President Donald Trump signed an executive order to add a 25% tariff on steel imports on Feb. 10, and for the University of Rhode Island, it is too early to tell how much of an impact the tariffs will have on campus building costs, according to Abby Benson, the vice president for administration and finance.
The expectation is the tariffs will specifically impact steel, aluminium and lumber in the United States, because they are the significant suppliers for those materials, according to Benson.
The Office of Administration and Finance doesn’t have control over who the suppliers are for on campus construction, according to Karl Calvo, the assistant vice president of administration and finance. The university contractors doing the construction project are the point of contact with the suppliers.
“I’m sure the contractor that does a project like the Fine Arts Building or the Ocean Robotics Lab that’s going up at the Bay Campus, [the contractor] is going to do the research and figure out who offers the least expensive supplies by cost,” Calvo said.
If the contractors already bid on the projects, then they know how to find the cheapest cost on supplies, according to Calvo. If a new project is going out for bid and it hasn’t been awarded yet, then the supply prices could impact what the bids come in at, which could end up costing the university more money.
When the office knows of the possibility the building costs will be higher, they add an extra percentage of supply prices to cover that potential cost, according to Calvo. Typically it’s 10% as an insurance policy on their end, should construction come in higher because of supply problems.
“That’s something we do as a matter of practice, sort of contingency funding and throughout the project or other variety of contingencies that could become a reality,” Benson said. “So we need to make sure we have [contingencies] built in.”
Funding issues cause uncertainty because all construction projects at URI have a budget based on money received from the state, according to Benson. If problems on a project operating on a fixed budget happen dramatically, a supplier change or construction circumstances could have an impact on the budget.
Bids could come in a lot higher than anticipated, according to Benson. If there is a project that’s going out after the tariffs have been put into place and the budget comes with a high response, that could impact the existence of the building of the project.
“Then we’re actually looking at what the scope is of what we’re actually constructing, and how we might address that,” Benson said. “Or in unusual cases, if we can’t adjust the scope, or the building plan we might have to look for additional funding.”
In some of the large construction projects, there will be structure at a base bid, according to Calvo. In order to ensure that they can award the project, and then attached to that bid there will be alternative bid items. The contractors who bid will then give separate pricing for smaller pieces the office wants to add to the project.
The office tries to address supply chain issues like slowing down deliveries, according to Benson. They keep an eye on the trends and industry news around construction tariffs to prevent schedule impact on projects. They make sure to recognize issues early and make decisions to ensure project delivery is on time and on budget.
