While materials price escalation has grabbed most of the headlines, labor costs are also contributing to construction’s growing inflationary pressure. "The one thing that is not getting a lot of attention, but soon will be, is wage and salary pressure on contractors’ prices," says Julian Anderson, Phoenix-based partner at project cost consultant Rider Hunt Levett & Bailey. "As the economy picks up, there is going to be upward pressure on salaries of supervisors, cost engineers, schedulers and other professionals that are going to be passed along to owners." VIEW MORE ARTICLES FROM SECOND QUARTERLY COST REPORT Summary: Inflation Makes Its
VIEW MORE ARTICLES FROM SECOND QUARTERLY COST REPORT Summary: Inflation Makes Its Move Cement: Price Hikes Shatter Years of Calm Copper: Huge price hikes stymie subs Steel: The art of negotiating price relief Bridges: Dealing with steel price shock Asphalt: High oil prices hit paving costs Labor: Rising employment pressures costs VIEW RELATED DATA Builders’ Construction Cost Indexes A surge in materials price escalation during the first half of the year has ripped through the industry’s major construction cost indexes. Average annual inflation measured by 13 indexes increased from 3.2% in the previous quarter to 5.6% for the quarter ending
Source: Portland Cement Association As they place bids for this summer’s work, U.S. contractors are becoming alarmed by unexpected and historically high price increases in the cement and concrete marketplace. "We got hit over the head with steel prices and worked through it, but this ready-mix thing blindsided us," says Clay Fischer, president of Woodland Construction Co. Inc., Jupiter, Fla. In south Florida, ready-mix prices are up $8 to $10 per cu yd since January and suppliers have announced another $5 increase effective July 1, he says. On top of the price hikes, shortages are popping up, making availability an
Specialty contractors in the U.S. that use extensive amounts of copper-based products have been squeezed in recent months, as never before, by sharp rises in copper prices. But now there are some indications that the copper price spike may have peaked. "The acute tightness in the market right now is probably about as bad as it is going to get," says John Mothersole, the Washington, D.C.-based copper specialist for construction forecasting firm Global Insights Inc. He notes that after a few years of excess capacity, copper supply has been exhausted by global economic recovery, particularly large demand from China. This
(Photo courtesy of The Williams Group) A high-stakes negotiation may soon take place in the Washington, D.C., area between contractors on one of the East Coast’s biggest transportation projects and state and federal agencies. Prime contractors and their steel fabricators and erectors on the Woodrow Wilson Bridge have asked for relief from last winter’s sudden financial blow, when raw steel suppliers informed fabricators and erectors of sharply higher prices and limits on shipments. Rather than eat the losses, the contractors are seeking relief. Question marks hovering over the 7.5-mile-long bridge project, which will link Maryland and Virginia across the Potomac
(Photo courtesy of American Bridge) Although the initial shock of this year’s historic spike in steel prices is starting to ease somewhat, contractors, transportation departments and fabricators expect to contend with its re- percussions on bridge projects for a long time to come. The 40 to 50% jump "created a path of damage like a tornado, and we’re still trying to clean up that mess," says Pat Loftus, president of High Steel Structures Inc., a Lancaster, Pa.-based fabricator. "Basically, [higher steel prices] are going right to the bottom line because there’s no way to absorb them," says Dennis Hirschfeld, president
If you are feeling nostalgic for the 1970s, forget about dusting off the lava lamp. Go to a construction bid closing these days where estimators are having flashbacks to ’70s-style materials price inflation. An explosion in scrap steel prices during the first quarter got the ball rolling with huge price increases for almost every construction product made of steel. But steel now has more company, as other key materials face price gyrations. Commodity markets are in turmoil, resulting in price increases from 15 to 45% for copper, stainless steel and aluminum construction products. Record crude oil prices in the second
Gadget and software vendors often promise that the electronic technology revolution is at hand and next year’s killer application will transform the way business is done in a flash. Yet ENR readers and proponents of technology adoption in construction say the process has been grinding along for decades, bringing more evolutionary, rather than revolutionary, change. They suggest that a more accurate analogy to the real pace of progress might be the "Hundred Years War." Trace the roots of just about any useful device or capability derived from electronic technology and you will find yourself wading in research and development dipping
The practice of scheduling projects with the help of mathematics matured just as computing power arrived in the form of massive mainframes in the late 1950s. With PCs now available that are more powerful than the old mainframes, some believe today’s simplified popular scheduling software eventually may be integrated into other business programs or used with more sophisticated add-on features. Two organizations were the spawning grounds for the new technology. In 1956, E.I. du Pont de Nemours Co., Wilmington, Del., started studying the application of new techniques to run its mammoth engineering and construction projects. The company’s mathematicians decided that
In 1972 microprocessors hit the market as the key components of the first handheld electronic calculator. The nameplate read simply "Hewlett Packard" and the device could perform logarithmic and trigonometric functions. It sold for $395, which in those days represented several weeks pay for a young engineer. But it was a huge success and within three years the K & E Company, manufacturer of slide rules and perhaps the biggest direct competitor, shipped the last of its mathematical magic wands. Slide rules had been the gold standard of manual calculators for 400 years, but they were blown out of the
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