Conventional wisdom says that construction material prices increase slightly year-over-year. The thinking goes that, as long as supply chains aren’t interrupted, material prices will roughly match the rise of cost-of-living and inflation rates. This mindset is appealing, because it creates a simplified process for estimating material costs: Just take last year’s price for a given material and add a couple percentage points to account for any increases. But there are two issues with this mindset.
Issue 1: Blanket Cost Increases Don’t Cut It
First, there’s no such thing as a standard rate of increase for construction materials. Different materials increase or decrease in price at disparate rates each year: Lumber prices may increase while steel prices decrease. To complicate things further, building components made of the same material may change at differing rates: Copper pipe may see a 7% jump, when copper roofing prices only rise by 3%.
Issue 2: Material Prices Don’t Stand Still
Second, markets don’t operate on a year-over-year basis; they are in constant flux. Material prices don’t suddenly reset on January 1 each year and then stay at that rate for the next 12 months. In some cases, they rise and drop on a weekly basis. Such sporadic changes make it impractical to use one price rate for a given material for the entire calendar year. At any point throughout the year, you could be budgeting too much or too little for that material.
Keeping Current with Key Materials
To create air-tight and defendable budgets for every project, estimators need the most accurate data possible, and blanket once-per-year cost updates won’t get the job done. That’s why Gordian publishes quarterly updates to both the City Cost Index (CCI) and a list of key building materials in the RSMeans database. Quarterly construction material cost updates give project design teams greater ability to produce estimates accurate to their local market at any point during the calendar year, so they and their clients can be more confident their project budgets will hold up.
Quarterly construction material cost updates are available for every RSMeans dataset and are automatically loaded into RSMeans Data Online subscriptions. Each line item cost is backed by the 22,000 hours that Gordian’s Cost Engineers spend annually researching, developing and validating RSMeans data.