Mitigating Risk in the
Construction Supply Chain

Transcript

Scott Seltz:

Good afternoon and welcome to this webinar, Mitigating Risk in the Construction Supply Chain. This event is brought to you by Engineering News-Record and sponsored by InEight. Hi, I’m Scott Seltz publisher of the ENR and your moderator for today’s webinar. Thanks for joining us.

 

Scott Seltz:

Organizations in construction are constantly adapting against an evolving backdrop of supply chain risks and changing business landscapes due to a staggering lack of supply chain transparency. Alarmingly, many of these risks are not immediately visible and remain unplanned for. In this webinar, we’ll discuss opportunities for the industry to improve supply chain management for both increased projects, certainly, and better industry outcomes. Now please join me in welcoming today’s presenters. As director of product management for InEight, Ryan Kerschen focuses on delivering practical customer solutions in the area of contract and capital management and document control. He brings with him over 20 years of experience across engineering, industrial operations, construction, and procurement.

 

Scott Seltz:

Mike Davis is the co-founder and CEO of Felix. Mike has been pivotal in the development of Felix and has a deep understanding of how technology can help organizations get control over their procurement. Prior to launching Felix, he co-founded PlantMiner, which had grown to become Australia’s largest online construction marketplace. I’ll rejoin the presenters at the end to field your questions that come in throughout the webinar, so don’t forget to submit them in the Q&A section of the webinar council. And now I’ll hand things over to Ryan Kerschen from InEight to kick things off. Ryan.

 

Ryan Kerschen:

Thanks, Scott. First off, just a little bit about InEight. We at InEight deliver field tested construction, project management software for owners, contractors, engineers, and even architects. The people that build the world around us. We offer tools that support all phases of the capital project life cycle. We’re very excited to be here with Felix today to discuss our thoughts on the modern supply chain and how to make the most out of the challenges that may include. And maybe over to Mike for a little bit about Felix.

 

Mike Davis:

Thanks, Ryan. And great to be here with you this morning at my end, your afternoon. In addition to what’s on the screen, I would just say to everyone that Felix’s reason for existence is to build solutions and technology that helps organizations and contractors in construction more effectively and efficiently the way that they manage and engage with their third party vendors. And this has been in direct response to industry calling out for purpose built solutions for construction, where it’s either been a sea of spreadsheets and emails or technology and platforms that aren’t fit for purpose. Back over to you, Ryan.

 

Ryan Kerschen:

Thanks, Mike. So just as a brief overview of what is to come today, Mike and I would like to give our point of view on what defines a supply chain and what makes a construction supply chain unique from some others. We will also be addressing risks in the supply chain. Some of those risks have been an inherent part of doing business in a national or global economy for quite a long time while others may be much more recent or even still emerging. Along with considering opportunities to mitigate the risks that exist in construction procurement, it’s important to consider that traditional solutions may not effectively rise to the level that is now required, where can we find areas that we need to peel back the onion a bit to help ensure a successful result. And finally, we would certainly like to give our thoughts on how the right tools and technologies can support your needs to build with confidence.

 

Mike Davis:

Now, please, don’t panic when you look at this infographic immediately and the complexity and try to understand it on first view, part of the point is it is complex and difficult to understand, and the construction supply chain is a web of interdependencies and complexity in itself. There are decentralized components and centralized components of the construction supply chain, and we’ve got many different stakeholders with different tension points and push and pull all throughout the process. So for those of you who work in industry and procurement understand this, intimately, you’ll understand that within the supply chain we’ve got labor, product and materials, subcontractors, consultants, there are plant and equipment and that all of this is supported by a complimentary industry such as freight and logistics, and which are obviously prevalent right now with supply chain issues caused by COVID and the increased shipping is all having a knock-on effect within industry. So while supply chain is a nice and easy to digest term, in reality, the industry operates more within supply or supply networks or a supplier ecosystem.

 

Ryan Kerschen:

And that’s exactly right. And one thing that adds, I think, additional challenge and complexity to the construction supply chain is that so much of what you see on your screen right now might be temporary, essentially it’s built up and created and immediately tore down with each construction project, especially on small to midsize projects like high performing project managers, field engineers, they may successfully navigate supply chain challenges and then like high performing individuals are prone to do, they get promoted. And then the next wave of staff is coming on with limited experience. And adding to the temporary nature of those construction supply chains, each successive project may add variables, location, geography, market, which in turn will adjust not only what types of services and materials you need, but also where they can be sourced from. So as your company grows and your procurement processes mature, centralizing certain activities can certainly help maintain some permanence in your operations, and we’ll touch more on that later.

 

Mike Davis:

Ryan, I think it’s a great point that you make. And it’s worth, I guess, thinking about other sectors, maybe it’s food or manufacturing, where those supply chains are really a lot more stable and mature over time. And it’s that transient nature, and as you mentioned, the rapid assembly and disassembly of construction supply chains with the project based nature of construction, which inherently can result in a lot more risk in the supply chain, and that’s what we’ll explore shortly.

 

Mike Davis:

So what is supply chain risk? So let’s go to the Oracle, the project management institute for a definition, and risk as defined by the project management institute is an uncertain event or condition that if it occurs has a positive or negative effect on a project objective, therefore a risk is not an event or an occurrence which has already happened that’s an issue, it’s an event that has not happened and might not ever happen. Therefore, in the context of construction, supply chain risk is any potential event or issue associated with any entity within the network that if experienced would have a negative knock-on effect on organizational objectives. I also want to point out that supply chain risk management is the management of those risks, not the direct management of individual parties within the supply chain network.

 

Ryan Kerschen:

Thanks, Mike. In the upcoming slides, we’re going to get into some additional detail around those risks that may be present in your current and upcoming projects. So if you would, take a few seconds to consider if one or all of these risks are at the forefront of your current concerns for our poll question today. Once we’ve received your input, we’ll move on to discuss them in a bit more detail.

 

Ryan Kerschen:

Okay, fantastic. There’s a few still trickling in, but let’s move over to the results. And I think, maybe as we expected, you can certainly see that all of these factors are contributing to risk that you see on your current project, but obviously the thought that almost all of them can exist at any point is a real possibility.

 

Ryan Kerschen:

So first off, we hope this slide helps illustrate not only the types of risks that you might need to account for, but also that risk is multifaceted. Consider that your supply chain consists of not only goods, which may be more susceptible to the effects of an uncertain world, but also your subcontractors, which introduce additional performance risk along with potential disruptions to their unique supply chains as well, add in the unique needs and initiatives of your clients, owners, applicable laws and remaining compliant while meeting the tangible targets of the project can really be daunting.

 

Ryan Kerschen:

One additional thing I’d like to mention regarding the graphic on the right side of your screen is that risk is dynamic, not only in terms of what is facing you and its potential effect, but also where you are in time. If you’re a dot on that diagram, hopefully you find yourself on the periphery of one circle and able to focus on a specific challenge. But keep in mind that at another point in time you may find yourself closer to the middle working to alleviate concerns on multiple fronts. And that comes right back to the poll question you just answered that all of the above are real challenges for you today.

 

Mike Davis:

And I think, Ryan, in parallel or complementary to that, how an individual may move around within an organization or their role may change, which presents a different risk lens and landscape around them, also worth considering, especially prevalent in today’s environment, the dynamic nature of the external world and environment around us and the operating environment for construction and how that may change the landscape of risks. So to circle back on your point, both from a macro and micro point of view, the landscape is always dynamic and always changing and having an understanding of those risks that are prevalent around us. And I think it was really encouraging, the number of all… All risks in the poll was really encouraging because risk is exists everywhere, and often these are what we call sleeping risks in the supply chain that aren’t visible yet, but may exist within your supply network.

 

Mike Davis:

So this is I think, a really good understanding of what strong communication looks like. The concentric circles are the layers of your supply chain, all communicating around various risks on an ongoing basis and providing proof of action. And the Red arrows in the center are your internal communications, sideways across projects and business units and up and down through the organizational hierarchy. Some examples here would be suppliers updating annual insurance certifications or ISO accreditations in the system, or communicating early on potential problems that are actually resolvable if caught on time. And in reality, the only efficient, let alone truly effective way to manage all of these communication channels and store and share all of this communication information is to take a digital platform approach, which results in minimal double handling of common data and a one source of recorded and verified truth on key risks.

 

Ryan Kerschen:

Thanks, Mike. So as we transition from discussing the risks involved with your supply network towards some opportunities for success, and remembering that you could possibly be combating multiple factors at once, it’s also good to consider that the new landscape has probably introduced additional disruptions that may make previous successful adjustments inadequate.

 

Ryan Kerschen:

For example, many of these weaknesses stem from the fact that, as we saw on the previous slide, the disconnect in the supply of materials may be multiple levels deep by the time you feel the impact. You may have had a supplier experiencing a delay in fabrication in the past, you may have been forced to find a new supplier that had better potential to meet those needs of your project, however, when multiple providers in the same category are competing for limited raw materials, your optimism around your previous solution may not meet the current challenge. The same logic applies to your contracts and how you might preemptively work to mitigate risk. Even though you may be extremely covered from a cost and risk perspective, if your supplier sees an unforeseen price or availability shift in their supply chain, your financial protection may be immaterial next to the overall risk to delivering a successful project. But it’s certainly not all downside, let’s take a look at some of the opportunities in the supply chain as well.

 

Mike Davis:

Thanks, Ryan. So as we’ve moved really quickly through this topic, we’ve gained an understanding of what risk, is the construction supply chain and some structural challenges that present in today’s environments. So with all of these risks and challenges, these present also opportunities for improvement and understanding and even competitive advantage. So now we’re going to look at some of what those opportunities look like, and what’s some enablers and tools and systems we can use to leverage those opportunities. I think what’s clear from looking at the slide here is that the effective management of risk is a process and it’s not a product or an outcome that remains static, it’s a fluid process. But much like we looked at previously, that the prevalence of any of these particular touch points may be more or less at any one time. And essentially the management of risk, in particular in supply chain, is a governance framework. And often the ability to leverage real time data when required to make decisions and understand the levels of risk that exist.

 

Ryan Kerschen:

Yeah, I think that’s exactly right. And as we were putting this information together, and one thing I kept coming back to across all these different areas, whether it was the due diligence or even the steady state, I thought a common theme across all of them revolves around the thought that experience and qualifications is a genuine value add when identifying and addressing long term risks, certainly that experience and qualification in your supply base, but also in your own employee base. And from that perspective that can certainly be achieved through the growth of things like shared services, offering a dedicated career path in supply chain or procurement and hiring and cultivating long term multi-project experiences to help inform those challenging decisions. Taking that same thought a step further, if managing risk is about informed decision making, then collecting the necessary data or taking advantage of available metrics can really be a significant contributor to supply chain success. Especially valuable are data sources that are as near real time as possible. The ability to react quickly and learn from your entire portfolio of active projects can really be exceptionally valuable.

 

Mike Davis:

Ryan, I think you’ve introduced a really important element here and that’s the human element involved in understanding and effectively managing risk. And often in organizations and the ecosystem that we operate in, that comes down to strong leadership and leadership driving effective and positive change throughout their organization and the ecosystem that is working on projects. So positive change is not really possible unless all of the affected stakeholders contribute to that change. If the aim of value creation for all parties, so that’d be that industry, clients of industry and society, then it’s a team effort and the team effort manifests as demanding increased transparency and accountability of supply chains, which digitize practices can better enable and vastly improving communication around risk and providing evidence of best practice assisting and supporting the digitization of the industry as a whole. So the question is, where to from here?

 

Mike Davis:

So now what we’re going to talk about is some of the enablers and how in particular technology and our area of specialty Felix and InEight can help enable and leverage some of these opportunities to better manage risk that we’ve talked about.

 

Mike Davis:

So first here’s an interface of Felix. And while our platform is modular, the core deep capability that underpins it is intelligent vendor management. And as I outlined at the beginning, a deep understanding of the third party vendors that we engage with and manage to safely and profitably deliver capital works programs and projects. So here’s just a really sort of zoomed out helicopter view of what a centralized vendor dashboard can look like. And we’ll see just a couple of, I think data points worth noticing on the screen. You can see that different vendors have tags that may indicate sustainability, whether they’re a veteran-owned business, for instance, that they’ve been approved to work for defense work, it can be really anything custom, but again, it’s that quick identifier as decisions need to be made on the fly. We can see that they’ve got an active contract with the business they’re approved or suspended to work with, and even a quick glance at when their next compliance or insurance document has an upcoming expiry, as well as their performance score based on previous experiences or projects that they’ve worked with your organization.

 

Mike Davis:

Again, just drilling into this a little further, and this may be a specific vendor that we work with. So if we look at the screenshots that’s in the background, you can see a range of various criteria that may have been assessed and approved, or is still in flight by all of our subject matter experts within the organization on that particular vendor. So a whole range of data points and information on our vendors to have at our fingertips when we need it to make those informed decision making. And I guess I’ll just summarize in terms of vendor management itself, I think with construction organizations, having a critical dependence on the third party vendors that we work with to deliver projects, often our understanding and information that we have on those vendors has really lacked behind or lagged behind our own internal workforces. So with the shifting operating landscape, whether it’s XPE or ESG targets, third party compliance, there’s a dramatic shift towards effective tools for managing and understanding vendors.

 

Ryan Kerschen:

Yeah. Thanks, Mike. And I think continuing on the tool discussion and transitioning from some of those great things that Felix provides in evaluating your supply chain and selecting the right supplier for your project, there’s certainly inspiration and innovation to be found in many places, but what we’re looking at here is a screen from the InEight contract module, we’ve also found the opportunity to steal good ideas from inside your own company.

 

Ryan Kerschen:

So one area where we have seen a lot of interest recently is in utilizing work packaging concepts from maybe traditional self-perform work for subcontracted scopes. So contracts, at least in their software, ERP counterparts are often limited in detail from what you actually create within the system and manage to really facilitate the payment process. However, by adding the capability to break down those line items into claimable components, we open up new opportunities for subcontractor progress, earned value, easier invoice validation, and bring additional detail and intelligence all the way back through that supply chain process. And this isn’t just a benefit for contractors, subcontractors can benefit from the additional transparency, better tools for them to show progress and easier backup information for invoices. We’ve seen versions of these processes in different parts of the world and starting to see certainly a lot more of it in North America.

 

Ryan Kerschen:

So when discussing what good looks like on some previous slides, we mentioned the value of data and analytics, and one of the most important things, to me personally, when creating software is that every action has two purposes. We want to create tools that allow everyday users an efficient and effective way to perform their tasks like you might have seen on the last screen. But in addition to that, by performing those tasks, we collect the data behind the action and aggregate it across your portfolio. Ideally, you are able to do your job better, and simultaneously, everyone across your company can benefit from the experience. That data can provide valuable insights across your supply chain. What suppliers are more associated with successful projects? Are there particular vendors that are currently in buyout across multiple projects that may warrant additional review for added risk? And you’ve created the information and taking the time to review the analytics, I mean, could prove to be exceptionally valuable.

 

Ryan Kerschen:

So let’s take that data conversation, maybe one step further and just focus on subcontractor and vendor change orders. Again, just by performing your daily tasks within the system, you have created a wealth of data that could benefit current and future projects. Now this is certainly not to say that all change orders are bad, and I think there was even reference on an earlier side that this is just a point of change that we need to learn something from, but they do provide an excellent data point for analysis.

 

Ryan Kerschen:

So consider some of the following possibilities, like, what suppliers have the most change orders? That one seems pretty straightforward, but dive into the drivers for those changes. What markets are experiencing the most change orders? Are those markets constant or are certain markets trending? Are we seeing the effects of supply disruption, and is that propagating in certain markets that we operate in? And if you’re working with a connected data platform, you may also have the potential to analyze how many of your vendor and supplier changes were funded by your client or owner and how many came out of project contingency or margin. So just by focusing on this one area of analytics has the potential to inform better decisions in your buyout and vendor selection, subcontractor scope, and even your prime contract language. So extending that mindset from this one data point to all that potentially available information really could significantly mitigate that risk in your construction supply chain.

 

Mike Davis:

Thanks, Ryan. It’s clear, as you listen to the delivery in the slides, there’s just so much information that’s available to understand and have visibility on risks in the supply network and the ability to effectively source and pass that data and have it inform you is critical.

 

Mike Davis:

So in terms of just bringing us home now, and in summary of what we’ve really quickly covered today, which is such a broad topic, any one of these areas we could have really dived into for a deep exploration, but we presented an understanding of risks, supply chains and supply chain risk in construction and some of the key areas that make up these risks. And how do those risks present opportunities for individuals, individuals within organizations and within their ecosystem to take a challenge, and to your point, Ryan, to what good looks like and how can we tick those boxes and make sure that as an individual with an organization or as an organization as a whole, we’re aware in across, and have visibility in as many risks as possible. And like we said, some of those can exist deeper within your supply network, it could be suppliers of suppliers. So there’s a lot to be across.

 

Mike Davis:

And then we’ve covered enablers. So how can we leverage technology specifically to manage and efficiently and effectively manage the information and provide visibility on the risks, provide a governance framework to effectively manage that risk, and ensure that we’re able to be as productive as possible on our projects and not drowning in the administration and manual processes of sourcing and gathering and passing data. So we’ve covered a lot, and over to you, Ryan.

 

Ryan Kerschen:

Yeah. Thanks, Mike. And that really concludes what we have for you for content today. We greatly appreciate ENR for having us for this opportunity and for all of you for taking the time out of your day to be with us. We have certainly a little bit of time left and we’re going to throw it back to Scott now for any questions.

 

Scott Seltz:

Thank you, Ryan and Mike, that was great information you shared with us today. Before we have you address questions that are coming in from our viewers, I’d like to remind our of viewers that we’d love their feedback. So please take a few moments to complete our webinar survey now, which you’ll see on your screen, or you’ll be directed to at the end of the presentation. And I’m going to give our viewers some time to submit questions. And while I was listening to your presentation and discussion, I had some questions that occurred to me that I’d like to pose to you both. So the first question is, are Felix and InEight working together? How did your relationship start?

 

Mike Davis:

Thanks, Scott, I’ll jump in first here. Yes, we are working together and we’ve got a great relationship that’s formed between the organizations and we see such a great opportunity and complimentary fit without our platforms to take to market. And it’s an interesting story of how we came together, it was actually a tier one multidisciplinary organization that was going to market to solve a really broad scope of requirements for us, and InEight was in invited to participate in that tender. But staffed ranked at the top of their priorities was vendor management and managing vendor risk in their supply chain, they’d had a couple of incidents that they wanted to use as catalysts to solve that burning problem and they actually suggested that InEight and Felix team up for that bid. So that’s what brought us together and it’s blossomed from there.

 

Ryan Kerschen:

Yeah, and maybe just one small thing to add to that. I think one of the things that drew us to Felix as a partner too, was our shared goal of creating that topnotch user experience. Point solutions are fantastic if they do what you need to do, but the appetite to integrate and to tie that together to make the user experience more valuable, I think is really one of the things that we felt could benefit our combined customers really well.

 

Scott Seltz:

Great. Do you plan to integrate your platforms?

 

Ryan Kerschen:

Yeah, absolutely. So we’re actually currently working on some integrations already. We’ve started with our document management product, trying to get the key bidder information that InEight users may be holding there and get it over to Felix for them to use in the bidding process. And once those are done, we’re going to start working on some ties between Felix and the contract management product that you saw a few screenshots of earlier in the presentation.

 

Scott Seltz:

Thank you. My last question, and then we’ll go to our viewer questions. What are some of the emerging risks in construction that you see?

 

Mike Davis:

Scott, I think it’s… Yeah, I’m just thinking on the fly here. And it’s probably worth mentioning, it’s something that we didn’t cover a lot today, but is certainly an emerging trend, not only in construction, but sectors everywhere, is really ESG or governance and environmental. And that may be, the emerging targets and requirements to work with disadvantaged businesses, LEED certification and green construction, there’s a global movement towards net zero. The modern slavery act is coming in many countries.

 

Mike Davis:

So how do these present risks with the need to meet these targets and engage with third party vendors and suppliers of suppliers who ensure transparency in the supply chain and the ability to meet these targets, often that comes with a requirement to continually work with new vendors that we haven’t worked before and have an understanding and visibility of how organizations achieving these targets and the ability to source this data from third party vendors, automate the reporting. So there’s risk in continually working with new vendors that we haven’t worked with before, that presents its risks. And there’s risks in these targets being driven by board down, and that the need to meet these for reputational risk and just organization’s ability to be able to actually have visibility and report on those effectively without drowning in administration is something that we are certainly seeing has got real cut through in the industry and something that organizations and constructions are really prioritizing to address.

 

Ryan Kerschen:

Yeah, and I might even share just a little anecdote on that. I mean, talk about emerging risks, I had a customer share with me multiple stories about suppliers citing material increases, significant material increases after a contract to work. And these were scenarios where, from a contractor point of view, cost and risk was covered, but they no longer felt comfortable just pushing that back on the supplier where they start to look at, do we need a more broad solution with our owners as well? Because if we just go onto the next person, there’s a good chance they won’t be able to fulfill this either. So I think some of the emerging risks are starting to affect that contract language and that the solutions that might have worked yesterday don’t work anymore at this point.

 

Scott Seltz:

Very good. Another viewer asked, have you utilized Monte Carlo risk simulation for construction cost and schedule to help inform decision making?

 

Ryan Kerschen:

I’ve seen a little of that in the past with some previous positions. I think that would be super interesting with some of the data points of today. So I haven’t seen one now that talks about what has happened with the global supply chain, whether it is availability or cost increases. I think adding those new data points, I think it would be very interesting to see how that would look and what that might result in. I haven’t seen one recently, but I think with the new data that’s coming available, as well as those impacts, I think that would be really interesting.

 

Scott Seltz:

Great, thanks. Another viewer’s asking, actually there are two questions here, two viewers are kind of asking the same question. And it’s, do you have any solution for making the manufacturers more accountable for delays and communication regarding such?

 

Mike Davis:

Yeah, I’ll jump in. Thanks, Scott. I think it’s a really important point, and if we just zoom out just from manufacturers as such and I guess all stakeholders involved in the delivery, probably one key point that we didn’t quite make is that everything in construction is time bound and time is obviously money and it’s often delays in projects that cause the greatest cost blowouts and as we know, delays can be cascading and have knock-on effects.

 

Mike Davis:

So, like you said, as the manufacturers, we move through the supply chain and particularly global supply chains at the moment, that is really prevalent. I’m thinking about our tools around procurement scheduling, et cetera, and the sort of organization and centralization of that communication and connectedness with all of the other downstream processes in procurement that exists in Felix. What we’ve really taken there is a traditionally large and sort of offline Excel sheet used by contractors and brought it into the platform. I haven’t seen that quite used with manufacturers yet, but I’m just thinking that conceptually that maybe something where accountability with the manufacturers is brought into that. So it’s a really interesting thought and concept. I don’t know if you had any builds on that, Ryan.

 

Ryan Kerschen:

Yeah, and I think this even speaks to a couple of the questions that have come up. And what we have at least seen or heard from a lot of our customers is the days of maybe the just straight turnkey EPC project are starting to shift a little bit because of these scenarios, and that certain owners have been willing to either participate in some of the procurement activities and that will be a part of that contract, right? So whether it’s considered broader definition of force majeure, which I think has come up in one of the questions, or it has just been getting part of that supply chain linked into the contract itself so those delays produce an automatic extension. I really think there’s… It’s hard to push something on the manufacturer, even though there may be a financial penalty there, if there’s no product, there’s no product. So getting your client involved with that conversation and seeing that we can all kind of work together for that common goal is something that we’ve heard our customers talk about that they are doing with their larger construction projects.

 

Scott Seltz:

Thank you. Another viewer is asking, and this is a big question, any insight on when the supply chain issues will subside to a more realistic timeline, any thoughts on that?

 

Mike Davis:

Nothing that I would confidently put my name to in terms of predicting the markets or operating environment around us. Yeah, it’s so unpredictable. And I think that, unfortunately, in a sense, we’re really having to learn to live with and manage uncertainty around us.

 

Scott Seltz:

Very good.

 

Ryan Kerschen:

Yeah, I’m with Mike on that one. That certainly would be a great question to know the answer too. And I know certain sectors are bouncing back and others are still hoping to adjust, but I’m sure we haven’t seen the end of it.

 

Scott Seltz:

And you did kind of address the force majeure, but I’m just looking at this viewer’s question. And have you heard, Ryan, clients that have actually successfully used that during pandemic induced delays?

 

Ryan Kerschen:

From my understanding, yes. I would have to go back and kind of review some specific instances, but yes.

 

Scott Seltz:

Great, thank you. There’s one question here, I don’t know if you guys can see in the panel, and it’s about regulatory risk.

 

Ryan Kerschen:

Yeah, and certainly those are some really specific areas too, with regards to regulatory risk. But as far, from my point of view, that solution kind of goes back to our, what does good look like slide. And I guess I can even pull that up if I can slide to the right spot here. But the thought being that having an educated and experienced staff is where you start to get ahead of these items. It’s where you start to address not only the changes, but it’s part of these people’s DNA to understand not only the changing complexities of the world, but how to address them. So I think obviously from an owner perspective, they’re going to expect you to be compliant, whether with their own internal targets or regulations that may apply, I think developing that experience staff is where you start to get in front of those items and really make positive change.

 

Scott Seltz:

Okay, there’s [inaudible 00:43:40] question. Are you seeing a difference in willingness to accommodate (reimburse) delayed costs from supply chain issues between US government customers versus commercial clients?

 

Ryan Kerschen:

That’s a super interesting question that I don’t know the answer to. I think that’s one that I’d be willing to do a little look into because we have customers that work in both those realms, but I don’t know that specific answer. So interesting question, but I don’t have that one.

 

Mike Davis:

It’s interesting, actually here in Australia that we’ve seen some governments, not necessarily specifically delays, but if we think about fixed quotes, fixed costs that may have been given on large projects, specifically government projects, and over a period of two or three years by the time that procurement is happening and materials and everything is being sourced, there’s been wildly fluctuating costs. We’ve seen governments here step in and absorb some of that risk and that pricing differential, which depending on the severity of it could really adversely impact a contractor if they were having to honor the time delay of the cost and materials, especially in the current environment. So we’ve seen the government step in here and willing to share some of that risk and make good on that cost.

 

Scott Seltz:

Very good. One last question from a viewer, how many days of material inventory do you recommend to be on site ready for install? Is there an aspirational KPI, two days or three days, et cetera?

 

Mike Davis:

Yeah, I would-

 

Ryan Kerschen:

[inaudible 00:45:41] I probably wouldn’t be… That wouldn’t be in my area to comment on, I think we could certainly talk to some customers and that would be a great one to source, but certainly not my expertise, at least. I appreciate the question.

 

Mike Davis:

Yeah, absolutely Ryan, that would be something that I’d be circling straight to some of our key customers on and they’d be better placed to answer.

 

Scott Seltz:

Sorry gentlemen, I didn’t mean to throw you hard one there.

 

Ryan Kerschen:

No problem.

 

Scott Seltz:

Well, that’s all the questions we’ve received. So please join me once again in thanking Ryan Kerschen and Mike Davis for their presentation, as well as our sponsor, InEight. If you have any additional questions or comments, please don’t hesitate to click the email us button on your console and we’ll share them with our presenters so they can respond directly to you. If you didn’t have a chance to fill it out earlier, you will be redirected to our post event survey at the end of the webinar. We look forward to hearing from you on how to make our programs work better for you. Please visit enr.com/webinars for the archive of this presentation to share with your colleagues as well, as information about our upcoming events. Make sure to tune back in for tomorrow’s webinar, Infrastructure, The Next Mega Trend, How to Maximize The Opportunity, airing at 2:00 PM Eastern standard time. We hope you have found today’s presentation to be a good investment of your time. Thanks again for joining us and have a great day.