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.
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
K-12 Schools | Apr 1, 2024
High school includes YMCA to share facilities and connect with the broader community
In Omaha, Neb., a public high school and a YMCA come together in one facility, connecting the school with the broader community. The 285,000-sf Westview High School, programmed and designed by the team of Perkins&Will and architect of record BCDM Architects, has its own athletic facilities but shares a pool, weight room, and more with the 30,000-sf YMCA.
Market Data | Apr 1, 2024
Nonresidential construction spending dips 1.0% in February, reaches $1.179 trillion
National nonresidential construction spending declined 1.0% in February, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.179 trillion.
Affordable Housing | Apr 1, 2024
Biden Administration considers ways to influence local housing regulations
The Biden Administration is considering how to spur more affordable housing construction with strategies to influence reform of local housing regulations.
Affordable Housing | Apr 1, 2024
Chicago voters nix ‘mansion tax’ to fund efforts to reduce homelessness
Chicago voters in March rejected a proposed “mansion tax” that would have funded efforts to reduce homelessness in the city.
Office Buildings | Mar 27, 2024
A new Singapore office campus inaugurates the Jurong Innovation District, a business park located in a tropical rainforest
Surbana Jurong, an urban, infrastructure and managed services consulting firm, recently opened its new headquarters in Singapore. Surbana Jurong Campus inaugurates the Jurong Innovation District, a business park set in a tropical rainforest.
Cultural Facilities | Mar 27, 2024
Kansas City’s new Sobela Ocean Aquarium home to nearly 8,000 animals in 34 habitats
Kansas City’s new Sobela Ocean Aquarium is a world-class facility home to nearly 8,000 animals in 34 habitats ranging from small tanks to a giant 400,000-gallon shark tank.
Cultural Facilities | Mar 26, 2024
Renovation restores century-old Brooklyn Paramount Theater to its original use
The renovation of the iconic Brooklyn Paramount Theater restored the building to its original purpose as a movie theater and music performance venue. Long Island University had acquired the venue in the 1960s and repurposed it as the school’s basketball court.
Green | Mar 25, 2024
Zero-carbon multifamily development designed for transactive energy
Living EmPower House, which is set to be the first zero-carbon, replicable, and equitable multifamily development designed for transactive energy, recently was awarded a $9 million Next EPIC Grant Construction Loan from the State of California.
Museums | Mar 25, 2024
Chrysler Museum of Art’s newly expanded Perry Glass Studio will display the art of glassmaking
In Norfolk, Va., the Chrysler Museum of Art’s Perry Glass Studio, an educational facility for glassmaking, will open a new addition in May. That will be followed by a renovation of the existing building scheduled for completion in December.