Let’s be honest: estimating is hard. And one of the reasons for this is the cost of construction material, as it changes frequently. Other expenses, like labor and overhead are somewhat more predictable, especially once you have a good handle on how long it takes to accomplish a task. Just plug that number in and multiply it by your hourly labor costs. If the cost of wages increases, then you just adjust the hourly figure. Add a little bit for contingencies like delayed materials delivery, and you’re in business.
Unfortunately, materials costs are less predictable. Why? There are a lot more variables to construction materials. Besides the standard forces of supply and demand, along with the price of raw materials, other issues can influence materials costs. For instance, high tariffs involving various countries can increase costs. Regulatory issues can increase production costs, as well. Supply chain disruptions also influence pricing, and they tend to be less predictable.
Of course, your ability to find the price of a certain item is crucial to accurate estimating. And, accurate estimates substantially increase the chance of arriving at a price which is fair for both you and the customer. Underestimate by too much, and you’ll lose money. Overestimate, and your customer might get soaked. The ideal is to get an estimate that fairly compensates your company while remaining competitive. With that in mind, here are some ways to go about getting accurate numbers. Besides the method, we’ll talk about when to use each one, and where it falls short.
Proven Sources To Find the Cost of Nearly Every Construction Material
1. Consult Internal Price Lists
If you’ve been in business long enough, there’s a good chance you have internal records that reflect prices paid for materials in the past. Typically, this data is gathered from the invoices sent to you by suppliers. Or, if the materials were paid for upfront, like you might do at a hardware store, there are receipts. Contractors that have good internal controls and effective project management will input these costs into project records. In addition, there should be a spreadsheet that records the unit prices for these supplies.
As the saying goes, the best predictor of the future is the past. If you paid 5 cents each for a certain size of screw a couple months ago, there’s a decent chance that you’ll still pay that now. In addition, these numbers give a realistic view of how many units you use for each project type, which helps with takeoffs.
Things like supply shortages and discontinued brands can cause pricing to change relatively fast. If you have a significant amount of historical data, you’ll be better prepared to predict the effect of normal inflation, but newer companies can’t always do this. Instead, you’ll need to check periodically to see if there have been any pricing changes. Often, you have a pretty good idea based on the most recent hardware store run, but there are limits.
In addition, you might not have datapoints on everything. Internal price lists are inherently limited to what your company has used at some point in the recent past. So, if this is the first time you have poured a concrete foundation then you probably don’t have historic data for it. It’s possible that you know how much a bag of cement costs, but this doesn’t help with hiring the mixer and using a large amount of cement.
When to Use
Using an internal price list is most effective when the cost of materials is relatively stable, and when the company has used those materials recently. So, if inflation is predictable and you’re building the tenth free-standing garage with slab foundation that year, then price lists are wonderful. On the other hand, if there is a shortage of cement right now because the supply chain is messed up, then you should check the pricing with your suppliers.
2. Get in Touch with Industry Associations
Another way to find out how much something costs is by turning to local industry associations. In many larger areas, there are builder’s industry groups. Besides lobbying for the interests of your fellow contractors, these groups are excellent repositories of information. This is not only true because of the local grapevine, but because the associations are made of practicing contractors. Even in the face of stiff competition, there’s room for an exchange of information and industry cooperation. If there’s a significant disruption in supply chains, then this will be reflected in industry intelligence.
With all of this said, how do you take advantage of this resource? Generally speaking, there are two ways to benefit. First, they might have a newsletter. If there are significant price changes, then there’s a good chance they will tell you. The other way is to call or e-mail with a specific question.
The main advantage to this approach is that it can be hyper-local. So, if the lumber suppliers have been waiting months for that load of pine 2x4s, then the prices will probably be higher than usual. Or, you might have to go farther away to order the lumber and pay higher shipping as a result.
It’s a little bit hit or miss. If there isn’t much information on a material, then the industry association might not be able to tell you much. On the other hand, they might be able to suggest a certain supplier.
When to use
If you’re new to the industry, then your local construction industry association is invaluable. They’ll be happy to help you with finding suppliers and costing. Also use this approach when local conditions are unpredictable or significantly different from your region.
3. Use Industry Price Books
This approach is probably the oldest way to find the cost of construction materials. Along with internal records, industry price books have been an important tool for estimators since long before the computer age. In fact, price books also used to take the form of paper catalogues, such as the ones you still can get for Sears or Tractor Supply. They also reflect the price offered in the service area at any given time.
Non retailer industry books are broken down by specialty and location. Typically, they are issued every year and are based on the average for an area. Companies such as R.S. Means and BNI Books spend all year compiling the data. To purchase these books, you’ll need to know what kind of materials you need. For instance, one book covers electrical supplies, another plumbing, and a third lumber. This is because prices are broken down by area, and include data for standard quality, budget, and premium options. If you need information on any given construction material type, chances are that there’s a listing in the relevant volume.
The beauty of price books is that they try to cover all the bases. That means that they’ll give you both national averages, in addition to area-specific variables. In addition, all the types of materials are listed, in detail. And, since the books are updated every year there’s an attempt to keep the data current. Finally, you’ll find pricing for every type of supply within the same category in one place.
Unfortunately, pricing books come with one fatal flaw: the data tends to be obsolete as soon as it’s printed. While the books are a good guide for regional and quality differences, you’ll need to verify the information. If you are doing a time-sensitive estimate, then this need for verification can be a major problem. In this case, you’re better off picking another pricing method.
When to use
There are two major times to use a materials cost book. The first one is when you don’t have any historical data of your own. The second is when you are expanding into a new area. During expansions, you might not have accurate historical data. By looking through the price book, you can see if there are major pricing differences between your old locations and the new ones. Of course, these books are also a great source of additional information when you need some context for whatever reason.
4. Scour Supplier Websites
Looking at supplier websites is a great way to determine how much something will cost. Not only will they tell you exactly what the item they carry will cost you, but they’ll provide information on extras like delivery. You can quickly and easily determine the total cost of any item that you need, whether you need 10 screws or 10,000.
The advantages of this approach are obvious. For one thing, you get a definite number rather than an estimate, which is what most other information sources provide. Related to this, you can often bookmark the item for ordering later if you win the bid. From that standpoint, pricing from a supplier website couldn’t be much easier.
Another advantage is the fact that you can simultaneously see what brands they carry. If you live in a smaller area, this is great because it’s easier to give your client exact choices later on. Plus, if the supplier has a physical location in your area, the fulfillment information can be much shorter than when using a single office supplier.
Finally, scouring supplier websites allows for comparison shopping. Depending on the customer and your circumstances, you might use an average of what you see in a given category. Or, if they talked with you about which kitchen cabinets they want, then the exact price of these items can be added to the estimate. Unsure? Give the client a few different options, along with their corresponding costs. This is easy if you have the highly detailed information from a supplier website.
If you need to comparison shop, this can take a lot of time. And, those cost differences can make a significant dent in your bottom line if you aren’t careful. Similarly, this approach might not work if you need something for which the supplier isn’t online. That can happen, for instance, if your customer wants a certain brand of light fixtures that the retailers with an online presence don’t carry. Or, for that matter, if they are out of stock just about everywhere.
When to use this approach
Overall, this approach is best when you will purchase the items from a trusted supplier that has an online store. Mega-stores like Lowe’s and Home Depot excel in this area, and in addition they tend to have a huge selection. Another time to use this approach is when there’s something relatively new on the market. In addition to giving a price, the websites will often let you compare it with other products. This can allow you to make an informed decision.
5. Call Around
Similar to looking up prices online, you can call a supplier. This will give you the same information as online, but it works for situations where there isn’t a website. So, you can call a supplier for something highly specialized. Or, you might know of a newer supplier that doesn’t have their website fully operational yet.
Of course, this is an especially time consuming method of getting a price. We would recommend using it only when you have something very specific in mind and only need to call one or two places. The other time to do this is when you’re trying to find something that’s in short supply.
6. Use a Database or Information Broker
Finally, there is a newer way to find the prices for materials. Specifically, this comes in the form of online databases and marketplaces. One example of this is Construct Estimates, where you can upload plans, purchase material takeoff and estimating services. The advantage of an approach like Construct Estimates is that they let you compare prices at the click of a mouse. You’ll even have the opportunity to take advantage of bulk pricing in some cases.
Likewise, some of the information brokers are going online. The main example we found as of January of 2023 is RH Means, which publishes paper books too. They have a subscription database that’s still in testing mode. It has the advantage over paper in two ways. First, it’s online so you have less clutter. And second, the information is more up to date, since numbers are easy to change with an online format.
Construction material pricing is often difficult. With prices changing regularly, both as a result of changing commodities prices and market forces, it can be hard to keep on top of costing. Fortunately, by following the strategies in this guide you have a better chance of success.