How to Navigate Inflation and Supply Chain Problems in the Construction Industry

It’s impossible to escape the current supply chain problems and inflation. All it takes to be reminded of the rising costs and limited supply is to walk through a grocery store. Almost every profession has been affected by these issues and the construction industry is no different.

In fact, construction has been one of the hardest hit sectors for both supply chain issues and rising costs. Navigating a construction project has radically changed, even when compared to managing a project a year ago. If one of your 2024 goals is to renovate your office or start a new branch of your retail chain, you might have to allot more money and time to the project than you’d initially planned. How do you manage your expectations and stay within a budget during these uncertain times? Let’s discuss how to make your construction project as budget-friendly and quick as possible.

Supply Chain and Construction

Right now, we’re facing one of the worst labor and supply markets in American history. Because of this, the construction industry is experiencing longer than usual wait times on supply deliveries. Last year, if we ordered a door in February, it would be in by May. A door ordered in February of 2024 will hopefully arrive by August.

Time is money, especially when it comes to construction and renovation projects. This time lost equals months of rent money without bringing in profit for many businesses. While a contractor has limited control over supply deliveries, a good contractor will order parts in advance and effectively coordinate with different teams to make sure everything is done as quickly as possible. More than ever before, it’s important to have a contractor who is an adept coordinator and project manager. You need a contractor who is good at thinking ahead and will order parts well before they’re needed for the project.

When looking for a contractor, it’s also important to find one who will set realistic timelines for these projects. Even if you have the most coordinated contractor in the world and she orders everything for the project as soon as you sign the contract, there’s a chance there will be supply chain delays. If a contractor’s timeline sounds too good to be true, it probably is and you should find someone who will be honest about how long a project could take.

Inflation and Construction

With supply and demand issues comes rapid inflation. Because the supply for construction materials is so limited, prices are rising faster than they have over the past 50 years. In the first three months of 2022, material costs rose 8% nationally. Most likely, you will see these increased costs in the proposed (and actual) budget on construction and renovation projects.

There are a couple ways to keep costs under control and the first might sound contradictory: don’t work with the contractor whose quote is way below everyone else’s. Often, these low quotes are unrealistic. You’ll end up with a poorly constructed or renovated space or with unforeseen costs down the road. Instead, find a contractor who is honest about the cost and is devoted to getting the job done right.

The second way to combat inflation is to find a proactive contractor. A proactive contractor will initiate trades early and pay ahead of time. This will get you better prices on construction materials as costs can rise as much as 5% every month. When a contractor is thinking ahead, you will be paying June’s material costs instead of September’s.

While it’s always important to work with a reputable contractor, it’s even more important in times when costs and supply are uncertain. A good contractor will advocate for your project, be proactive in procuring materials, and be honest about how much a project is going to cost. Especially if you have a strict budget and timeline, it’s best to sit down and discuss supply and inflation problems with a contractor before agreeing to work with them.

Carlton Building Services in Hampton Roads Virginia

Carlton Building Services specializes in repairs, maintenance, renovations, remodelings and build-outs for a variety of clients in Hampton Roads, Virginia Beach, and Chesapeake areas. We have years of experience handling projects in the retail, office, and healthcare space and would love to work with you on your next project!

To learn more about our services, check out past project highlights or contact Carlton Building Services to see how we can help with your next project.

JP Carlton

J.P. Carlton

J.P. Carlton is the founder of Carlton Building Services, a Hampton Roads-based construction company.