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Managing Material Shortages

A nail gun and hammer sitting on a roof
Prices are increasing, and deliveries are stalled. 

When I talk to contractors these days, the No. 1 concern they all seem to have is material shortages.

The events of the last year have been challenging for everyone, and the effects of the COVID-19 pandemic—including manufacturing shutdowns, slowed production, and transportation restrictions—are still impacting the roofing industry.

Prices are increasing, and deliveries are stalled. 

While you cannot control the supply chain or the higher costs you’re facing, there are strategies you can use to protect your business and your projects. 

Reviewing Your Contract 
Now and always, it is crucial that you review every one of your contracts and understand their stipulations.

For instance, look through your contracts for any clauses regarding delays.

Some delays, such as those resulting from extreme weather, are excusable and allow for time extensions.

However, material delays may not necessarily fall into that category.

That means that if you receive materials late, you may be required to make up the time.

Those additional hours will require more labor, which can impact your profits.

So, if you can, insert a material delay clause that allows for a time extension. 

If possible, consider adding a price acceleration clause.

If material costs go up after the contract is signed, this provision will allow you to increase your price as needed.

For instance, the clause might state that if material costs increase by more than 5%, you will increase your price but without a change order.

Just be ready to provide evidence of the price increase to the owner. 

Also, consider a material substitution clause.

If you realize that specific material is not available for your project, this language will permit you to make a reasonable substitution. 

Staying in Touch with Your Customers 
Throughout every project, keep your customers informed.

If you discover you can’t get material or you anticipate other delays, be sure you update your clients.

Try to offer solutions, rather than just present problems.

And if even if things get tense, remember to remain polite and professional.   

Working with Your Vendors 
To avoid having to substitute materials or wait for late deliveries, see if you can build an inventory of materials you often need.

To accomplish this, have conversations with your suppliers and cultivate strong partnerships with them.

Tell them about your priorities, and ask for their insights about supply trends, shortages, and other obstacles.

By collaborating with your suppliers and manufacturers, you will create a mutually beneficial relationship, which will help ensure you receive the materials you need. 

Maintaining Detailed Records 
Throughout the course of your projects, be sure to document everything you do.

If you suffer a material delay and need more time, submit a request for a time extension based on the unpredictability of the delay.

Track your customer’s response, as well as any follow-up emails you send.

If you proceed with your work, even without an approved change order, you need a paper trail to prove your due diligence.

In addition, ask for assistance from manufacturing and distribution to provide you with letters that support your claim for additional costs or time.

This meticulous recordkeeping will benefit you if you must make or defend claims.  

As the last several months have shown, contractors must be flexible and ready to handle the unexpected.

By carefully reviewing your contracts, communicating with your clients, partnering with others in the industry, and keeping good records, you can be prepared for anything the future may hold. 

 

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation. 

 

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