3 Things to Consider When Budgeting for Your Real Estate Projects in 2023

February 6, 2023

Supply Chain Issues

Now that we are almost three years since the start of the pandemic, the majority of us have adjusted our expectations for how long it takes to obtain materials and equipment for our projects. In-house manufacturing has been slowed due to the reduced number of employees (which arguably may be the new norm for the foreseeable future), and the problems have been compounded due to inflation and various global concerns. As a result, it takes longer to make things, and supply chain delays and disruptions are typical. As owners reps, when we proactively factor these delays into our project timelines, we shield our clients from the anxiety and unrest which come from budget uncertainty. 

Labor Cost

Most commercial-related industries have not brought back a full pre-pandemic workforce as of yet, and high school graduates have been entering trade schools at decreasing rates for some time now. Both of these factors have led to labor shortages for contractors. Contractors’ labor costs are typically higher now compared to several years ago, because they are simply uncertain about staffing. The number of field staff working on projects may be limited, and they may not be certain they’ll be able to provide the same level of expertise for any particular project. High-quality employees are demanding high salaries, and if companies want to hire good employees, they have to pay for it. This makes field labor cost a huge variable in project budgeting. The same can be said for office employees as well. Unfortunately, many of the design and FF&E-related firms are dealing with similar challenges as it relates to employee retention and growth.

Material Increases

In addition to supply chain disruptions for manufacturing, material prices continue to steadily increase. The majority of typical items you see on a construction project such as lumber, steel, and drywall have continued to rise and/or fluctuate since before the pandemic. Clients have hope pricing for these items will eventually go down in the near future, but as of early 2023, this is unfortunately not realistic. At this point, budgets should be made based on the assumption that material costs are changing just about on a daily basis, and should be updated frequently.



26 Treaty Dr, Wayne, PA 19087




Skip to content