It’s no secret that material costs are on the rise, with the upswing in the global economy, an increase in the number of steel buildings, and an ever increasing global market, there is a direct correlation between the above mentioned factors and supply vs. demand. Globally, there has been a decrease in the availability of raw materials due to not only demand, but also the decreased output capabilities of some major suppliers.
How does all this affect your steel project?
- In the past, price increases were most often forecast with ample time for project owners to make smart decisions in advance on when and how to move forward with their projects, as of lately the volatile market is experiencing literally overnight price updates that makes it complicated for decision makers to anticipate this as the new normal and be ready to act in order to protect their budget. Our article regarding the steel construction cost planning shed a light about the planning process.
A 10% increase in raw steel prices on a $100, 0000.00 project is and additional $10,000.00 immediate cost. As your steel supplier, we do everything in our power to assess the markets and communicate closely with steel mills to stay ahead of the pricing curve, and we always work with our clients to minimize the risk.
- The size and design of your project is obviously another key factor affected by price increases. A project that initially uses 150 tons of steel may be a candidate for redesign with critical thinking (value engineering) that allows for a deduction in overall steel quantity while maintaining the desired footprint and structural integrity. Every one of our structures goes through rigorous design process (design for fabrication) that allows for maximum efficiency that is converted into cost savings for our clients.
- Price increases on steel can have a dramatic effect on funding, especially for pending projects about to begin. Most lending institutions insist on the upfront costs to be identified, and it is often an additional negotiation with the financing institution when the planned budget increases, another reason to make sure order of your project is placed with a fixed price right after funding and deposits are secured.
- The price fluctuations of steel also affects the price of the cladding & roofing materials and the accessories of the metal buildings. Roofing and cladding sheets and insulated panels are also made of steel, therefore, the price increase in the steel primarily affects the cladding material costs.
Price fluctuations are the “new normal” in today’s economic times, at least for the foreseeable future. With that said, building with steel is, and will always be the best choice for commercial construction in both time and money. With a proper planning, a good understanding the markets, along with an experienced supplier like Novelty Steel, you can manage all the risks and deliver a success story. We work hard for our clients to achieve success in every project we are a part of.