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Unplanned construction issues may require contract renegotiation

On Behalf of | Sep 20, 2021 | Firm News

Delays in multifamily construction projects across the nation may contribute to a rise in building and labor costs. A shortage of suppliers and issues with sourcing materials may prevent contractors from completing projects on time.

As reported by Construction Dive, 83% of developers surveyed by the National Multifamily Housing Council experienced construction delays during May 2021. The overall rate of multifamily construction starts, however, decreased by 12.5% between 2020 and 2021.

The survey noted common causes for cost issues

All survey respondents claimed to have run into price increases in their materials. Construction materials affected the most surged in price by 38% over the past year and labor constraints distressed 47% of developers. Lumber costs amplified by more than 200% between 2020 and 2021.

Because of the hike in lumber prices, developers found ways to save money in other areas. While 49% of developers cut costs by eliminating fixtures or other materials, 62% provided their customers with revised project prices. Modifying the price or scope of work services may, however, cause significant construction delays, especially when contracts require renegotiation.

Defects and delays may require specialized clauses to prevent breaches

As reported by Builderonline.com, research involving at least 2,000 U.S. construction projects discovered common causes of construction defects. Sources of defects included construction site workmanship deficiencies and misinterpreting a construction plan’s details.

Researchers reported an average deficiency rate of 6.5% for U.S. multifamily projects. Arizona reportedly had an average deficiency rate of 12.7% in its multifamily projects or two times more than the defects discovered for multifamily projects in California.

When it appears that developers require more time to complete their construction plans or need to source different materials, a contract may require revisions. This may help to avoid otherwise unexpected construction issues that might result in costly litigation.