Supply Chain Disruptions in Construction: How Estimators Protect Material Costs

With supply chain disruptions in construction and rising supplier prices, now is the time for estimators to reevaluate their bidding process to ensure they’re still able to win jobs and maximize their profits.

The current uncertainty surrounding tariffs has already led to price increases across the industry.

According to Associated Builders and Contractors’ (ABC) analysis of U.S. Bureau of Labor Statistics’ Producer Price Index, construction input prices increased 0.5% in March of 2025. These rising costs can affect your bid preparation, project budgeting and, ultimately, eat into your profit margins.

Supply chain disruptions in construction cause material shortages and delivery delays.

Here’s how you can keep winning jobs and building strong bids when faced with material and pricing struggles caused by economic uncertainty.

Key Takeaways:

• Supply chain disruptions force construction estimators to revise bidding strategies.
• Estimators should identify gaps in their process and address them to reduce the effects of cost increases on their business.
• Many estimators are investing in construction estimating software to help them mitigate rising costs.
• Contingencies serve as a powerful financial buffer to offset concerns surrounding rising costs.
• Estimators are turning to McCormick — all-in-one takeoff and estimating software — to help them build better bids in the face of rising material costs.

Understand the Current Bidding Landscape

With the constantly changing economic factors surrounding material prices and availability, it’s important to stay informed, especially about tariffs and the resulting supply chain disruptions.

There are tariffs that are in effect, others that are paused for adjustments and some are pending, so it’s crucial to review trade publications — like Construction Dive — and construction organizations’ websites — like ABC — to stay current on cost changes and how they can impact your estimates.

Review Your Current Quantity Takeoff and Estimating Processes

Construction supply chain disruptions require contractors to reassess estimating and material takeoff processes and identify alternative material sourcing strategies that maintain project viability.

For example, you may be able to order alternative materials or source them from a different, more cost-effective supplier.

In addition to reviewing how you source materials, you should also look for other areas of improvement or gaps you need to address. Common problem areas include:

• Incomplete scope coverage
• Incorrect quantities
• Unclear specifications
• Missing labor or equipment costs
• No allowances for contingencies

Ultimately, by identifying and addressing these concerns, you can improve your bids to insulate areas of your business from rising material costs.

Invest in Construction Estimating Software

Supply chain disruptions in construction create estimating challenges that require real-time material tracking and automated procurement adjustments to maintain accuracy.

Manual estimating, paired with rising material costs, only exacerbates these issues. Estimators may miss a measurement or calculation, which can throw off the entire bid.

Many construction estimators are addressing these concerns by modernizing their approach with construction estimating software to automate measurements, calculations and improve visibility at every step of the estimating process. Some construction estimating software can:

• Allow you to perform takeoff and estimates on the same screen
• Perform real-time updates to keep your project manager, stakeholders and project owners on the same page
• Access trade-specific material databases to get real-time costs and availability
• Improve construction change order management to avoid cost overruns

While construction estimating software can seem like a costly upfront investment, it’s well worth it for many estimators who are looking to minimize the effects of rising costs.

Construction estimating software does this in three simple ways:

1. Review real-time costs of trade-specific materials and find the right supplier in minutes.
2. Perform accurate measurements and calculations to reduce material waste or excess.
3. Many construction estimating software platforms integrate with accounting software, allowing you to see the full impact of material costs and other job costs and adjust in an instant.

By leveraging construction estimating software, you’re able to see the full impact of rising material costs on your estimate and adjust as needed before submitting your bid.

Factor in Rising Costs to Your Estimates

One way to address rising costs is by creating contingencies, or financial buffers that should account for cost increases or project delays. Contingencies combine cost analysis and risk assessment to limit the effects of rising costs on your bids.

By providing contingencies, your company reduces its exposure to price increases. However, it’s important to do research and calculations on the front end to determine the right way to handle your construction cost management.

Contingencies that are too large can lead to misallocations, while not having enough set aside may result in overruns or significant project delays.

Contractors should review data and contingencies from past projects and combine that with their understanding of the current landscape to create contingencies that shield themselves from rising material costs.  

Mitigate Supply Chain Disruptions With McCormick

Supply chain disruptions in construction and economic uncertainty are expected to continue — at least in the short term. Construction estimators need to review and refine their approach to estimating to limit their company’s exposure to rising material costs and continue being competitive.

Many mechanical, electrical and plumbing estimators are turning to McCormick — all-in-one takeoff and estimating software. With McCormick you can:

• Access trade-specific database with real-time material costs
• Automate measuring and counting with a built-in takeoff tool
• Improve change order management to monitor actual vs. estimates
• Combine and split costs with a bid summary section for more clarity

For more information about how McCormick can help you combat rising material costs, speak with an expert today.

Frequently Asked Questions About Supply Chain Disruptions in Construction

What Is the Difference Between a Material Escalation Clause and a Force Majeure Clause?

These two clauses protect estimators from different risks — and relying on one when you need the other can leave a project financially exposed.

• A force majeure clause excuses performance entirely when an unforeseeable event makes a contract impossible to fulfill, such as a port shutdown that halts all steel imports
• A material escalation clause — a contract provision that lets prices adjust if material costs spike — keeps the contract intact but adjusts the price when specific materials exceed a defined cost threshold from the original bid

For most projects today, both serve a purpose: force majeure covers catastrophic disruptions, while escalation clauses address the more common scenario where prices rise but materials are still obtainable.

Who Bears the Financial Risk When Material Costs Rise — the General Contractor or the Subcontractor?

It depends entirely on how each contract is written.

If a general contractor signs a fixed-price contract with the owner but doesn’t include cost-increase protections in subcontracts, the GC takes on the full financial risk — even when the price overrun starts with a subcontractor’s supplier.

On the flip side, if a subcontractor submits a firm sub-bid without escalation protection, they’re locked in even if their distributor raises prices before the work begins.

The safest approach: make sure subcontracts include the same protections as the prime contract. Whatever coverage the general contractor negotiates with the owner should pass down to subs — and the risk each party carries should match what’s actually agreed to.

How Do Extended Material Lead Times Affect Project Scheduling and Estimating?

When delivery times stretch out, the fallout goes beyond slow procurement. Delays can push back key construction milestones and expose the contractor to penalty fees that cost far more than the delayed material itself.

Estimators need to flag long-lead items during takeoff. A missed procurement window can collapse a schedule that looked achievable at bid time. Factoring in buffer times for deliveries and identifying backup material options are decisions that should happen during estimating.

Additionally, establishing procurement milestones as contract deliverables — so that owner approval delays don’t shift the order date risk back to the contractor — is one of the most underused protections available at bid time.

How Do Tariffs Differ From Other Supply Chain Disruptions When It Comes to Contract Protections?

Unlike most disruptions — such as weather events or labor strikes — tariffs present a specific challenge because:

• They’re policy-driven
• They can arrive with little warning
• They often don’t qualify as force majeure events under traditional contract language

That last point has legal backing.

Courts have generally found that government-imposed costs are foreseeable business risks rather than unforeseeable events, which means standard force majeure clauses may not provide a recovery path when tariffs drive up material costs.

If your contracts rely on force majeure alone, consider adding supplemental language that explicitly addresses government-imposed costs.

Escalation clauses — provisions that allow contract prices to adjust based on documented cost changes — are more reliable for tariff scenarios. These clauses work best when tied to published price indices (such as the PPI) or documented supplier invoices, rather than vague wording that can inadvertently exclude government-imposed costs.

For projects with significant imported material exposure — such as steel, aluminum or electrical components — contractors should add tariff-specific language that explicitly names import duties as a triggering event for the clearest protection.

Can Estimating Software Help Identify Which Line Items Are Most Exposed to Price Volatility?

Yes — when estimating software is connected to live pricing services, estimators can see in real-time which materials have shifted since the database was last updated. That makes it easier to flag high-risk line items before the bid goes out, rather than discovering a margin problem after the contract is signed.

McCormick’s pricing service compatibility keeps material costs current throughout the estimating process — so estimators working through volatile periods aren’t building bids on prices that are already weeks out of date.

That visibility doesn’t eliminate market risk, but it gives estimators the information they need to add extra cushion to the specific items most at risk — rather than spreading a flat buffer across the whole bid.