China’s Current COVID Lockdowns will impact Global Construction Costs & Material Deliver Schedules :
John G. McConville CCP
Construction Cost Expert & Author of (11) Cost Estimating Books / Databases on US & Global Construction Costs & Labor Productivity:
250 million Chinese citizens more than 20% of the population are currently in COVID lockdowns.
In the last month China has introduced extreme COVID lockdown procedures in 2 of its largest cities, Shanghai (25 million) and Beijing (22 million) and more than 35 other cities, these cities are for the most part the engine that drives most of China’s economic growth.
China’s manufacturing output is starting to weaken as COVID lockdowns continue, causing many factories to be idle or to work at reduced levels. China is the world’s factory, it produces as much as 35% of the worlds construction related components.
China's COVID lockdowns add to the current global shipping backlog. China has a logistics / shipping backlog that will seriously impact the global supply chain in the coming months. COVID has impacted the Chinese transportation industry & its seaports, these seaports have a limited number of workers & have exhausted the storage space to handle the many 1,000's of shipping containers arriving at the seaport, compounding the supply chain challenges we are currently facing.
COVID related supply chain disruptions that we have experienced over the last 9 to 12 months will likely get worse in the next 8 to 20 weeks.
More than 80% of US contractors are experiencing delays in obtaining construction materials and are in many cases paying premiums to procure them. Plywood / OSB, roofing, rebar, steel products and other basic construction materials remain in short supply.
The following is a partial listing of construction items and there delivery times to a construction site from the placement of an agreed purchase order, many of these products are manufactured in China:
- Window systems 32 to 40 weeks *** (an example of how this can impact construction costs is as follows, the contractor(s) needs to close-up the building to protect the building from weather conditions (snow / rain / cold temperatures etc.,) to start the finishing trades (ceilings, floors, painting etc)., many contractors are issuing change orders to the Owner to fill in window opening with temporary plastic sheeting / frames) to work around this problem.
- Instrumentation related devices 38 to 50 weeks
- MC Valves 25 to 36 weeks
- Process pipe fittings CS & SS 18 to 28 weeks
- Metal studs / framing 18 to 24 weeks
- Warehouse Dock Levelers 14 to 28 weeks
- Plumbing fixtures & components 16 to 26 weeks
- Electrical Lighting Fixtures & components 16 to 28 weeks
Compounding the supply chain issues, is inflation, it is sky-rocketing in most countries around the world, in the USA to 8.5% in March, reaching a new 40 year high level. Wholesale inflation in the US increased to 11.2% annually in March, driven largely by an increase in the price of gasoline / diesel - its highest ever recorded level.
A number of economists are forecasting construction prices in the US will increase by as much as 12% to 14% by July from a year ago, in many ways adding to the challenges faced by the global construction industry.
Compass International provides Construction Estimating Data for 125 countries, we forecast Engineering, Procurement & Construction cost for 2022, applying latest inflation / escalation values to our historical benchmark database.
The Construction Cost Databases provide current construction materials, labor costs, field in-directs / preliminaries, process equipment, A&E-CM billing rates, Square Foot / M2 Building costs (for 100 + facility types), country productivity values & (2) location factors for complex (high value) & less complex( indigenous) facilities.
Our data is focused on Oil / Gas, Chemical, Pipelines, Offshore, Manufacturing (Consumer Goods, Food / Beverage / Computer Chips), Commercial (offices, hotels, shopping centers and airports), Pharmaceutical / Clean Rooms & Infrastructure Facilities:
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For more information contact John G. McConville CCP - Operations Director - Compass International - USA Telephone +1 (609) 577 4505