Since 2020, supply chain disruptions and increasing building costs have continued to be the top two issues within the construction industry. The impact can be felt when purchasing anything from food and gas, to trucking and commodities. Across all markets within the United States, no one is exempt from these issues.
In particular, electrical gear and components are commanding the longest lead times with some gear orders taking as long as 60-72 weeks for delivery. One way to solve this issue is for the general contractor, designers, MEP engineers, electrical subcontractors, and suppliers to collaborate to find ways to design projects using equipment that does not require a longer lead time than the overall project timeline will allow. While this is one way to manage through supply chain issues today, this is an issue that is expected to remain for the foreseeable future.
The construction industry was hit hard during COVID by skyrocketing wood prices but over the past year, they have begun to stabilize. On the other hand, products ranging from cement, steel and asphalt shingles, to petroleum-based products such as caulking, piping, and glues, have been on an upward trajectory. Referencing the Producer Price Index for Building Material and Supplies Dealers, the index has remained fairly consistent since October 2022 signaling a broader stabilization throughout the industry which could potentially drive prices lower into 2024.1
In addition to fluctuating material prices, a shortage of labor and increasing labor costs are also significant contributing factors to the increases in building costs. Depending on the market and region within the United States, hourly rates for construction professionals can range from $24 per hour to as much as $35 an hour. Workers specializing in areas such as pipefitting, carpentry and electrical work can often command hourly rates that are even higher.
But while labor costs may be more difficult to manage, there are several ways contractors can reduce project costs. One is to implement an internal tracking system that allows for real-time monitoring of material costs and availability. With this insight, materials for upcoming projects can be purchased in advance and in bulk at a lower cost. Putting a just-in-time ordering process in place will also help to reduce overspending and provide the necessary tools and supplies as they are needed onsite. Finding ways to reuse and recycle waste from construction sites is both healthy for the environment by reducing landfill waste and also saves money on removal costs.
Since 2020, supply chain disruptions and increasing building costs have continued to be the top two issues within the construction industry. The impact can be felt when purchasing anything from food and gas, to trucking and commodities. Across all markets within the United States, no one is exempt from these issues.
In particular, electrical gear and components are commanding the longest lead times with some gear orders taking as long as 60-72 weeks for delivery. One way to solve this issue is for the general contractor, designers, MEP engineers, electrical subcontractors, and suppliers to collaborate to find ways to design projects using equipment that does not require a longer lead time than the overall project timeline will allow. While this is one way to manage through supply chain issues today, this is an issue that is expected to remain for the foreseeable future.
The construction industry was hit hard during COVID by skyrocketing wood prices but over the past year, they have begun to stabilize. On the other hand, products ranging from cement, steel and asphalt shingles, to petroleum-based products such as caulking, piping, and glues, have been on an upward trajectory. Referencing the Producer Price Index for Building Material and Supplies Dealers, the index has remained fairly consistent since October 2022 signaling a broader stabilization throughout the industry which could potentially drive prices lower into 2024.1
In addition to fluctuating material prices, a shortage of labor and increasing labor costs are also significant contributing factors to the increases in building costs. Depending on the market and region within the United States, hourly rates for construction professionals can range from $24 per hour to as much as $35 an hour. Workers specializing in areas such as pipefitting, carpentry and electrical work can often command hourly rates that are even higher.
But while labor costs may be more difficult to manage, there are several ways contractors can reduce project costs. One is to implement an internal tracking system that allows for real-time monitoring of material costs and availability. With this insight, materials for upcoming projects can be purchased in advance and in bulk at a lower cost. Putting a just-in-time ordering process in place will also help to reduce overspending and provide the necessary tools and supplies as they are needed onsite. Finding ways to reuse and recycle waste from construction sites is both healthy for the environment by reducing landfill waste and also saves money on removal costs.
