December 22, 2015
The impact of tightening labor markets and increasing material lead times is offset by reduced fuel costs.
Turner Construction Company announced that the Fourth Quarter 2015 Turner Building Cost Index – which measures costs in the non-residential building construction market in the United States – has increased to a value of 959. This reflects a 1.05% increase from the Third Quarter 2015 and a 4.58% yearly increase from the Fourth Quarter 2014.
Overall construction activity remained stable through the Fourth Quarter, with slight increases in the West, and greater increases in the South and Southeast. The reduced cost of fuel is offsetting most material cost increases and fluctuations.
“The high volume of work underway continues to put upward pressure on skilled labor,” said Attilio Rivetti, the Turner vice president responsible for preparing the Cost Index. “As a result, we are seeing subcontractors and vendors being more selective in their pursuits, which has driven selective trade cost increases. We are also seeing continued increases in material delivery lead times in response to market demands and limited availability of production and fabrication facilities. As market demands continue to grow, the lead time for material will also continue to grow.”
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.