While we are only in the infancy of 2023, one question looming over the New York construction community was already answered when Governor Hochul vetoed the Material Price Escalation Bill (A.10109/S.8844). The bill was introduced in April 2022 to alleviate the burden of rising material costs by allowing contractors to potentially renegotiate state contracts that were bid on prior to the pandemic.
Although the Governor did acknowledge the financial effects of COVID-19 and inflation on the construction industry’s economy, the rationale to veto the bill revolved around billions of dollars of unbudgeted cost implications to the state.
We thank the many dedicated industry associations that advocated for the legislation and will continue to appeal to the governor to address this important issue in 2023. In the meantime, Grassi’s Construction team is here to help you navigate the uncertainty of escalated pricing coupled with limited cost recovery options.
As we prepare to enter year-end financial reporting season, the impact of this scenario will be evident in your balance sheets and operational results. Construction contractors should plan proactively to address these challenges.
Please contact your Grassi Construction advisor or Carl Oliveri, Construction Practice Leader, to discuss and plan for any potential impact to your year-end December 31, 2022 results.