Supply chain, personnel issues with construction of houses in the Southeast

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Each year, Savannah-based insurance brokerage Sterling Seacrest Pritchard releases a Construction Risk Sentiment Index, which is a survey intended to “provide construction companies with insights and benchmark data that are both operationally and geographically significant”.

Through the survey, the agency analyzes factors such as top risk issues, pipeline of opportunities, and average issues that construction companies are least prepared to deal with.

As shown by the 2022 index, which was released on September 26, the agency found that the top three risks for construction companies were material costs and delays (93.02%), personnel (74.42%) and economic problems (25.58). %).

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According to more than half of construction companies in the Southeast region, material costs and delays were the top issue they were least prepared for.

While staffing was a predominant concern in the 2019 and 2021 SAP risk indices, material delays and economic issues (6.5%) are more recent issues that emerged as a result of the pandemic. of COVID-19. In the 2019 release, material costs and delays were not listed as a major concern among construction companies.

“A lot of changes have happened [since the pandemic]said Matt Cail, SSP Client Strategy Manager. “Primarily… a greater focus on contractual provisions and… specificity in a construction contract.

“I think there’s been a resurgence of interest in construction contracts and their terms and the importance they play in the construction space.”

Since 2020, the company has seen an increase in material cost and shipping concerns as well as poor staffing.

For homebuilder and Homebuilders Association of Greater Savannah member Jeff Kramer, these issues are apparent in his work experience.

“The last 12 to 18 months have been the worst I’ve seen in my 25-year career,” Kramer said. “The toughest challenges we’ve had have been the supply chain…finding work and finding labor. It was tough there.

Townhouses under construction on Montgomery Street near Gwinnett Street.

The pandemic did not stop home builders from working, as they were considered essential workers. Due to lower interest rates, Kramer says there has been an increase in housing projects as more people look to buy homes.

“When [the government] lowered the rates, it blew things up even more in our industry,” he said. “…All three sectors have grown tremendously, which has put a strain on the supply chain.”

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According to Kramer, the main problems in the housing industry will improve over the next three to six months as interest rates and property prices rise again: “…We will see some much-needed relief both in supply chain and cost.”

To correct the impact of issues found in the index, Cail suggests providing more employee benefits and being more thorough when evaluating project pipelines. As mainstream topics become less of a concern over the next year, the Construction Confidence Index may see a shift in its upcoming surveys.

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