Donald Trump's latest batch of new tariffs shook the various sectors, and one of the numerous sectors that were greatly hit by it is the construction industry. Chinese imports that were subject to tariffs greatly increased the cost of materials, and companies are under tremendous pressure to finish projects on shoestring budgets.
For contracting businesses, operating in this new environment can be challenging. Innovative construction management tools, like Archdesk, provide solutions for managing budgets, increasing efficiency, and safeguarding profitability.
This post addresses how tariffs impact the construction industry and how it's essential to use tools such as Archdesk in order to remain under budget.
What are the latest tariffs and how do they affect construction?
President Trump's action in putting tariffs on billions of dollars' value of imported commodities like steel and aluminum aimed to protect American businesses. It had harsh consequences for the U.S. construction industry, though.
Increasing Cost of Imported Construction Materials
China, one of the top suppliers of construction materials to the United States, has been hit the hardest by these tariffs. In 2018, the United States imported $17.5 billion of construction materials (U.S. Census Bureau). Steel prices, which are a crucial material, rose by as much as 25% since the tariffs were introduced (SteelBenchmarker).
This direct surge has a straight effect on project budgets, offering minimal space for construction managers to accommodate unforeseen cost overruns.
The ripple effects of these tariffs extend far beyond steel. To cite a single example, the price of aluminum, that other crucial building material, is 15% higher since the tariffs were imposed (Aluminum Association). Prices for lumber rose by 20%, adding up to as much as $9,000 to new single-family-home prices, by the National Association of Home Builders' estimates. And yet, in spite of that, a survey by Associated General Contractors of America determines that over 60% of construction companies are experiencing delays or terminations of projects due to rising materials cost. These added costs impose tremendous financial burdens on the industry.
In accordance with this trend, the price of structural steel has risen 25% in the previous year alone, as reported by the Bureau of Labor Statistics. Similarly, copper prices rose by nearly 40% and impacted wiring and plumbing in residential and commercial construction projects significantly. Roofing materials saw their cost rise by 15% over a six-month timeframe, as pointed out by a survey conducted by the National Roofing Contractors Association.
In addition to that, materials delivery charges in materials transportation are also going up by approximately 12%, which is yet another cost of a project. Adding to those materials and logistics cost hikes should see, on average, the budgets of construction projects increase by 10% in the next year.
Project delays and cost overruns
Due to heightened expenditures, companies are forced to adjust the deadline of projects or cut corners on material quality, leading to delays and damage to business reputations. Cost and quality is a challenge for project managers to meet, and numerous organizations end up in delicate financial positions.
Why Keeping to Your Construction Budget Is More Important Than Ever
Controlling material cost, or any cost for that matter, in today's economy is becoming ever more crucial. Cost inefficiency results in bloated budgets, disgruntled customers, and reduced profitability.
- Real-Time Tracking enables managers to identify cost overruns in advance.
- Correct Forecasting allows for long-term cost planning, leaving space for unforeseen difficulties.
- Profitability Analysis enables the deployment of resources where they bring the highest return.
Loose budgetary disciplines can come with costly consequences, and there may be little room for maneuver in the face of increasing tariffs.
How Archdesk Helps Keep You in Control of Your Expenses
For businesses that struggle to deal with these new issues, construction management tools like Archdesk are the solution. Archdesk allows construction companies to deal well with financial pressure and remain profitable in their constructions by using innovative features.
1. Complete Budget Control
Archdesk allows you to prepare detailed budgets for projects including labor, material, equipment, and overheads. It offers:
- Template-based budgeting for homogeneous budgets.
- Support for projects in various currencies.
- Reconciliation functions to compare spending to estimates
Find Archdesk Budget Management
2. Real-Time Cost tracking
Archdesk provides an easy-to-use actual cost versus estimation tracking mechanism. It consists of:
- Real-time variance analysis for better cost control.
- Purchase order and invoice tracking.
- Subcontractor payment administration for ensuring financial transparency.
Real-time tracking prevents surprise financial setbacks, allowing you to lock in the funding of your projects even amid economic instability caused by tariffs.
3. Advanced Forecasting Tools
Cost forecasting becomes increasingly vital. Archdesk cost forecasting capability offers:
- Earned Value Management (EVM) to gauge project progress.
- Cost-to-Complete estimates, also known as Cost
- Contingent planning based on risk in anticipation of material cost volatility uncertainties.
This future-oriented approach enables you to save for the unexpected, keeping both your projects on schedule and in the black.
4. Actionable Reporting and Insights
Archdesk's robust analysis capabilities give you the insight you need in order to respond to budgetary stresses appropriately. They include:
- Customized project performance monitoring dashboard.
- Profitability analysis to gauge the financial well-being of your projects.
- Exportable reports for sharing news to important stakeholders.
5. Integration with Project Management
Not only does Archdesk help manage budgets, it also seamlessly integrates into your overall project workflows. These are:
- Scheduling and resource allocation.
- Automated cost allocation to reduce manual effort.
- Connecting performance measurement and document management
Platform integration also ensures synchronization of all the activities across the projects for efficiency and cost management.
Numbers don't lie
Still unsure if Archdesk really delivers? Let's see what the figures say:
- Projects involving the construction sector that use project management software are 2.5 times as likely to complete on schedule (McKinsey Global Institute).
- Archdesk customers experience a 15% average cost reduction in projects due to better budget management (Archdesk Customer Survey, 2023).
With figures like these, it is clear that installing Archdesk is both a smart business choice and a strategic necessity.
How Your Business Can Weather Tariff Barriers
The state of today's economy demands new methods of managing budgets in the construction industry. It may appear impossible to get around increased tariffs and raw materials prices, but the right program can make all the difference.
By using an end-to-end system like Archdesk, construction businesses can manage in the midst of constant change, protect budgets, and secure profitability in their projects. Through live tracking, forecasting, or actionable insight, Archdesk provides the financial management necessary in uncertain environments.
Uncover how Archdesk transforms cost controlling
Tariffs are changing the face of construction, yet your business doesn't need to bear the brunt. Take back control of your construction budget and turn problems into opportunities through Archdesk. Discover Archdesk Today
