Protecting Your Business Against Rising Material Costs

What a year 2021 has been already—a puzzle that no one can quite put together, but one thing is for sure, building material costs have skyrocketed! The unpredictability of material costs is dangerous ground for contractors. So, how can you truly protect your business? Your friendly Cromeens Law Firm Attorneys are here to guide you through this season and advise you on your next steps to protect your business.

I already signed a contract on a project but material costs are on the rise. What’s next?

There has been so much uncertainty about what this season could bring to the construction industry. It’s necessary to game-plan ahead of time to ensure that you and your business are protected from unprecedented events. So, what if you have already signed a contract on a project? What are the next steps? First, you review the contract to see if there is a provision that will allow you to recover the increased cost of materials.

Unfortunately, unless you added something to the contract to allow you to recover the cost, you will not be able to increase the contract amount. You need to take a hard look at the numbers. If you are projected to lose some of your profit, the best idea is to probably take the hit and make sure you add something for the potential material cost increase on all your contracts moving forward. If you take a hard look at the numbers, and it’s clear you will lose money, request a change order for the increased material cost.

If your request for a change order is denied, you need to consider your next steps very seriously. When you signed the contract, you agreed to do your work for a certain price. When it costs more to do your work, you owe the difference. If you walk away from the project, you could be sued. This is the risk you face if you choose to walk away. If you are considering walking away from a project, we recommend contacting a construction lawyer to look over your contract and advise you on your risks and potential outcomes before doing so. The attorneys at The Cromeens Law Firm can do this for a flat fee.

No more surprise legal fees

There are no unexpected legal fees when it comes to pricing at The Cromeens Law Firm. We understand the importance of a bill you can depend on!

How to protect your company against rising building material costs when issuing a bid

There are a few ways to protect your company when you issue a bid. First, you can put a time limit on when your bid can be accepted. For example, you could put at the bottom of your bid, “If this bid is not accepted, with written confirmation, within 72 hours of it being sent, it is subject to change.” If the bid is accepted outside of the 72-hour window and the material cost has increased, you can adjust the bid to include the extra cost before it is finalized.

Another way to protect your company through the bid process is to add a term that would allow you to increase your bid amount if the material cost increases. An example would be, “If at the time this bid is accepted and the material cost has increased more than 2%, contractor is permitted to increase its bid price to include the cost of the increased materials.”

I’m about to sign a contract; what verbiage should I add to protect myself?

You need to add two different things to any contract you sign to protect your company from rising construction material prices. First, you need to build in protection for the increased costs in your contract. For example, you could add the following verbiage to your contract before signing: “If at any time before contractor purchases the material required for this project and the cost of the material increases more than 2%, contractor is entitled to be paid the increased cost.”

Second, you need protection from the increased time that it could potentially take to get the materials. For example, you could add the following to your contract: “If contractor is unable to obtain materials in the timeframe expected when this contract was originally signed, due to a shortage, contractor will be granted additional time to complete its work and will not be assessed delay damages for any such delays.”


Do not miss these necessary steps! Be proactive in your projects. Before signing anything, build in language that protects you on the front-end. It is such a strange time in the construction industry. Stay alert! Your business depends on it. If you don’t add the appropriate language into your contracts, you will have to eat the increased cost of materials, and you could be liable for delay damages if you don’t get your materials on time. Remember—everything must be in writing; don’t just take anyone’s word for it. Don’t delay, contact us today! Your Cromeens Law Firm construction law attorney is ready to take your call at 713-715-7334.