The global pandemic has impacted every industry, and many are still dealing with the effects. For Mowery (and the entire construction industry), one of the biggest challenges is an unprecedented supply shortage and rapidly dramatic price increases.
In fact, according to the Q4 2020 U.S. Chamber of Commerce Commercial Construction Index, 71 percent of contractors are facing a shortage in at least one type of material. With material shortages in lumber, steel, and concrete to name a few, not only are these scarcities driving price increases, but they are also delaying project timelines. With indicators showing no end in sight for these current challenges, it is critical for general contractors and project owners to work together to achieve the best result.
The Increase of Material Costs
Over the past year, manufacturers from all over the world have slowed down production for a variety of reasons including COVID illnesses in the workplace, government directives for mitigating the spread of the virus, and other related concerns. Even after the shutdown, manufacturers were often unable to bring workers back at a normal scale.
This was not the case for the construction industry. After restrictions were lifted, projects quickly started back up at a rate no one could have predicted. Materials were being consumed faster than they were being produced causing depletion and prices to soar. A few examples of material price increases as of April 28, 2021 highlight this issue (likely these have gone up since the publishing of this blog):
- Lumber costs have increased by approximately 340 percent.
- Steel prices are up approximately 173 percent.
- Concrete costs have increased by about 25 percent.
This trend has not only been felt by Mowery, but contractors at every level of the industry.
The Impact on Timelines
Not only are material cost increases being felt by everyone in the construction industry, so are project delays. In fact, according to the U.S. Chamber of Commerce Commercial Construction Index, 83 percent of contractors are facing product delays. For example, building materials that would have been delivered in 7 to 10 weeks are now out over 30 weeks. This has caused 71 percent of contractors to struggle to meet their original project timelines. Current trends show product delays could continue well into the third quarter of 2021 or longer.
We’re Committed to Delivering a Remarkable Experience
At Mowery, our promise is to always deliver a remarkable construction experience, which is why we have put additional processes in place to mitigate these challenges as much as possible. Our initiatives include:
- During the preconstruction phase, our team completes additional estimating, reducing the need for repricing and prepares detailed schedules taking into consideration material delays. This allows us to provide the most realistic budget and project schedule for clients.
- We research alternative material options that provide the same quality with better pricing or quicker delivery to help keep projects on time and on budget.
- Our team has broadened the search for vendors and subcontractors to gain access to the best material pricing and delivery times.
- We have also remained flexible and are adapting projects as needed to access available materials and control costs.
With over 95 years in the industry, we have developed strong relationships with our vendors. We are leveraging these relationships and our material purchase history to position ourselves higher in the queue for product distribution.
During these unprecedented times, our team communicates with the project owner to educate them on the impact these trends are having on the industry, not just Mowery. This includes discussing material options and timelines to make decisions together that will lead to a remarkable result.
To learn more about material pricing and supply delays or to have your questions answered, start a conversation with our building professionals today.