Friday, August 28, 2009

Trend - Construction materials are declining in cost

I'll be doing several recurring posts here with some snippets from a deliverable I produced for a client. They are a federal government client, who run the facilities for that organization. They asked me to look into some trends affecting the facilities world.

Trend #1 -

The economy will bottom out, potentially Fall 2009, but not boom thereafter. There will be continued real estate challenges for both the construction industry and individuals. The defined end of the recession will also not immediately result in jobs growth, which could be delayed up to a year and a half later. As a result of these economic issues, there has been a one-year 8.92% decrease from the Summer 2008 peak (Turner Building Cost Index).

Questions for the client -
  • Have we seen the corresponding price reductions in construction costs?
  • Do our cost estimate models reflect this?
  • Can we lock in existing materials rates for a long-term period?

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