In the world of construction, materials have always been a major factor in completing a project on time and on budget. Owners develop specifications that require quality materials, designers develop projects incorporating those requirements, and contractors work with suppliers to bid and construct projects accordingly. But in today’s world of rapid increases in the cost of materials and supply line availability issues, it is more critical than ever that all folks involved in the process take all the steps needed to create a successful, constructible project. Throughout the development and construction process, materials must be addressed. Now more than ever, we are living in a material world.
How Do Materials Impact Schedule?
Material impacts on a project schedule should be addressed early in the process. Developers can work with owners to identify materials that will negatively affect construction schedules. If a material has a long lead time, it must be ordered early in the process, or an alternate material must be selected. Traditionally, most owners only pay for materials when they are incorporated into the project. For some items, such as fabricated steel girders, owners should have mechanisms that pay for items when they are fabricated. These items can be inspected even if they have not been incorporated into the project.
These “materials delivered but not in place” specifications make it easier for a contractor to get materials with long lead times ready early in the construction process, so that the schedule is unaffected. In some cases, the project timeline simply must be adjusted. Ignoring long lead times and setting unrealistic schedule expectations may get a project through development, but it will not help during construction when the acquisition of materials delays projects. At times, the owner must choose between a desired schedule and a desired material. Many contracts require use of the Critical Path Method (CPM) in scheduling. A CPM generates a graphical view of a project and calculates how much time and resources are required to complete each activity. One way to address material supply line issues is to require a contractor to address the acquisition of critical materials in the CPM. This can help to assure the project schedule is met. The answer is not to ignore the impacts materials have on the schedule, but to address them.
How Do Materials Impact Project Cost?
Developers should work with owners to understand and reduce the effects of rising material costs on a project budget. If the cost of an item has risen greatly, then the construction estimate must be adjusted accordingly to give proper credit. One approach for reducing the effects of rising material costs is to alter the methodology for developing the engineer’s estimate. The Federal Highway Administration (FHWA) has developed estimating guidelines that identify two methods for developing the engineer’s estimate for a project – historical costs and actual costs. A general rule has been to use actual cost estimating for only the major items of work. The major cost items are the 20% of the items that contribute 80% of the estimated costs. The remaining minor items have been estimated using the historical cost method. It may now be necessary to use actual cost estimating for more items, especially ones comprised of materials with more volatile costs.
Another way to mitigate cost escalations for a material is for owners to develop guidelines for use of alternate materials that still meet minimum quality standards. Owners should consider specifying “preferred materials” and “alternate materials” in the bid packages. Designers should listen to what the client really needs and make recommendations, not just specify what has always been used. It is important to understand what is available and provide owners a choice. Again, the key is getting ready early in the process so that mechanisms are available to the construction team to lessen the negative effects materials have on time and budget.
The Importance of CEI
Living in this new material world makes Construction Engineering and Inspection (CEI) more important than ever. During construction, steps must be taken to keep the project moving with quality and efficiency. CEI personnel must stay plugged into the CPM schedule and thoroughly understand the relationship between critical materials and the schedule. CEI personnel should monitor the schedule, recognize issues early, and communicate them to the owner. Contractors must be held accountable for the acquisition of materials in a timely manner early in the schedule. If guidelines for use of alternate materials are in place, decisions must be made in a timely manner to keep the project on schedule. “Time is money,” and many times, a change in materials is a small cost compared to time delays. Clear communication during periodic progress meetings is paramount. The more decisions that can be made locally and quickly, the better the chances are that the project schedule will remain unaffected. Understanding and communication between CEI teams, owners, and contractors results in successful projects. A small investment in CEI can help to provide oversight of critical activities, which results in more on-time, on-budget projects.
Clearly, we cannot control the cost and supply line issues associated with materials in the world of construction. But all folks involved in the development and construction process should take the steps necessary to address the effects these issues have on schedule and budget. Developers can work with owners to anticipate and mitigate issues by producing better estimates, addressing materials in the CPM, and providing mechanisms for the use of alternatives. CEI personnel can monitor critical materials and the CPM, communicate with owners, and help ensure decisions are made in a timely manner to avoid delays. Today’s world may be a materials world, but by working together, we can avoid unnecessary delays and costs, and save those pennies for a rainy day.