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
Giants 400 | Oct 30, 2023
Top 80 K-12 School Engineering Firms for 2023
AECOM, CMTA, Jacobs, WSP, and IMEG head BD+C's ranking of the nation's largest K-12 school building engineering and engineering/architecture (EA) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report.
MFPRO+ Special Reports | Oct 27, 2023
Download the 2023 Multifamily Annual Report
Welcome to Building Design+Construction and Multifamily Pro+’s first Multifamily Annual Report. This 76-page special report is our first-ever “state of the state” update on the $110 billion multifamily housing construction sector.
Giants 400 | Oct 23, 2023
Top 115 Multifamily Construction Firms for 2023
Clark Group, Suffolk Construction, Summit Contracting Group, Whiting-Turner Contracting, and McShane Companies top the ranking of the nation's largest multifamily housing sector contractors and construction management (CM) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report. Note: This ranking factors revenue for all multifamily buildings work, including apartments, condominiums, student housing facilities, and senior living facilities.
Senior Living Design | Oct 19, 2023
Senior living construction poised for steady recovery
Senior housing demand, as measured by the change in occupied units, continued to outpace new supply in the third quarter, according to NIC MAP Vision. It was the ninth consecutive quarter of growth with a net absorption gain. On the supply side, construction starts continued to be limited compared with pre-pandemic levels.
Warehouses | Oct 19, 2023
JLL report outlines 'tremendous potential' for multi-story warehouses
A new category of buildings, multi-story warehouses, is beginning to take hold in the U.S. and their potential is strong. A handful of such facilities, also called “urban logistics buildings” have been built over the past five years, notes a new report by JLL.
Building Materials | Oct 19, 2023
New white papers offer best choices in drywall, flooring, and insulation for embodied carbon and health impacts
“Embodied Carbon and Material Health in Insulation” and “Embodied Carbon and Material Health in Gypsum Drywall and Flooring,” by architecture and design firm Perkins&Will in partnership with the Healthy Building Network, advise on how to select the best low-carbon products with the least impact on human health.
Contractors | Oct 19, 2023
Crane Index indicates slowing private-sector construction
Private-sector construction in major North American cities is slowing, according to the latest RLB Crane Index. The number of tower cranes in use declined 10% since the first quarter of 2023. The index, compiled by consulting firm Rider Levett Bucknall (RLB), found that only two of 14 cities—Boston and Toronto—saw increased crane counts.
Office Buildings | Oct 19, 2023
Proportion of workforce based at home drops to lowest level since pandemic began
The proportion of the U.S. workforce working remotely has dropped considerably since the start of the Covid 19 pandemic, but office vacancy rates continue to rise. Fewer than 26% of households have someone who worked remotely at least one day a week, down sharply from 39% in early 2021, according to the latest Census Bureau Household Pulse Surveys.
Contractors | Oct 19, 2023
Poor productivity cost U.S contractors as much as $40 billion last year
U.S. contractors lost between $30 billion and $40 billion in 2022 due to poor labor productivity, according to a new report from FMI Corp. The survey focused on self-performing contractors, those typically engaged as a trade partner to a general contractor.
Giants 400 | Oct 17, 2023
Top 70 Sports Facility Construction Firms for 2023
AECOM, Turner Construction, Clark Group, Mortenson head BD+C's ranking of the nation's largest sports facility contractors and construction management (CM) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report.