What Rising Material Costs Means for the Construction Industry

By Jeff Dinardo
What Rising Material Costs Means for the Construction Industry


The spike in material costs is hard to miss, and it's beginning to affect everyone in the construction industry. Many construction companies are having to face the pressure brought on by the cost escalation issues.

Estimating departments in companies like Turner Construction (ranking first or second in the major segments of the building construction field) are having to effectively serve their clients while managing the market risks tied into materials like hollow metal doors and frames.

One article wrote that "materials prices rose at a 16.5% annual pace in the first four months of 2008" (Read the full article here). And the reason? Easy, the same reason we all dread the next time we have to fill up our gas tanks--the soaring energy and petrochemical prices.

So what does this mean for us in the construction industry? Brand names like Yale, Stanley, LCN, and others who depend on steel and aluminum are all having to reevaluate their prices. Contractors taking on projects for the education, healthcare, commercial, and general building industries are having to budget for the first major inflation in years.

It used to be a no-brainer to throw down a general price for closers, hinges, locksets, and other door hardware. But now there is a pause in the process. There have been so many price adjustments since the beginning of the year, that many companies are having to take more time to accurately budget out their jobs.

And the ascending costs seem to be far from their peak. The last major price increase for construction materials was in 2004. At that time the inflation continued to go up for 22 months. The current situation is looking at a length of time much longer. It all depends on when the demand of our core resources, oil and ore meets the available supply. Only then can we expect to see a plateau of building material costs.

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