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Costs Continue to Outpace Bid Prices: AGC


Construction costs.

The prices contractors pay for construction materials far outstripped the prices contractors charge in the 12 months ending in September, despite a recent decline in a few materials prices, according to the Associated General Contractors of America.

“Construction materials costs remain out of control despite a decline in some inputs last month,” said Ken Simonson, chief economist, in a prepared statement. “Meanwhile, supply bottlenecks continue to worsen.”

The producer price index for new nonresidential construction—a measure of what contractors say they would charge to erect five types of nonresidential buildings—rose 5.2 percent over the past 12 months, despite a decline of 0.9 percent in the latest month. From September 2020 to last month, the prices that producers and service providers such as distributors and transportation firms charged for construction inputs jumped 17 percent, according to Simonson.

There were double-digit percentage increases in the selling prices of most materials used in every type of construction with the exclusion of lumber and plywood, which fell 12.3 percent during the past 12 months.

How much are construction materials?

  • The producer price index for steel mill products increased by 134 percent compared to last September.
  • The index for copper and brass mill shapes rose 39.5 percent.
  • The index for aluminum mill shapes increased 35.1 percent.
  • The index for plastic construction products rose 29.5 percent.
  • The index for gypsum products such as wallboard climbed 23 percent.
  • The index for insulation materials rose 19 percent.
  • The index for prepared asphalt and tar roofing and siding products rose 13.1 percent.
  • The index for truck transportation of freight jumped 15 percent.

Fuel costs, which contractors pay directly to operate their own trucks and off-road equipment, as well as through surcharges on freight deliveries, have also jumped.

Many contractors are experiencing extreme delays or uncertainty about delivery dates for receiving shipments of many types of construction materials, according to AGC.

Source: AGC