Reducing Building Costs Amid Shortages and Price Increases
The recent rising costs of building materials and labor shortages limit supply, delay construction and heavily affect your bottom line. Though the prices and availability of necessary materials will likely continue to flux, you can decrease your overall costs and remain confident in future projects.
Inflation's impact
Various materials have experienced price increases due to scarcity in 2021 and are expected to continue throughout this year. Lumber costs rose 316% from the start of 2020 to the middle of 2021. But that's not all. Plastics, glass, concrete, metals and even paint have been affected by shortages and driven up building costs.
Though the shortages affect total construction costs and timelines, demand and sales continue to be strong, and homebuilders remain confident. According to the National Association of Home Builders/Wells Fargo Housing Market Index, builder confidence rose four points to 80 in October 2021.
Reducing construction costs
Passing on the same price increase to customers can help your bottom line but may not be great for business. Instead, consider these alternatives to save money on building costs without suffering a loss to retain clients and keep projects on schedule.
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Develop the plan with budget in mind. Determine budget limits before starting the project and continually compare processes to the budget.
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Use alternative materials. Suggest and explain the benefits of more effective or easily accessible materials, such as recycled steel, plastic and concrete.
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Establish effective communication channels. Set expectations and requirements for everyone involved when it comes to communication, which can speed up working processes, help avoid mistakes and improve the final build.
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Consider multiple suppliers and distributors. You may get discounts by leveraging relationships with existing suppliers, but sometimes, buying dynamically based on cost and availability can make a substantial difference.
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Reduce construction waste. Limiting energy and resource usage, using prefabricated materials and techniques, and renting equipment instead of buying it outright can improve the project's sustainability and decrease costs.
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Avoid change orders. Changing materials or designs after an order has already been placed can take a toll on your budget and your timeline. Reserve change orders for emergencies or critical errors only.
Meeting the high demand for new builds while staying on budget is more crucial than ever before. With these tips, you can navigate any shortages and increases while staying on schedule and decreasing overall construction costs.