AGC: Increasing construction materials prices driving up project costs

By |  November 10, 2021


Rising construction materials prices seem to be increasing costs of construction projects, according to the latest Associated General Contractors of America (AGC) analysis of federal data.

Association officials point out that while there has been a big jump in what contractors charge for projects, the rise in materials prices is even higher.

“After being battered by unprecedented price increases for many materials, contractors are finally passing along more of their costs,” says Ken Simonson, AGC’s chief economist. “Meanwhile, supply chain bottlenecks and labor shortages continue to impede contractors’ ability to finish projects.”

The producer price index for new nonresidential construction – a measure of what contractors say they would charge to erect five types of nonresidential buildings – jumped 7.1 percent from September to October and 12.6 percent over the last 12 months.

An index of input prices – the prices that goods producers and service providers such as distributors and transportation firms charged for inputs for nonresidential construction – climbed by 21.1 percent, compared to October 2020. That includes a 1.3 percent increase since September, Simonson adds.

Simonson also notes that many products, as well as trucking services, contributed to the extreme increase in construction costs.

The price index for steel mill products more than doubled, jumping nearly 142 percent since October 2020. Indexes for aluminum and copper and brass mill shapes climbed 37 percent over the last 12 months, while the index for plastic construction products rose more than 30 percent.

The index for gypsum products such as wallboard climbed 25 percent and insulation costs increased 17 percent. Trucking costs rose 16.3 percent while the index for diesel fuel, which contractors buy directly for their own vehicles and off-road equipment and also indirectly through surcharges on deliveries of materials and equipment, doubled over the year.

AGC officials urge the Biden administration and Congress to do more to address supply chain backups that are crippling construction firms and the broader economy. They are calling for measures such as additional tariff relief for key construction materials.

“Supply chain backlogs are clearly one of the biggest threats to the economic recovery,” says Stephen Sandherr, AGC’s CEO. “Washington officials need to be more aggressive in taking steps to get key materials moving again so construction firms can continue rebuilding the country.”

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About the Author:

Jack Kopanski is the Managing Editor of Pit & Quarry and Editor-in-Chief of Portable Plants. Kopanski can be reached at 216-706-3756 or

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