Construction Costs Rise for 22nd Straight Month in November

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Current construction costs rose for the 22nd consecutive month in November,” consultancy HIS reported in its IHS/Procurement Executives Group Engineering and Construction Cost Index (ECCI).

The ECCI index is based on responses from “procurement executives representing leading engineering, procurement and construction firms” as to whether several types of material, equipment and subcontractor labor costs rose, fell or were flat in the prior month.

Values above 50 indicate more respondents reported rising than falling prices. The index “registered 53.2% in November, up from 52.6% last month. Once again, the materials/equipment sub-index was the softer of the two subcomponents. Current materials/equipment prices registered 51.0% in November, the same as its October reading.

The headline current materials/equipment price index has been hovering right around a breakeven 50 since April, with five of twelve subcomponents now below this neutral mark. November recorded the seventh consecutive month of falling prices for carbon steel pipe and a fourth month of falling freight rates between Asia and the US. Copper-based wire and cable and fabricated structural steel were also below [50] in November, indicating falling prices.

The current subcontractor labor index registered 58.5%, up from 56.4% last month, with the strongest gains in November concentrated in Western Canada and the US South and West regions. In the open-ended response section, respondents also expressed concern over the availability of skilled labor (such as welders and pipefitters) in the US Gulf Coast as investment in downstream energy projects picks up in 2014.”

The ECCI Index tracks industry-specific trends and variations, identifying market turning points for key projects, and is intended to act as a leading indicator for wage and material inflation specific to this industry.  Read More