AIA Women’s Leadership Summit: Lifting Each Other in the AEC Industry

How Surging Construction Input Prices Impact Project Management

Update Surging Input Costs: What Contractors Need to Know November saw a significant increase in construction input prices, prompting serious discussions within the commercial construction sector. According to the recent analysis by the Associated Builders and Contractors (ABC), input prices for construction rose an eye-catching 3.4% year-over-year, with a 0.6% monthly increase compared to October. This trend is igniting concerns among contractors, particularly as they navigate a challenging economic landscape mostly fueled by tariff-induced price hikes. Understanding the Drivers Behind Rising Costs One of the most significant factors exacerbating construction costs has been the ongoing tariffs affecting a variety of materials. For instance, aluminum mill shapes—heavily impacted by tariffs—soared by 28% from November 2024 to November 2025. The rising prices of other key materials, such as fabricated metal products and structural shapes, only add to the troubling landscape for builders looking to maintain project efficiency and budget. The Impact on Project Bids Interestingly, while material prices have escalated, contractors’ bid prices haven’t kept up, increasing only 2.7% over the past year. Thus, contractors are faced with the double-edged sword of rising input costs against slower bid price growth, resulting in tighter margins and tougher negotiations with clients. Many contractors are now accelerating purchases in hopes of offsetting these anticipated costs, but this rush can also strain supply chains and lead to additional challenges down the line. Energy Costs Add Pressure Energy prices are also weighing heavily on the construction costs. November brought a 10.8% jump in natural gas prices alongside a 1.4% increase for unprocessed energy materials. These hikes not only affect the costs of construction materials but also impact the overall expenses related to operational logistics and project management. What This Means for Commercial Projects in 2026 Entering 2026, contractors and clients alike should brace for more volatility. James Simonson, chief economist at the Associated General Contractors of America, has pointed out that the construction industry’s rising input costs dwarf general inflationary trends. With 62% of contractors listing economic slowdown among their top concerns, addressing these rising costs should become a priority for anyone involved in construction management. Strategies for Managing Rising Costs To navigate this complex matrix of rising prices, contractors must adopt proactive strategies. Initiatives could include tight monitoring of material costs, effective negotiation with suppliers, and leveraging bulk purchasing agreements. Emphasizing sustainable building practices can also lead to long-term savings, especially in a market where resource efficiency is becoming increasingly critical. Final Thoughts: Preparing for Future Construction Trends As the construction industry heads into a year marked by uncertainty, stakeholders are encouraged to maintain a flexible approach when adapting to these input price fluctuations. With a concerted effort towards innovative practices and efficient project management principles, navigating the rising tide of construction costs is feasible. In this evolving landscape, staying informed is paramount. Engage with your suppliers frequently, explore sustainable alternatives, and prepare to adapt strategies to ensure quality outcomes for your projects. Remember, planning today paves the way for successful builds tomorrow.