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Construction Advisory_Q2 2020

Q2 2022 Summary: As the industry looks at ways to navigate continually changing market conditions, it is necessary to plan a mitigation strategy for the temporary issues as well as the permanent effects brought on by the pandemic, national and global events.


Are Your Wage Scale Rates Up to Date?

As you have likely noticed, supply chains continue to experience dramatic impacts from the coronavirus pandemic, coupled with the effects of natural disasters and the war in Ukraine. Factory shutdowns have delayed production for a multitude of construction materials and equipment, while delays at major ports have snarled typical shipping logistics. Fuel prices are way up, and some raw materials are in short supply. In all cases, the result is higher prices.

While we believe some of this material escalation is short-lived, another important component may not be receiving sufficient attention and is likely a more permanent change. Labor escalation is also occurring as contractors are competing for qualified and competent craft workers. These wage increases are largely here to stay, and it is important to realize that the idea of prices returning to pre-pandemic levels is likely not a reality. Adjusting expectations to fit this new normal is helpful in making informed decisions about how and when to deploy capital for projects. As always, your trusted contractor partner is a valuable resource in evaluating current market conditions and future projections to aid in decision-making.

Vaughn Construction Craft Employees

Delays in City Permitting Might Hurt Your Schedule

City permitting woes continue to affect all aspects of construction. Commercial permits for new construction, renovations, and utility tie-ins are taking a considerably longer time on average to go through City and utility provider departmental review for AHJ approval. See the table below showing average lead times across the larger Texas markets:


Permitting Chart

*Site development permit lead times can take up to 12 months in some markets. In saturated markets, utility provider coordination and approval may substantiate longer processing times.

The issue seems to have started with the coronavirus pandemic and is now being impacted by staffing shortages and employee turnover. Most projects are requiring multiple re-submissions, with each iteration having to go back through all departments.

What can you do? Submit your plans as early as possible and allow adequate time in your schedule to accommodate the current processing times. In addition, procurement of major equipment and coordination with your project’s utility providers can overlap the City permitting timeframe. This will ensure your project does not experience additional delays and gets off to a strong start.


Mitigating Supply Chain Impacts

Supply chain impact is a new reality that every Owner, Design Team, and Contractor must evaluate on their projects. How firms mitigate the effect of long lead items is becoming an increasingly crucial process during preconstruction. We have incorporated some of the following examples on recent projects and found them useful in helping to keep schedules on track: 

  • Take advantage of a JOC/MSA contract to procure long lead equipment like TPO roofing, air handling units, chillers, switchgear, power distribution units, and transformers, prior to executing a contract for a new project. On two current projects, we are also utilizing our JOC contract to begin site utility reroute, selective demolition, and make-ready while still finalizing the GMP for the new project.
  • Utilize a concrete superstructure in lieu of a steel structure. During preconstruction, we showed an Owner how they could be topped out with a concrete structure before the steel joists could even arrive. This also provided a cost savings of $5 per SF. 
  • Design electrical distribution around multiple smaller breakers or fused disconnects. On a recent project, we replaced two 3,000-amp switchboards with a lead time of 11 months with wireway and fused disconnects with a lead time of only three months.  
  • Use a single-skin metal panel system in lieu of an insulated metal panel system. This can provide a cost savings of up to 50% and save approximately six weeks in procurement time.
  • Open the specifications to allow for more manufacturers without sacrificing quality or warranty. One roofing manufacturer may have TPO available in three months while a different manufacturer may be at nine months.  

We would love to hear about any other supply chain issues you may be experiencing. We likely have a lesson learned or another tool in our belt that we would be happy to share.

Click here to read more about how to maximize the value of your Job Order Contract.

Concrete superstructure

Concrete structure progress on the Prairie View A&M University, Engineering Classroom and Research Building project.


About Vaughn Construction

Vaughn Construction is a Texas-based construction company that specializes in new construction, renovations and additions to civic, healthcare, education and research facilities. The privately-held company has offices in Austin, Bryan/College Station, Dallas/Fort Worth, El Paso, Houston, Lubbock, San Antonio, and the Texas Medical Center (Houston).