The only certainty with lumber prices these days is uncertainty. Lumber availability, housing demand, and supply chain issues all play a role in price volatility. Although some analysts are predicting lumber prices will stabilize in the coming months, the question remains at what price point will they level off?
Pre-pandemic prices for lumber were between $350 and $500 per thousand board feet. In the spring of 2021, we saw prices as high as $1,515 per thousand board feet. The cash market price of framing lumber hit $915 per thousand board feet earlier this month. There could be another spike in prices in the spring of 2022.
There are steps home builders can take to weather the storm and protect profit margins in these uncertain times. The focus should be on optimizing designs and having very detailed plans to minimize waste and improve material usage to control costs. This is a wise strategy regardless of the status of the lumber industry.
Reducing Costs by 5%-10%
Our team of consultants has been meeting with home builders to help them improve efficiencies in their lumber management process and cut costs. The first piece we look at is the design. The second piece is the development and management of your lumber list. Once we analyze those pieces, we are able to identify problem areas and provide our clients with actionable steps that can result in significant cost savings.
Sole sourcing may leave you exposed to material shortages. We recommend developing and managing your own lumber list to avoid relying on one lumber vendor. The 80/20 rule applies here. This must be balanced with strong relationships to ensure adequate supply.
Despite the current state of the lumber industry, we have been able to help many home builders reduce direct construction costs and decrease variances. Generally, we are able to identify areas for reducing costs by five (and sometimes up to ten) percent.
Improving Lumber Management Processes
We offer customized consulting and coaching packages involving every area of the home building business including proven strategies for improving lumber management processes. Our clients learn best practices for reviewing plans, bidding lumber, structuring deliveries, and defining scopes. They receive one-on-one coaching to improve working drawings, develop efficient material takeoffs, and improve framing procedures. The focus of our consulting services and coaching packages is on helping home builders increase efficiencies and improve profitability.
Contact us a 303-972-7666 or email@example.com
to discover how we can help you develop effective strategies for lumber management and improve your bottom line.