State of the Construction Industry: October 2021…
According to recent data from the Associated General Contractors of America, contractors paid much higher prices for construction materials over the past 12 months than the prices they’ve charged on construction projects and construction contracts.
The association noted that from September 2020 to last month, the prices that producers and service providers such as distributors and transportation firms charged for construction inputs jumped 17%. The producer price index for new nonresidential construction—a measure of what contractors say they would charge to erect five types of nonresidential buildings—rose 5.2%.
“Construction materials costs remain out of control despite a decline in some inputs last month,” said Ken Simonson, the AGC’s chief economist. “Meanwhile, supply bottlenecks continue to worsen.”
The AGC, along with other construction organizations, is urging the White House to end trade tariffs with other countries-many enacted during the previous administration, as well as put measures in place to help shipping ports, transportation companies and more overcome current supply chain backlogs.
The Takeaway: Like the labor challenge, rising material costs and supply chain issues have had a crippling effect on the construction industry. Hopefully, governmental measures will help, though ultimately, many of these cost and supply issues are tied to the pandemic itself. That’s why many contractors have upgraded their operational software and technologies to help them become more agile and efficient when it comes to labor, equipment and materials. Real-time data and tracking, cloud-based workflows and more are helping contractors not only eliminate material waste, but find the best prices available to them from larger pools.