Skip to Content


Managing the Escalation of Supply and Demand, Rising Costs in the Construction Industry

Gas prices aren’t the only things rising lately. Across the construction industry, contractors and their clients are facing an increase in costs for raw building materials and, subsequently, projects. The supply chain has been significantly affected by many factors leading to rising costs for products such as lumber and steel.

While fluctuations in price isn’t a new issue for construction companies, costs for building materials have skyrocketed in recent years. The COVID-19 pandemic wreaked havoc on the global supply chain but the issue has been exacerbated by labor shortages and inflation. As a result, project managers have had to keep a careful eye on the market to monitor prices in an effort to accurately bid and quote projects.

According to a recent Producer Price Index (PPI) report, the price of construction materials has increased 8% since the start of 2022 and 33% since January 2020. This far outpaced the rate of inflation which rose nearly 8% from February 2021 to February 2022 – the most significant year-over-year increase in more than four decades.

Sustained periods of increased commodity demand are known as commodity supercycles. Such occurrences are rare, but have been documented a few times in the last 50 years including one in the 1970s and another in the early 2000s, concluding with the financial crisis of 2008. Some economists suspect the increase in prices we’re facing today could be the start of another supercycle.

Concrete, plastic construction materials, and insulation are also among the common items in building projects that have seen a rise in cost. The rapid escalation of material prices has left many construction firms pivoting to finish previously quoted projects at costs well below the current market price. In some cases, more cost-effective materials are being utilized to keep costs down. We’ve already seen an uptick in the use of recycled and 3D printed materials such as walls, floors, and concrete – one of many trends impacting the construction and project management industry this year.

Despite the increase in costs, the demand for both residential and commercial construction projects continues to rise. Contractors are under increased pressure to bid the price of materials high enough to cover the escalating costs while keeping their prices low enough to remain competitive. Mid Hudson Construction Management references its long-term relationships with sub-contractors to assist in gaining numbers to better estimate the costs of new construction projects.  Also, new technology ensures efficiency and is one tool our team has utilized to help minimize the burden of increased pricing on our clients.

Mid Hudson Construction Management has been providing building solutions for over 20 years. Contact us today at (845) 298-9230 or by emailing to learn more.

Comments are closed.

    Partner with us on your next project.

    We treat every project as our own. Taking the extra time, meeting the needs of all stakeholders. Find out why our reputation for attention-to-detail is second to none. An hour or two spent with us can be illuminating, productive, and likely will save you from some costly mistakes. We will contact you within 24 hours of receiving your message. Thank you.

    Quick Contact

    (845) 298-9230

    Our Location
    85 Civic Center Plaza, Suite 104
    Poughkeepsie, NY 12601
    Hours: 7:30AM-5PM / Mon-Fri

    Back to top