Lives were flipped upside down overnight at the onset of the Covid-19 pandemic. Lockdowns snarled the supply chain and seemingly affected almost all industries. Product shortages exacerbated higher prices and shipping delays. Even though widespread recovery appears to be on the horizon, many parts of the construction industry are still facing lingering effects. The industry relies on materials and equipment to build projects, so problems arise when delays reach lead times that are not anticipated alongside volatile pricing.
Faced with potential delays on the City of El Paso’s Eastside Regional Police Command Center project, Sundt Construction’s El Paso team worked efficiently and collaboratively to prepare for price escalations and product shortages from the start of preconstruction into construction.
Efficiency During Preconstruction
Consistency in pricing throughout all preconstruction phases to the start of construction is crucial. “We tried to lock in prices early on with letters of intent,” Project Manager Luis Licon said. “We tried to find ways to lock in pricing, working quickly to determine inclusions and exclusions per the contract drawings.”
The team not only worked directly with the subcontractors on their pricing but took it a step further with the manufacturer’s pricing. “We did this primarily with subcontractors who had more expensive material and long lead times,” Luis said. “Some of them [subcontractors] sent us a letter from the manufacturer citing they would get hit with escalated prices and how long they could hold their current prices.”
Project Engineer Jennifer Peralta worked on the letters of intent and contracts with the various subcontractors, asking for dates on lead time for materials and expected arrival dates. The timelines continue to evolve. “For most of them [subcontractors], there has been a reduction of two or three weeks from what they initially gave us.”
When the time came to submit the Guaranteed Maximum Price (GMP), lead estimator Yazmin Trueba added different contingencies and allowances. “Because it has become increasingly difficult to predict [material] prices post pandemic, I accounted for the price escalation at the start rather than dealing with it later down the line when scheduling and prices are locked in,” Yazmin said.
Communication has been vital going into construction. Noted Yazmin, “It’s about educating the owner with our processes, so they know we are being proactive in trying to mitigate escalation costs.” The communication and relationship-building paid dividends in how the team kept the project within budget.
Onward into Construction
In early February, the team broke ground on the $33 million, 41,000-square-foot facility. Superintendents Mike Dominguez Jr., Mike Banuelos and Jaime Perez share a weekly schedule with the subcontractors to determine when materials and equipment need to arrive and avoid unnecessary delays.
“Kudos to the superintendents,” said Luis. “Through their diligent planning and scheduling, they have been able to work with the owner and the design team to reduce delays and minimize time impacts.”
Planning for the Future
Inflation, market volatility, and world conflicts continue to contribute to the unpredictability of materials costs and lead times. The industry continues to face challenges in meeting the rising demand for construction. Sundt’s team continues to work proactively with owners to track cost escalations, long lead times, and to provide design assistance to subcontractors to minimize time impacts on projects.
When asked about the future, Luis said, “Right now, our goal is to get to the end of the project with minimal surprises. So, we plan and document. There could be an extended lead time, but we are able to minimize the impact if we prepare well.”
