March 2025 CT

NAVIGATING UNCERTAINTY... from page 20.

2. PRE-PURCHASE MATERIALS Consider pre-purchasing materials to lock in current pricing and offset the impact of potentially significant cost hikes. Keep in mind, however, that suppliers generally will not be able to store materials and deliver them as needed. Key questions to consider include: Do you have secure, cost-effective storage areas on your premises? How long would you need to store the materials and how long are they viable? Can you insure the materials to avoid addition al costs in case of damage? 3. MAKE SURE YOUR CONTRACTS ARE CLEAR Cost escalation clauses have long been common in con struction contracts. They allow for annual price adjustments based on market conditions, usually ranging from 3 to 5 percent. The COVID-19 pandemic was such an unprece dented jolt to the global supply chain that many community associations and their contractors needed to adjust their agreements so both sides could absorb some of the pain from massive price increases. Standard cost escalation clauses have become business as usual again as market conditions have mostly stabilized. But with many uncertain CONTINUES ON PAGE 40

tions — Southern Yellow Pine — is American made and will not be affected by the much-discussed potential tariffs on Canada (which supplies much of the softwood lumber used in homebuilding). However, the devastating wildfires in California will likely boost demand for all types of lum ber as the area rebuilds, affecting supplies and pricing nationwide. Although we are now in wait-and-see mode regarding lumber prices, there are steps that you can take to help manage issues that may result in cost increases for key materials in the year to come. How Do You Prepare for the Unknown? 1. COMMUNICATE WITH YOUR PROJECT PARTNERS Property managers and board members should com municate regularly with your contractors, engineers, and attorneys to stay informed about potential price increases. Regular communication ensures that everyone is aware of the latest market trends and can make informed decisions.

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MARCH 2025