Dealing With Rising Construction Materials Costs

construction  materials costs

Overall costs are lower than they’ve been since 2010 for the construction industry. But construction materials costs are rising. In August 2020, we saw the largest increase in lumber prices since 1949. Some of the rising costs can be attributed to:

  • Construction demand is greater than mills’ current production capabilities.
  • DIY (do-it-yourself) renovation projects increased among at-home homeowners.
  • Mills closed due to pandemic; those that remained open saw a dramatic demand reduction.

5 Strategies for Managing Construction Materials Cost

With no end in sight to the pandemic and international tensions running hot, construction materials costs will continue to rise for the foreseeable future. Anirban Basu, Associated Builders and Contractors

You can’t control higher construction materials costs but you can better-manage construction project materials:

1. Bulk shipments – Large orders for materials needed at different phases of the project lead to:

  • Potential damage from moving materials repeatedly
  • Shuffling materials around
  • Time lost trying to find where materials are stored
  • Unplanned deliveries

Ask your distributor(s) to work with you to break down deliveries according to contractors’ needs.

2. Inventory – The number of hours we lose locating and retrieving materials is amazing. We also tend to over-order because running out of something presents more challenges than having too much of anything. Every day, crews lose time making lists of needed materials and stopping work to retrieve ordered materials. This is a key project planning area construction management teams can improve upon.

3. Pre-work kits – Encourage distributors and contractors to package materials in customized kits for faster delivery and onsite installation. This also reduces waste.

4. Update cost estimates/plans regularly – Changes in construction materials costs need to be factored into the project as soon as possible.

5. Use construction management software – When a contractor needs additional materials, shared software alerts workers of the possible change in project scope. It can eliminate miscommunication.

Construction materials costs are leading to newer – better – construction industry materials. And technology is driving development. Construction Monitor has been a leading provider of analytics for the construction industry since 1989. Ask us how we can customize data to make it work for you.

4 Tips for Maintaining Relationships with Your Construction Suppliers

construction suppliers

Your construction business depends on several factors for success. Four of them include:

  1. Diligence – Regulatory agencies and insurance claims are managed through documentation. Lawsuits are not uncommon to a construction business, and your documentation can make or break a litigation.
  2. Management – No one person needs to manage everything. But everything must be managed, from A (architects) to Z (zax).
  3. Technology Managing information to increase opportunities is relatively new to the construction industry. The leaders in your field use a technology advantage to stay on top.
  4. Transparency – You want construction business operations visible to stakeholders and project management. This is reassurance that efficiency and employee satisfaction are part of your strategy.

Supplier Relationships Also Drive Success

Good supplier relationships may lead to favorable prices,
generous terms, improved availability, and even the
occasional buyback
. –Armando Roggio, Marketing Professional

Every construction business depends on suppliers. Your reputation for quality, quick turnaround, competitive pricing, and customer service depends on your suppliers. When your brand is on the line, supplier relationships can prove very beneficial.

1. Be knowledgeable

Know your purchasing history, compare it to economic history, and if you have a new construction business, get that information from similar businesses. Your suppliers will have a better understanding of what and how much to order. When you plan ahead, they can too, and this prevents supply chain bottlenecks.

2. Demonstrate professional courtesy

Be patient with supply chain problems; at least as patient as you’d want your clients to be when you’re in the same situation. Rather than complain about the problem, work to be part of the solution.

3. Enjoy the relationship

When placing an order, take the time to enjoy the conversation. Let your suppliers know you value their friendships.

4. Pay promptly

If you’re slow to pay, suppliers will save their best deals and the largest amount of negotiation leeway for other customers. When you’re dealing with a financial crunch, suppliers may give you longer to pay because you’ve proven you can pay on-time.

Construction Business Growth is Our Business

We take the time to collect and sort business permit data so you don’t have to. Instead, put this data to work for you. Call 800-925-6085 or contact Construction Monitor

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