Michael Moore / ENR As economists warn of tough times ahead amid rising oil costs and the weakening U.S. dollar, the fallout from ongoing inflation is being felt across the industry as highway, commercial and power projects are being delayed, scaled-back or abandoned. World materials demand coupled with record fuel costs are ratcheting up cost indexes. “It’s really brutal,” says Ken Simonson, economist at Arlington, Va.-based Associated General Contractors. In a Construction Inflation Alert issued by AGC this month, Simonson predicts a 6% to 8% increase in construction costs this year, following two years of double-digit cost increases. Steel, copper
Construction unions are enjoying the largest percentage increases in wages and fringe benefits in decades, setting a pace that could continue for years. But not all markets share equally. Annual wage and fringe increases hit a national average of 4.4% in 2007, according to the Construction Labor Research Council, Washington, D.C. That was up only slightly from the 4.2% average in 2006, but the rate was the highest recorded by CLRC since 1983. Between 2001 and 2006, increases ranged from 3.9% to 4.2%, according to CLRC. “It’s been a very slow creep, but it’s creeping up nonetheless,” says Robert M.
Although ENR’s cost indexes measure the costs of nonresidential buildings structures, the downturn in the housing market still has a major impact on index movement. In March, lumber prices in the indexes were down another 2% after dropping 14% the previous year. Lower lumber prices are the main factor keeping inflation low. Inflation measured by the Building Cost Index (BCI) kept in the 2% to 3% range for the last two years, after increasing 5%in 2005 and 10% in 2004 when the index absorbed a 31% increase in steel prices. The Construction Cost Index (CCI) was less affected by the
Michael Moore / ENR Seattle market is strong, but housing is cooling. Seattle’s commercial building boom is making life interesting for area builders as they struggle to put together competitive bids and meet project budgets, knowing that materials and fuel prices will continue upward and owners are becoming more resistant to escalation adjustments. The big issue for project managers is how to mitigate the risk of volatile material and fuel prices. The reality is that the days of stable prices for construction materials are over for the foreseeable future. The major factors are increased construction activity and demand for materials
Eastman Kodak Co Kodak Park housed an aging infrastructure on a brownfield site. When the Eastman Kodak Co. decided to implement a $200-million, 13.5-million-sq-ft footprint-reduction program (FRP) at Kodak Park in Rochester N.Y., it turned to design-build with a difference. Using electronic bidding coupled with sealed bids or reverse auctions, over 150 contractors have successfully delivered 1,600 contracts covering everything from asbestos abatement, building demolition, environmental remediation, utility relocation, build-outs and site restoration in the four-year program. “We retained and improved our infrastructure and we now have a campus-like site that can attract new tenants and new revenue to offset
Signal-Rite LLC Remote compensator Las Vegas is hearing heavy metal, not from the usual clink and clatter of slot machines, but from the heavy iron flexing its muscles on some of the country’s largest, most ambitious projects. The city’s famed Strip, a four-mile-long swath of Las Vegas Boulevard, is lined with hulking mega-resort casinos that are constantly being renovated, expanded, imploded and built anew to turn concrete and steel into cash. The Strip has a dizzying amount of work under way, with $41.4-billion of hotel, casino and convention construction through 2012, reports the Las Vegas Convention and Visitors Authority. Yet
Jim Huff, Santee Cooper Prospects for a continuing boom in coal-plant construction in the U.S., considered bright as recently as 2006, are suffocating in a cloud of carbon-dioxide emissions. With public, regulatory and lender concern growing, many proposed plants have been cancelled. Permits issued for others require offsets for their carbon emissions, while the ones that remain in permitting are being intensely challenged. The U.S. Environmental Protection Agency must regulate carbon-dioxide emissions under the Clean Air Act, the Supreme Court ruled last year, but Congress has failed to give EPA guidelines for a national policy. Three investment banks last month
WBF Program provides entry path for women into trades. The Conference Board of Canada estimates a shortage of one million workers in the high paying trades and related occupations within 20 years. As a result, employers are looking towards Alberta's Apprenticeship and Industry Training System and its Women Building Futures program to solve long-term staffing solutions. Industries relying on apprentices include construction and transportation with such short-staffed trades as rig technicians, ironworkers, plumbers, and heavy equipment technicians. The industry-driven program is designed to meet the evolving requirements of each designated trade, and maintain high industry standards. Alberta has only 10
Before Suncor Energy Ltd. announced a $20.6-billion expansion to its oil sands project in northern Alberta, it had already started scoping out its future construction labor force. Predicting a peak need of 7,800 workers in 2009/2010, Suncor had to start looking early because in Alberta, jobs far outweigh qualified workers. The major North American energy producer is already in negotiations with Edmonton-based contractor PCL Constructors Ltd. for a number of different tradespeople. Related Links: Alberta's Booming Oil Sands Boast Cold Weather, Hot Market Production Plans Pick Up Steam When Temperature Plunges, Production Falls, Too Alberta's Worker Shortage Boosts Apprentice Program
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