How to Mitigate Impacts of Inflation on the Construction Industry
MaterialsPro
Apr 26, 2023 - 4 minutes
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If you ask any project owner and building contractor what their greatest work challenges are, they're likely to list intermittent materials price changes as one of the most common issues they have to deal with. Considering that Inflation rates have been on the increase in recent times: from 15.92% in Mar 2022 to 21.91% in Feb 2023, one can only imagine what impacts this is having on the cost of materials and consequently the profit margins for builders.
However, Inflation cannot be entirely controlled, but certain measures can be taken to lessen its severity.
In this blog post, we will share some strategies for managing rising materials costs in construction.
1. Plan ahead
One of the essential steps in managing rising materials costs is planning ahead. You must always anticipate price increases and adjust budgets accordingly. Contractors should be aware of the economic conditions, supply chain disruptions, and other factors that can impact the cost of materials. By being proactive, you can avoid unnecessary cost overruns and delays.
2. Purchase Materials Ahead of Time
To prevent potential inflation and price hikes, it's advisable to order crucial construction materials ahead of time and negotiate fixed prices. It's usually more cost-effective to store these materials in advance rather than purchasing them at a later date when prices may have increased. You can make use of our Price Lockdown feature which enables you to lock in prices of bulk building materials for an agreed period of time - 30, 60, and 90 days in which the prices of materials will not be affected by price changes within this period of price lockdown.
3. Optimize designs
Optimizing designs can help minimize materials costs. Designers should aim to use materials that are readily available, locally sourced, and have a low environmental impact. This approach can help reduce the cost of transportation and storage, which are significant expenses in the construction industry. Additionally, designers should explore the use of prefabricated components that can help reduce on-site labour and waste.
4. Collaborate with suppliers
Collaborating with suppliers can help you better manage materials costs. Building strong relationships with suppliers can help contractors negotiate better prices and secure reliable delivery schedules. It is also essential to keep track of materials pricing and to be aware of any price increases that may impact the project budget.
5. Communicate with stakeholders
Communication is key to managing rising materials costs. You should communicate with stakeholders, including clients, suppliers, and project teams, to ensure everyone is aware of the potential impact of rising materials costs. Effective communication can help manage expectations and avoid surprises that can lead to cost overruns.
6. Take a proactive approach in identifying new strategies to reduce expenses
You have to proactively discover new ways to mitigate costs so that you can keep your projects on budget and maintain profitability. This includes utilizing tools such as construction management software to improve project efficiency, streamline communication, and optimize resource management, and researching and testing new materials and construction techniques that could reduce costs while maintaining quality.
In conclusion, managing rising materials costs in construction requires a proactive approach. Planning ahead, optimizing designs, collaborating with suppliers, communicating with stakeholders and more are all strategies that can help you manage the impact of rising materials costs. By taking a comprehensive approach to materials management, you can improve their bottom line, maintain project schedules, and deliver quality projects.
At MaterialsPro, we understand the importance of having high-quality building materials on-hand for your construction projects. This is why we offer a wide range of procurement services, including our price lockdown, to help you manage construction costs while dealing with inflation. Visit our website today to learn more about how we can help you save time and money on your next project.
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