Design, Construction & Compliance

Building Cost Projections

COST PROJECTIONS BEGINNING FY19

The Past Year

NATIONALLY

In late 2017 Turner Construction Company reported that “he busy construction market, shortages of skilled labor and the impact of natural disasters on material production and demand are putting upward pressure on construction costs”

While there are slight increases in materials, the cost increases come from the labor market.  Some materials saw price increases, aluminum being one of those.  Petroleum based products have seen cost increases due to hurricanes in the southern United States as well as longer lead times for some materials.  There is an expectation that with the tariffs announced by President Trump effective on March 23, 2018 on steel and aluminum would increase prices significantly as 43% of US Steel goes to the construction industry.

Nationally the outlook for an upswing in construction starts is high.  “Architectural and engineering services employment increased by 3.3% for the same time last year, a favorable indicator for future construction demand”

(Above data compiled from AGC and Turner Construction Company)

LOCALLY

With the state budget issues continuing, the volume of state funded construction related work is on the downslide, however post-secondary education construction, utilizing private funding, continues to expand with significant work.

The Forecast for FY19

The problem facing the construction industry is skilled labor and qualified subcontractors.  However, with the large projects at the University of Kansas and Kansas State University winding down, we are experiencing bid numbers at or slightly below the budgeted amounts.

Cost Projections

 

Yearly Cost Projections
from FY 2018

Monthly Cost Projections
from FY 2018

FY17

4.5%

0.003750 / month (4% / 12 months)

FY18

7.5%

0.003125 / month (7% / 24 months)

FY19

11.0%

0.003056 / month (10% / 36 months)

FY20

15%

0.003125 / month (14% / 48 months)

FY21

19.0%

0.003167 / month (17% / 60 months)

These projections were compiled from multiple sources including AGC of America, US Bureau of Labor Statistics and Engineering News Record

Historical Cost Indexes

Year beginning in January

Average Index

% change

Year beginning in January

Average Index

% change

2018

1058

5.07

2007

854

7.70

2017

1038

5.00

2006

793

10.60

2016

989

4.70

2005

717

9.50

2015

943

4.50

2004

655

5.40

2014

902

4.40

2003

621

0.30

2013

864

4.10

2002

619

1.00

2012

830

2.10

2001

61

3.00

2011

812

1.60

2000

595

4.40

2010

799

-4.00

1999

570

3.80

2009

832

-8.40

1998

549

4.60

2008

908

6.30

1997

525

4.00

(The above historical cost data was obtained at www.turnerconstruction.com/cost-index.)