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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 / August 24 2011 - Construction bid prices have inched up to Sept 2007 levels

The trend is clear that construction bid prices have passed their low point in the United States.

The trend is clear that construction bid prices have passed their low point in the United States.

Construction bid prices have inched up to Sept 2007 levels

The latest research from global property and construction consultant, Rider Levett Bucknall, shows that – from the recession low point in January 2010 – construction costs have now inched up to about the same level as they were in September 2007.  From the last year and a half of quarterly upticks in construction bid prices, the trend is clear that construction costs have passed the low point.

On a more concerning note from Rider Levett Bucknall President and Global Board Member, Julian Anderson, is the fact that bid prices are rising less quickly than the combined cost of labor and materials.

“Our July 2011 figures show that bid prices are now in danger of – and are very close to – actually falling below the indexed cost of labor and materials,” said Anderson.  “Common sense tells us that this trend cannot continue without serious consequences for the industry – consequences which may include more construction related businesses closing and more projects ‘going bad.’”

Presently, though, all 11 locations where Rider Levett Bucknall collects construction cost data continued to report positive inflation for the period.  Modest quarterly inflation of between 0.2% and 0.5% were experienced in Las Vegas, Phoenix, San Francisco, Seattle and Washington, DC; whereas Boston, Denver, Los Angeles, New York, and Portland saw inflation of between 0.5% and 1.0%.  The Honolulu market is the one outlier among the markets in which Rider Levett Bucknall tracks construction cost data; due to recently passed legislation which made changes to the application of the Hawaii General Excise Tax affecting General Contractors’ tax responsibilities, construction bid prices in Hawaii markets jumped over 3.0%.

“What the construction industry now desperately needs is a sustainable recovery in the general economy,” added Anderson. “But what with the recent debt ceiling and deficit reduction debates at the Federal level, the subsequent downgrade in credit rating by Standard & Poors and the roiling in the stock market; how our country will achieve this remains a matter of debate.”

News / August 24 2011 - Construction bid prices have inched up to Sept 2007 levels