Chicago Building Roundtable | Crain’s company in Chicago

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In recent years, the country has experienced supply chain issues, material shortages and rising fuel costs. What is the current status of these issues and what impact have they had on the industry?

Susan Bergdoll: Extremely tight supply with a difficult permitting process to create new logistics space, coupled with supply chain bottlenecks hampered by port congestion and shortages of shipping containers, railcars and trucks result in rent increases and shipping bottlenecks. Additionally, rising fuel prices and material shortages are increasing development costs and delivery times. Finally, companies want readily available workers, and most growth markets, including Chicago, are experiencing a shortage of skilled workers needed to build projects. Our customers are also seeing a general labor shortage. This is a concern, given that a large e-commerce setup may need to employ several thousand workers.

Leigh McMillen: Supply chain challenges, including rising costs, long lead times and unavailability, continue to impact materials of construction as well as equipment categories. Businesses need to take a proactive approach to solving the supply chain problem. At Leopardo, we have an in-house sourcing expert who negotiates local, regional and national purchasing agreements for prefabricated goods and materials. We closely monitor supply chains to maintain price, schedule and quality of critical project materials and equipment. Getting the right materials to the right place at the right time requires competent planning, logistics and transportation. While we see the benefits of early involvement, we anticipate many of these challenges will last well into 2023. Restarting global economies will take time and replenishing inventory will be difficult as demand remains high.

Elbert Walters: As in many industries, the unionized electrical industry in Chicago and Cook County has faced its own challenges in recent years. Many Powering Chicago member contractors specialize in highly technical installations that require microchips. Due to the worldwide shortage of chips, this has slightly changed the timelines of some ongoing projects, but our members continue to move the projects forward by completing other project components while the chips are in development. One way to do this is to increase the prefab work done offsite before or during a project schedule. Prefab work includes assembling key components of a job, leading to a smooth and fast installation process.

How are the deadlines at the moment? What are the issues that have the most impact on these timelines?

Susan Bergdoll: The work of construction and the process of developing a building, in general, has become increasingly difficult. It is difficult to meet schedules due to a shortage of labour, materials and rising material costs, as well as delivery delays that have upset traditional schedule expectations. It’s definitely harder to sit in front of our customers and give them the timing clarity they’re looking for. What used to take 9-10 months to build can now be a solid 15 months if you don’t plan ahead. We were able to use our size and scale as an advantage and make commitments on critical path items months before a project started to keep us on track. We have already placed material orders for the bulk of our 2022 pipeline to secure our start dates and minimize schedule disruptions.

Leigh McMillen: We are currently experiencing longer lead times for many categories of building materials and equipment. The issues that affect delivery times the most start with manufacturers, where low raw material and component inventories, low finished product inventories, labor shortages, transportation and logistics delays are a poor mix for the corresponding high demand.

Elbert Walters: Many projects Powering Chicago members are working on have progressed on time and on budget with little or no impact. Since many unionized electrical contractors across Chicagoland have been around for decades, their skilled electrical project managers and estimators have adapted to external changes to ensure projects have realistic timelines that, once started, are completed in a timely and economical manner.

Can you tell us about some specific building trends that clients have requested recently? What do you think drives these trends?

Susan Bergdoll: There are many, but here is an example. Given the supply chain disruptions we are seeing today, many of our customers are requesting increased trailer parking and site fencing so they can store additional product in trailers inside secure site boundaries.

Leigh McMillen: One request we have from customers in the laboratory and life sciences arena is flexibility. Although the initial footprint required for these labs is small, 5,000 to 15,000 square feet, this need could easily double or triple quickly as the business scales. The challenge is that these lean start-ups are early stage and lack the means – both in terms of funding and in-house expertise – to acquire such expensive turnkey spaces. Laboratory and life science customers need short-term leases or traditional leases with the flexibility to scale.

Elbert Walters: A recent trend with new and existing buildings has been the desire to install electric vehicle (EV) charging stations to meet the growing demand for EVs that consumers are buying, especially given the tax breaks and incentives that the federal government and Illinois offer EV buyers. Powering Chicago has more than 30 unionized electrical contractors certified through the Electric Vehicle Infrastructure Training Program (EVITP) and each of IBEW Local 134’s journeyman electricians are specifically trained in renewable energy. This ensures an informed and skilled workforce ready to meet the demand for EV infrastructure.

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