June 01, 2009
Cost Index decreases 8.92% from its peak in Second Quarter of 2008
Turner Construction Company announced that the Second Quarter 2009 Turner Building Cost Index, which measures non-residential building construction costs in the United States, has decreased 3.35% from the First Quarter 2009 and has decreased 8.92% from its peak in the Second Quarter of 2008. The Turner Building Cost Index number for Second Quarter 2009 is 837.
Karl F. Almstead, the Turner vice president responsible for the Turner Building Cost Index said, “An overall reduction in construction starts and increased competition has caused construction costs in the commercial and institutional markets to decline. Positive signs in the economy, including an upturn in the Architecture Billing Index (ABI) and an anticipated increase in federal public sector spending, are signs of optimism in the construction industry.”
“Commodity and material prices continue to drift downward in reaction to decreasing demand. Inventories and plant utilization rates have also declined,” said Almstead.
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 preconstruction services and utilizing enhanced procurement strategies, Turner effectively manages the market risks associated with cost-related issues.
Turner has prepared the construction cost forecast for more than 80 years. 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.
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