Adapting to New Challenges in the Construction Market

Herbert Spencer coined the phrase “survival of the fittest” to describe and broaden Charles Darwin’s famous evolution and natural selection theories. The term could undoubtedly be applied to today’s construction and development industries as the challenges of material and labor shortages, increased lead times, rising costs, and the likelihood of increased interest rates continue to take hold. How builders and developers deal with these challenges will likely determine their success and potential survival in the coming years.

There are several approaches that companies are exploring to leverage against the current supply chain challenges that include; developing strategic partnerships with material suppliers, committing multiple projects under a single agreement, pre-purchasing materials, and purchasing production slots months in anticipation of future demand. These approaches will certainly assist firms in ensuring materials are available when needed, but not without a significant investment and the associated financial risks.

Transitioning from 2021 into 2022, material prices have...

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Material Cost Increases Abound

The turn of the calendar has brought about an unfortunate turn for material pricing. At this point, it seems like nearly all materials have seen major increases. All of this is in line with some of the largest inflation increases ever. What’s going on?

While each material has its own nuances, the primary driving cause behind all of them is the same condition we’ve been dealing with for years: High demand supported by low-interest rates means a lot of construction is happening right now. Costs are up quite simply because projects continue to be built in spite of them. Subcontractor backlogs have been surveyed as being at some of the highest levels in recent history. And there doesn’t seem to be an end in sight. 

The message now is to stay the course in spite of material cost increases. We...

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