November 8, 2021

When the supply chain breaks: relationships and creative thinking keep things rolling

Whether it’s trying to buy a car or get a package delivered, we’re all dealing with a severely dysfunctional supply chain. It’s absolutely frustrating, but it’s out of our control, right? And yet, we’ve found that a few things you actually can control—like strong relationships and creative problem-solving—can allow you to still get things done when others can’t.

Managing a construction project, whether it’s a high-rise, a new retail center or a tenant improvement, is very much like a line of dominoes carefully stacked up to make a cool pattern when they fall. Right now, the chaos within the manufacturing, shipping and delivery industries is creating gaps that can stall out the entire process.

Counteracting that chaos is the in-house construction management team NAI Elliott created years ago to add value for our clients. Focused solely on construction projects, our experts have end-to-end knowledge of all the people and details involved, performing at a higher level than a generalist property manager could. The team uses their combination of experience, skills and colleagues to respond more quickly, provide direct project oversight, and tap into the vast knowledge base within our company.

The team and their clients have been accustomed to a smooth operation, but that expectation has been upended in the last couple years. “Construction essentially comes down to budget and schedule,” says NAI Elliott Construction Manager Craig Olson. And lately neither of those elements has been controllable; this is new territory for the team. “Right now what we’re facing is that subcontractors can’t get the labor to get work done; if they do have the labor, they can’t get the supplies and materials they need. And if they can find them, the prices are outrageous.” It all adds up to projects taking twice as long and costing twice as much.

“There are materials shortages across all trades,” adds our Facilities ManagerJulian Morales. “Asphalt, metal conduits, paint… everything.” Bob Bolt, a longtime NAI Elliott vendor with roofing contractor McDonald & Wetle, lays out the specific dilemma: “If you can get most of the materials but not all of them, you can’t finish the roof. What used to take two weeks to get now takes six to eight months. And most years prices go up 3% to 5%; this year it’s 40% to 50%. It’s the worst situation I’ve seen in 41 years in this business.”

As a sampling, here are some of the specific quandaries faced by the CM team in 2021:

· A parking-lot striping job that couldn’t get the paint needed, because it was back-ordered.

· A roof rebuild that needed specific finishing nails that weren’t currently available on the market.

· A project that needed a fire-rated glass door for a new tenant move-in, but the door was delayed for an unspecified amount of time.

· A national retail chain that couldn’t get its standard carpet color/choice for a new store.

· A project where the tenant was occupying in February, but the only local vendor who bid on the job couldn’t finish the cabinetry needed until March.

Faced with these kinds of barriers, we got resourceful.

Finding solutions comes down to two crucial elements: relationships and communication. And those two are inextricably linked. “NAI Elliott has been around for a long time,” Craig says. “We have a large volume of work, and a great reputation we’ve worked hard to build. We’re deeply connected in the industry, and people want to work with us. That provides leverage and resources we can apply to the problem.”

“Communication is the key to relationships in both directions,” Julian adds. “We maintain constant communication with our vendors as well as our owners and tenants; we’re honest and realistic about our expectations, and theirs. We may be at the mercy of a manufacturer or distributor to get materials. I circle back with everyone as often as possible to keep them all up to date.”

And this approach pays relationship dividends. As Bob Bolt puts it, “NAI Elliott appreciates what we offer, and we’re on the same wavelength. Strong relationships with good people are the key to staying in business. We really appreciate having a customer like them.”

So, how did those seemingly doomed projects listed above work out?

· The team found an alternate product to get the striping job done in time; they’ll do some touch-up when the original product is available.

· We got a call from McDonald and Wetle; they anticipated that this roofing job was coming up, so they set aside a stock of the specific finishing nails for him, as a favor for a longtime partner.

· Rather than delay the entire build-out while waiting for the right door, we convinced the contractor to recycle a door from another project to complete the TI job on time; the contractor will take it out and install the new door when it arrives.

· The team found a suitable replacement carpet for the national chain, convincing them that deviating from the template was justified to meet the tight time frame.

· We reached out to a contractor in Eugene we’ve worked with that has an in-house cabinetry team; based on their long-time relationship with NAI Elliott, they agreed to do the cabinetry right away to meet the deadline.

These outcomes don’t happen for everyone; it takes serious problem-solving skills and reliable partners. “We take care of our vendors, and they recognize it,” Craig says. “Portland is big, but it’s actually small in the way everyone is connected.”

And those connections are built and strengthened best over time. “When times are flush like now, some people are going for the gold, trying to capitalize quickly,” he explains. “But we’ve worked long-term with our vendors and suppliers, through good and bad times. Our relationships are really partnerships.”

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© 2020 NAI Elliott - All Rights Reserved

© 2020 NAI Elliott - All Rights Reserved

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