The Hurricane Effect in Construction

  • Nov 1, 2017

By Heather Mund, Marketing Coordinator

Hurricane Harvey hit the Texas gulf coast August 25th as a Category 4 storm with winds reaching upwards of 150 mph.

Our nation collectively watched the slow moving storm dump 40+ inches of rain in Houston and other parts of Texas’ Harris County. The estimated damage from the storm has been placed at $150 to $180 billion.

Just two weeks later, Hurricane Irma made landfall in the U.S. when it hit the Florida Keys on September 10th, as a Category 4 storm. Winds reached upwards of 142 mph and produced up to 15+ inches of rain in some areas. The damage estimates are up to $100 billion.

Estimated damage from both storms has surpassed $200 billion, more costly than Hurricanes Katrina or Sandy. The costs associated with these storms include things like damage to infrastructure, crop loss and disruption to business.

Historically, our industry will not see the full effects on construction cost escalation until months or even years after a storm or storms hit, so the complete ramifications are still unknown.

Impacts on Labor

Prior to the effects of the storms, there was a shortage of qualified labor to perform jobs. We expect this trend to continue and even intensify, as laborers choose to relocate to affected areas. It is likely that workers will choose to make relocations due to the promise of higher wages and guaranteed work hours.

The cost of labor will continue to increase in an effort to retain employees, and the competitive market will also affect project schedules as subcontractor’s availability becomes increasingly tightened.

Impacts on Materials Pricing

The early effect of pricing for materials is becoming apparent. The most extreme impacts will affect residential construction, rather than commercial.

While it’s unclear just how much prices will escalate, we are seeing increases in drywall, MEP equipment and exterior finishing components. Locking in material contracts early is the key to avoiding some of these increases.