How Labor and Materials Shortage Impact Building & Design

Posted by Hillbrook Projects on 14 July 2022

We first heard of the shortages in materials around the time the pandemic hit, and most factories worldwide had to close down temporarily. It has affected the building industry on such a vast scale – there were shipping delays, and the price of the materials shot up. It has been a year now, but it looks like the shortage is still impacting the industry – worse, it's not going to end anytime soon.

The state and federal initiatives such as stimulus grants and first home buyer grants have increased building activity in the country. However, because of the Australia-wide shortage, the supply chain has been dramatically affected – manufacturers, suppliers, contractors, and subcontractors had to deal with massive delays, frantically searching for band-aid solutions in order to prevent issues with homeowners. We know that production delays cost time and a lot of money.

There's also the matter of construction costs. CoreLogic's Q2 CCCI or Cordell Construction Cost Index showed that the national residential construction costs increased by 10.0% over the 12 months up to June this year. It is considered the highest annual growth rate recorded outside the GST introduction, which was 10.2% throughout the year to March 2001.

Figures released by Cordell showed that metal, steel, fixings, and fencing are all under pressure, not to mention the price increase of timber products. CoreLogic’s cost estimation manager adds that suppliers frequently say challenges they are facing, such as the rising fuel, freight, and electricity costs are massively impacting the industry. For 18 months, the residential construction industry has already been greatly affected by labour availability and expenses. Those factors, plus the shortage of labour and materials, have made it challenging to complete projects on time, leaving builders vulnerable to the changes in the market and holding costs.

In addition, CoreLogic Research Directors have said that while the increase was expected, it's added concern to the industry that's already under tremendous workload pressures due to economic conditions. There's also no reprieve regarding the supply – the lack of materials, increased fuel costs, and inflation problems. It's said that these factors will push building costs much higher.
A shortage in building materials has significantly affected everything from timber to cement, tiles, and even paint. As the residential construction industry continues to grapple with the long-term effects of the COVID-19 pandemic, the fundamental question is this: is there even a solution to the shortage problem? Here are a few things you can do as a builder:

Pre-order Supplies
Ordering supplies ahead of time is one of the most effective ways to secure all the necessary materials. Many are apprehensive about booking clients because of the delays, so if you have what you need in advance, there's more certainty in booking clients. It will be incredibly problematic if you're in the middle of a project and supplies are unavailable.

Consistent Communication with Clients
Always keep your clients in the loop when it comes to possible delays or issues that could happen. Clients appreciate transparency more than anything, so to avoid more problems, keep them up to date.

Consistent Communication with Suppliers
Maintain a friendly relationship with the supply chain; the only way to do that is to communicate regularly. Instead of just waiting in the wings, you might be able to heart updates in the pipeline that would eventually land you first dibs on the supplies you want.

Be Considerate
Remember when people just started hoarding toilet paper once the governments announced the lockdown to prevent the spread of COVID? That didn't go so well for many people, and it's never the solution to any crisis. While taking care of your clients is essential, stockpiling would only promote division among builders and suppliers. Sure, do what is necessary to protect what is yours but not at the expense of other people.

What should homeowners do before they decide on building or renovating their homes?

Experts suggest you discuss everything you know about the industry's condition with your current builder. Make sure you check with them if the materials needed for your project are available and find out how they would be able to handle any possible shortages. Ask if there will be delays you need to be aware of so you can also examine the contract before you sign. They must also incorporate allowances in their turnaround time so you can also manage your expectations. Always, always ask for updates.


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