How to Mitigate Inflation Effects in Construction Projects

In March 2022, the US inflation reached 8.5% according to the US Consumer Price Index (CPI), which is the highest inflation rate reported since 1981. This 40-year high inflation rate has impacted all kinds of business, including construction. While there are other ways to reduce the impact of inflation, engineering design services and project management can greatly benefit construction projects to mitigate inflation impacts.

Recovering from the inflation will take up time, and equipment and material prices will continue to rise in the near future. To control the project costs, efficient engineering design at an early stage will significantly reduce the materials needed, which in turn will cut down the project costs. Apart from this, engineering design firms can also get the approval required from the local DOB in a short time, which can help start the construction process without any delay.

Optimizing the building system layout in a 3D design software environment effectively saves on cost. The savings can be from reducing the length of air ducts, piping, electrical conduit, etc. Every foot saved will represent materials you don’t need to purchase. Efficient building system layout combined with procurement management can ensure material purchases are done on time and there are no project delays. 

Start the Construction Stage Earlier

Early procurement of materials required during inflation times can help project managers start the construction stage early. However, you would need an approved project design to start the material procurement stage. Upon completing the required set of construction documents, you can proceed with the equipment purchases referring to the equipment schedules and BOM. Efficient planning of material procurement based on lead times of each material will eliminate the risk of delivery issues. 

How NY Engineers can help

Apart from providing MEP design and consultation services, we also excel in construction administration and material procurement. We can also assist in qualifying for local incentives and loans with low interest, which will significantly reduce the overall cost of the project. 

Importance of MEP Layout

MEP system designs are complex and involve a lot of components that interact with each other. Inefficiently designed layout will lead to the project becoming unnecessarily expensive. This additional cost can go up to a few thousand dollars if you consider the design layout required for the entire building. 

Using Building Information Modeling (BIM) design engineers can optimize the systems layout, check the system interactions for any clashes, and the cost of the installations even before the construction phase begins. Smart building models and automated construction material takeoff can further allow project manager to compare the cost of design decisions. 

Onsite Renewable Power and Energy Efficiency

When it comes to looking at construction costs, design phase and construction phase tend to get a lot of attention. However, building operation and maintenance expenses are equally important. Expenses like energy bills are also affected by the inflation. 

According to the CPI report, the increase for energy was 32%. The US Bureau of Labor Statistics provided a breakdown of energy products and services:

  • Gasoline – 48%
  • Fuel oil – 70.1%
  • Electricity – 11.1%
  • Utility piped gas – 21.6%

The building that are completely dependent of utility providers, must consider the impact of the price hike due to inflation. Onsite renewable energy generation coupled with energy efficiency measure will not only reduce the energy bills significantly (including the impact of the inflation), but also reduce the carbon emissions of the building. 

The US has been actively encouraging the use of renewable energy generation systems. For building owners, onsite renewable generation coupled with energy efficiency measures will qualify them for tax incentives, rebate programs, low interest loans, and many other financial benefits. For NYC building owners, this can help building owners avoid the penalties under the Local Law 97, which will come into effect from 2024. 

Author’s Bio

Michael Tobias, PE, is the principal and founder of NY Engineers. He leads a team of over 50 MEP/FP engineers. Although New York Engineers main headquarters are in NYC, the business has led over 1,000 engineering projects in New York, New Jersey, Connecticut, Pennsylvania, Florida, Maryland, and California, as well as Malaysia and Singapore. Michael is an advocate for green technology and energy efficiency, and approaches engineering as a vehicle to raise the quality of life.