The good news: the cargo and transportation snags that have encumbered building material availability this year showed signs of finally easing in September.
The bad news: the lack of material supply and increasing demand for labor are keeping prices high, to the point where manufacturers aren’t willing to hold price quotes for more than a week, if at all.
That, in a nutshell, is the state of the construction market, which the general contractor Consigli lays out in its Market Outlook for October 2021. The Outlook, written by the firm’s Director of Purchasing Peter Capone and Vice President of Preconstruction Jared Lachapelle, sends up red alerts about the availability of six product categories—steel joist, steel deck, MEP equipment, roofing insulation, lab casework, and mineral/rock wool—whose lead times for fabrication after release, as of Sept. 1, ranged from 20 to 40 weeks, with steel joists having the longest wait time.
The Outlook reports a 12 percent average price escalation for the 15 building materials tracked, and anticipates another 3 percent bump through the final quarter of this year. Roofing insulation, roofing membranes, gypsum wallboard, light-gauge metal framing, and glass exceed the overall averages.
As a result of large manufacturers not willing to take risks on escalating prices. “subcontractors are being changed market increases at the time of delivery,” states the report.
![The lead times for several building materials exceeds 20 weeks. Image: Consigli](/sites/default/files/inline-images/Consigli%20October%20Outlook.png)
MANAGING RISK TAKES DISCIPLINE
Consigli’s strategies for risk management include:
•lock in prices with subs that are willing to share risk
•buy in bulk quantities whenever possible
•consider alternative supply sources
•implement stringent quality assurance and control measures
•focus on weekly materials delivery verification
•pre-purchase and warehouse materials
•identify peak manpower needs
•utilize prefabrication that takes labor off site
•partner with trades through design-assist
Consigli thinks labor shortages could get worse in the second half of next year. The severity will depend, in part, on vaccination mandates at a time when a sizable number of construction workers still refuse to be vaccinated. But even a fully vaccinated workforce might struggle to keep pace with construction demand that the pending $1 trillion infrastructure bill, if passed, would further pressure.
The Outlook notes that some manufacturers are focusing their production capacities on commonly used materials like drywall and MEP equipment, which is limiting—and sometimes halting—the production of specialty products. And AEC firms need to be vigilant about maintaining compatibility and quality when manufacturers source products from alternate vendors.
Consigli sees some light at the end of this supply tunnel. Its Outlook notes that steel prices are starting to level off as production increases. But citing the National Roofing Contractors Association, Consigli also cautions that shortages in roofing materials and insulation (whose lead time right now is 24 weeks) will continue through next year because of raw materials supply issues.
Related Stories
Great Solutions | Jan 2, 2019
Net zero construction trailer brings health and wellness to the jobsite
As AEC firms scramble to upgrade their offices to maximize occupant wellness and productivity, Pepper Construction asks, What about the jobsite office?
Building Owners | Dec 18, 2018
More-frequent catastrophes are exposing commercial real estate and properties to potentially higher insurance rates
A new report on the property and casualty market foresees modest rate hikes for construction projects.
Building Technology | Dec 18, 2018
Data and analytics are becoming essential for EC firms competing to rebuild America’s infrastructure
A new paper from Deloitte Consulting advises companies to revise their strategies with an eye toward leveraging advanced technologies.
3D Printing | Dec 7, 2018
Additive manufacturing heads to the jobsite
Prototype mobile 3D printing shop aims to identify additive manufacturing applications for construction jobsites.
Contractors | Oct 26, 2018
How three contractors expanded thin profit margins
If there’s one issue that every contractor is familiar with, it’s the challenge of finishing the job on time and on budget.
Contractors | Oct 26, 2018
Three ways construction leaders harness digital transformation
The construction industry is lagging behind others when it comes to digital transformation. Some construction firms “are still using paper-based processes that can only be described as archaic,” according to a 2016 report by PricewaterhouseCoopers LLP’s Strategy1.
Contractors | Oct 24, 2018
How seasoned construction pros handle the cost of scaling up
Here’s how seasoned operators meet the new demand for homes, offices and new locations without drowning in new expenses.
Contractors | Oct 2, 2018
Nonresidential spending reaches new high in August
Total nonresidential spending stood at $762.7 billion in August, an increase of 8.4% compared to one year ago.
Contractors | Oct 2, 2018
Katerra adds a Denver-area GC to its growing stable
Bristlecone Construction brings self-performing expertise in concrete and framing.
Architects | Sep 14, 2018
We’ve entered the golden age of brain science. What does it mean for AEC firms?
New research from the SMPS Foundation explores the known principles and most recent research surrounding the human brain and behavioral science. The goal: to discover connections between the science and the AEC business.