Construction material costs increased an estimated 20 percent last year, and the outlook for 2022 doesn’t look much rosier. Supply chain issues caused by the coronavirus pandemic continue to impact the price and availability of essential resources, elements and parts. Around the world and across the country, COVID-19 continues to impact the construction industry as concerns about new variants influence production schedules and building timetables for suppliers and contractors alike.
Even with all the market uncertainty, though, AEC professionals can mitigate some of the risk by incorporating management practices that increase cost-saving opportunities on projects:
Periodically review budgets as a team: Budget-centric meetings become more important when prices fluctuate. Reviewing budgets as a team increases accountability among various members, and it also provides the opportunity to use multidisciplinary skills to examine different solutions. Transparently discussing challenges and concerns on a project encourages brainstorming among peers to find fixes. Harnessing the knowledge and experience of your team promotes integrated approaches to problem solving instead of relying simply on one department or specialty.
Examine cost-escalation clauses in contracts: The fine print can cost you money. Whether it’s the agreement between a GC and a building owner, or a subcontractor and a supplier, the agreed-upon manner for addressing cost increases means someone’s responsible for unforeseen overages. You don’t want that to be you. Previous boilerplate language in contracts may have adequately and equitably addressed cost changes in “normal” non-pandemic conditions, but continuing delays in the supply chain and prices that can dramatically fluctuate daily requires a re-evaluation of how these additional costs are absorbed.
Plan to save: The earlier you can secure materials, equipment and manpower to be on-site at the required time, the more likely you’ll be to get them at a favorable price. Early planning widens the window for negotiating with subcontractors and suppliers: people like the certainty of an upcoming job rather than fretting unwanted down time. Planning doesn’t just improve procurement prices; it also gives you the opportunity to utilize more prefabrication and kitting, which removes the need for costly on-site work by moving it to the controlled environment of a prefab shop.
Schedule a time with an expert to learn more about saving costs on your next project.