The Resiliency of the Herd – Overcoming Challenges From COVID-19
By Brett Norton, Vice President of Operations, Buffalo Construction, Inc.
As we recently hit the second anniversary of the COVID-19 pandemic, for many of us, it was a time to reflect on all we’ve encountered and overcome in the past two years – a temporary pause in the construction industry, travel restrictions, learning to pivot with new technology to keep projects on track, supply chain issues globally, and all the while, working remotely. And, don’t forget, many of us had to work with our children at home, so we became both a teacher and a parent. It was not an easy two years for anyone.
According to Nationwide’s 2021 Agency Authority report, the pandemic negatively impacted 70% of construction companies. However, despite the challenging times, our team accomplished some big wins as a company. We used this uncertain time to strategize our overall approach to business so that if and when something like this should happen again, we are prepared.
The Start of COVID-19
When the pandemic first began, there were a lot of questions for us to answer quickly. What do we do? How do we comply with federal and local mandates? What are our company rules and regulations? How do we keep each other safe? What do we do when there are positive COVID cases inside our company or with the vendors we are working with? We were facing more questions than answers early on, so it was crucial to consider how we communicated with the team so that we were all on the same page.
Externally, travel restrictions and individual state COVID rules became a big challenge for our team. We were in different jurisdictions across the country with various regulations limiting work or travel. A couple of bigger states like California and Michigan had pretty stout COVID standards coming out of the gate that caused a lot of projects to pause, and for the industry as a whole, a lot of work that had not yet started was put on the backburner.
Since business and personal travel had stopped, this wiped out the hotel and hospitality development pipelines. But for goods and services like fuel and convenience work and fast-casual restaurants, there was an opportunity to pivot, and our team was there to help client partners solve some of these creative problems. For the restaurants that could no longer offer in-person dining, they were able to pivot into drive-thru or carry-out style models that kept them running during these challenging times, and also set models moving forward as to what efficient drive-thru service, carry-out facilities and online ordering portions look like, and the modifications needed to accommodate those. The speed of the creative problem-solving happening and pivots created was incredible to see.
Internally, we were facing our own creative problem-solving challenge: how to support our working parents who were suddenly juggling working remotely with their kids home from school. This quickly became part of our business planning that we had never considered before. We provided all of our teammates with anything they needed to work from home and dramatically shifted work hours and expectations. We saw a lot of teammates working in phases – after the kids started school, whether in person or at home; after the kids were finished with school; and on the weekend. While we’ve always been a results-based company rather than a timecard punching company, this remote working model helped us all learn how important it was to support one another, what was expected for virtual working and what was allowed. With one of our company’s core values being compassion, showing this support and allowing this flexibility was very important to us and will become part of our business model moving forward.
Adopting New Technology
I think many of us remember when the real estate markets dropped in 2008 and how slow the industry was to react. The construction industry has typically been slower to adopt technology. Still, when it came to the COVID-19 pandemic, things moved much more quickly, which showed us how far our industry has come.
Like many others, we made a quick pivot into using some of our digital assets like Microsoft Teams or FaceTime, some of our 360-degree cameras and the technology we had in the field, which helped us keep projects going.
Our team is in a unique position in that we were already used to remote interactions for projects, since we build coast to coast. For one project alone, we may have a project manager that lives in Wisconsin building a project in Nevada with an estimator and project coordinator in Kentucky. But now, thanks to an iPad and the creative use of technology like FaceTime or Teams, we didn’t need all of these teammates together in person. We leaned into this technology and were able to be there virtually for foundation prep, concrete, walkthroughs and more. By including our client partners in these digital walks, our results and quality were seen in real time, assuring the work met expectations even in trying times.
Moving forward, this will likely change how we all connect for particular situations. Nothing can ever replace face-to-face interactions, and there, of course, will still be a lot of situations where that personal communication is needed to sit down and talk or go over information. But the pandemic has also helped us all evaluate what level of engagement is necessary for a particular situation. Is this a situation where I need to hop on an airplane and be there in person, or can we accomplish the same result with an email or over a team chatting system like Teams or Slack? I think this crisis has challenged people, teams, companies and organizations to challenge the communication style that best serves the situation. This is something we’ll all be able to take forward with us into future crises.
Supply Chain Impact
While we all faced obstacles during the pandemic, the biggest one that impacted and continues to impact our industry is supply chain, which has made it very difficult to plan materials and even manpower for construction projects. In the construction segment alone, there was a significant impact on the workforce due to the aging population of superintendents and subcontractors. For instance, some plumbers at the tail end of their career decided to retire versus return to work, so we suddenly had a smaller service base to work from in our industry. According to the Pew Research Center, by the third quarter of 2020, nearly 28.6 million Baby Boomers left the labor force to retire, which was up 3.2 million people from the year before.
Additionally, the Bureau of Labor Statistics estimates that construction material prices were up overall by almost 25% in 2021. Lumber prices have even been more chaotic. A project that may have cost $400,000-$600,000 in lumber in today’s market could now be $1-1.2 million for the same lumber package. This has a trickle-down effect on everyone and is ultimately passed on to the end-user – consumers.
So, not only is plumbing material more difficult to get and more expensive, but it also takes longer to get the products installed. This is a battle we will likely be experiencing for some time to come.
Changing Our Construction Model
What we also found during this pandemic was the need for a new construction approach to address some of the issues, like supply chain, thrown our way. Conventional construction typically includes design and bid, and then the contract and build process. That lends itself to be very disruptive by a crisis like COVID and supply chain issues. Any number of influences can upset that very linear and very legacy construction approach.
So, we changed our approach to construction to an integrated approach, where we take all of these systems in parts and do them in conjunction with each other. This means, as we are designing work, we're planning and budgeting work that fits an overall model and doing it with available materials. We are also budgeting it in regions where the construction will take place so that we are using actual pricing from that moment in time to develop the construction budget. This is important because it allows us to get to a point where we are ready to build the project using available material, using real wage experience in the market that we are working in, and we are much more predictable and accurate to manage to a budget. For the client partners we are doing this with now, we’ve noticed their pro forma has become much more predictable with less volatility or disruptions, so the duration of the project is much shorter. Constant collaboration with the owner’s team to identify and respond to rapidly changing conditions (inflation, material availability, labor shortage) is another bedrock of our approach.
Historically you could build hotels in 8 to 10 months, and those are 12- and 14-months cycles now in our current environment. Restaurants that were historically 18 weeks to build are now about 20 weeks on the same build. So, anything we can do to put efficiency into the program smooths that out completely.
The Positive Take on COVID-19
As we look back two years later, I believe we all have our own positive wins from this pandemic. For Buffalo Construction, Inc., one positive we encountered as projects slowed down was having the opportunity to implement our Entrepreneurial Operation System® (EOS). There was an increased focus on strategic objectives, which would have a significant operational impact that we’ll soon be discussing in an upcoming article. Stay tuned!
We also found that all of the issues presented in the pandemic all had solutions. As a Herd, we were able to solve all parts of all equations, and we did that with the relationships that we have with our teammates, our client partners, and the vendor partners we work with. And when we can put them together in that integrated construction approach, we can solve all problems we encounter. What that tells me is when we face any future challenges or opportunities, if we can approach it with a team approach to construction that includes all parties involved, we’re going to get a better outcome overall.
If there is one thing our team knows how to do, it is adapt, and this pandemic helped us strengthen those skills and rise above all the challenges in our industry. This adaptability will continue to make us successful as a company for the long haul, no matter what crisis is thrown our way.
