Material Cost Volatility: Our Procurement Strategy for Unstable Markets

From mid-2022 through the end of 2024, structural steel prices in Europe moved by as much as 40% within a twelve-month window. Concrete aggregates, timber, and copper cabling followed. For contractors working on fixed-price contracts tendered in a lower-cost environment, this created genuine existential risk. Our response was not to absorb the losses — it was to redesign how we procure.

Early Commitment and Forward Purchasing

Where programme allows, we now commit to structural steel and precast concrete at design completion — not at tender stage, as was traditional. On the Apex Logistics Center, steel was committed 18 months before erection. The client approved the early purchase order in exchange for a guaranteed maximum price. When steel prices rose 22% between commitment and erection, the saving was passed directly to the client.

Supplier Diversification

We reduced our dependence on single-supplier relationships for critical materials. For every material representing more than 8% of a project's budget, we now maintain two approved suppliers. The secondary supplier is not always the cheaper option in a stable market — but in a constrained market, having a qualified alternative has prevented programme delay on three separate occasions.

Contract Clauses and Client Communication

We began including material fluctuation schedules in our tender documents — setting out the index reference for key materials and the adjustment mechanism if prices move beyond a defined threshold. This transparency allows clients to make informed decisions at the procurement stage rather than dispute-driven adjustments during the project. It also builds the trust that long-term client relationships depend on.

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A client who understands the market will make better procurement decisions. Our job is to give them the information they need — not to hide risk in a price.