Prices for most construction materials have seen significant increases since the spring of 2020, according to a comprehensive report just issued by the Associated General Contractors of America.
The report, 2022 Construction Inflation Alert, notes that gypsum building materials and plastic construction products have recorded increases of 44% and 55% respectively.
Other materials, after initial 2020 and 2021 increases, have in recent months decreased somewhat, although still higher than where they were when Covid-19 first hit: steel mill products are up by a significant 124%, but that’s down from the 140% increased recorded late last year.
Lumber and plywood products, meanwhile, have been on a particularly uneven ride, increasing by 120% as of early last year, then dropping to a less than 40% increase in late 2021. As of last month, lumber and plywood were up by 61% over the spring of 2020.
The report notes that besides the price of materials, supply chain issues have been endlessly challenging builders, beginning in early 2020 when “factories in China and northern Italy were shut down, causing shortages of items as diverse as elevator parts, floor tiles, and kitchen appliances.”
As of early this year, “another round of covid-related restrictions in China disrupted production and shipping from that country.”
Meanwhile, says the report, a combination of Russia’s attack on Ukraine and international countermeasures against Russia has resulted in a decrease in such items as “pig iron used in steelmaking, neon for lasers used in semiconductor manufacturing and other applications, and Ukrainian clay used in producing ceramic tile exported to the U.S. from Italy and Spain.”
The report additionally notes that contractors have been hit with hourly wage increases of 17.5% as of June, even as job openings have seen a 39% increase from May of last year to May of this year.
Against such headwinds, the AGC report recommends that contractors should “provide project owners with timely and credible third-party information about changes in relevant material costs and supply-chain snarls that may impact the cost and completion time for a project that is underway or for which a bid has already been submitted.”
The report additionally suggested that owners and bidders may want to consider including price-adjustment clauses in contracts, while also discussing the “best timing for ordering materials and components.”
“Buying items earlier than usual can provide protection against cost increases,” the report adds.
By Garry Boulard
