The construction sector is going through a period of unprecedented change that has led to a number of builders going into administration in recent months, sending fear through many Australian families who are building new homes.

We understand this is a concerning time and we want to assure our customers that Oreana Homes has a range of strategies in place to mitigate impacts and deliver our projects.

WHAT HAS HAPPENED?

COVID-19 dealt a severe blow to supply chains globally, not just for construction, but across all industries.

During the pandemic, the government introduced substantial financial incentives for consumers to utilize in an attempt to keep the construction industry running, coupled with the promise of lower interest rates, many Australians opted to take up the incentive and build a new home.

However, at the same time, the pandemic shut down trade and manufacturing across the globe for many materials such as timber, steel, cement, plaster, appliances, etc, and while trade has resumed, there is a lot of catching up to do.

The current war in Ukraine, which was ignited in February this year, has also exacerbated supply problems, particularly for timber, as a large portion of Australia’s timber supply actually stems from Russia and the Baltic region.

All this has led to a cocktail of issues in the construction sector with builders struggling to fulfill work orders and meet deadlines.

In fact, Australia has seen the largest ever increases in house construction costs according to the Australian Bureau of Statistics, up 17.3 per cent across the nation in the 12 months to June 30.

Research from CommBank has shown 48% of construction businesses have experienced supply chain difficulties.

WHAT WE’RE DOING

There’s no easy answer to the supply chain problems, and no project, no matter how well planned, is risk free.

However good planning and policy can help to mitigate many of the issues.

Here at Oreana Homes, we have an expert team working constantly to update and analyse our risk matrix to ensure we’re equipped to deal with any problems that we see may eventuate, so we stay ahead of them.

The matrix maps suppliers, identifies risks and potential solutions in the event a supplier cannot deliver.

The financial, technical, and environmental risks to a project are then ranked on a scale of probability and severity. The most severe and likely risks are managed first while the least likely and least severe threats are prioritised last.

This ensures we can plan and have a strategy in place and ready to enact for all manner of risks to the supply chain but especially the most severe.

We constantly update and reassess the matrix as the supply chain evolves and changes.

Our other actions include:

• Implementing forecasts of material requirements for sites and staggering ordering when appropriate
• Extending the life of equipment/assets particularly when there is a lag when ordering replacement equipment
• Considering adequate alternative materials where there is a shortage
• Creating a vibrant staff culture so staff want to stay and work in the business
• Seeking out new suppliers where there is a risk of delivery failure

WHERE TO FROM HERE?

An effective supply chain management approach is one that is both innovative and resilient and that is exactly what we stand for at Oreana Homes.

We do absolutely everything we can to deliver on time and on budget and if there is an issue, we’ll work through it, and come through stronger at the end.

It is pleasing to see green shoots emerge in the supply chain with signs timber shortages are starting to ease as construction comes to an end on the latest wave of new houses brought on by the Federal Government Home Builder grant.

Although supply and labour issues will remain an issue until at least the end of the first half of 2023, we can see that industry momentum is moving in a positive direction. Our focus continues to remain on delivering new, quality-built homes in the best possible time frames for our partners and clientele.