Raw material prices in the construction industry: stay in control during times of crisis

Raw material prices in the construction industry: how to stay in control during a crisis

It’s a feeling many contractors are familiar with. You’ve submitted a quote. You’ve secured the contract. And then, two months later, the steel for those foundations costs 18% more than when you calculated the price. Or the cost of diesel for your machinery has risen by a fifth in the space of a few weeks. Even though your contract is fixed.

The war in the Middle East has brought this situation back into the spotlight. After the US and Israel launched the conflict with Iran in March 2026, oil and gas prices rose sharply. Traffic through the Strait of Hormuz, which accounts for around 20% of global oil and LNG exports, has virtually ground to a halt.

Robobank and ABN AMRO warn that the construction sector is directly in the firing line due to higher transport costs, more expensive building materials and rising energy prices. The memory of the war in Ukraine is painfully fresh. In 2022, average selling prices for building materials rose by 14%, and a year later by a further 18%.

In Belgium alone, as many as 2,780 construction firms went bankrupt in 2025, 6.1% more then previous year, which was itself a record. The most frequently cited cause? Being unable to pass on rising costs to clients. The question is no longer whether prices are rising. The question is: how quickly will you notice it, and how quickly will you adapt?

Which construction materials are being hit hardest by the war in Iran?

The impact is not the same for everyone. Three cost categories stand out for Belgian and Dutch contractors.

• Fuel and transport
  The pice of diesel for bulk buyers rose from €1.74 per litre at the end of February 2026 to a record high of €2.08 in March, an increase of around 20% in just a few weeks. For road builders, earthmoving contractors and contractors with their own fleet of machinery, this translates directly into higher operating costs per site.
• Energy-intensive building materials
  Aluminium, glass, concrete, tiles, insulation materials, bricks… The production of these materials is energy-intensive. If gas prices rise, their production costs rise almost automatically, and retail prices follow suit within weeks.
• Steel
  It is ubiquitous in the construction industry, from reinforcing steel in concrete floors to steel beams and roof structures in industrial buildings. Industry analysts expert a price spiral similar to that seen in 2022-2023 if the conflict continues for several months.

Why fixed-price agreements cause problems for contractors

The structural problem is well known, but becomes painfully apparent with every crisis. Many construction contracts are concluded at fixed or lump-sum prices. At the time of tendering, you estimate material costs based on current market prices. You then set that assumption in stone in the contract, sometimes for projects that are still 12 to 24 months away.

When raw material prices rise suddenly, contractors find themselves in a tight spot. Unless you use price adjustment clauses, you cannot pass on the higher costs, or can only do so partially. Every extra euro spent on steel, diesel or energy directly eats into your profit margin. In an industry that already operates on minimal margins, this hits you hard.

VOKA and Bouwunie have recently called on the federal goverment to take action. The sector is advocating for the inclusion of crisis provisions relating to military conflicts in new contracts. But until such protection is in place, the only real defence is to know what it will cost you before someone else tells you.

How quickly do you notice price increases in your current projects?

That is the crucial question. And the honest answer varies greatly from one construction company to another.

For many medium-sized contractors in general construction, roofing, joinery or road construction, financial tracking on a project-by-project basis is fragmented. Your purchasing department knows what had been ordered. Your site manager knows what has been used. The finance department knows what has been invoiced. But no one has a complete picture at any given moment of what a project is actually costing, compared to the budget.

The information is there. It’s just scattered across Excel files, individual emails and verbal updates. That’s a risk even in normal times. Add volatile commodity prices to the mix, and you suddenly have a gaping hole in your cash flow.

The picture is more complex for larger contractors in infrastructure, industrial construction or project development. Systems are in place, but they often operate in silos. There is a lack of integration. As a result, it takes too long for a cost increase to become apparent at project level.

How Build-Software van help you when prices rise
Build-Software has been specifically designed for the construction industry. It is not a generic ERP system that you have to adapt retrospectively, but rather an integrated platform that is based on the way construction companies actually work.

• A single datasat, from initial costing to final settlement. If material costs change during the course of the project, this is reflected in the same system. No need to manually re-enter data into another system.
• Real-time insight for each site. If certain raw material prices rise, you can see how this affects the cost price of ongoing projects. Not after the fact, but whilst the project is still underway.
• Equipment management and fuel monitoring. For contractors with their own fleet of machinery, Build-Software offers monitoring of equiment usage, including fuel costs, with an immediate impact on the cost per hour or per project.
• Incoming invoices and price discrepancies. If a supplier charges a higher price than that stated on the purchase order, Build-Software flags the discrepancy.
• Post-project analysis as a learning tool. Once a project is complete, Build-Software carries out a fetailed comparison between the budget and the actual costs, which is valuable for future quotations in volatile times.
• Price adjustments with comprehensive indices and multi-level breakdowns. Build-Software uses a comprehensive price adjustment engine with extensive indices. We apply the breakdown down tot he level you require. When indices change, we authomatically apply the adjustment.

Which sub-sectors stand to benefit most from improved price management?
Not every contractor is feeling the samen impact of the current raw materials crisis. Based on the latest market analysis, these are the sectors facing the greatest urgency.

• Road construction and infrastructure: High dependence on fuel, large volumes of steel and contracts spanning several years. The combination of fixed-price agreements and high variable costs makes this sector highly vulnerable.
• General contracting (industrial and non-residential construction): Steel is a major cost factor here. A15% rise in the price of steel can quickly amount to tens of thousands of euros on a medium-sized industrial project.
• Finishing and technical installations: Aluminium and copper are also affected by geopolitical shocks. Companies specialising in roofing, joinery and installation work to tight project deadlines. As a result, price fluctuations over the course of a year, when aggregrated, may have a significant impact on margins.
• Project development: Project developers who work with contractors and subcontractors manage an overall budget over an extended periode. If raw material prices rise halfway through the construction phase, the entire project’s profitability comes under pressure.

How well is your company managing its material costs?
An honest assessment starts with three questions:

• Do you currenty know, for each ongoing project, by how much the actual material costs differ from the budget?
• If a supplier raises their prices tomorrow, how quickly do you expect to see that reflected in your project monitoring?
• Did you realise early enough during your last project that it was making a loss or failing to meet its margin target to make the necessary adjustments?

If the answers to those questions are unclear, it’s not a question of poor discipline. You’re facing a systemic problem. And you solve that with better systems, not by working harder.

The construction companies that weathered the crisis of recent years best, from the conflict in Ukraine to the energy crisis and the surge in inflation, were not necessarily the largest. They were the best-informed. They knew what it would cost. And they knew it early enough.

Conclusion
The war in Iran is the latest in a series of geopolitical shocks affecting the Belgian and Dutch construction sectors. Rising fuel, steel and energy prices are no longer a hypothetical risk, their impact is already being felt. And based on previous conflicts, we know that the full impact on construction material prices sometimes only becomes apparent 6 to 12 months later.

The question isn’t whether your business will be affected. The question is whether you’ll notice it in time to respond. That doesn’t require any drastic measures. It does, however, require a clear overview of your figures, by site, in real time.

Curious to find out how Build-Software can specifically improve your cost control? Book a demo and discover what real-time site monitoring means for your profit margins.