Mika Majapuro

Construction costs are increasing rapidly. Some developers have said that total construction costs are up 30% over last year. A lot is contributing to the rising construction price tag, but a labor shortage and rising materials prices are among the biggest drivers. Now, trade tariffs on steel and lumber are putting more pressure on construction costs. While there is little developers can do to curb these increases, implementing materials management technology is one way to offset it.

“The biggest problem is uncertainty. Some projects are done at a fixed price, so you may be bidding on a project today but there is a multiple-months delay to construction,” Mika Majapuro, director of product management and strategy at Teletrac Navman, tells GlobeSt.com. “That is a risk window where you will not know what is going to happen to the materials price. There are currently a lot of upward pressures on materials cost. If you combine other trends like labor shortages and rising wages, there are a lot of pressures on development margins, which are already thin to begin with.”

Teletrac Navman is focused on using technology to create efficiencies in materials management. “There are a lot of inefficiencies not only from employee productivity but also in materials management,” adds Majapuro. For example, materials might not be delivered, get lost on a large job site or run out earlier than expected, causing inefficiencies that can have a huge impact on the bottom line. “When you receive a material, you can use barcodes to tag materials so that you know where the material is received and where it is placed,” explains Majapuro. “As you are using the material, you can use software applications to track the amount used. Then, you can hook it up into a purchasing system so that when the material reaches a certain level, more will automatically be ordered. These are the kind o efficiencies that technologies can create.”