Q2 2026 Cost Index Report

Lead times across most equipment categories have stabilized and are generally tracking within predictable ranges. Current data show a combination of unchanged ranges and selective improvement at the lower end, although several categories remain limited or vary by manufacturer. Risk continues to be concentrated in limited or manufacturer-dependent equipment, including chillers, generators, UPS systems, switchgear, and custom air handling units. These categories remain more sensitive to integration complexity, component availability, and project-specific requirements.

While overall conditions reflect improved supply-chain performance, lead times have not uniformly improved across all categories. Maximum ranges remained unchanged for several equipment types, while the medium-voltage switchgear range widened from 30–44 weeks to 28–48 weeks, indicating continued manufacturer- and configuration-dependent variability.

Supply chain conditions remain generally stable, although availability remains limited or manufacturer-dependent for several major MEP equipment categories. Tariffs continue to present a pricing risk for equipment with exposure to steel, aluminum, copper, and covered metal-intensive industrial and power equipment. U.S. trade actions in April 2026 increased Section 232 duties on covered metals and derivative products, while a June 2026 action subsequently adjusted the treatment of certain industrial equipment and residential HVAC products. Actual exposure varies by product classification, metal content, country of origin, and sourcing.

While these impacts may already be partially reflected in current pricing, they can contribute to cost variability, shorter bid validity periods, and reduced overall pricing certainty.

Geopolitical risk remains elevated and active, continuing to create uncertainty for global logistics and material flows. During Q2, conflict materially disrupted shipping and energy flows through the Strait of Hormuz. A June agreement supported increased traffic and partial reopening of the strait, but renewed attacks in July demonstrate that conditions remain volatile, and maritime-security risk remains high. The disruption contributed to elevated energy prices during Q2. However, EIA’s July outlook anticipates continued recovery in oil production and trade flows, with energy prices declining from their Q2 peaks. Direct impacts on metals, plastics, and MEP equipment pricing are not yet clearly demonstrated in the PPI and lead-time data reviewed.

While widespread shortages have not materialized, continued risk remains for petroleum-based inputs, ocean freight, and equipment with significant international supply chain exposure.