High demand for construction material creates some challenges for projects

Ryan Anderson and his team at Ackerman-Estvold keep busy all year long with a number of architecture and engineering projects, but pricing for construction material has risen dramatically in recent months causing challenges to complete some projects.

At least a couple of projects the Minot, N.D.-based company had been working on has been put on hold because of this dilemma.

“Within the past six weeks or so, we've seen a number of things happen,” he told Prairie Business on May 11. “We started to hear a lot of information, a lot of chatter from different contractors about issues with supply chain and the issue with costs on all kinds of materials, whether it's manufacturing materials or even the raw materials themselves.”

Clients who postponed projects last year because of the pandemic are wanting to build now, including on the residential side as homeowners want to take advantage of low interest rates.

“They might have been holding off over this past year, or maybe they stopped the project,” he said, “but now they're gearing back up and so there's a lot of demand for materials … Material prices are really skyrocketing right now.”

It’s a problem not only in North Dakota, but a challenge across the country.

According to an economic report released on May 7 by Wells Fargo, lumber prices have increased over the past year of the COVID-19 pandemic, which caused saw mills to shut down in some states. Lumber futures contracts for May priced at $1,645 per 1,000 board feet, according to the report. That’s up about 60% from the month prior and 374% over the past year.

Demand, however, has proved more resilient.

Terri Miller, an architect with Architecture Incorporated in Sioux Falls, S.D., said she is noticing something similar in her market.

“Right now my biggest concern is we have quite a few projects on the books, but I don’t know if there will be material to build all of it,” she said. “We have to be creative to get structures built. We’re forced to explore new ideas to get to where we need to go.” continued on page 18

Anderson said his team at Ackerman-Estvold do what they can to help the client, such as researching additional funding options and identifying grant opportunities, to keep projects moving forward.

In the worse-case scenario, sometimes a project halts or is postponed.

It is a gamble to guess how long this challenge will last. Anderson said it could last four months to four years, but Miller said she’s heard chatter it could last three to five years.

Or it could be over tomorrow.

But likely not.

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Terri Miller Ryan Anderson

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Remodeled workspace

That doesn’t mean that projects are still not being put on the books, but going forward could be rough for some of them.

Industry professionals say they are seeing other types of projects happening in the business world too, especially as more people head back into an office setting. For some business, like Ulteig, the office setting is not going to look the same as it did pre-pandemic.

President and CEO Doug Jaeger told Prairie Business that his team is focusing on turning some offices into “collaboration centers,” where employees can gather with other team members for project discussion and ideas, but spend other days working remotely.

Miller said some businesses that have employees in the office have inquired about installing taller cubicle walls for those desks with high-rise desktops to help prevent airborne particles from escaping to the next desk.

She also said infection-control tools that fit into HVAC systems and filter out air-borne particles are something that some companies also have adopted, but these high-priced tools are usually seen more in hospitals or larger corporations.

Mike Dunn, business development manager at Construction Engineers in Grand Forks, said he also is seeing businesses wanting to do remodel projects for a post-pandemic world.

Other projects include remodels to bring buildings up to current standards.

“We’ve got two or three things when it comes to the projects right now that we're seeing,” Dunn said. “The CARES Act funding, and some of this federal funding for schools, health care and other public buildings is coming through to help move things along as far as personal safety and COVID response is concerned and just overall health and wellness. We're seeing a lot of interior remodels and upgrades that way, helping health care to comply with new standards, setting up for infection control and some of those things.”