Why Construction Material Costs Are Still Rising and What We Can Do About It

Construction Process

Construction Material Costs

We’re sure you’ve heard about the current shortages, long delays, and price spikes in construction materials as a result of the pandemic. 

At the end of 2020, the U.S. Chamber of Commerce Commercial Construction Index reported that an astounding 71% of contractors were facing a shortage in at least one type of material. Looking further, 52% of 1,489 AGC member contractors have reported a project delay due to a shortage of construction materials, parts, or equipment. And some materials, such as lumber, have increased as much as 170% in price throughout the process.

The issue has grown unexpectedly and quickly, and many industry professionals are unsure of where to go next in dealing with the shortages and price spikes while demand is only growing. It’s important to understand everything that is contributing to the problem to recognize where we can go to help remedy it.

Why the Construction Materials Crisis is Happening

From the outside looking in, it may be easy for one to think that the increase in price of construction projects is to make up for a lack of business as the economy took a big hit since the start of the pandemic. However, it’s quite the opposite.

The industry is trying to find a balance between the surge in demand for new projects and supplies becoming more limited and therefore, more expensive. Contractors have to bill in reflection of the price of the materials that the project requires.

These materials are increasing in price for their own set of reasons:

  • Delivery methods have become limited. Container and trucking shortages across the nation have also contributed to a decrease in avenues for construction materials to get from one place to another, causing significant lead time issues. 
  • The supply chain is turning to regional sources. Many local contractors rely on global manufacturers to provide specialty materials for their projects. But in today’s world, these sources are either heavily delayed or unavailable, so contractors are turning to regional suppliers who already offer limited availability and putting a heavier demand on their resources.

Another large underlying issue that the industry is currently facing involves the extreme labor shortage. Timelines are being pushed with the limited amount of manpower available on the jobsite, in addition to the problems mentioned above. 

What Contractors Can Do

To help in the current situation the construction industry is facing, a main driver in sticking to scheduled project timelines, efficiently maximizing your available labor, and utilizing your resources and supplies effectively is prefabrication, or modular construction.

The prefabrication process in the construction industry involves constructing subcomponents of a structure within controlled environments and bringing them to the jobsite as whole pieces for further completion of the project.

The benefits of using this method include:

  • Significantly less waste. Building materials are stored, used, and put together without being exposed to weather elements that could cause damage and leave them to be wasted. 
  • Accelerates timelines. Similarly, weather can negatively impact turnaround times and steps in the process by causing unwanted delays. When working exclusively out of these conditions for a large portion of the project, this is avoided. Other parts of the project can be happening at the jobsite or at another facility at the same time, as well.
  • Maximizes labor availability. Prefabricated processes typically offer much safer environments for construction workers, avoiding injuries that could decrease their availability. Working in controlled environments also leads to an increase in efficient labor.

All of these factors can easily contribute to keeping your construction project on the right track, the whole way through, balancing some of the current issues that are tipping the scale in the wrong direction.

What the Supply Chain Can Do

Before COVID-19 struck our nation, many of our supply chain organizations were utilizing a “just-in-time” business model. They were used to the steady demand in resources and materials without expecting a major spike to happen.

This past year has put a spotlight on the need for resiliency in the supply chain. We have a unique opportunity to learn from this experience. Building a resiliency plan is essential in being prepared for major disruptions to occur. This includes reevaluating business models, processes, and workflows and building manufacturing and distribution facilities to help alleviate the vulnerabilities that led us to this major shortage in supply for construction materials.

How to Guarantee a Secure Construction Project

Despite the challenges that the construction industry is facing, GALBRAITH/Pre-Design, Inc. is devoted to providing the highest quality service, efficiency, and trust in each of our construction, renovation, or pre-design projects. We’re proud to utilize sustainable, efficient, and cutting-edge technologies and processes to stick to timelines and exceed expectations, while developing relationships with the most-reliable suppliers on the East Coast. Contact us today for a FREE consultation!