Lumber throwing a wrench in construction budgets!
COVID, and a massive increase in demand for
residential housing is having a new impact in the industry - I've heard
multiple anecdotes about increasing lumber prices - including a personal shock
as I went for some lumber at the local big box and a sheet of 3/4 CDX plywood
was $75! Various sources indicate average
increase in lumber and plywood pricing from 100% to 171%! Lumber has traditionally been a very consistent
cost and the current escalation is an unusual impact to construction costs.
RSMeans, who have been tracking construction costs
for a good long time have put together some data that indicates a rapid
increase in lumber and plywood costs over the past year, with the cost for
materials alone doubling.
Like steel, lumber material costs find their way into
many assemblies in construction, framing of course for residential and some
larger projects, but also casework and millwork, doors, windows and other trim,
and is used heavily in concrete forms and as temporary framing, temporary fall
protection, and temporary protection.
What does this mean for your project budget? If you have a wood frame structure, labor was around 30% of that cost last year – with the materials cost doubling, you should expect to see at least a 60% increase in bid pricing.
Formwork is a substantial part of concrete cost, although the impact of material price increases is reduced due to reuse of forms, so the overall impact may be lower here. I would expect increases in the 5% range for concrete bids, due to wood material cost. Larger projects of course utilize steel formwork, so may not have significant impacts.
Doors, windows casework and other manufactured goods that utilize wood materials have raw material costs that are a much lower portion of the finished good cost, and the portion of that material cost that is wood is highly variable. With that said, the same demand increase, and manufacturing changes due to COVID are driving prices for manufactured items higher as well.
Subcontractors will likely be requesting changes for lumber price increases if they have not locked in pricing, and future bids may include material cost escalation clauses.
GC’s and CM’s should be adjusting their estimate review processes and contingency calculations to cover this unusual risk.