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Construction Costs Predicted To Rise Again



Construction costs in the third quarter 2006 are projected to increase over the second quarter 2006, according to the Turner Building Cost Index.


Construction costs in the third quarter 2006 are projected to increase over the second quarter 2006, according to the Turner Building Cost Index.

The third quarter 2006 index will rise to 801, showing a 1.78 percent increase over the second quarter 2006 index of 787 and a 10.33 percent increase over the third quarter 2005 index of 726, Turner says.

"The frenzied market activity of the past several quarters appears to be stabilizing.  Although the strain on skilled labor remains, a lower level of volatility in commodities has served as a stabilizing influence on construction costs," says Karl F. Almstead, the Turner vice president responsible for the Building Cost Index.

"While there is a reduced level of activity in the residential markets, the commercial market remains active and is supported by sustained market strength in healthcare, education, science, and technology,” Almstead says.  

Turner is managing the escalation risk that is prevalent in the construction industry through performing 90% of its work under contract arrangements where Turner provides extensive preconstruction planning services before the contract price is fixed and before construction begins. Turner also utilizes unique procurement strategies to improve predictability in this volatile market.  These services and strategies are mitigating risk for both the client and for Turner.  

Used widely by the construction industry and Federal and State governments, the building costs and price trends tracked by the Turner Building Cost Index may or may not reflect regional conditions in any given quarter. 

The Cost Index is determined by several factors considered on a nationwide basis—labor rates and productivity, material prices and the competitive condition of the marketplace.  This index does not necessarily conform to other published indices because others do not generally take all of these factors into account.




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  posted on 10/5/2006   Article Use Policy




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