Construction costs have been going up. Mostly, this is due to rising costs of parts and materials—especially if they have to be imported and are inflated by tariffs. But it also has to do with inflation in general, as many products have seen their prices go up in recent years.
In construction, over the last five years, this spike has been very notable. For instance, when you compare costs today to what they looked like in February 2020, many materials are roughly 40% more expensive.
Why would this cause disputes?
This can cause disputes because original estimates for a job may no longer be accurate. Say that a construction company takes on a $10 million project that is supposed to take two years to complete. That estimate may have made sense under the market conditions when it was originally provided. But if costs go up by 40%, is the job now going to cost $14 million—even though the scope hasn’t changed at all?
This can lead some customers to be frustrated with the overall expenditures. They will either have to change their plans to reduce costs—meaning they get less than they originally expected—or they’ll have to invest more in the project than anticipated. Customers who are often frustrated by increasing costs may have questions about exactly how that money is being used or where it’s going, even when contractors and construction companies point to rising material costs and note that the increases are out of their hands.
When these disputes do occur—especially if they’re based around alleged contract breaches—it’s crucial that those involved understand what legal options they have.
