Strategies to mitigate rising construction costs

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Early planning, particularly aided by Early Contractor Involvement (ECI), results in early engagement for critical materials and equipment, while the collaborative approach ensures that design phase decisions are coordinated to adapt to the actual products ordered.

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Although the food and beverage industry continues to face challenges ranging from labor shortages to transportation and supply chain issues, and even disruptions from natural disasters and extreme weather , overall, there were positive indicators.

McKinsey recently reported that “Since 2019, the [grocery] the market experienced an impressive growth of 15%. » The United States Department of Agriculture (USDA), along with the Food and Drug Administration and other federal and state partners, are closely monitoring the food supply chain and the USDA website says “there are currently no nationwide food shortages”, pointing out that the avoidance of widespread disruptions is due to “food production and manufacturing [being] widely dispersed across the United States. However, this production and manufacturing capacity relies on a network of built infrastructure which itself faces supply chain and cost issues.

There was no reduction in new construction starts in the food and beverage market; in fact, a multiplicity of market developments are driving increased demand for new builds, expansions and facility upgrades. The main changes are an increase in home food preparation fueled by the pandemic and an increase in the consumption of packaged goods. Fresh produce delivery, farm-to-table movements and ready-to-eat (RTE) products are reshaping the market. “Ghost kitchens,” or commercial spaces that prepare food for home delivery rather than investing in storefronts or dining rooms, are also changing the food consumption landscape. Broader consumer-driven trends include the push for greater durability and a lower carbon footprint in all types of structures. In addition, the design of facilities must respond to an increased interest in the cleanability and separation of production lines in order to reduce the risk of contamination. All of these factors and more are forcing food processors and suppliers to invest not only in more square footage, but also in different types of manufacturing, storage, and picking/packaging equipment.

On time, on budget

Completing construction on time and on budget requires rethinking the status quo, as competition for labor and materials is intense. The large volume of space under construction was highlighted by Commercial Edge in April 2022, when the group reported that “the industrial construction pipeline stood at 640.1 million square feet nationwide, representing 3.7% of existing US industrial inventory.” For food facility construction, the most volatile products continue to be metals (both rebar and structural members), mechanical equipment, piping, electrical equipment, as well as conduits and wiring. The volatility can be attributed to the fact that these materials affect all disciplines in all markets. Store constraints are also a major consideration, as current store hold times are typically only a week or two at best, and commodity price suspensions often only affect current prices. In addition to material availability and store constraints, product transportation also becomes strained, adding another level of availability problem.

Owners seek to exercise greater control over the value chain, working with industry partners for stronger pre-construction planning, as well as becoming more involved in procurement decisions. Early planning, particularly aided by Early Contractor Involvement (ECI), results in early engagement for critical materials and equipment, while the collaborative approach ensures that design phase decisions are coordinated to adapt to the actual products ordered. In addition, general contractors help with an in-depth understanding of long-lead items as well as material availability and pricing. Often, these contractors have strong relationships with vendors, subcontractors, and vendors, which allows the team to improve wait times based on a letter of intent.

A great way to mitigate supply chain issues is to run various construction scenarios and balance competing considerations across the entire construction schedule. The owner and his team must weigh availability issues against other concerns such as safety and quality. For example, choosing bolts over welds reduces variables that can affect quality, resources, and supply chain issues. Indeed, bolts are generally simpler to install, requiring nothing more than an initial high quality product and a proper tightening procedure. Welding, on the other hand, requires much more material control (such as solder rod oven temperature control and segregation, welding gas control, welding machine calibration, etc.) and welders must have skills that require testing and certification. Welds also typically require some form of non-destructive testing, depending on the applicable design code. An added advantage of the bolts example over welds is that the reduction in training or special skills opens up the field to a larger pool of resources, alleviating labor shortage issues. On a project scale, many similar design elements can be selected to reduce the need for special training or skills.

Since modern food facilities use some of the most sophisticated automated and robotic solutions available, pre-construction activities should devote sufficient time to understanding how a given set of equipment will impact facility layouts, utilities and energy, etc. Owners and design partners should work with original equipment manufacturers to understand the needs of proprietary equipment.

Technology tools, while no longer new to most job sites, will only be fully optimized if all team members are aligned and invested in their collaborative use. Products ranging from construction management software to drones to light detection and ranging (LIDAR) can improve communication, data collection and tracking. Building Information Modeling (BIM) remains one of the most useful technologies. If used early in the design process, BIM can help standardize material sizes and configurations, as well as incorporate constructability or material changes that align with supply chain availability. supply. Using BIM can allow the team to use early ordering more effectively, taking advantage of material availability or compensating for long lead times.

Safety, quality and efficiency risks are inherently greater for manufacturing in the field than for controlled workshop settings. For this reason, prefabrication and modularization can help alleviate field resource availability, including labor shortages in construction. However, pre-engineered items require more up-front design time to support procurement, so pre-construction activities must consider scheduling issues related to material and shop availability constraints.

ECI is a fundamental strategy for alleviating supply and cost constraints and improving project results. Through this collaborative approach, the team can weigh all project variables and run informed scenarios to help identify the most efficient and cost-effective approach to a given problem. They can also make thoughtful use of available technologies.

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