Orange County Branch Newsletter

May 2022

President's Column

Inflation and Shortage Supply Impacts

By Remi Candaele, PE | ASCE OC Branch President



Inflation and Shortage Supply Impacts

We have all been witnessing price inflation, whether it is at the gas station or at the grocery store. Both inflation and material shortage have become part of our design considerations when we select and specify materials for our projects.  The approach has been further emphasized over the last couple of years: the Architectural Engineering and Construction (AEC) community should initiate design and construction projects with a thorough understanding of material availability, fabrication, delivery lead time, projected construction index price, and an evaluation of equivalent alternatives. Just a couple of weeks ago, I sat in a meeting and heard the developer of a large residential project in Orange County had to pre-order water conveyance steel pipes from a U.S. manufacturer, agreeing to a 9-month lead time as a significant share of the steel pipe supply was historically imported from Russia.

Here are a couple of numbers I thought are relevant in characterizing both inflation and the supply chain over the last 16 months:

  1. The Construction Index issued by the U.S. Bureau of Labor Statistics has risen from 140.4 (January 2021) to 174.3 (April 2022).  As a proxy, this means that our engineer’s estimates of probable costs would have increased by 25% since January 2021.
  2. As of May 6, 2022, only 35 ships were waiting to unload their cargo at the ports of Los Angeles and Long Beach, compared to a record high of 109 in January 2022 (link).  The Ports have worked tremendously to reduce the number of empty containers sitting on dock space by 28%, allowing ships to unload more quickly. 

Ongoing events may contribute to the future volatility of the market, including geopolitical outcomes of the conflict in Ukraine, the lockdown in Shanghai affecting the world’s largest cargo-handling port, union negotiations at the Ports, and the measures implemented by the Federal Reserve to fight off inflation. The bottom line for us (civil engineers) is to reinforce the benefits of a project kickoff to evaluate all economic factors and material availability.

Switching gears, last month, our Orange County Branch celebrated exceptional individuals and outstanding projects at the 2022 ASCE OC Annual Awards Night.  Please congratulate our awardees (listed at the end of this article) as you encounter them in the future.

Finally, I invite you to attend our numerous in-person events these spring and summer seasons.  Our committees have been working hard to resolve the logistical challenges inherent to this endemic era.  As we ramp up the implementation of quality events, our goal is to restore attendance and excitement to pre-pandemic levels.  I look forward to seeing you all at our events.

That’s a wrap. ‘Til next time, take care of yourselves, and please reach out with any questions or suggestions.

Remi


About the Author:

Remi Candaele, P.E., M.S., QSD/QSP, M.ASCE, is a Stormwater Professional at Q3 Consulting and the 2021-2022 President of ASCE Orange County Branch. Remi can be contacted at [email protected].


Advertisement:

Visit our Sponsor