Rider Levett Bucknall (RLB)—an independent company which provides project management, construction cost consulting, and property and construction advising—recently released its second quarter North American construction cost report, and overall it seems the construction industry should look forward to the year ahead as the increase in bid cost of construction outpaces the general cost of goods and services.
In a letter introducing the report, RLB president Julian Anderson said, “Cost escalation continues to trend significantly above the Consumer Price Index, in a reflection of the good times we’re currently experiencing in the field.” The firm expects 2017 to be a “generally positive” year in construction barring “some external shock to the economy.”
In the U.S. section of the report, RLB looks at the comparative cost of construction in 12 U.S. cities, indexing them to see how costs are changing in each city and compared with each other. The index tracks bid cost of construction, including costs of labor and materials, overhead costs, sales taxes and profit margins among other things.
Generally, in a boom, construction costs increase faster than the net cost of labor and materials, because overhead levels and profit margins are increased in response to growing demand. In a bust, construction costs dampen or even reverses.
From April 2016 to April 2017, the national average construction cost increased approximately 4.8 percent. Los Angeles and San Francisco saw the greatest increases at 9.08 and 10.99 percent respectively. Boston, Chicago, Denver, New York, Phoenix, Portland, Seattle, and Washington D.C., had more modest increases, ranging from 3.74 to 5.29 percent. Honolulu experienced a 0.26 percent in construction costs.
The report also indexes Calgary and Toronto in a separate Canadian section and compares estimates of current building costs across eight markets (including offices, retail, parking and more) within each of the U.S. and Canadian cities. You can view the full report here: http://assets.rlb.com/production/2017/06/28233117/Q2-QCR-2017.pdf