Rising material prices continue to affect the design and building industries, often in unpredictable ways. Causes range from natural disasters to the availability of raw materials, but architects and manufacturers are learning to innovate within the labyrinth of a shifting market through increased collaboration with manufacturers and new approaches to material selection.
In many cases, a spike in prices comes down to a perfect storm of events. Take cotton, for example. Due to flooding in production countries like Pakistan and Australia, combined with increased demand from China, the fiber is at its highest price in nearly 150 years. “Those two things mean that cotton has gone through the roof and everyone is trying to find alternatives,” said Andrew Dent, vice president of material research for global materials consultancy Material Connexion.
In many cases, though, it’s difficult to find an exact substitute in price and volume, especially as even commonplace plastics like polyethylene and polypropylene—used in everything from vinyl wall coverings to packaging—are rising with the price of oil. Recycled material manufacturers also face uncertainty as they search for reliable scrap and trust that virgin material prices stay high. “How do you build a business based on hoping oil prices will go up?” asked Dent.
For structural materials like steel and concrete, which held 58.4 and 20.3 percent market shares respectively in the first quarter of 2011, there is no substitute. Sometimes changes in materials prices may not affect a project as much as one would think—because fabrication and erection comprise most of a structural system’s cost, a 10 percent rise in steel pricing would mean about a 3 percent rise in overall project costs for an average steel or reinforced concrete project. But large fluctuations can happen: steel scrap saw its highest and lowest prices since 2004 in a just four-month span in 2008. That’s why protection from swings is critical for fabricators. “As with anything, the real question becomes who holds the risk for those types of changes,” said John Cross, vice president of American Institute of Steel Construction, a not-for-profit technical institute and trade association for the steel industry. “Some fabricators will submit a bid with an escalation clause, and some submit it without,” he said. “You have to be very careful in terms of what you are specifying.”
As everyone in the building industry learns to count on rising costs, architects are using the integrated project delivery approach for more and more projects. A few years ago, Renzo Piano and FXFowle worked with three contractors who were paid $200,000 each to develop curtain wall mockups for The New York Times Building. FXFowle managing partner Guy Geier estimated that the $600,000 investment saved at least $2 million on the project. Now, on a yet-to-be announced corporate headquarters in Toronto, the entire design and engineering team as well as the primary contractors and owners are making decisions together, he said. The firm has also been able to leverage simultaneous work on projects in Riyadh to get better material pricing. “Because there’s not much work in Europe, the competition for work in Riyadh is intense; we’re able to get very competitive prices on the curtain wall systems we’re using,” said Geier.
Ultimately, some materials continue to defy any cost-cutting measures. The huge spike in rare earth elements—necessary for military technologies and smartphones as well as solar cells, wind turbines, and HVAC equipment—caused by soaring demand coupled with China’s market control could drive manufacturing prices in to new heights. “It’s the lesser known materials that have a big impact,” said Dent of Material Connexion. But competition and lean times lead to innovation, he added. “Just because you’ve got an unlimited budget doesn’t mean you’re going to produce anything better.”