In recent years, there has been a worldwide impact on supply chains, and almost all types of industries are affected, and construction is not an exception. The drastic changes in the availability and price of construction materials have shifted the sector. Over time, this has been a recurring issue that can be difficult to deal with.
As a construction business owner, are you experiencing a rise in material prices today? Are you unsure of how to deal with it? Do not worry; it happens all over the industries now and is considered inevitable.
And while you cannot truly stop the material costs from rising, some ways and strategies can help you deal with this problem proactively.
Read and learn more.
But why are the Costs of Construction Materials Increasing?
There are several reasons why construction material costs are soaring, but we breakdown them into three issues:
1. Production of construction materials
Many manufacturers of building materials have suffered immensely and continue to suffer even today due to many government restrictions. As a result, it decreases the productivity of many manufacturers and suppliers, increasing material costs.
2. Political and trade issues
Political circumstances can also create confusion in the entire economic system, which often leads to hikes in the costs of construction materials. For example, the trade war between China and United States has increased the price of construction materials such as steel.
Also, it is no secret that the intense inflation rate in the UK is overreaching. As a matter of fact, we have been facing the highest inflation rate in the last 40 years, which is predicted to rise to 18% in 2023 this year.
3. Environmental factors
Yes, even some environmental factors have contributed to the rising costs of building materials. One example is the wildfire that destroys the West Coast of the USA and some areas of British Columbia. Another factor under the environment is the adaption of certain regulations like sourcing wood that increase the overall costs of timber extraction.
Which Construction Materials Have Seen a Rise and Fall?
As of today, we have witnessed a rising cost in the following construction materials:
- Gypsum products: This crucial building material used for constructing ceilings and walls has a price increase. Gypsum’s cost has increased by almost 20% in the last three years and is expected to rise in the coming years.
- Paint: The paint used for the exterior has risen nearly fifty percent since May 2022. Also, the PPI for architectural coatings has increased by 1%, which is a big thing but not surprising.
- Ready Mix Concrete: The price of ready-mixed concrete has been increasing by nearly 9% since 2023. This is mainly because conventional methods do not meet the increasing demand for building materials.
- Transportation freight: The price of diesel fuel for transporting construction and building materials has risen in recent months. It has increased by 13% and is expected to rise in the coming years.
- Steel products: The price of steel products, like structural shapes and reinforcing bars, has increased since then. And it is one of the many building materials that is predicted to increase in a higher percentage.
- Softwood lumber: Due to the increasing demand for building materials, lumber prices have been rising too. The price of this material has seen an increase of 13% and is anticipated to rise in the next months.
- Other building materials: The price range of other building materials, such as bricks, stone, and asphalt, has also dramatically increased. To put it simply, as the costs of building materials continue to surge, so as the costs of construction.
How Can You Deal with The Crisis?
Now the biggest and most important question for you is, how can you reduce costs and risks on your construction projects caused by the upsurging construction material prices? First and foremost, allow us to cite a fact – the increasing material costs are totally out of your control, and you can do nothing to stop them from increasing.
However, you can be strategic and find proactive ways to manage construction materials, equipment, and inventory. Here are some strategies we hand-picked for you, ready to be used to your advantage.
1. Better balance the budget of your materials
You must consider cutting off some expenses of your construction materials. But how?
One we highly suggest is to embrace prefabrication. Your construction company must consider this tip to lessen waste and operate more efficiently. Using prefabricated materials does not involve waste since they are designed outside the construction site. There will be a reasonable number of materials since everything is assembled in advance. Hence, why do you order it and use it immediately? In addition, prefabricated is far less expensive to transport compared to hiring some people to move materials to your construction site.
2. Optimize resource management
How are you currently ordering, monitoring, and managing your construction materials and inventory? Are you even using the latest crew schedule software that can help you with all your processes and workflows?
To further maximize your profits and reduce material costs, it is imperative to keep close tabs on your inventory using the software we just mentioned. It’s jump-packed with many features that can help you with your concerns.
Another thing is to make it a practice to assess market conditions and stay in touch with your chosen suppliers. Ultimately, this helps you optimize your resource management and even helps you beat any prices before they start taking effect in the market.
3. Use construction scheduling software
Tracking the rising costs of construction materials is important as ever, especially in an industry like construction. You must always be proactive in finding ways to manage your expenses better and lessen your construction material costs. Otherwise, it will greatly affect other aspects of your construction budget.
Best to invest with Pro Crew Schedule – a cutting-edge construction software designed to manage every aspect of your construction business, including your expenses. Pro Crew Schedule is the top solution if you want to automate and digitize your inventory of construction materials, equipment, and tools.
It is the only one in the software market that offers both scheduling and inventory features integrated into the cloud-based platform.
4. Review your material sourcing strategies
If you find yourself ordering and buying resources from different areas, you might be at a greater risk of external sourcing problems. These issues can often lead to price increases and supply shortages. So, it is always wise to better assess your material sourcing strategy. Doing so can help you determine where these construction materials come from and their lead times.
Another easy and quick solution is to work closely with your current clients when reviewing specifications. This help in seeing other options or trying other sourcing alternative resources that may fit the scope of your work and budget!
5. Get creative with your suppliers
Greater collaboration with your suppliers might unlock more benefits and workable arrangements. So, it is essential to maintain a good relationship with your suppliers.
Get creative with your arrangements. Some possible arrangement you and your suppliers can implement is to make bulk purchases, which may give you more discount. Best to implement construction employee scheduling software for better and more effective collaboration. Using a centralized platform can help you communicate with your suppliers and make room for more negotiations.
Pro Tip: You can also negotiate about warehouse storage of construction materials to prevent price increases and avoid storage fees. It is always important to revisit some terms and opt for the best solution.
Take Advantage of Pro Crew Schedule’s Inventory Feature
Under your inventory are your construction materials and gathered data about their rising costs. Over time, managing and tracking them can be a lot harder. And not taking it with great effort may affect your company’s bottom line.
Make sure to efficiently track your inventory and everything that falls under it – materials, equipment, tools, assets, etc. And only with reliable construction dispatching and scheduling software like Pro Crew Schedule can you automate your entire inventory, resulting in more efficient material management and enhanced inventory control.
Here are other astounding benefits Pro Crew Schedule offers:
· Simplified inventory management: This is perhaps the best advantage of using this software. Pro Crew Schedule is designed to simplify your inventory process, saving you time, money, and even your sanity.
· Reduced many risks: You may start losing control over your inventory. However, this issue can easily be prevented because specialized software like Pro Crew Schedule allows you to adjust your stock levels.
· Prevent stock-outs and redundant stocks: You can easily track your construction materials and determine their stock levels. This will give you a clearer view of what materials you need more and what is not.
· Better inventory item during recall: It can be extremely tedious to track your construction materials in your inventory. However, with a sophisticated tool, you can easily look for a specific material and retrieve data about it, including the number of stocks, suppliers, and delivery date.
· Ease of access: Pro Crew Schedule is accessible anytime in multiple locations. You can access it on your devices anytime and anywhere.
Get your 30-day free trial and see how Pro Crew Schedule can help organize your construction inventory