The price is not the risk

By Cotney Consulting Group. 

The real risk is signing the contract before the company understands the cost, cash, schedule and supply commitments required to deliver the project successfully.  

Canadian roofing contractors operate in a market where material prices, tariffs, freight costs and availability can change faster than many project contracts. The natural reaction is to focus on price: 

• What does the insulation cost today? 
• How long will the supplier hold the quote? 
• Will steel or aluminum increase again? 
• Can the contractor obtain the specified membrane? 

Those are important questions. But the price itself is not the greatest risk. The greater risk is committing to a fixed project value, completion date and material specification before understanding how the work will be purchased, financed and delivered. A price increase may reduce the contractor’s margin. A poorly structured commitment can eliminate it. 

Construction costs are still moving 

Canadian construction costs continue to rise, even if the rate of escalation is lower than during the pandemic's most disruptive years. Statistics Canada reported that non-residential building construction costs increased during the first quarter of 2026 and remained higher than one year earlier across the metropolitan areas it measures. Those figures represent broad construction conditions rather than roofing materials alone, but they confirm an important point. 

Costs are not standing still. Canadian contractors also continue to operate in a changing trade environment, where tariffs, quotas and import controls can affect the cost and availability of steel, aluminum and related building products. 

The Canadian Construction Association has continued to identify higher costs, geopolitical uncertainty and supply chain pressures as risks facing the industry. Contractors cannot control the global market. They can control when they accept its risk. 

The estimate is only a snapshot 

Every estimate is created at a particular moment. The labour rates reflect what the contractor knows today. The material quotations carry specific expiration dates. Freight assumptions are based on available routes and supplier information. Currency values may affect imported products. The project schedule assumes that materials will be available when required. The estimate may be accurate on the day it is completed yet inadequate by the time the contract is signed.  

That delay matters.  

A tender may remain under review for weeks or months. Scope discussions may continue. The owner may change the schedule. Product approvals may be delayed. A general contractor may request that the roofer hold pricing while other trades are still being finalized. 

During that time, the supplier’s quote may expire. The contractor should never assume that an old material quotation remains reliable merely because the project value has not changed. Before accepting the work, the estimator should update the material pricing, freight, lead times, availability and applicable taxes or tariffs. The contractor must compare the conditions that existed when the estimate was prepared with the conditions that exist when the commitment is made. That final review is not an administrative step. It is a risk decision. 

Quote validity must mean something 

Many roofing proposals include language stating that prices are valid for 15, 30 or 60 days. Too often, that language is treated as a formality. When the owner accepts the proposal after the validity period has expired, the contractor may still honour the original amount because the company does not want to lose the project. 

That decision should never be automatic. A quotation validity period protects the assumptions underlying the estimate. Once it expires, the contractor should have the right to re-verify costs and adjust the price where necessary. 

The company also needs a clear internal process:  

• Who monitors proposal-expiration dates? 
• Who requests updated supplier quotes? 
• Who has authority to extend pricing? 
• Who approves the additional risk? 
• How are changes communicated to the customer? 

Without those controls, salespeople or estimators may extend pricing informally without understanding what has changed. A contractor should not hold a multimillion-dollar material commitment based on a casual email promising that the price will remain good. A quotation is not the same as a confirmed allocation, production slot or delivery commitment. Contractors should understand exactly what the supplier has promised and what conditions remain outside the supplier’s control. 

The contract must allocate volatility risk 

A roofing contractor should not assume that every material increase can be passed through to the customer. The contract determines whether the contractor has any right to additional compensation. 

Before signing, the contractor should review how the agreement addresses material escalation, tariffs, government-imposed charges, taxes, duties, freight increases, product substitutions, delayed approvals, extended schedules, owner-caused delays, force majeure, changes in law, notice requirements and the evidence required to support additional costs. 

The language must be reviewed as a complete system. A material-escalation clause is of limited value if the contract also requires the contractor to provide a guaranteed price despite subsequent price increases. A tariff clause may not help if the contractor misses a strict written-notice deadline. A substitution provision may be ineffective if the owner can delay approval without extending the schedule. 

Qualified Canadian legal counsel should review material-escalation, tariff, delay and substitution clauses. Their effect will depend on the agreement, project type and applicable provincial or federal law. The project team’s responsibility is to understand the business consequence:  

• Who carries the risk if the material costs more? 
• Who carries the risk if it arrives late? 
• Who carries the risk if the specified product is unavailable? 

If the answer is always the roofing contractor, the project price must reflect that exposure. In some cases, the correct decision is not to increase the price. It is to decline the project because the schedule, contract terms or material uncertainty create more risk than the potential return justifies. 

Buying early creates a different risk 

Early purchasing can reduce escalation and availability risk. It can also create new problems. The contractor may need to fund materials months before they can be billed. Storage must be arranged. Products can be damaged, contaminated, stolen or used on another project. Warranties or shelf-life requirements may be affected. The design may change after the purchase has been made. 

The decision to buy early should therefore involve more than the estimator and supplier. Operations should confirm the project schedule. Finance should evaluate the cash requirement. The project manager should verify submittal and approval status. The manufacturer or supplier should confirm storage conditions and product limitations. The contract should establish when ownership transfers and who is responsible for stored materials. 

The contractor should also confirm whether stored materials can be billed and what documentation the customer requires. An early purchase may protect the material price while creating a cash-flow problem that is just as damaging. A profitable project can still strain the company if too much cash is tied up in materials that cannot yet be invoiced. 

Material availability can matter more than price 

A contractor may be able to absorb a moderate increase and still complete the work profitably. A material that does not arrive can stop the entire project. Availability risk should be evaluated during the estimating phase, not after the contract is signed. 

The contractor should know whether the product is regularly stocked, whether it must be manufactured specifically for the project, the realistic lead time, where it is manufactured, whether imported components are involved, whether the supplier has confirmed allocation, whether approved alternatives exist, what other work depends on the same product, how long the supplier will hold the material and what happens if the project schedule changes. 

Special colours, custom metal, tapered insulation, uncommon membrane thicknesses and project-specific accessories can create substantial exposure. A specification may permit equivalent materials, but that does not mean the substitution will be approved quickly. The contractor should identify acceptable alternatives before the original product becomes unavailable. Waiting until the project is already delayed puts the roofing company in the weakest possible negotiating position. 

Supplier relationships are a form of risk management 

Price matters, but the lowest quotation is not always the lowest-risk option. A dependable supplier provides more than material. The supplier provides accurate lead-time information, product knowledge, early notice of changes, documentation, delivery coordination and assistance when a problem occurs. Contractors should evaluate suppliers based on both performance and price:  

• Did the material arrive when promised? 
• Was the order complete? 
• Were substitutions communicated in advance? 
• Was damaged material resolved quickly? 
• Were price changes explained and documented? 
• Did the supplier assist with planning, or merely process the purchase order? 

Strong supplier relationships do not eliminate market volatility. They improve the contractor’s ability to see it coming. That visibility is valuable. A contractor may be able to change the estimate, revise the schedule or discuss an alternative with the customer when the warning arrives early. There are fewer options after the crew has mobilized. 

The purchase order must match the project commitment 

The contract with the customer is only one side of the risk. The purchase order issued to the supplier is the other. The roofing contractor should ensure that the purchase order clearly states the product and manufacturer, quantities, approved substitutions, price, taxes, freight, delivery dates, delivery location, storage requirements, required documentation, responsibility for damaged or incomplete shipments, conditions for price changes and cancellation or return provisions. 

Verbal understandings should be confirmed in writing. The supplier’s quotation should be attached or incorporated where appropriate. The contractor must also verify that the supplier’s terms do not transfer unexpected risks back to the roofing company. A customer contract may require delivery by a particular date while the supplier accepts no responsibility for delays. That gap belongs to the contractor unless it is managed before the order is placed. 

Estimate the consequence, not only the increase 

Material risk should not be measured solely by calculating the percentage price increase. The contractor must consider the full consequence. A delayed material shipment may create additional mobilization, equipment extensions, temporary protection, labour disruption, overtime, storage costs, schedule penalties, lost production on other projects, customer disputes and cash-flow pressure. 

Material delays also consume labour capacity. A crew held for a delayed project may be unavailable for work that is ready to proceed, while remobilization later can disrupt several additional schedules.\ A $10,000 material increase may be manageable. A four-week delay due to the same material may cost several times that amount once operational effects are factored in. 

Estimators and project managers need to think beyond the purchase price. They must ask what happens to the project if the material changes, arrives late or cannot be obtained. That is the real exposure. 

Risk must be reviewed before the signature 

Many roofing companies conduct a handoff meeting after the contract has been awarded. That meeting is necessary, but some decisions are already too late by then. High-risk projects should receive a pre-contract review. Estimating, operations, finance and leadership should examine material quotations and expiration dates, lead times and availability, tariff and currency exposure, supplier commitments, contract clauses, cash needed for early purchasing, storage requirements, approved alternatives, schedule assumptions, notice obligations and potential margin erosion. 

The purpose is not to slow down sales. It is to prevent the company from signing an agreement that operations cannot fulfil at the estimated cost. A project can look profitable on the estimate and still be a poor business decision. 

Discipline protects margin 

Roofing contractors cannot eliminate price volatility. They cannot control tariffs, international conflict, manufacturing interruptions or every transportation delay. They can decide how long they will hold a quotation. They can update supplier pricing before accepting the work. They can review the contract. They can identify alternative materials. They can assess the cash required for early purchases. They can document supplier commitments. They can refuse to accept risk without compensation. 

The market price is visible. The larger exposure is often hidden inside the schedule, contract, procurement plan and cash requirements. That is why the price is not the risk. The real risk is signing the contract before the company understands the cost, cash, schedule and supply commitments required to deliver the project successfully.