These days you can’t scroll through LinkedIn or Twitter or watch the news without hearing about extreme price volatility and difficulties in material procurement in virtually every industry, and all around the world. The construction industry is feeling the impact, and it will be essential for all stakeholders (clients, general contractors, subcontractors, material suppliers and consultants) to work together to alleviate the risks and challenges.
The Ottawa Construction Association (OCA) recently shared the follow table with members (based on data from the US Bureau of Labour Statistics Producer Price Indexes), demonstrating the increase in material costs over the past year:
If you’re preparing to build or renovate, planning as far as you can in advance is pivotal to ensure you aren’t caught out by shortages or price escalation. Terlin can help.
The best way to mitigate the challenges is for us to work in collaboration with you and your design team during the pre-construction phase of your project. Your design should be developed with as much flexibility as possible, in terms of budget, schedule and materials. This will help avoid getting locked into solutions and materials that may not be available once the project is tendered. In addition, if you are prepared to pay for materials in advance, you can mitigate the risk of price volatility and supply shortages.
The OCA also shared the following strategies as a starting point for clients as they are planning their upcoming projects:
- Ensure your project budget is in alignment with the current landscape before tendering.
- Award projects quickly, and with sufficient lead time built in for procuring materials and confirming subcontractors.
- Plan your project with all parties in the subcontractor and supply chain as early as possible. Communicate early and regularly.
- Set a realistic project completion date. Listen to your contractors during the bidding stage.