A High Price to Pay: What Contractors Can Do About the Cost of Construction Materials

There are several reasons for the high prices, including inventory shortages, manufacturing issues, supply chain disruptions, wildfires, tariffs, and the strong demand for materials. And worst of all, no one knows how long this will last. But one thing is sure—contractors must be on top of their game to keep their businesses moving forward.

June 28, 2021 | Contractor

By: John L.

I bring over 35 years of experience in the construction industry in both field and office positions to Acuity including carpentry, welding, project management, contract negotiation, and much more. Also, I founded my own commercial general contracting firm specializing in building grocery stores. Over the years I’ve worked closely with architects, civil engineers, and developers. I’ve found it instrumental to build solid relationships with all involved in the construction project, including insurance companies. This is why I am here, I want to help you the contractor better understand insurance and help Acuity to offer products and services that meet your unique needs. I feel a close connection to construction and with my background I feel that I can make sure contractors have a better insurance experience.

In my 40 years in the construction industry, I have never seen anything like the shortages and rapid price increases of building materials that are occurring today.

Listed below are a few tips to consider in these unprecedented times:

Stay in contact with your suppliers for weekly updates on material prices and availability. Your suppliers are also in communication with other contractors in your area who are in the same boat. You may pick up a tip or two from them.
Research different options for materials and lead times for delivery. This can include interior and exterior finishes as well as roofing. For example, you could consider prefab framing components versus traditional stick framing, precast versus block versus pre-engineered, steel versus wood studs, or trusses versus post and beam.
Your bid process is critical this season. You may need to shorten the time to hold your pricing from 90 or 120 days to 30 days. Shortening the project schedule from 16 weeks to 13 weeks may also help.
Contracts are very important. A construction attorney can help with drafting and understanding them, especially when it comes to contingencies for material cost increases, which may be drafted under a force majeure clause.
Upfront communication with your client can help create a win-win situation. Being transparent about the industry situation can help avoid problems with price increases or material delays. Understanding your clients’ needs and desires can help you formulate options to present to them. They may want to complete the project in phases.
Relationship capital can be leveraged to explain the situation to the right person. An established working relationship can speak to your character, integrity, and value. Use it—you’ve worked hard to develop it.