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Planning for Volatility

Monday, March 14, 2011

This post is a little different than most of my entries but is something that anyone in the construction related industries should pay attention to. We all feel the results of the Middle East unrest when we fill up our personal vehicles but what else does this impact? The cost of everything you specify or purchase for a construction project will go up as a result of that situation on the other side of the world.

The chart says it all. Delivered prices for components used to make your equipment and delivered prices for the equipment to the job site will all go up to cover the large "fuel surcharges" that are now being added to diesel fuel. As the chart shows, the surcharge for diesel in class 371...a common class for HVAC equipment... is now 55.6%. When added to other costs for delivery the end result could be a 15% increase in total delivery costs.

Delivery costs are factored into the cost of producing products and you need to remember to include them in the costs of receiving products on your project jobsite.