+70% increase in the price of wood (+100% in Europe!). + 25% increase in cement prices. This rise in the price of building materials, which comes at a time when the sector is already struggling with an unprecedented labor shortage, has been worrying construction professionals for several months. 

And rightly so! How can you grow your business when profit margins are shrinking? How can you save money to stay profitable and competitive? What solutions are available to construction professionals? We take stock for you. 

Understanding the causes of rising building materials prices

As with any alarming situation, the best way to deal with it is first to make sure you understand the root causes that led to it in the first place. The surge in building materials prices didn't happen overnight; it was the result of a multitude of factors and circumstances: 

• Shortage of raw materials: Growing worldwide demand for certain construction materials (such as concrete, consumption of which has risen by 4% every year since the early 2000s), coupled with problems of extraction and production, are leading to a scarcity of resources and, consequently, higher prices. 
• Supply and demand: in the immediate aftermath of the COVID-19 epidemic, the construction sector boomed, rapidly putting the market under pressure. With demand outstripping supply, prices soared. 
• Supply chain disruption: The COVID-19 pandemic caused major disruptions in global supply chains, and we are still suffering the consequences. Plant closures, labor shortages and transportation difficulties linked to the closure of borders and ports have considerably increased the cost of transporting materials and raw materials.
• Geopolitical factors: International tensions and conflicts between countries, even distant ones, can disrupt supplies of certain raw materials, such as oil and gas, leading to higher energy prices and, in turn, higher prices for building materials in Quebec. 

The consequences of rising building materials prices for industry professionals

The soaring price of building materials is having a major impact on all players in the construction sector, from general contractors to civil engineering professionals and subcontractors. All companies are affected, from the country's largest to its smallest. Among the main challenges facing your companies are the following: 

• Higher construction costs: Obviously, the higher the cost of materials, the higher the total bill for you and your customers. 
• Difficulties in meeting project budgets and deadlines: Material shortages cause delivery delays, making it impossible to complete a project on time if materials are not delivered. As for the sudden rise in the price of building materials, this can quickly jeopardize adherence to the initial budget, sometimes forcing companies to cut back on quality. 
• Reduced profit margins: To remain competitive and win tenders, many companies are forced to reduce their profit margins. 
• Increased pressure on company profitability: To remain competitive and profitable, companies in the construction sector have no room for error. This makes them more vulnerable to risk. 

What are the solutions to rising building materials prices?

Fortunately, even if the rising price of building materials continues to worry many professionals in the sector, there are solutions to deal with the situation. It is possible to put in place good practices to limit the impact of this rise on your business and preserve your profitability. 

Negotiating and finding alternative suppliers: 

As a first step, you can start a dialogue with your usual suppliers to try and negotiate a better price for your building materials. Emphasize your order history, reliability and loyalty. And don't hesitate to request several estimates from different suppliers. By comparing prices and conditions of sale, you may be able to make a good deal. 

Optimizing inventory management :

With prices on the rise, there's really no time to waste! It's crucial to optimize your inventory management to avoid mistakes and additional costs. Opt for precise planning of your needs for each of your construction projects, and keep close track of all your uses and expenses. Investing in dedicated software can be an excellent idea, as some programs enable real-time tracking of your inventory and optimal resource planning. 

Using estimating software : 

All industry professionals agree that the profitability of a construction project depends on the estimate. And in a context of soaring prices, this is even truer! Adopting high-performance estimating software is therefore an excellent idea for ensuring the profitability of your construction business, because for accurate, detailed estimates, it's an indispensable tool that will enable you to : 

• Keep an eye on the price of building materials in real time: By integrating up-to-date material prices, these software programs help you anticipate real project costs and limit unpleasant surprises.
• Improve the accuracy of your estimates: Estimating software allows you to take into account the many parameters that influence the cost of materials, such as quantity, dimensions, technical specifications and supply conditions. As a result, your estimates will be more reliable, and the risk of errors considerably reduced. 
• Anticipate fluctuations in material prices: High-performance estimating software can integrate data on changes in material prices (among other things, of course) and simulate the impact of these fluctuations on the total costs of your projects. As a result, you'll be better armed to face the risks associated with price volatility, and your estimates will be more competitive. 
• Save time and increase efficiency: Using estimating software allows you to automate time-consuming bidding tasks such as price research, quantity calculation and quotation formatting. You'll have more time to concentrate on your core business!

Rising building materials prices are not inevitable! 

Soaring material prices are putting the construction industry under severe pressure, but there are simple solutions to protect you: inventory optimization, negotiation, optimized planning, estimating software, project management software, etc. We have no doubt: you're perfectly capable of adapting and growing your business. There's no doubt about it: you're perfectly capable of adapting and growing your business!

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