Staffing Woes and Diesel Fuel Soars: A Snapshot of Construction Realities

November 8, 2023

Headshot of Tim Amorello


In the world of commercial construction, every fluctuation in costs and labor availability can significantly impact a project’s timeline and budget. An analysis recently published by the Associated General Contractors of America (AGC) sheds light on the challenges facing the construction industry, revealing a monthly increase in costs driven by a dramatic surge in diesel fuel prices. The survey also underscores the ongoing staffing challenges faced by contractors, which have a direct impact on project completion. This serves as a stark reminder that supply chain disruptions experienced during the COVID-19 pandemic have not yet been fully mitigated. Below is an overview of the key insights derived from AGC’s research as well as the benefits of having a construction consultant on your team to ensure the success of your investment.

Soaring Diesel Fuel Prices

The headline-grabbing aspect of the AGC’s analysis is the near-record leap in the diesel fuel price index. From mid-July to mid-August, the producer price index for diesel fuel skyrocketed by a staggering 34.6%. This surge represents the most substantial one-month increase in diesel fuel prices since 1990. Further exacerbating the situation, retail diesel prices have continued their upward trajectory, with a 77 cents per gallon increase over just ten weeks.

Impact on Bid Prices

The effect of the diesel fuel price spike is evident in the broader landscape of construction costs. In August alone, these costs increased by 1.1%, marking the highest jump since January. However, it’s worth noting that while fuel costs played a significant role in this increase, other commodity prices remained relatively subdued. The index for new commercial building construction, a measure of the bid prices contractors charge for new structures, saw a modest 0.2% uptick in August. Year-over-year changes were also relatively mild, standing at 0.1% for inputs and 4% for bids.

Stable or Declining Prices for Other Commercial Construction Materials

Apart from volatile fuel costs, many construction materials experienced stable or declining prices in August. Cement and architectural coatings, for example, saw flat price indexes. There were also decreases of 0.2% for plastic construction products, 0.5% for steel mill products, and 0.4% for gypsum building materials. These figures suggest that the overall construction cost landscape is relatively stable beyond the diesel fuel price surge.

Ongoing Staffing Challenges

While fluctuating costs are a headache, the AGC’s annual workforce survey, conducted in collaboration with Autodesk, highlights an equally critical issue: staffing challenges. An astounding 85% of respondents reported having job openings for hourly skilled craft workers or salaried workers. Within this group of firms, 88% reported difficulty filling skilled craft positions, while 86% reported similar challenges for salaried openings. Furthermore, 61% of firms that experienced project delays attributed them to worker shortages.

Stephen E. Sandherr, the AGC’s chief executive officer, emphasized that the current approach to preparing future workers is failing the high-paying construction sector. Many parts of the country are struggling to find enough skilled workers to meet the increasing demand for construction projects. The survey findings reveal that two-thirds of contractors believe that many candidates lack the necessary skills to be employable in the industry. To address this gap, AGC officials stress the importance of exposing more individuals to construction career opportunities and providing them with the fundamental employment skills required for success.

How a Construction Consultant Can Protect Your Investment

While the construction industry grapples with the challenges of rising material costs and staffing shortages, there are strategic solutions available to help projects stay on time and within budget. One invaluable resource for achieving this goal is partnering with Moran Construction Consultants. Bringing a wealth of industry knowledge, our consultants utilize their years of experience to help project stakeholders make informed decisions that optimize resource allocation and budget management.

Skilled at adapting to changing circumstances in the face of fluctuating costs and labor market dynamics, we can provide recommendations to keep your project on the right track even when external factors threaten to derail it. Interested in learning more about how we can help? Contact us online or call us at 866-545-3350 to learn how our team of consultants can help protect your investment.

Headshot of Tim Amorello