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'A perfect storm'

Supply chain delays spur higher costs for government projects

NORTH METRO ATLANTA — For the past year and a half, government construction projects have faced millions of dollars in added costs and delays due to the COVID-19 pandemic.

In addition to the obvious increased strain on healthcare infrastructure, the pandemic has had measurable impact on municipal governments and their ability to complete projects for their citizens.

Supplies of concrete, steel and other basic construction materials have dried up, and what can be secured comes in at higher prices.

Alpharetta Public Works Director Pete Sewczwicz calls it “a perfect storm.”

In March and April 2020 many manufacturers closed down with the rest of the world, he said. The lack of production led to a shortage of basic materials. As buying continued, manufacturers have been chasing their tails trying to catch up to demand ever since.

In Alpharetta, things like light fixtures — which used to be available for next-day delivery — are now taking weeks to arrive, Sewczwicz said.

“We’ve been having to re-establish expectations with the public,” Sewczwicz said. “What we used to be able to do within a couple of weeks as a quick project, it now takes us twice or three times as long just to procure the materials and make sure we can do the project.”

Johns Creek has faced the same issues. Construction bids for Cauley Creek Park came in more than 42 percent higher than initially expected taking the total estimated cost from roughly $13 million to more than $19 million. The bids were presented to council members at an Oct. 11 work session.

Assistant City Manager Kimberly Greer attributed the higher bids to inflation, increases in costs for labor and materials and delays along the supply chain. Additionally, Greer said, when contractors present their bids, they take on risk by setting a price that would not shift even if costs continue to rise. They must accommodate for potential changes in their bids at the onset.

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Competition among cities in North Fulton County for contracts has not helped. Local municipalities are still trying to hire contractors for projects identified in the current transportation sales tax. Add state contracts for improvements on Ga. 400 and Interstate 285, and the competition doubles.

Contractors, already spread thin, now must allow for work crews culled by exposure to COVID-19.

“The Kimball Bridge Road corridor project is a great example,” Sewczwicz said. “It started right before the pandemic, and it got hit hard from contractors who got sick or were exposed. It got hit hard with material shortages. We wanted to put in streetlights, and that took longer to get delivered than we wanted … and it was a trickle-down effect.”

Alpharetta’s Public Works Department has had to be creative with projects, streamlining needs and expanding expected durations.

“The last thing we want to do is tell the public ‘We’ll be done with this project in nine months,’ and then we find out three months in that we can’t get half our materials for one reason or another,” Sewczwicz said.

But there’s a limit to how proactive departments can be. Sewczwicz said in Alpharetta they’re trying to keep a supply of some items on hand but it’s a small inventory because the department’s operating budget was not set up for stockpiling.

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Shortages are affecting people all over the country and the globe. In some ways, this understanding has helped the Public Works Department, Sewczwicz said.

“Everyone is being upfront, collaborating, figuring out what we can do and working together through it all,” Sewczwicz said. “It’s been very, very fortunate.”

Alpharetta also caught a break with the final leg of the Big Creek Greenway, which opened on Memorial Day weekend, weeks ahead of schedule. The project was already underway before the onset of the pandemic, and when the department and contractors saw the rise in concrete prices, Sewczwicz said, they rushed to expedite the project.

Local public works departments are also faced with the rising property costs in the area, Sewczwicz said.

“It’s not just construction pricing that’s the challenge that we’re dealing with for municipal projects. It’s the cost of the property,” Sewczwicz said. “What was costing properties in north Fulton two years ago versus today is astonishing. … If you’re not getting hit on the back end of the supply chain aspect of the project, you’re getting hit on the front end with acquiring [property.]”

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Some estimates say the supply chain could return to some level of normalcy by next year, Sewczwicz said, but until then, he’s asking residents for patience with projects.

“We want the projects finished as fast as possible, as well as possible, with as limited issues as possible,” Sewczwicz said. “But at the same time, we’re not going to compromise quality.”

Reach Sydney Dangremond at 770-847-7404. Follow her on Twitter @syddang_.

Sydney Dangremond was a digital editor with Appen Media Group and covered Johns Creek.