Kansas Department of Administration

Building Cost Projections

COST PROJECTIONS BEGINNING FY23

The Past Year

NATIONALLY

Supply chain delays and constraints are a constant battle as delivery times for building materials, as well as most consumer goods, continues to lengthen, disrupting the flow of construction projects. 

The war in Ukraine and the West’s response are likely to have multiple effects on construction materials costs and availability. The most immediate impact is likely to be on diesel fuel and gasoline prices.  Cargo ships in the region have been halted or delayed.

While some material prices appear to show signs of leveling, there is a continual escalation in steel, copper and aluminum prices.  In addition, the supply chain disruptions have continued at unprecedented levels.  With subcontractor backlog returning to pre-pandemic levels and skilled labor shortages persisting, competitiveness by vendors and subcontractors appears to be somewhat less aggressive as compared to earlier in 2021.

(Above data compiled from AGC and Turner Construction Company)

LOCALLY

It the beginning of 2021, subcontractors and suppliers were not holding bid prices more than 14 days and some as little as 7 days.  As 2021 came to a close, many contractors were being told by suppliers that the price wasn’t firm until the materials were fabricated, causing general contractors to ask for additional money. 

As stated above, delivery issues continue to extend the duration of construction projects.  In some instances, a project that previously took 7 to 8 months is running up to 12 months or longer. 

Labor shortages are also affecting the construction industry as baby boomers are retiring and new skilled labor is not keeping up with the void left by these retirements. 

As much as people want to believe that the pandemic is over, it is not, and is affecting the construction industry more now than a year ago. 

The Forecast for FY23

Labor shortages and cost increases are affecting the ability to complete work on time and on budget.  Projections are up this year as the current situation will not easily or quickly resolve itself.

Cost Projections

 

Yearly Cost Projections
from FY22

Monthly Cost Projections
from FY2021

FY23

6.0%

0.00500 / month (6% / 12 months).

FY24

11.0%

0.00458 / month (11% / 24 months)

FY25

15.0%

0.00417 / month (15% / 36 months)

FY26

19%

0.00395 / month (19% / 48 months)

FY27

24.0%

0.00400 / month (24% / 60 months)

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

Historical Cost Indexes

Year ending in January

Average Index

% change

Year beginning in January

Average Index

% change

2021

1230

5.4

2010

799

-4.00

2020

1171

-0.51

2009

832

-8.40

2019

1156

5.5

2008

908

6.30

2018

1096

5.60

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

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

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