In a Construction Executive magazine article, Orlando partner Robert Alfert Jr. discusses one consequence of the pandemic: the rising cost of construction materials. As a result, contractors have been turning to construction law firms to navigate delayed projects, interpret contract language, assist in risk mitigation, and ensure the road ahead is paved with understandable and protective clauses. High prices for steel, lumber, and copper are a prime example of why contractors need to plan carefully in advance for every project—and why contract language matters.

While planning ahead might ease the pain of unexpected costs in the future, having prices skyrocket during projects left contractors searching for clauses in their contracts that addressed price hikes or sought to renegotiate altogether. “Materials cost escalation has been a very significant financial hit to many existing projects. COVID-19 is one of the top five deal points in every construction transaction today, and most projects are grappling with its impacts,” says Robert Alfert, partner at Nelson Mullins Riley Scarborough LLP. “I suspect that these issues will continue through 2022, especially on the litigation side.”

“While parties can fight over it [material cost escalation and force majeure], the smart ones get to the table to craft a sensible business resolution. For example, on one lump-sum deal for a $100 million multi-family project, increased lumber pricing caused a $3 million bust. While the owner could have fought it and made the contractor prove force majeure relief, the owner negotiated for all stakeholders to kick in to make the deal work. Then we dealt with the lender to allow for payment of stored materials so that we could buy all materials before more escalation occurred,” Alfert says.