Businesses and Customers Rethink Construction Projects Amid ‘Unprecedented’ Increase in Material Costs

PRice and construction material delivery times continue to rise to historic levels, but local architecture and construction firms say their workloads are not being negatively affected.

An input price index – the prices that producers and service providers such as distributors and transport companies charged for non-residential construction inputs – was 21.1% higher in October than a year earlier. That included a 1.3 percent increase since September, according to an analysis conducted by the Associated General Contractors of America.

“We have seen an unprecedented increase in the prices of building materials and labor over the past two years,” said Chris Beckering, executive vice president of Pioneer Construction Co. “At the same time, we’ve seen historic delays in delivery times due to supply chain and production issues – something people don’t talk about as much. “

The production of raw building materials is simply failing to keep up with demand, Beckering said.

“For the industry to solve some of these growing lead times issues, we’re really going to have to increase the production capacity of some building materials as an industry as demand has continued to exceed production capacity,” Beckering said. .

For example, Pioneer has just been informed by its supplier of steel joists and decking that new product orders will not be fulfilled until 2023, Beckering said. Historically, it took between 10 and 16 weeks for steel products to be delivered, he said.

“The reality today is that projects take longer between design and completion, and the main bottleneck is the availability of building materials,” Beckering said. “We haven’t seen this kind of environment in my professional career. We’ve seen material prices escalate, but it’s with a certain product or with a certain trade. Now it is at all levels.

Pioneer has pre-purchased construction supplies to meet short-term demand, Beckering said.

New normal

In many cases, developers have worked with their construction and design teams to rework projects with different materials that are more readily available.

Construction of Orion CEO Roger Rehkopf said it is increasingly common to have ongoing negotiations with project owners and architects over the materials available that will maintain quality standards.

“Even with some paint colors, pigments cannot mix different colors,” Rehkopf said. “Things you never thought about before – you used to buy 50 coating colors and now you could get 12. Right now the juggling ball is what I can do to look for another product that will do the same.” with what is available.

This has been a huge part of Megan Feenstra Wall’s work lately. Wall, director at Grand Rapids based Mathison | Mathison Architects LLC, and his colleagues feel pressured to meet the same design and build deadlines in extremely long lead times with most building materials.

Projects had to be redesigned and reworked due to high material costs and long lead times, increasing the time architects typically spend on projects in times of high demand, said Feenstra Wall, who is also president of the American Institute of Architects Grand Rapids.

“My practice is busier than ever, and I’ve heard the same from other AIA members,” said Feenstra Wall. “A lot of things take more time and more input, and this has extended our involvement in projects for months beyond what we anticipated. “

This produced a mixed bag as the projects are either redesigned or cost more, she said.

“We are looking for ways to keep the scope as it was with the same budget by choosing different materials, which is often not possible at the moment,” said Feenstra Wall. “We need to talk about changing the scope or (the customer) spending more money. We’ve done both and we’ve seen both happen.

Stay busy

Despite the obstacles, projects usually stay in the pipeline or are temporarily put on hold. The past year brought “real concern” that supply chain issues for building materials and the complications that would result would deter developers from pursuing projects, but Feenstra Wall said it was not. the case.

The Architecture Billings Index (ABI) increased by one point from August to the end of September to reach 56.6. ABI scores over the past eight months were among the highest on record in the index’s history in the immediate post-recession periods. Among member firms of the American Institute of Architects, arrears are on average 6.6 months – the longest since the Institute began collecting data on arrears in 2010.

Feenstra Wall said one downside is a growing sense of exhaustion among architects with a heavy workload after the stress of the pandemic.

Still, staying busy is better than the alternative of missing work, she added. Mathison | Mathison hired a few more employees to meet the high demand.

“It forces us to think about how we do things and rethink that,” Feenstra Wall said. “Whether it’s working in a hybrid fashion or changing the materials and products that we’re used to selecting, it forces us to look at other systems and products, which is pretty exciting. “

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