Over the course of the past year, public and private entities have witnessed unprecedented increases in the cost of materials for construction. And while South Florida remains a hub for development, both private developers and municipalities face an ongoing challenge—volatile changes to market conditions affecting the price of construction. The cause of these changes is diverse and dynamic. The COVID-19 pandemic, which surged in 2020 and 2021, has left a lasting mark on the industry. While markets appear to be stabilizing, material and labor shortages run rampant, making it increasingly difficult for property developers (including municipalities) to accurately price their upcoming construction projects. To make matters worse, in 2022, military conflict in Ukraine further exacerbated the impacts of COVID-19 in the following ways: increasing the cost of fuel, which increased operation costs for construction projects; and contributing to supply chain disruptions, which increased procurement lead times.

Despite material and labor shortages, development continues. To that end, property developers are actively searching for means to mitigate the risk of ever-increasing prices resulting from such shortages. At a time when certainty is lacking, property developers should consider the following approaches to protect their interests as they negotiate new contracts for construction.