Callahan Construction Managers’ Post

Transcript

Hi, my name is Frank Desanzo, VP at Preconstruction and Purchasing. Here at Callahan. I oversee our team or pre construction experts who have a collective wealth and knowledge that is essential to building successfully in today's market. The team I mentioned is made-up of nine estimators, 3 civil engineers, a licensed architect, BIM modeling staff, QA, QC. Manager, a scheduler and an in house logistics manager. Additionally, I'm happy to say that due to our company's commitment to sustainability, we now have 29 Passive House certified people on staff both in pre construction and operations. So we're coming out with this newsletter to help inform our clients about current market trends as well as to offer some construction insight on what's affecting our industry today. As the leader of our pre construction group, the question I get asked most often is where do I see the market? Going and where do I see on pricing, I'm going to address some of those topics here today. First, let's start with where we were for some time. We were in a stage of increasing project volume that was was really consistent over many markets. Multifamily life science, assisted living, hospitality, etcetera, all had quite the demand over the past five to 10 years. In the case of multifamily, that duration was even longer. We knew our correction was imminent. It wasn't a question of will it happen, but when will it happen. It was easy. To see that we're heading towards a tipping point with pricing that would make it challenging for deals to be feasible. It's not news to anyone within our collective industries that we're experiencing that correction. Now on the construction side, I think those pricing challenges were based on a few different items, be it demand, supply chain or manpower shortages. Now, I do think the market is starting to correct itself from the inflated pricing I just mentioned. The main driver in this is the quantity of projects that have been able to start at the end of the day. Your projects have been able to secure financing to get going. Because of that, I think we're seeing a change in commodity materials leveling out and decreasing in cost. Trade partners also now have the ability to secure their product in a time frame that allows for reasonable construction schedules. We also believe that manpower is becoming more available currently, although deals are still hard to finalize, it's encouraging that we, along with our trade partners can adjust to a more normal pricing predictability. In the past, as I just mentioned, we were dealing with major supply chain issues that forced our trade partners to carry high escalation in their numbers. That's no longer the case. I think with the prolonged period of consistency, we will not only be able to secure stable pricing but predict any limited escalation or de escalation that may occur. Important to mention, we are still experiencing some areas where securing product is still an issue, switch gear, meter sockets, major mechanical equipment. Name a few. While the hope is that these items will follow the trend of others in the market and become more readily available, they have not yet. It's critical in the preconstruction process to create a plan to mitigate the effect of these product delays. Although there are many unknowns in the industry, we look forward to the challenge of helping you navigate through them with good collaboration and teamwork. We have a deep bench of experts who are here to help. Be sure to subscribe to our newsletter in the future as we plan to do a deeper dive into the topics we mentioned today and. Follow along for key insight to help you on your next project. Thank you.