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Rider Levett Bucknall

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A blog on construction industry trends from the Rider Levett Bucknall Americas president, Julian Anderson.

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News / November 09 2011 - RLB USA reports continued construction bid price increases in Q3

Rider Levett Bucknall's National Construction Cost Index for October 2011

Rider Levett Bucknall's National Construction Cost Index for October 2011

RLB USA reports continued construction bid price increases in Q3

Third quarter findings from the latest construction cost report from global property and construction consultant Rider Levett Bucknall continue to show negligible cost inflation across the nation. A 0.5% national average increase in construction costs for the quarter rounds out year-on-year cost inflation of roughly 1.9%.

All 11 locations where Rider Levett Bucknall collects construction cost data continued to report construction prices on the rise for the period.  At under 0.2%, Honolulu and Seattle posted the lowest levels of inflation, while all other locations saw bid price increases of between 0.4% and 0.7% for the quarter. 

This steady increase in construction costs in U.S. markets – despite significant upward price pressure from the materials side of the equation – reflects a continued difficulty among subcontractors and general contractors in passing rising materials costs onto end users in what is still an extremely competitive market. 

Construction activity levels in housing remain historically weak; and, nonresidential construction activity remains subdued as well. For the first nine months of 2011, nonresidential construction put in place was 3.5% below the same period in 2010 (35.5% below the same period in 2006).

Rider Levett Bucknall President and noted speaker on construction cost trends, Julian Anderson, said, “At the end of the third quarter, it is clear that the U.S. economy continues to suffer from the damage done to it during the past summer; and, consequently, the construction industry continues to suffer too.”

Several key indicators show declining confidence in both the general economy and the construction industry.  An October 2011 Consumer Confidence Index® reading from The Conference Board plunged to 39.8, a figure not seen since the depth of 2008-2009.  The third quarter ENR Construction Industry Confidence Index fell nine points to 37, indicating a belief among the industry’s leading design and construction firms that the market it still in recession.  The September figure from the American Institute of Architects’ Architectural Billings Index also paints a more negative picture; at 46.9, this indicates declining business conditions among the nation’s architectural firms. 

Anderson added that, “with no end in sight to the dreary outlook, we expect that construction bid prices will remain tame for the balance of 2011 and probably into 2012.”

News / November 09 2011 - RLB USA reports continued construction bid price increases in Q3