project supply chain.bid approval timeline to reflect this reality can Consultants are spending more time on valueprovide more price certainty for the project. engineering, owners are considering the impactWork with Contractors to Ensure of increased costs to their capital budget, andRealistic Timelines and Schedules contractors are working to mitigate the risk ofWith the pressures of supply, the availability of price fluctuation while remaining productive andskilled labour and any effects from the COVID-19 competitive. For those projects already tendered,pandemic, early discussions with contractors can contractors are dedicating significant resourcesensure expectations from all parties on a project are and time ensuring they can meet project deadlinescommunicated and understood.with respect to supply and price. For anticipated projects and those being tendered, greater risk andMaintain Regular anduncertainty is being downloaded to the contractor.Consistent Communication Further, and perhaps most unfortunately, is that noRegular communication between all stakeholders silver bullet exists when it comes to addressing thecan make parties aware of any potential or issue. This is why it is critical that all project andunforeseen challenges that may arise.industry stakeholders consider a more collaborative*Not mentioned, but also important, is the role approach to lessen the negative impact of supplysuppliers can also play in assisting contractors, chain issues and price fluctuation. If the issue isparticularly with respect to material selection and dealt with broadly rather than by the contractorsupply chain intelligence. alone, there is a greater likelihood that the impact can be mitigated and lessened for all involved.What is consistent in each of these steps is the active Some of the steps to be considered include: involvement of multiple stakeholders and parties to a contract. Since this issue impacts all aspects Look at Early Involvement of Keyof the industry, now more than ever is the time Stakeholders to Ensure Project Budgetsfor stakeholders to collaborate and work together Reflect Pricing and Supply Trendsto lessen negative impacts of supply shortages and Early consultation and involvement of contractorsprice fluctuation.18 www.mcac.ca'