Building material costs continue to rise following a brief cool-off over the holidays. With current events adding in certain factors of fabrication, supply chain, and overall sentiment; commodities like lumber, steel, crude oil return with increasing prices. But what does that mean for those looking to build an addition, a home, or land development project? And what can prospective investors, builders, and owners do to be better prepared for surprise increases to material costs?
Lumber prices affect other building material costs
Market analysts are observing how lumber and its cost act as a predictive measurement for how other construction materials will act. Lumber commodities have been a newsworthy item since 2021 when prices were seen skyrocketing. Lumber costs reached an all-time high at over $1700 per 1,000 board feet in May 2021. Since then, the prices have crashed to $500 and already rallied back to around $1,500. However, “lumber is a bellwether commodity.” Other commodities related to the construction industry such as crude oil and cooper follow in lumber’s price action shortly after. This leads to the conclusion that other commodities, just like lumber, will be on the rise again. Some construction companies will be forced to part expenses to their clients due to sudden increases. But those who have budgets and projects that have been valued-engineered might be able to stave off exhaustion on their budget’s bottom line.
The design-build process can add a layer of security against volatility building material costs
With such volatility in building material costs, hiring the right contractor or construction company is essential. With design-build companies, owners can have another voice during the drafting phases of a build. Design-build companies can offer value engineering, which will identify areas of a proposed build where costs can be saved by foregoing more expensive options. An excellent example of this can be found with Sustainable Design Build’s recent projects where structural engineers call for a large steel support beam in a smaller house. SDB helped perform value engineering by identifying the potential savings and worked with the structural engineer to replace a costly steel beam with a cost-effective wood support system.
Should you wait to build?
Ultimately, the decision to begin a construction project is up to one’s own risk tolerance and position. Prices for construction material do not show any sign of returning to levels before the 2021 spike. Construction timelines have lengthened due to material and labor shortages, paired with a slowly increasing interest rate in loans reflects a rising in overall construction costs. Working with a design-build company and employing price-conscious value-engineering during the design phase of a project is only one of the ways to protect a project’s budget. If you have a project or concept that is ready to be explored, reach out to Sustainable Design Build for their professional assistance as soon as you can.
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