For instance, some commodities integral to the construction of a variety of projects have had major price increases in 2021.¹ Some of the largest price inflation was in steel mill products, diesel, and asphalt, which experienced 142%, 100%, and 69% price increases, respectively, between October 2020 and October 2021.² Another key cost in construction, truck transportation of freight, had a year-over-year price increase of 16%.³ Conversely, softwood lumber prices were down nearly 20% from October 2020 to October 2021⁴ after hitting all-time highs in early 2021.⁵ In general, the costs of inputs to construction have increased in 2021, and contractors have recently increased their bid prices to reflect the increased material cost of construction.⁶ Economists foresee inflation and supply chain issues continuing into 2022, which could cause high costs in the construction industry to persist.⁷

From the owners’ and developers’ perspective, project spending also steadily increased in 2021.⁸ While industries such as public safety and non-residential lodging had downturns in spending, the construction industry as a whole was bolstered by major increases in spending on commercial, residential, and manufacturing projects.⁹ Further, the signing of the federal infrastructure bill provides funding for new opportunities for contractors in 2022 and beyond, especially in civil projects such as roads and bridges, broadband installations, electrical grid improvements, and railroads.¹⁰

These significant cost fluctuations have impacted many of Breakwater’s clients and recent projects. Breakwater Forensics is skilled in analyzing construction cost impacts such as those stemming from material and transportation cost increases.

1: “5 graphs that illustrate construction’s challenging year” by Julie Strupp dated November 18, 2021.
2: “Producer price indexes and percent changes for select commodity groupings of intermediate demand by commodity type category” per U.S. Bureau of Labor Statistics updated November 9, 2021.
3: “Producer price indexes and percent changes for select commodity groupings of intermediate demand by commodity type category” per U.S. Bureau of Labor Statistics updated November 9, 2021.
4: “Producer price indexes and percent changes for select commodity groupings of intermediate demand by commodity type category” per U.S. Bureau of Labor Statistics updated November 9, 2021.
5: “Monthly price of lumber in the United States from January 2019 to October 2021” per Statista Research Department dated November 1, 2021.
6: “5 graphs that illustrate construction’s challenging year” by Julie Strupp dated November 18, 2021.
7: “Why prices will keep souring in 2022” by Anneken Tappe dated January 1, 2022.
8: “5 graphs that illustrate construction’s challenging year” by Julie Strupp dated November 18, 2021.
9: “Monthly Construction Spending, October 2021” per U.S. Census Bureau dated December 1, 2021.
10: “’Once-in-a-generation’ $1.2 trillion infrastructure bill heads to Biden’s desk” by Julie Strupp dated November 8, 2021.