According to the quarterly Turner Building Cost Index, construction costs for the U.S. industry should increase for the third quarter of 2005, over the second quarter of 2005. As per the Turner Building Cost Index, the third quarter 2005 index will rise to 726, showing a 3.13% increase over the second quarter 2005 index of 704 and a 9.67% increase over the third quarter 2004 index of 662.
Says Karl F. Almstead, the Turner vice president responsible for the Cost Index: “Material prices are driving cost escalation. Cement, copper, gypsum wallboard, and petroleum based products are all experiencing cost spikes. Global demand for raw materials is pushing up prices. Steel prices are on the rise after leveling off for several months.”
He continues: “Hurricane Katrina and the subsequent flooding along the Gulf Coast have created uncertainty; however, they will have an impact on construction costs that will last through the remainder of the year and the next 12 month period. The interruption of energy production, refining and manufacturing will increase the competition for energy and goods produced in the Gulf region.”
He adds: “The damage to port facilities and infrastructure will impact the supply chain for materials and products that passed through the Gulf ports. Therefore, both cost increases and schedule delays will be part of the fall out from this disaster. The clean-up and rebuilding efforts will increase demand for construction resources, which will add to the cost escalation pressure in the region and nationally.”