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Impacts from a rise in construction material prices are still being felt despite some recent signs of prices stabilizing, according to new analyses by the Associated General Contractors of America and the Associated Builders and Contractors. 

According to an analysis by AGC, construction input prices were up 1.1% in June from May, and up 16.8% from June 2021. “Some materials prices have fallen recently but others appear headed for further increases,” said Ken Simonson, AGC chief economist, in a press statement. “Since these prices were collected, producers of gypsum, concrete, and other products have announced or implemented new increases. In addition, the supply chain remains fragile and persistent difficulties filling job openings mean construction costs are likely to remain elevated despite declines in some prices.”

Construction input prices as tracked by ABC jumped 1.9% in June compared to the previous month, and up 20.1% year-over-year. Both industry associations base their analyses on data published by the U.S. Bureau of Labor Statistics.

“It’s no secret that contractors and their customers have been walloped by massive increases in construction materials prices,” said ABC chief Anirban Basu. He added that while the effects of higher input prices were still being felt in June, but the most recent day show that "key commodity prices have declined, so it may be possible we have achieved peak inflation."

Industry Voices Cost Concerns to Congress

The effects of higher material prices and broader worries around the impact of inflation have some industry figures taking their complaints to Capitol Hill.

Increases in costs for materials continue to have an impact on projects funded by the Infrastructure Investment and Jobs Act (IIJA), according to state, local and industry officials.

The officials, speaking at a July 14 roundtable discussion held by Republicans on the House Transportation and Infrastructure Committee, cited projects that rose well above original estimates, leading to deferrals or cancellations. The committee’s top GOP member, Rep Sam Graves (Mo.), said that inflation is “out of control” and is affecting project schedules.

Graves said, “Inflation is hitting the pocketbook of every American and it’s hitting the transportation and construction industries particularly hard.” He said that “the funding provided in the Infrastructure Investment and Jobs Act is shrinking in value every single day.”

Dr. Shawn Wilson, secretary of the Louisiana Dept. of Transportation and Development, said that “the most important thing for us to be able to do is to manage expectations.” 

Wilson, who also is the president of the American Association of State Highway and Transportation Officials, said some of the IIJA’s expected benefits will not be realized because of several factors, including inflation, but also problems with the supply chain and finding enough skilled workers.

Industry associations brought in a few contractors from across the country to speak at the roundtable about how rising material and fuel costs had impacted their recent bids. 

George Palko, president and chief executive officer of Great Lakes Construction Co., Hinckley, Ohio, said his company bid, or was involved as a subcontractor, on three Ohio Dept. of Transportation projects in the past three months on which bids were rejected because they were far higher than the budgeted amounts.

Palko, who also was representing AGC at the meeting, said one project had been estimated at $2.7 million, but came in at $5 million. Another was estimated at $13 million but had risen to $16 million. The third was estimated at $180 million but came in $270 million.

Karen Hubacz, president of Bond Construction Corp., Spencer, Mass., pointed to the cost of fuel, which she said, “is impacting every aspect of my business.” Hubacz, who represented the National Stone, Sand & Gravel Association, said, “Fuel prices have nearly tripled this past year, which is driving every cost for the materials we produce.”

House Transportation and Infrastructure Committee Democrats did not respond to a request for comment from ENR about the Republicans’ meeting.