Construction materials

Building materials: where are you and why are you so expensive?

The COVID-19 pandemic has disrupted the global economy in unprecedented ways. One of the significant impacts of the pandemic has been its effect on the price and availability of building materials. From companies cutting production, to shipping delays caused by border restrictions, to labor shortages as the pandemic has begun to wane, materials manufacturers and contractors are facing enormous uncertainty regarding construction materials.

In addition to COVID, the construction industry now faces an increasingly uncertain economy, including runaway inflation and dramatic increases in gasoline prices (with resultant increases in shipping costs). As a result, parties to construction contracts are forced to deal with the difficult issues of material availability and escalating prices. If the owner insists on a lump sum contract and refuses to accept any risk associated with material availability or price escalation issues, the owner leaves the contractor no choice but to build in the costs of these risks in the offer it submits. On the other hand, if the contractor insists on passing all this risk to the owner, he will quickly see his backlog evaporate since the owners do not want to accept all this risk given the economic impact it could have on their project.

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