What a difference six months can make. During the third quarter of last year construction inflation was still reeling from the impact of record-high steel and oil prices set during the first half of 2008. By the first quarter of 2009, the inflation trend had completely reversed itself. Most major construction cost indexes tracked by ENR declined this quarter. Materials producers are frantically cutting production as prices hit rock bottom. Construction’s unemployment rate jumped into the double digits, and a severe credit crunch is pushing many subcontractors closer to the edge of bankruptcy. Related Links: Inflation Reverses Course As Recession
The three index tables on this page each represent various components of ENR’s two primary indexes. The Materials Price Index is the materials component for both of ENR’s cost indexes. The Common Labor Index is the labor component of ENR’s Construction Cost Index and the Skilled Labor Index is the labor component of ENR’s Building Cost Index. Related Links: Inflation Reverses Course As Recession Floors Prices Renegotiations Make Bad Times Worse Labor Deals with Uncertainties What Drives ENR’s Cost Indexes How To Use ENR’s Cost Indexes View Complete Report with Data and Analysis ENR only publishes cost index history tables
Although ENR’s cost indexes measure the costs of nonresidential buildings, the downturn in the housing market still has a major impact on index movement. During this quarter, lumber prices in the indexes were down another 1.8%, after dropping 23% over the previous four years. Falling lumber prices had been offset by surging steel prices. However, the current recession has sent steel prices tumbling. As a result, the Building Cost Index (BCI) fell 1.8% this quarter, pulling the year-to-year escalation down from 7.3% last fall to 4.3% this month. The Construction Cost Index (CCI) is less affected by these swings in
Governments throughout the world are pouring trillions of dollars into their economies to halt their decline and stimulate recovery. It’s still too early to detect results, and in most places construction has ground to a halt. But in Vietnam, a skyscraper continues to rise. Toronto also is relatively unscathed, thanks to pent-up demand for office space, and Calgary’s market is still floating on oil. Photo: Turner Construction Collapsing world economy has failed to halt the rise of Vietnam’s Bitexco Tower. “On a relative basis there is work in Vietnam, whereas work has stopped in India, Russia, Dubai and other places,”
Readers of ENR generate a steady stream of questions about the magazine’s indexes and how to accurately apply them to construction projects. To help clarify the nature and uses of the cost indexes, here are answers to the most frequently asked questions and suggestions on how to avoid costly mistakes. Related Links: Inflation Reverses Course As Recession Floors Prices Renegotiations Make Bad Times Worse Labor Deals with Uncertainties Finding Cost Data on the Internet What Drives ENR’s Cost Indexes View Complete Report with Data and Analysis Q: What is the difference between ENR’s Construction Cost Index and its Building Cost
Even with many sealed lips about project fates, evidence of the credit crunch can be vividly seen in stilled excavations and incomplete, mothballed commercial and residential structures from New York City to San Francisco. Developers in New York City alone have stopped construction on at least 30 sites, says the buildings department, while the local Building Trades Employers’ Association (BTEA) reports nearly $5 billion of delayed or stalled projects. Slide Show Tempe work stopped in 2008. Photo: The Firm PR. Work on Vegas twin-tower resort-casino halted. Construction also is slow on the West Coast. In California, the dollar value of
The impact of a sudden shift from record high demand last summer to cancelled projects, depressed markets and falling materials and labor costs this spring has spurred a once-in-a-generation poker game of renegotiation on projects across the country. Related Links: Inflation Reverses Course As Recession Floors Prices Labor Deals with Uncertainties Finding Cost Data on the Internet What Drives ENR’s Cost Indexes How To Use ENR’s Cost Indexes View Complete Report with Data and Analysis While many in the industry are reluctant to discuss the trend for attribution, industry sources say the temptation for owners to renegotiate pricing is widespread.
Jim Kunz, business manager for operating engineers’ union Local 66 in Pittsburgh, has reason to believe the recession will not hit his city as hard as others. So far, only 400 of the 5,200 members of his local actively pursuing work are out of a job. And Pittsburgh overall may have reason to share his optimism, long ago having diversified its business base and also learning to live with and recover from the decline of its steel industry. Photo: Jim Judkis / ENR Business agent Kunz says relatively few of his members are not working and there is cause for
When the financial crisis originally struck in the United States in 2007, the initial effect in Latin America was muted. That changed last year as the dramatic drop in purchases pounded commodity prices — the backbone of most Latin economies. Moreover, as investors began seeking safe havens the availability of funding shrank as well. Photo: C.J. Schexnayder Sao Paulo's Rodoanel Mario Covas, a 170-km loop encircling Brazil's largest city, is one of the key infrastructure projects officials hope will bolster the country's flagging economy. As a result, since late last year, countries across South America have launched a variety of
Las Vegas is delaying a planned $890-million convention-center upgrade amid falling visitor numbers and reduced gaming receipts. The Las Vegas Convention and Visitors Authority expects a 21.8% drop in room tax revenue for fiscal 2009, prompting construction plans to be shelved until mid-2010. LVCVA will pay up to $5 million annually to service the project’s existing debt. About $140 million has been committed toward construction thus far, of which 68.5% is being financed. The project was scheduled to finish in 2011. In February 2006, MWH Global Inc., Broomfield, Colo., with HNTB, Kansas City, Mo., was awarded a four-year, $45-million contract
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