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Will inflation force you to revise your estimates?

On Behalf of | Aug 15, 2022 | Construction Disputes

When you provide a prospective client with an estimate for the work they would like done on their property, you base the figure you provide on estimated supply costs and your current staffing arrangements. If circumstances change drastically, you may have no choice but to amend your prior estimate. 

With inflation surging around the country and increasing costs by record-breaking amounts, you will have more challenges than you may have faced a year ago when providing estimates for your clients. As new home construction slows, there will also be more competition for remodeling and renovation projects. 

If someone reaches out to you for a project that you quoted months ago, you may no longer be able to honor those prices. How do you address the increasing cost of construction materials? 

You can revise your estimate for anyone about to hire you

The best way to protect your company from disputes that could prove expensive is to communicate with your potential future clients about how costs have changed. Some homeowners may be understanding enough to even agree to change the budget for a project when you have already signed a contract with them. 

The best approach is always transparency, which means providing clients with information about changing market circumstances as soon as you become aware of the issue. Providing written notice about how these changing costs for your construction supplies will affect the final price your clients pay can help you avoid claims that you unfairly increased costs.

Adding time limits to your estimates is another way to manage these kinds of issues. With a highly changeable market, 30-day limits on estimates are not unreasonable.

Although it can be hard to do, you may need to think about the delay between when someone obtains a quote and when you do the work and factor in the high rate of inflation in recent months when providing estimates. 

Home improvement and renovation companies hoping to adjust their existing contracts or defend against construction litigation because of price changes may require support to secure a positive outcome.