Building material prices and their associated issues have made headlines in recent months, and with good reason. Not only are lumber, steel and related materials harder to come by, but those who do manage to access them find themselves paying more out of pocket than in the past. (And by a steep margin, too.) What are the factors behind the recent shift, and how are they affecting today’s construction projects? The FUSED blog digs into the issue.
The Issues Behind Building Material Prices & Availability
The COVID-19 pandemic has affected people’s ability to source everything from gasoline, to building materials — and even fried chicken. The precise reasoning behind the various shortages, however, will differ. Let’s take a look at the issues surrounding two key elements likely to impact your construction projects:
- Steel Shortages: Lockdowns early on in the COVID-19 pandemic led to a drastically decreased demand for steel. As such, steel mills everywhere chose to sell off their product — and some took the added step of shuttering operations completely. While such decisions took an estimated 2.9 million tons of the material off the market, the issue was later compounded by labor strikes and curbed steel imports. As restrictions loosened and construction and manufacturing companies began to see an increase in jobs, those steel mills that were in operation found themselves working at breakneck pace to meet that pent-up demand.
- Lumber Shortages: In anticipation of a pandemic-related housing slump, sawmills all over found themselves closing their doors in spring of 2020. When that slump never hit — but, in fact, shifted to substantially increased demand on the housing market — those mills faced a demand they simply couldn’t meet. On top of the pandemic-related surge were environmental factors that had been building up over time but compounded the issue. Beetle infestations and historic wildfires put added strain on an already threatened commodity.
Keeping Projects Rolling Amid Availability Issues
Availability concerns aside, there is still work to be done. The issue becomes how to go about such work in ways that won’t break the bank or face outlandish timeframes. Here are a few considerations that can help keep your work moving forward — and budgets in check.
- Plan Projects Accordingly: Place materials orders well in advance to allow for added lead time. Whenever possible, tackle any work unaffected by ongoing issues before starting on that which might include obstacles. You might even consider dividing projects into phases — knocking out your most important work right here and now, while booking less vital projects months down the line at times these issues might be resolved.
- Factor in a Bigger Budget: Your construction company will likely do their very best to keep projects within price perimeters, but increased materials costs affect them, too. In fact, lumber prices rose more than 250% in the past 12 months. Put simply, many (if not most) projects you take on will cost more than in the past. We recommend working closely with your construction company to work out a project plan that works for you (and your bottom line).
- Allow for Flexibility: Market conditions change all the time, and it is impossible to know exactly how a particular project might be impacted. Lay out a desired budget and timeline with your construction company, but be prepared to factor in some wiggle room. Ideally, they will keep you in the loop every step of the way regarding where your work stands — and when it will reach completion. Open conversation is always important, but especially during times like these.
Modern-day issues affecting building material prices and availability might be frustrating, but they won’t last forever. If you have questions on any of the above, or if you’re interested in learning more about how FUSED can help with your next industrial, civil or commercial construction project, feel free to contact our company. Our construction pros are here to help