Lower energy costs, a sluggish recovery and cheap imports, especially from China, have combined to slow construction inflation. In the first quarter of this year, a group of six general-building cost indexes tracked by ENR averaged annual gains of just 1.6%, down from 1.9% during the previous quarter and 2.6% a year ago. Compiled by Power-Advocate, construction costs for gas-fired power plants are down 5.2% from the first quarter of last year.
“Material prices are flat, but we are seeing some inflationary pressure in our subcontractor bids,” says John Marino, chief estimator with Sierra West. The firm’s index measuring subcontractor costs is up 8.5% for the year, while its general-building cost index shows an annual increase of 3.4%. Both indexes measure costs in the relatively robust San Francisco area, where some subs are adding 1% a month to cover inflation between the time they submit a bid to the time they get a notice to proceed, says Marino.