The recent surge in inflation, as indicated by the U.S. Consumer Price Index, poses challenges for various industries, including construction. This article delves into practical approaches to mitigate the impact of inflation on construction projects.
Initiate project planning promptly by engaging architects, engineers, subcontractors, and suppliers. Utilize project management software for seamless communication and swift decision-making.
Accelerating schedules involves expediting construction activities, including ordering materials in advance to lock in prices before potential increases.
Ensure precise bid preparation by leveraging site surveying technologies. Estimate quantities accurately and use anticipated input prices at project commencement, not during bid preparation.
Inform potential clients that accurate bids contribute to project efficiency, reducing the likelihood of exceeding schedules and budgets.
Emphasize non-monetary values such as experience, quality, and speed during bidding. Highlighting these aspects can be equally, if not more, important to clients than focusing solely on the lowest bid.
Regularly review project and projected costs to maintain budget adherence. Swiftly address potential issues to ensure profitable business operations.
Consider escalation contingencies of 10% to 15% per year in budgets to buffer against cost overruns during periods of high inflation.
In cases of large or complex projects, share inflation risks with other parties under contract conditions.
Identify alternative construction materials with comparable strength and design at lower costs. Examples include timbercrete, ashcrete, and hempcrete, which may offer cost advantages over traditional materials.
Adopt modern construction methods, such as prefabrication in factories, to reduce vulnerability to inflation. This approach minimizes transportation costs as components are centralized.
Traditional construction methods may involve various subcontractors and materials from different regions, making them more susceptible to inflation.
Utilize lean construction practices to optimize projects for efficiency and reduce waste throughout the construction stages.
Order crucial construction materials in advance to fix prices and mitigate potential future increases. The cost of storage is often outweighed by the savings compared to purchasing materials later.
Expect variations in pricing and consider flexible approaches to design, timing, or cost-sharing.
Encourage the removal or reduction of tariffs on imported construction materials through regional representatives and legislators.
Eliminating tariffs can significantly lower the cost of construction materials, aiding industries facing shortages and averting shutdowns and layoffs.
Advocate for the removal of unnecessary regulations, policies, and enforcement actions that could increase costs and impede the flow of raw materials, components, and finished goods.