Recent Building Material Price Increases
Can you confirm them? The builder no longer wants to offer a fixed price, stating on avearge 20% increases for lumber, plywood etc. Are you all affected by this? Is it even true?
I am suprised the builder won't offer a fixed price as they can typically lock in our material prices with our suppliers when they bid a job. There has been an increase in building materials and it will continue to rise according to my suppliers. On average it appear that the prices here in Michigan are going up about 10%, which as you can imagine can seriously impact the cost of any project. Also keep in mind that when fuel cost rises so does everything else...
Another reason for builders to build on the cost + set fee method.
This is the only way I do customs.
Here in NC, my cost have rose dramatically......not only in lumber but also in other materials such as roofing, drywall, metal etc.
I use to get 7/16" OSB for $7.00....I pay almost $20.00 with tax. Advantech once was $15.00....is now $30.00 plus......what gets me even more hot is the steel industry crying because they cant compete.......so do they do......cry to a bunch of wennie politician to instill tariffs.
Now 250,000,000 Americans have to pay more for steel products in order appease 250,000 steel workers........nothing but socialism........gosh, I hate politicians.
Hello NC_Yank,
I hear ya! It's too bad this is happening though as the thought of affordable housing, which everyone in my area is in great debate about, can pretty much be tossed out the window if prices continue to rise. In any event, I wish I had better luck at selling cost plus. It seems like everyone I deal with wants the cost period and they just aren't willing to hear anything else. So what's you secret on getting your clients to sign cost plus contracts?
While we are on the subject of price increases, I just got off the phone with my plumber and he said copper prices have went up 60%.......as if plumbing costs weren't already high enough*L*
NC_Yank is right although its pretty common for lumber to jump this time of year its especially www.plywood.this year its the war in Irag last year or next it will be the shortage of teetsie fly or the good weather or bad weather or the good or bad economy.
Lately the lumber yard I deal with is only offering a 14 day price lock.And 21 days on materials I don't need.
Mike
I work on large (100million+) commercial projects and the material situation is very real. Several large Bay Area subcontractors are flirting with bankruptcy due to signing large contracts and being shellshocked when they tried to lock material (rebar in particular).
They typically allow 10-15% escalation in materials for these projects due to the time it takes for them to proceed (sometimes a year or more from the time of signing). That spread usually works in the subs favor, but lately we have witnessed steel go up 35% in one month and copper at similiar levels. Drywall is the next shoe to drop, so lock it in if you can.
Sorry for the delay response.....I did however email you my take on cost plus.
But for the benefit of other readers......I will touch on a few points......
I do cost (actual cost of construction) plus my set fee. I educate any potential clientel as to why it is advantageous to all parties. Lets face it.....Im in business to make money.....if I allow the deck to be stacked against me....as with the case with set pricing.....then chances are that I will get a bad deal.
Let me also say that they are CALLING ME.......Im not calling them. If they got my number then it was because of my reputation.......giving a professional service as a professional and fair price.
I let all potential clients know that if they are looking for a cheap bid then we dont need to waste each others time......I give them names, numbers and locations of previous jobs I have done.
I let them know my background and experience...........I sell myself.........real simple.
I do not jump on every job........if I do not feel comfortable in being able to complete the job do to my work load....then I tell them ........I also give them names of other contractors that I trust.
You have to make your client know that you are honest and know what your talking about.
Image.........I do not play the part of Billy Bob Redneck...........I present myself in a clean cut manner and let them(clients) know I do not tolerate foolishness on my jobs nor do I allow drugs or alcholic beverages on my site. While I do not require a dress code for my subs.......they know to act like professionals at all times.......if their is a problem I tell my subs and my clients to bring the problem to me........do not discuss it with anyone except me.
There is no secret.......its a matter of presenting yourself in a professional manner.
People never go out doctor shopping based on prices..................they want compentence......
Good luck
NC
Hello NC,
Funny you mentioned that "People never go out doctor shopping based on prices..................they want compentence...... " In the same token, I read an article awhile back that discussed why it shouldn't be common practice for builders to bid jobs without charging a fee. It made the same type of reference to doctors and lawyers, stating that they are professionals, such as builders, and it didn't make sense why builders are willing to go through hours upon hours of work (bidding) for free. It would be nice to see all builders jump on board with this but it's highly unlikely it will ever happen. I do think it will keep some of these homeowners from getting a dozen bids on their projects
sounds right to me. last advantech i bought was a month ago at 38.00 a sheet. i'm afraid to ask what current price is
Hey Tom,
The reason that so many builder s(residential) are willing to do the bid work is because they are HUNGRY.
Unfortunately often their desire to get the contract results in under bidding the job......which is why THEY STAY HUNGRY.
Hey TNT,
We haven't gotten up to $38.00 yet for advantech but with gas prices and everything else going up....I can see it coming. I suspect gas prices will come back down around September.....another election thing........this happens with all sitting presidents.....although the democrats will have you believe other wise.................oh oh.....I better stop myself before I get off on those (policticians) worthless parasites....
I do think interest rates will go up....after the elections of course....and then lumber prices may come back down.
NC
Hi Guys
I work in the modular home buissness and the rumor from our suppliers is lock in now you may not be able to even get it later.
"OSB shortage you know"caused by shutting down manufaturing plants to create a shortage of material. hey OPEC can do why not everybody.
ED