"Pricing Insanity" Affecting All Levels of Construction

Whether in board meetings or on job sites, construction employees at all levels express concern regarding the unprecedented hikes in building costs.

"Starting in March of this year, it just became all-consuming," said Brian Perlburg, senior counsel of construction law and contracts for Associated General Contractors of America. "It hasn't let up. It's become an evergreen issue."

Aniran Basu, the chief economist at Associated Builders and Contractors, predicts that prices will rise well into next year. "Contractors have the most difficult job in America today because every decision is fraught with risk and uncertainty."

"All projects right now are trending over budget," said Donny Smith, director of pre-construction services PCL Construction, based in Orlando, Florida. "Everything costs more—if you can get it. There are certain air-conditioning units that, I don't care if you have millions to offer, you can't get. These are things you can't overcome. Flexibility is a highlight."

Smith says the answer lies in communication and transparency between contractors, subcontractors, and clients. "It's not just about spending more money. The solution is more work," he said.

Contractors now automatically purchase materials as soon as they sign contracts to lock in prices. Smith says he doesn't want subcontractors to delay purchases.

Basu values partnerships more now than ever before. "Too often, we've had this dividing line between project owners and general contractors and another line between general contractors and subs; this has to be one happy family. Everyone has similar challenges, and everyone has the same objective. So it makes sense to have some risk-sharing moving forward."

That said, Basu added, "Having a good attorney is a really good idea at a volatile time like this."

With the construction industry on uncertain ground due to rising building costs, some call for more cohesion between contractors, suppliers, and vendors.

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