Across the construction industry we are seeing escalating prices in both materials and labor. Not only is this affecting contractors’ abilities to accurately bid the price of materials, it is also affecting the supply chain, which is subsequently throwing a wrench into project timelines.
Steel and copper have faced a shortage of supply. Lumber, PVC and insulation are also facing supply and demand imbalances. These, on top of increased tariffs and issues due to some companies hoarding supply, have caused a spike in materials prices.
Solutions to Rising Construction Materials Costs
Fluctuations in materials costs is nothing new in construction, but the past two years have certainly been more tumultuous than most. Part of being able to effectively weather the ups and down of new construction costs is to simply be aware of the market.
Your general contractor should be a key resource in helping you understand how things are currently priced and help you better plan and predict where things are headed so you can more effectively mitigate risk. They should also be able to suggest cost-wise material alternatives that will still meet your same needs and project objectives.
Contract Provisions to Look For When Evaluating Budget & Goals
For project owners, an important area to pay attention to during the project bidding phase is any qualifications included in the proposal. There may be statements addressing material prices and/or shortages. Make sure you understand them and ask detailed follow-up questions if you don’t.
As you closely evaluate the project bid, you may notice a force majeure clause in a contractor’s contract. In general terms, this provision relieves parties from their contractual obligations when certain circumstances outside their control arise. An example may be when an unanticipated situation would make it inadvisable to continue with the project.
The contract might also include a material price escalation clause. If the difference between the price of materials quoted and the price of materials when delivered go beyond a specified threshold (generally denoted as a percentage), the contractor may be allowed to request a change order to adjust the price for those materials.
Price escalation clauses offer protections to project owners in the event of unforeseen price increases. GCs take on more risk with the price escalation clause, but it also allows them to prepare a more accurate bid based on current costs rather than inflate them (perhaps unnecessarily) so they will be protected in the future.
Supply and demand has always had a big impact on materials cost for construction projects in Florida, but when you partner with an experienced general contractor or owner’s rep who has navigated market fluctuations for years, you can feel confident that your expectations and outcomes will be in alignment.
For questions about the current state of commercial construction in Florida, get in touch with our team at Seacoast Construction.
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