Challenge Five

Supply Chain Challenges & Soaring Materials Prices

2022 saw prices for many key construction materials soar while delivery schedules for those products became erratic and inconsistent. The rapid changes in prices and delivery schedules meant many contractors were stuck with contracts based on estimated costs for materials and schedules for projects that were no longer accurate. In other words, supply chain problems and spiking materials prices put the industry’s success at substantial risk.

Opportunities Built

AGC Conducts Inflation Education Campaign and Pushes for Greater Flexibility on Contract Changes

AGC updated and distributed multiple editions of its Construction Inflation Alert, a document designed for firms to use to educate owners about how rising materials prices and supply chain problems are impacting the industry. These alerts provided the documentation necessary for many members to secure more flexible terms from their clients to help cope with inflation and delays.

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AGC Chief Economist Ken Simonson also gave Inflation-Focused Presentations, both virtually and in-person, to dozens of public and private owner groups and reporters about rising materials prices and supply chain problems. These appearances helped owners adjust their expectations for bid prices and project schedules.

We also worked with the U.S. Army Corps of Engineers to publish the first-ever Contract Changes Playbook. The new playbook is designed to help make the change order process more transparent and to accelerate decisions about whether to accept those change orders. The playbook has proved helpful for contractors working with one of the largest federal construction owners as they adjust to the reality of rising materials prices and supply chain challenges.

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And AGC of America’s Consensus Docs coalition revised and updated its National Resource Center on Price Escalation to address rising materials prices and ongoing supply chain problems. The center continued to serve as one of the most relevant sources on construction prices escalation and supply chain disruptions.

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