Construction Costs Are Surging Again — Is Your Next Bid Protected?
Construction costs are moving sharply higher again, creating another round of pressure on contractor margins.
According to an analysis of federal Producer Price Index data by the Associated General Contractors of America (AGC), the cost of inputs to new nonresidential construction increased 8.9% from August 2025 to August 2026.
For signatory contractors already managing collectively bargained wage and benefit increases, rising material costs create a challenge on both sides of the estimate.
Some Construction Materials Are Rising More Than 20%
The overall 8.9% increase doesn’t tell the entire story.
Several materials important to FCA contractors have experienced significantly larger year-over-year increases:
- Aluminum mill shapes: +27.3%
- Steel mill products: +23.4%
- Copper and brass mill shapes: +20.9%
For architectural glass and metal contractors, aluminum pricing is an obvious concern. For wall and ceiling contractors, rising steel prices can directly affect metal framing packages.
But the cost pressure isn’t limited to steel and aluminum.
Painting and Coatings Costs Are Moving Higher
Commercial painting and coatings contractors are also seeing increases move through the supply chain.
Sherwin-Williams announced an 8% price increase in its Paint Stores Group effective September 1, 2026, citing inflation in raw materials, energy, logistics and packaging.
PPG has also implemented significant pricing actions across its paints, coatings and specialty products as it responds to higher input costs.
Federal data reinforce the trend. Through August:
- Prepared paint: +5.9%
- Basic organic chemicals: +14.8%
- Plastic resins and materials: +6.6%
These numbers suggest that contractors should not assume today’s paint and coatings pricing will remain available when projects actually begin months from now.
Wallcovering and Flooring Contractors Should Be Watching Upstream Costs
There isn’t one federal index that perfectly captures commercial architectural wallcovering or commercial flooring prices. But several materials used throughout these product categories are experiencing significant increases.
Federal producer-price data show:
- Plastic resins and materials: +6.6%
- Synthetic rubber: +8.3%
- Unsupported plastic film, sheet and related products: +12.5%
- Paper: +10.0%
- Paperboard: +5.1%
- Converted paper and paperboard products: +4.4%
These are input-cost indicators rather than direct measurements of finished commercial flooring or wallcovering prices, but they demonstrate the inflationary pressure occurring throughout the supply chain.
For flooring contractors, resilient flooring, backing systems, adhesives and other products can be affected by changes in petroleum-derived materials, resins and rubber.
For wallcovering contractors, vinyl, plastic, paper and specialty substrates can face similar upstream pressure.
Labor Isn’t Getting Cheaper Either
Materials are only half of the equation.
Average hourly earnings for production and nonsupervisory construction employees increased approximately 5% over the past year, faster than wage growth across the overall private sector.
For signatory contractors, collectively bargained increases make future labor costs more predictable—but contractors still have to make sure those increases are built into today’s estimates based on when the work will actually be performed.
A project bid today may not begin for six months or a year.
That creates a simple but important reality:
Today’s material price + today’s labor rate ≠ tomorrow’s project cost.
Owners Are Feeling It Too
Cost escalation is beginning to affect whether projects move forward.
In a recent AGC/NCCER survey, 55% of contractors reported having projects canceled, postponed or scaled back during the previous six months, with one-third of respondents attributing those disruptions to increasing costs.
That creates another challenge for contractors.
When projects are delayed or canceled, competition for the projects that do move forward can increase—putting pressure on margins at exactly the time contractor costs are becoming more difficult to predict.
What Should Contractors Be Looking At?
This is a good time to review how your company manages escalation risk.
Material pricing: How long are supplier quotes valid? Are anticipated manufacturer increases included in your estimate?
Labor escalation: Are known CBA wage and benefit increases built into the project based on when the hours will actually be worked?
Project delays: What happens if work originally scheduled for this year moves into the next contractual wage or benefit increase?
Contract language: Who carries the risk when tariffs, manufacturer increases or extraordinary material escalation occurs between bid day and installation?
Procurement: Can critical materials be purchased, released or price-locked earlier?
Estimating: Are historical costs being updated quickly enough to reflect today’s market?
These questions matter regardless of whether you are installing paint and coatings, wallcovering, flooring, drywall and framing, ceilings, glass and architectural metal, or other finishing systems.
As material volatility continues and collectively bargained labor costs increase, understanding and allocating escalation risk before signing the contract may be just as important as getting the original estimate right.
Sources: U.S. Bureau of Labor Statistics Producer Price Index data; Associated General Contractors of America; AGC/NCCER workforce survey; Sherwin-Williams; PPG. Material input indexes cited for wallcovering and flooring represent upstream materials and should not be interpreted as direct increases in finished-product prices.
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