A recent article shared in Construction Dive contained some great information we wanted to share. Just when it seems like we are all exhausted with pricing news, more comes available that pulls us right back in. The article features five charts that give some indication of the state of construction today, and where it might head. Take the time to read it ̶ it’s worth it ̶ then take a look at our commentary below.
From our standpoint, we are seeing the following on these issues:
- Architectural Billings – Our design partners are still quite busy in certain areas and sectors, particularly multifamily, yet we do know firms that have already incurred staff reductions. This is an index we watch closely.
- Construction Backlog – We have had a record backlog in 2022 like many contractors, and talk of our trade partners becoming more available hasn’t come yet – Especially the specialty trade contractors.
- Volatile Material Prices – The chart here is very accurate. Some things are coming down, and we see softwood as a great leader in that, but concrete, gypsum, copper, and diesel fuel have all shown price increases and limited supply.
- Labor Shortages – Manpower continues to be a struggle in projects as demand for it remains high and our trade partners tell us how hard hiring still is. We have not seen the impacts of the federal projects the article mentions, but in Ohio, large manufacturing projects for electric vehicle batteries and microchips have taken away tradesmen in large numbers from our partners.
- Construction Input Costs – As the last chart shows, we have experienced the pressure of input costs increasing after contract and squeezing out margin. This too does not appear to be letting up just yet.
We are all looking forward to a day when we do not have to talk about prices to the extent we do currently. At least for the time being, it appears costs have become more widely understood and predictable with articles like this very much matching our experience.
Bruce Douglas, PMP, LEED AP BD+C
Executive Vice President, Midwest
The Douglas Company
