Construction Cost Increases Are Easing After Period of Rapid Growth
Turner Building Cost Index Predicts 7.09% Increase Over 4th Quarter 2006
New York, N.Y. – December 11, 2007 – Turner Construction Company, the nation’s leading general builder, today announced that construction costs increase in the Fourth Quarter. According to the Turner Building Cost Index, the Fourth Quarter 2007 Index value is 876 which represents a 1.51 percent increase in construction costs over the Third Quarter 2007 and a 7.09 percent increase over the Fourth Quarter 2006 index. Turner has issued this quarterly forecast for more than 80 years.
According to Karl F. Almstead, the Turner vice president responsible for the Turner Building Cost Index, “Activity in the non-residential construction market remains strong in spite of the residential mortgage sub-prime issues and concerns over its impact on the credit markets. In many markets, the large volume of work has stretched the available labor and trade contractor resources driving construction cost increases. From the materials perspective, commodity prices have eased slightly over the past quarter, but global demand, especially from the emerging economies, continues to drive an upward trend in prices. Manufacturing and transportation cost increases, reflecting increased energy costs, have also added to the escalation of construction costs.”
“The market remains strong and the factors that have influenced the almost double digit escalation of the past three years are still in the market. However, the market has eased from the hyper levels of activity to levels that are better supported by the industry resources.”
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—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.
