Controlling Material Costs in the Construction Industry

With President Donald Trump calling for tariffs on imported goods, consumers are likely to feel the pinch as retailers expect consumers to eat the costs. So are general contractors. Building materials such as lumber and steel will come with tariffs that will greatly impact the cost. In fact, builders estimate that the recent tariff actions will come with an added cost of $10,900 per home.

For some materials, prices could see dramatic increases. These additional costs could substantially impact builders’ ability to deliver new projects.

As a general contractor, you need to keep these costs in mind. The cost of building materials has risen by 34% since December 2020. This is much higher than the rate of inflation. With materials constantly increasing in cost, here’s what you can do to keep the prices under control.

Establish Long-Term Relationships with Suppliers

Good relationships with suppliers can lead to several benefits, including volume discounts, improved service, and possibly better payment terms. Having a long-term relationship should be your goal. It should be a partnership, with each party invested in the other’s success.

Regularly Review Your Suppliers

Despite the advice given above about maintaining long-term relationships with your suppliers, it’s also important to regularly review your suppliers’ prices and quality. Things change. Are you still getting the best value for your money?

Optimize Material Usage

Lumber is expensive and you’re paying for each little piece of wood you get. Therefore, you want to make sure you are measuring materials accurately. Don’t be wasteful. Being efficient can help you save a lot of money. Some construction software programs can help you with estimated material needs.

Focus on Inventory Management

Do you keep a lot of extra materials on hand? If so, now’s the time to invest in an efficient inventory management system. This can help prevent overstocking or understocking of materials. A good inventory system provides real-time visibility into your stock levels, helping you make informed purchasing decisions. You can decide whether you have enough of a certain material or if you need to buy more in the near future.

Use Substitute Materials 

Consider using substitute materials that can deliver high levels of performance for a lower cost. Some examples include:

• Cross-laminated timber as a substitute for concrete or steel in floors and walls. Cross-laminated timber is lighter than concrete and offers good seismic and fire performance.
• Recycled plastic lumber as a substitute for traditional wood in decking, fencing, or outdoor furniture. It’s resistant to rot, insects, and moisture.
• Bamboo as a substitute for hardwood flooring or structural elements. Bamboo grows quickly and is highly renewable while offering comparable strength.
• Recycled steel as a substitute for new steel in framing and reinforcement. It uses less energy to produce and reduces demand for raw ore.

 Contact Us Today

Tariffs and inflation will cause materials costs to increase. Is your contract prepared for these price hikes?

A Florida construction contract lawyer from Linkhorst & Hockin, P.A. will help you ensure your contract is in tip-top shape. We are prepared to help you find the best solutions for your construction contracts and issues. To schedule a consultation with our office, call 561-626-8880 or fill out the online form.

Source:

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