How COVID-19 is affecting commodity markets and how that affects construction
The latest stats on supply chain and demand are sobering to say the least. Across the board prices are increasing, inventories are decreasing and deliveries are slowing. All members of the construction industry face new challenges and uncharted territory. Every facet of the industry is involved and will be until a vaccine or more effective curative treatments are found.
This is a time when clear-eyed assessments need to be made and new best practices forged.
Mid Hudson Construction Management (MHCM) is committed to offering our clients information based upon past experience in commodities acquisition and our extensive attention to pre-construction.These help us navigate complex considerations for all stakeholders – owners, developers, subcontractors and supply chain vendors. We are examining the impacts step by step and, where possible, putting forward short-term or long-term solutions.
MHCM is maintaining the same square footage price throughout
Scott Travis, MHCM Vice President, explained this development. “Thus far, we have been able to drag and drop different products and supplies to achieve results as budgeted. We’re doing it with good sound thinking and safe ways to value-engineer our projects.” This may seem counterintuitive when lumber is the highest price it has ever been. However, Scott Travis came to the construction industry after substantial experience in purchasing commodities. “We make decisions taking into consideration existing inventory, weighted averages, and go through cost benefit analysis at a high level.”
MHCM believes in limiting surprises
Ray Travis, MHCM President, says: “There are so many variables: lumber, steel, dry wall and it’s essential to know how to buy them. If you buy more with the intention of stockpiling, handling charges go up. You have to take customs and tariffs into account and conclude whether what you may gain by paying a lower cost may be lost in logistics, pricing and availability.”
Necessity is the mother of invention
At present, alternatives are available. MHCM believes in thinking outside the box as both Scott and Ray Travis agree: “When substitution is necessary, we aim to introduce products that have the least impact to the end result. Some choices may actually be improvements. Some compromises are not. We exercise our best judgement in consultation with the stakeholders.”
Safety first – and last
Of course, every company’s first priority is keeping their employees safe and in employment. Ray Travis: “We are operating under the Centers for Disease Control (CDC) guidelines and suggestions from all relevant government agencies. It is in all of our interests, as well as common civility, to protect everyone’s health and that is our joint responsibility and priority.”
Timing is everything – looking forward to 2021
Mid Hudson Construction Management is deep in calculation to arrive at a formula that can help customers feel confident. As Scott Travis puts it: “An important part of our process is feasibility. If you are considering projects in 2021 and 2022, we can help you move forward with the least risk and the highest probability of success. We’re not magicians, but we have years of experience in challenging situations. Although this is a complex time, we’ve seen them before and have led projects to success.”
Limit surprises. Call MHCM.
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