With the media constantly reminding homeowners that the price of lumber keeps rising, you may have questions about how this will affect your plans. Are you currently doing your research and getting ready to add a deck, porch or three-season room to your home? Summer will be swooping in soon! Prime outdoor living season is already underway. Do you have visions of enjoying more time outdoors, grilling outside and dining on a new screened porch or patio?
Our conversations with homeowners have revealed two typical reactions to rising wood prices. These are potential clients thinking about investing in a new or improved outdoor living space. Some homeowners have decided to postpone their new deck or porch until they are comfortable that lumber prices have stabilized. No one knows when that will happen. Others have decided to move forward as soon as possible with their outdoor building projects before prices rise even higher.
You may be wondering how your contractor is handling the rising prices of building materials. Like many companies, Archadeck of Columbus was taking a wait-and-see approach. We continued to provide firm quotes on each project – not estimates – and we honored those quotes even when lumber prices increased. That meant the cost our clients paid for a new deck or porch within the past year may have reflected below-market lumber prices. If the actual cost of lumber increased between a client’s contract signing date and their project start date, Archadeck took the hit.
A business can only operate that way for so long. At Archadeck of Columbus, we now find it necessary to add an “escalation clause” to our contract for the outdoor living projects we build. In fairness to everyone, we have chosen a policy of full disclosure to make our clients aware of this change.
Archadeck of Columbus Continues to Provide a Quote, Not an Estimate
Please note that we are standing by our practice of providing an actual quote for each project, not an estimate. What’s the difference? Many (or most) contractors only provide estimates, and – as you may have experienced – estimates can change based on … who knows what. Estimates were a dodgy business practice long before the prices of building materials started increasing more than usual in 2020. Overly-trusting homeowners have always been easy prey to contractors who began work on construction projects based on estimates. In many cases these contractors had the full intention of collecting a higher price once a project was completed.
So, what is an escalation clause? It can vary. Here we explain the specific escalation clause we have added to Archadeck of Columbus’s contract. If you are getting quotes from more than one builder, please read each contract carefully because they will likely differ.
Our escalation clause pertains to any wood used in a client’s project. Examples would be pressure-treated pine, cedar, and paulownia wraps on posts, etc. If you have chosen a low-maintenance composite/synthetic deck, please be aware that we build a deck’s substructure with pressure-treated pine. Likewise, the porches we build include pressure-treated pine even if the visible “finish” materials are not wood. When we discuss your project, we will be completely clear about where we use wood.
To be specific, our contract’s escalation clause has a plus/minus feature. If wood prices rise between the day you sign your contract and the time we begin work on your project, your project cost will increase. By the same token, if the price of wood materials for your project decreases, you will be credited the difference. Your final payment under the contract will reflect a corresponding increase or decrease in the price of wood. We will not add any markup to an increased materials cost.
You can read an analysis of rising lumber prices on fixr.com: The Record-Breaking Lumber Price Visualized: Where It's Going and Who Will Pay Most.
Keep in mind that, as we have mentioned in the past, any reputable contractor will have a backlog of jobs. We cannot sign your contract one week, or month, and begin construction the next. Unfortunately this increases the likelihood that lumber prices will go up prior to your start date. As always, we encourage you to schedule a design consultation as far in advance as possible based on the time when you want your project completed. The sooner you contact us, the sooner we can design your project and the sooner you will be able to enjoy it.
If you have questions or concerns about the escalation clause, please let us know when we meet with you for your design consultation. We want to be completely transparent about this market-based development.
Are you ready to move forward with a new deck, porch or patio? There is no charge for our design consultation, and videoconferencing is an option. Contact Archadeck of Columbus today to get started!
The Archadeck of Columbus team.