I just dont understand how to explain it to myself, let alone others. I feel like something are covered by others terms.
There is the inflation that normally happens every year? CPI? Buying power of the dollar?
Then there are goods that cost an extraordinary amount more? This is considered inflation as well or is there a better term?
Basically if a project costs “A” more, I would like to know that “A” should be attributed to X, Y, and Z.
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Yay! This is literally and specifically what I do for a living.
We do normally factor in non-specific escalation into work that’s greater than a year away, typically around 3-4% as a budget.
I’m currently forecasting roughly 12% for work starting in 2023.
Material pricing in the past 3 years has gone nuts. Glass, just this past week, went up 40% in North America. 40. fucking. percent.
Armstrong and USG, major suppliers of drywall, ceiling tiles, and other basic carpentry materials have letters our basically saying their pricing is going up 15% per quarter *until they say “stop”*. Just an open letter of escalation.
Union labor in the US has been pretty flat for the past few years, the Unions reacted to COVID by just being happy to have jobs and their annual agreements haven’t changed much. Open / Merit Shop labor has been costlier as they share a labor pool with residential and that’s been busy as all get out.
Fuel and shipping have also been costly, many vendors stipulate a 10-15% “Fuel Surcharge” on all orders and that’s increasing now too.
So in order of factors for construction
1) Materials materials materials, they are through the roof and it’s really a massive problem.
2) shipping / fuel
3) Scarcity. It’s silly, but a single large buyer of steel has been building so many distribution centers for their online order business that they have single handedly blocked the US availability of many steel member sizes for several years.
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