Specialty Contractors In High Demand Amid Supply Constraints

Abstract

August 25, 2022 Jim Parsons KEYWORDS labor shortages / material costs / subcontractors Order Reprints No Comments Steep inflation over the past few months has exacerbated what was already a volatile market for construction materials, further complicating specialty contractors' efforts to successfully navigate a post-pandemic environment where many markets remain active, albeit with resources in short supply. "Just the cost of building projects is starting to be concerning with the additional cost of getting commodities that aren't as available," says Tom Schott, president and CEO of Cupertino Electric, San Jose, Calif. "And there's no real clarity on when things will really smooth out." Many subcontractors are attempting a number of work-arounds to their supply chain challenges, such as identifying alternative sources of supply, making bulk purchases and negotiating project-specific contingencies with suppliers, general contractors and owners. "You can't take anything for granted anymore." To be sure, most subcontractors already expected that supply chain issues would complicate their 2022 schedules and balance sheets. According to the Billd survey, titled "2022 National Subcontractor Market Report: How Labor Shortages & Market Volatility are Impacting Subcontractors," nearly 90% of respondents expected that the negative effects of materials pricing and procurement they experienced in 2021 would persist into this year. "If the contract doesn't have an escalation or force majeure clause, the subcontractor has to either eat the cost or try to negotiate with the general contractor," says American Subcontractors Association Chief Operating Officer Richard Bright. Subcontractors may have limited ability to influence issues underlying supply and labor shortages, but they appear to see technology as a solution to making the most of what is available. Still, subcontractors appear to be bracing for supply chain issues to be a part of life well into next year, with the addition of projects funded by the Infrastructure Investment and Jobs Act potentially complicating an already difficult environment.