Managing Supply Chains & Rising Construction Costs
Emily Van Eyk, Director of Mt Eyk, shares her experiences of running a new practice through a pandemic, with the main challenges relating to supply chain delays, rising construction costs and keeping up with demand.
Where is your practice based? How has your practice been affected by the pandemic?
My practice, Mt Eyk, is based in Fremantle, WA. Initially (approx. February to April 2020), the pandemic sowed caution in nearly all of our clients and practical limitations in others. The majority of our clients are single residential, and all chose to put their projects on hold to wait and see how the pandemic would affect them financially. One of our only commercial clients is an Aboriginal community group located in remote Australia (in WA). Due to the location and the swift regulations on visitation caused by the pandemic, our ability to visit the site was affected which, considering the stage of the project, severely slowed our delivery. While workarounds were developed, we exercised caution and a wait-and-see approach.
Not long after this initial slowdown (approx. May to July), projects began to come back online once the initial financial effects of the pandemic were assessed, and remote digital communications and work methods were implemented. This continued for the remainder of the year with a slight increase in enquiries in the final quarter, which I believe can be attributed to the building grants offered by the state and federal governments. However, the uplift wasn’t too dissimilar to the end-of-year impetus that seems to instigate new enquiries seen in a typical year.
2021 saw a significant increase in new enquiries possibly due to the grants, possibly also due to people spending more time in their homes with new WFH methods being normalised and also perhaps spending more time at home in lockdowns with time to think and plan. The increase was largely residential. The greater demand appears to now be quite constant, and we have witnessed no drop-off. It has now spread (for us) into other types of work (commercial, educational). We are a new practice; this is our fourth year, so some increase in demand could be natural in becoming more established.
In the last quarter and the start of this year, the effects of the pandemic have been felt strongly in supply issues for projects either in construction or tendering. This is beginning to cause issues in cash flow for clients with some choosing not to build due to increased tender prices.
What have been the key challenges for your practice over the last two years?
The key challenge has been in working with rapidly inflating construction costs and supply issues and keeping up with demand.
What early measures did your practice put in place in response to COVID-19 (in 2020 and 2021)? How has the recent Omicron outbreak affected your practice? What additional measures have you made (and do you foresee making) due to the recent disruption?
We moved everything to a cloud platform early in the pandemic and implemented flexible workplace arrangements. As a practice of two people (sometimes three, though usually contracted work), this was not difficult to achieve. Additional measures are focused on construction costs. Managing construction costs has pushed us to work earlier with builders in the design process towards a negotiated contract rather than tendering once the project is documented.
What advice would you give to other practices based on your experiences so far?
Advice is perhaps what I need. But for anyone in a new and small practice, try to take on only what you can manage and discuss price fluctuation early.
What do you believe needs to happen to support our profession and the wider building industry?
The Western Australian government has delivered a stimulus package of $5.5 billion (WA Recovery Plan), of which $440 million is for housing. A large majority of this package (not just the housing part) is focused on new and refurbished building work. This substantially props up the construction industry. As we are already feeling higher demand and short supply of not just materials but labour (in construction and practice), there will be negative effects, the most obvious of which are unsustainable price increases.
On an indirect note, the construction industry, including architects, is one of the most gendered in Australia. The positive financial returns of this situation will unfortunately be experienced by men substantially more than any other gender.
What measures have you put in place to support your employees’ mental wellbeing? How is this going?
Well, no measures in particular but as a general rule we do not complete excessive overtime, hours are flexible, and WFH acceptable where possible. On a more ideological note, I believe allowing an employee a high degree of exploration and initiative on a project, certainly inclusive of schematic design work and client exposure, is key to allowing anyone to feel more ownership of a project and enhance their satisfaction and ultimately their wellbeing. This must be coupled with clear responsibilities and support.
How can the ACA assist you? What would you like the ACA to prioritise as we face another disruptive year?
Personally, I find the NRF and the regulation of building practitioners to be paramount issues facing architects. While this isn’t necessarily related to the pandemic, addressing this issue while the industry is very strong would seem like an advantage.
I think communication is also key as being able to rely on the ACA to inform business about new responsibilities from government due to the pandemic is very helpful. This has been well managed by the ACA I believe.