Materials, Labor, and Rising Construction Costs Part 2
Construction costs are significantly higher for a variety of reasons, including rising material costs and labor shortages in companies across the country. As a result, projects are being scaled back and in some cases, canceled altogether. It is critical that companies find ways to achieve their goals while dealing with these restrictions. Two of the ways they can do so is by considering inflation and the role of technology in regard to saving time and money while improving the quality of their projects. Be sure to read part one, in which our Nashville contractor lawyers discuss the rising material costs and labor shortage issues.
How Inflation Affects Construction
The cost of construction rises faster than inflation. Increased inflation has been a major nuisance to construction development and contributes to the cost overruns and project abandonment. Since construction is a cost-based business, companies must find ways to reduce spending in other areas. Direct and indirect costs must be calculated accurately, and inflation must be accounted for when creating a pricing strategy. If not accounted for, rapid inflation can damage a company significantly.
The Role of Technology
Technology and lean processes can save construction companies time and money on their projects. Although new technology requires substantial upfront spending, it plays a vital role in managing the cost of construction. High-tech systems such as building information modeling (BIM) and virtual design and construction (VDC) allow construction professionals to view buildings and systems so that options can be better understood and challenges identified before construction even commences. Technology gives all stakeholders the opportunity to collaborate so projects can be better managed through waste elimination, timeline reductions, and balancing costs.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.