Improvements in the general economy have led to an increase in new residential and commercial building projects. However, the cost of iron, steel, and other construction materials threatens the potential profits of Michigan builders. According to the Associated Builders and Contractors Inc (ABC), the price of construction materials increased by 2.2% in May 2018. This represents the largest single-month increase since May 2008. Use these tips to keep your clients satisfied while still without sacrificing your employees or bottom line.

Manage Client Expectations

  • When building costs rise, the client is often hit with the full increase. This can be frustrating for project managers and property owners. Consider sharing the costs with your clients. A 50-50 split is a goodwill gesture that preserves long-term business relationships.
  • Discuss alternative materials. Unconventional building solutions like straw bales, rammed earth, and earthbags covered in stucco or aluminum siding make a sturdy yet cost-effective residential structure that can hold up in Michigan weather. Always check local codes and requirements before suggesting alternative materials.
  • Consider used materials. Plumbing fixtures and concrete products saw the biggest rise in pricing. Talk to your client about using aftermarket materials to reduce their overall costs.

Revise Your Strategies

  • Buy in bulk. If you have several jobs scheduled, try to buy enough material to cover them all at one time. Most sellers give a healthy discount to bulk buyers. You'll also save yourself from any future rises in material costs.
  • Share your workload. Working with another contractor not only lets you take on more jobs, it's also a great way to cut costs. You'll only be responsible for a portion of the material costs.
  • Shop around. If you've been using the same supplier for years, it may be time to take a look around. Call a few suppliers and ask them for their best deal. Let them know you're considering a change. You may even get a discount on your initial order if you let them know you're looking to buy on a regular basis.

High construction material costs don't have to damage your business. With a little forethought and some planning, you can still find a way to remain profitable in the face of inflation and rising demand