The COVID-19 pandemic has disrupted the global economy in unprecedented ways. One of the significant impacts of the pandemic has been its effect on the price and availability of construction materials. From companies reducing their production, to shipping delays caused by border restrictions, to the labor shortage as the pandemic has started to wane, material manufactures and contractors are dealing with enormous uncertainty regarding construction materials.

In addition to COVID, the construction industry is now dealing with an increasingly uncertain economy, including runaway inflation and dramatic increases to gas prices (with resulting increases to shipping costs). As a result, parties to construction contracts are forced to confront the difficult issues of material availability and price escalation. If the owner insists on a lump-sum contract and refuses to accept any risk associated with material availability or price-escalation issues, the owner leaves the contractor with no choice but to build the costs of those risks into the bid that they submit. On the other hand, if the contractor insists on placing all of this risk on the owner, they will quickly see their backlog evaporate since owners are unwilling to accept all of this risk given the economic impact it could have on their project.