In an earlier post, I mentioned what appeared to be the increased number of bids that have been rejected because all bids came in over budget. I surmised that one potential reason for this was the soaring cost of material and fuel prices. Here is an interesting article from the AGC of America about how rising material costs coupled with stagnant finished building prices are further threatening contractors margins. According to the report:
“Construction spending has sunk to 1999 levels, forcing contractors to keep bid prices down to win projects, despite huge price increases for key inputs,” said Ken Simonson, the association’s chief economist. “That steadily widening gulf threatens to put construction firms out of business and their employees out of work.
Contractors are powerless in controlling the finished price of buildings. However, they do have options in dealing with rising material costs. In an upcoming article for Construction Executive magazine, I outline how you can protect yourself from volatile material costs. As soon as the article is published, I will be sure to link to it here.