The U.S. Bureau of Labor statistics reported staggering spikes in construction material prices between May 2020 and May 2021: increases of 146% for refined petroleum products such as diesel fuel and asphalt base, 114% for lumber and wood products, 107% for cold-rolled steel sheets used for metal studs, and 39% for copper wire and cable. In mid-June, lumber futures for July delivery were down 42% from their record high reached in early May.

Across all property types, both ground-up and renovation projects are facing the dual challenges of price volatility and scarcity of supplies. And with general contractors, subcontractors, and suppliers unable to guarantee pricing of materials more than a few weeks out, many are shifting the risk associated with price uncertainty to owners and developers. Mitigating these risks can be challenging, but the following tactics can help alleviate the effects on a project’s bottom line:

1. Assemble the team early.

At Skender, we’ve found that combining project teams sooner rather than later can significantly increase speed-to-revenue. When architects and contractors collaborate early in the process, either in a design-build or design-assist delivery method, schedules can proceed more quickly, and expensive, time-consuming redesigns can be avoided. For example: in a ground-up project, a smart design choice regarding the location of the major vertical circulation (i.e., stairs and elevators) can result in significant cost savings.

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