B_1112_Cost_Trends5

Facility Management Cost Trends: Labor and Material Costs on the Rise

Oct. 23, 2012
Construction outlook is promising.

The construction industry is finally showing gradual but consistent improvement. Private construction, the major component of the industry, is up at all levels with the exception of hotels. Led by apartments and condos, housing is on the up-tick. Increases in construction costs are slowing but remain up for the year at 2–2.5%. Labor costs are outstripping material costs (2.5% for labor vs. 1.5% for material).0

In terms of the major construction materials, lumber prices are going up slightly after 5 years of declines. Steel is headed down, probably due to the slowed growth in China, the recession in Europe, and the world-wide economic downturn. Adhesives and sealants had slight gains in Q1 and Q2 then flattened out. Experiencing ups and downs since Q4 of 2007, wood siding has been slightly up for this year with overall gains of 1% over the previous 4-year period. After being up slightly last year (3%), fiber optic cable is now down for the last 12 months. Since its peak in 2004, fiber optic cable has decreased in price by almost 10%. Since 2006, granite prices have fluctuated within a narrow band of 2-3 percent. They are down slightly for the current year. Vinyl floor covering is flat for the year, but with petroleum on the rise, watch for it to continue its steady rise, which totaled 6% over the last eight years.

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