The Truth About Material Costs and Lead Times
There’s been a lot of talk about material costs and lead times lately. A recent analysis by the National Association of Home Builders (NAHB) has estimated that, due to the rising cost of soft lumber, the average price of building a new single-family home has increased by nearly $36,000. Consequently, a common question we are being asked is, “how will the rising costs of lumber affect my remodeling project?”
While it is true that new builds are experiencing an increase in cost, the good news is that remodeling projects typically do not require large packages of lumber. There are other costs that have been increasing due to the cost and lack of availability of some raw materials (think metals and petroleum based products), but not to the degree that lumber has been recently.
The larger issue, however, is lead times. Ordinarily, when we set a project schedule, we’re able to guarantee a finish date. Lately, that’s just not the case. Some materials’ lead times are unpredictable while others are extremely lengthy (some windows are taking nearly 6 months to arrive from the time we order them).
What are lead times?
A lead time is the amount of time between ordering a product/material and its delivery. Tubs, windows, doors, and appliances are all examples of materials or products that are experiencing longer lead times between manufacturing, ordering, and actual delivery.
Why are lead times longer than usual?
Simply put: Supply and demand. Factors such as Covid-19, workforce shortages, and factory shutdowns have played a large role in current production delays. Unfortunately, some manufacturers have temporarily halted production all together. While products are being delayed or even discontinued, the demand is still rising with the expanding economy. This is largely the reason for these temporary pauses on manufacturing – some sources claim that it is a way for them to focus on customer service. In other words, give themselves a chance to catch up before taking on any additional orders.
What can I do?
Remain flexible and plan ahead. We are encouraging clients to order their materials/selections earlier than we have ordered them in the past. We are now encouraging clients to order their final selections (doors, windows, and appliances) during preliminary design – well before construction begins. This way, we can receive our clients’ selections in time for installation.
Should I still plan my project now or should I wait?
Yes! It’s still a great time to plan your project. Material prices are not predicted to go down to previous levels so the sooner you start planning your project and invest in your asset, the longer you can enjoy it. Additionally, working with an experienced design-build firm can help you to stay on top of the process. Your designer can work with you to keep you up to date on current material costs and lead times and let you know when in the process is the best time to order your materials.