As the U.S. economy begins to emerge from its doldrums, continued improvement in new nonresidential construction projects is expected during 2004. But how will materials costs be affected by an improving economy and growth nonresidential building sector?
Annual construction price research conducted by RS Means, Kingston, Mass., reflects current economic conditions and offers price projections for selected CSI divisions for 2004 .
Division 2 (site work): Cost of high-energy and petroleum-related materials are expected to increase 5-12%, depending upon the relationship of petroleum components. Some material costs have been stable due to high inventories, but will increase when demand rises.
Division 3 (concrete): Cement, ready-mixed concrete, and reinforcing steel will increase 3.5-4% from 2003 levels.
Division 4 (masonry): Concrete masonry units also will rise 2-3% from 2003 costs. Brick prices will increase 2%. Cement increases 2-3%. Lime will remain close to 2003 prices.
Division 5 (metals): Factors, such as the pricing pressure of imported steel on mini-mills, global economic conditions, and excess inventories, and with the demand for fabricated structural steel anticipated to remain at 2003 levels, the price of fabricated steel projects will remain the same in 2004 (at a national average cost of $1,275 per ton for a 100-ton project).
Division 6 (wood and plastics): Milled lumber in 2004 will be up 2-5%. Plywood prices increased dramatically in the third quarter of 2003, but should stabilize in early 2004.
Division 9 (finishes): Drywall is anticipated to show a 2-3% increase for 2004. Wall coverings, flooring, ceramic tile, and paint should remain at 2003 levels.
Division 15 (mechanical): Copper product prices increased slightly last spring and are now flat, awaiting the surge in construction anticipated with the improving economy. Plastics, which fluctuate with the price and availability of petroleum, did not spike with the Iraq war and appear to be stable for the foreseeable future. HVAC equipment has seen spot increases, averaging 3-7%, but some manufacturers are trying to hold down increases to pick up market share when the economy picks up.
Source: Cost data research by RS Means, Kingston, Mass., a product line of Reed Construction Data, which provides construction information worldwide. For more information, visit www.rsmeans.com  or call (800) 448-8182.