The State of Construction Post COVID-19

June 17, 2021

Due to the unique circumstances surrounding the market, there is a greater need than ever for savvy, innovative construction managers like Donlar Construction. The US economy might be in the process of bouncing back from COVID-19, but the construction industry is still experiencing adverse effects. The problem is no longer a lack of demand for construction services; it is the lack of materials and the increased prices and lead times that go along with it. Construction Managers need to enact creative and effective solutions to continue producing successful projects, and Donlar is proud to be doing exactly that.

COVID-19  severely impacted the construction industry, and these effects are still being seen today. Planning and design were down drastically starting April 2020 and they did not start rebounding until January 2021. This directly effects construction starts: no design equals no new construction. The industry is starting to bounce back, with the Midwest leading the charge with a greater increase than any other region.

This increase in growth is a welcome change; however, there are other variables to consider when looking at the market as a whole, and chief among them are the input costs. The Bureau of Labor & Statics released some staggering statistics about the increase of input prices over the last year. Construction input costs are up 23.9% from last year, and it’s not hard to see why.  When prices from this May are compared to last May, lumber has skyrocketed up 154%. Natural gas is up 90%, and steel mill products are up 75.6%. these are just a couple examples of the unprecedented price increases we are seeing across the industry.

The price increases are only one piece of the puzzle. Some materials have become all but unattainable at the present, thanks to a variety of factors impacting the supply chain, including COVID related impacts. One result is exceptionally long lead times where materials can be found and finding alternative solutions when materials can’t be found.

In addition, product scarcity has also increased lead times for manufacture and transportation of construction materials to construction projects.  Recent regional input has indicated the lead-time (the time from contract issue to delivery of material on-site) of certain critical construction components has doubled since the beginning of 2021.  The projected lead-time for steel bars joists is 9-10 months; precast wall panel lead-times are over six months; and aluminum windows & curtainwalls are approximately 8 months.

These statistics illustrate the challenge of the current market: Despite industry activity increases, the industry is facing some unique challenges: the beginning of an economic recovery partnered with significant material shortages. While the statistics outlined above paint a grim picture, these challenges are more than surmountable; through diligent planning and creative problem solving, Successful construction projects are nevertheless still the standard at Donlar Construction, and we are proud to continue offering our clients brilliant construction solutions, time and time again.