Commodity pricing continues to drive construction costs upward
Turner Building Cost Index forecasts 6.49% increase in construction costs
Turner Construction Company, number one in BD+C's Giants 200 among general contractors, recently announced that the Third Quarter 2008 Turner Building Cost Index, which projects domestic commercial building construction costs, has increased by 1.77% over the Second Quarter 2008 and 6.49% over the Third Quarter 2007. According to Turner's findings, construction costs are escalating at rates higher than the Consumer Price Index.
According to Karl F. Almstead, the Turner vice president responsible for the Turner Building Cost Index said, “Construction costs are escalating at rates higher than the Consumer Price Index (CPI) and Producer Price Index (PPI) in large part due to increasing prices for construction material. Price increases for steel, non-ferrous metals, petroleum based products and energy costs for both the manufacturing and transportation of construction materials are driving construction cost increases.”
“Wage and benefit adjustments are generally higher than they were a year ago, reflecting the continuing strong demand on the skilled labor workforce. However, increasing trade contractor competition in many market areas is offsetting some of the material and labor increases,” stated Almstead.
Turner has prepared the construction cost forecast for more than 80 years.
Approximately 90% of Turner’s business is performed under contract arrangements where Turner provides extensive preconstruction planning services before the contract price is fixed and before construction starts. By providing high quality pre-construction phase services and utilizing alternative procurement strategies, Turner continues to effectively serve its clients and manage the market risks associated with cost escalation issues.
Used widely by the construction industry and Federal and State governments, the building costs and price trends tracked by The Turner Building Cost Index may or may not reflect regional conditions in any given quarter. The Cost Index is determined by several factors considered on a nationwide basis, including labor rates and productivity, material prices and the competitive condition of the marketplace. This index does not necessarily conform to other published indices because others do not generally take all of these factors into account.
Turner is the leading general builder in the U.S., ranking first or second in the major segments of the building construction field. During 2007, Turner completed $9.6 billion of construction. Turner offers clients a nationwide network of offices across the U.S. Founded in 1902, the firm is a subsidiary of HOCHTIEF, one of the world's leading international construction service providers. For more information, visit Turner's website at www.turnerconstruction.com.