Procurement strategies for raw material shortages
How construction projects can be completed on schedule even when supply chains are disrupted
The coronavirus pandemic, geopolitical crises and energy price shocks have made one thing clear: supply chains are more fragile than we thought. Construction companies that had been able to rely on stable material availability and predictable prices for years suddenly found themselves facing realities that rendered project calculations obsolete. Steel prices doubled within months, insulation materials were unavailable for months, and electronic components for building technology had lead times of over a year. The consequences are construction delays, skyrocketing costs and legal disputes over price increases and the impossibility of providing services.
When supply chains collapse: Real-world impacts on construction projects
Disrupted supply chains affect construction projects on several levels:
Delays: If a critical material is missing, the entire construction site comes to a standstill. Subsequent work cannot begin, construction site equipment continues to incur costs, and contractual penalties loom. A missing component, such as special façade elements or building services components, can cause months of delay.
Cost explosions: Price volatility renders calculations useless. Those who have offered fixed prices bear the full risk. Even with sliding price clauses, negotiations arise that tie up time and resources. Projects that were calculated with a 5 per cent margin can quickly become loss-making.
Quality risks: Under pressure, construction companies resort to alternative suppliers or inferior materials, with long-term consequences for construction quality and warranties.
Liquidity bottlenecks: Advance payments for materials increase, payment terms are shortened, and at the same time, construction progress and thus instalment payments are delayed. For construction companies with several parallel projects, this can threaten their very existence.
Strategies for resilient procurement
Anyone planning construction projects today must systematically manage supply chain risks. The following strategies have proven successful:
Diversification of the supplier base: Dependence on individual suppliers is highly risky. Multi-sourcing strategies with several qualified suppliers per critical material create alternatives. Suppliers should be geographically distributed to cushion regional disruptions.
Early material commitment: For critical and long-term available materials such as steel, aluminium or special façade elements, framework agreements should be concluded as early as the planning phase. Delivery dates are fixed and prices secured, even if this means upfront costs.
Stockpiling of strategic materials: Just-in-time works in stable times, but in volatile markets, calculated buffer stocks become a competitive advantage. Construction site warehouses or central material depots for critical components ensure the ability to act.
Plan for material substitution: Alternative materials and products should be considered as early as the planning stage. If a particular insulation material is not available, what equivalent alternatives are there? This flexibility must be anchored in tenders and service specifications.
Prefer regional supply chains: Long international transport routes are prone to disruption. Regional suppliers offer shorter response times, lower transport risks and often better communication. The trend towards local procurement is not only ecologically sensible, but also strategically wise.
Digital supply chain management
Modern technology makes supply chains more transparent and controllable:
Real-time tracking: IoT sensors and GPS tracking enable permanent monitoring of material deliveries. Delays are detected early on and alternative transport routes can be activated.
Predictive analytics: AI-supported systems analyse historical data, market developments and geopolitical events to predict delivery risks. This allows planners to react before bottlenecks become acute.
Digital procurement platforms: Cloud-based systems connect construction companies with suppliers, make availability transparent and enable dynamic tendering. Together with B3YOND-IT, 3XPERTS develops integrated procurement solutions that digitally map material flows from planning to the construction site.
Contractual protection
Contracts must realistically reflect supply chain risks:
Sliding price clauses: Rigid fixed prices can threaten the existence of a business in volatile markets. Indexed price adjustments based on material indices ensure fair risk distribution.
Delivery delay clauses: What happens if materials are not available despite having been ordered? Clear regulations on compensation, additional costs and postponements avoid legal disputes.
Force majeure regulations: What exceptional circumstances justify adjustments to performance? Precise definitions protect both contracting parties.
Collaborative planning with suppliers
Early contractor involvement and early supplier involvement bring material suppliers into the planning phase at an early stage. They can provide information on availability, delivery times and alternative products at an early stage. This collaborative planning reduces surprises and enables realistic schedules.
3XPERTS and B3YOND-IT: Systematic procurement management
As an experienced partner for property developers and construction companies, 3XPERTS systematically integrates supply chain management into project planning. From material availability analysis and supplier qualification to contractual risk hedging, we ensure that material bottlenecks do not turn into project crises.
Together with B3YOND-IT, we develop digital procurement platforms that make material flows transparent: cloud-based supplier networks, real-time order tracking, AI-supported early risk warning and integrated interfaces to ERP systems. From tendering and ordering to delivery to the construction site, you remain in control, even in turbulent times.
In a world of increasing uncertainty, resilient supply chain management is not a luxury, but a prerequisite for successful construction projects. We help you identify, assess and systematically manage supply chain risks.
Would you like to protect your construction projects against supply chain risks?
Contact us at info@3xperts.com or via our digital contact form and discover how we can work together to make your projects and your leadership role a success.