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O P I N I O N
Construction outlook
Disruption drives innovation, and these challenges will help us to be leaner in our business and develop more creative and collaborative ways to build.
A s we start 2022, the pandemic’s ripple effect is still creating upheaval and disorientation for the construction industry. We are currently experiencing significant problems from three distinct fronts: cost escalations, long lead times, and labor shortages.
I recently moderated a panel discussion for the Lean Construction Institute’s DFW Community of Practice. Our four industry experts – representing mechanical/ plumbing, structural steel, drywall/framing, and concrete – candidly explained how these three issues are affecting their businesses and our industry, and what we might expect as we move forward into the new year. Today, I’ll share some of my observations around each of these topics and highlight some of the takeaways from that insightful panel discussion. 1. Cost escalations. According to Ken Simonson, chief economist of the Association of General Contractors, “Prices for nearly every type of construction material are rising at runaway rates.” But when will it stop? During the referenced LCI event, panelists shared that they expect price increases to continue into 2022 and then flatten to a new baseline. Unfortunately, they do not see
the costs returning to where they once were. Before the pandemic, sophisticated builders with strong preconstruction departments could keep a budget for months, throughout the design process. But today, estimates can be completely outdated and irrelevant within a fewweeks or even in a matter of days. And it’s not just the cost for raw materials that’s climbing. Things like imported shipping containers are now four times more than before the pandemic, and with additional border control regulations anticipated in 2022, these transportation costs could compound. 2. Long lead times. Over the past three months, lead times on raw materials such as aluminum and copper have continued to rise. HVAC and
Keyan Zandy
See KEYAN ZANDY, page 10
THE ZWEIG LETTER FEBRUARY 21, 2022, ISSUE 1429
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