In some cases, increasing shortages and rising costs have caused contractors to postpone projects or use alternative materials when possible.
Ken Simonson, chief economist of the American General Contractors Association, said that steel, roofing and insulating materials are currently the most difficult products to obtain. The lead time for the strip joists used to construct the roof may vary from 10 months to 14 months.
According to the Producer Price Index of the Bureau of Labor Statistics, costs have also soared, and the steel mill product index rose 123% year-on-year in August. The shape of copper and brass rolling mills increased by 45.3% year-on-year, while the growth of plastic construction products was slightly less than 30% year-on-year.
"Completing the entire project and keeping it within budget is a real pressure," Simonson said.
In some cases, the contractor will replace materials to shorten the project time. For example, custom beams can be used instead of strip joists, but they are heavier and often require redesign of other structural elements.
"Although contractors can save time in replacing materials, they must get the project manager to agree to redesigns and higher costs, which may not always happen," Simonson said.
In many cases, it is even difficult to find potential substitutes. Simonson said that the recent extreme weather events have exacerbated the supply shortages that began with the pandemic and have dealt a devastating blow to the construction industry. The February winter storm in Texas shut down factories that provide raw materials for construction plastics, and Hurricane Ida caused a power outage for several weeks at the chlor-alkali factory that produces the key component of PVC pipes.
According to data analysis by Associated Builders and Contractors of the U.S. Census Bureau, non-residential construction expenditures nationwide fell by 0.4% in August, and monthly expenditures fell in 10 of the 16 non-residential subcategories. ABC chief economist Anirban Basu said in a statement that rising material costs and labor shortages “result in more project owners to postpone work”.
Due to the reduced demand for non-residential projects, contractors have largely assumed higher costs. According to the US general contractor's email analysis of BLS data, from April 2020 to August 2021, construction input costs increased by 28%. At the same time, the bid price rose by only 5% during the same period.
Simonson said that various shortages and other supply chain bottlenecks are expected to continue until next year, or even 2023.
"I think it will take a long time to see things return to their previous normal state," he said.
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