Despite Labor and Pricing Pressures, Turner Forecasts Continued Increase in Construction Costs
Turner Building Cost Index Forecasts 7.7% Increase Over 3rd Quarter 2006
New York, N.Y. – September 17, 2007 – Turner Construction Company, the nation’s leading general builder, today published its quarterly Turner Building Cost Index forecasting that construction costs in the US building industry are continuing to increase in the Third Quarter. According to the Turner Building Cost Index, the Third Quarter 2007 index shows a 1.89 percent increase in construction costs over the Second Quarter 2007 and a 7.74 percent increase over the Third Quarter 2006 index. Turner has issued this quarterly forecast for more than 75 years.
According to Karl F. Almstead, the Turner vice president responsible for calculating the Turner Building Cost Index, “The construction industry continues to face a shortage of skilled labor and trade contractor availability. The strength of the developing economies of the world has added to the demand for raw materials and equipment, adding to the pressure on material prices in the United States. In spite of this upward pressure on construction pricing, the forecast for the market continues to appear strong. According to McGraw-Hill Construction, the non-residential building market activity grew five percent over the past twelve months. Confirmation of the continued strength in the construction industry is supported by the AIA’s June Architectural Billing Index.”
This forecast is produced by Turner as an indicator of market trends and does not have direct implication for Turner’s financial performance. Approximately 90% of Turner’s business is performed under contract arrangements where Turner provides extensive preconstruction planning services before the contract price is fixed and before construction starts. By providing high quality pre-construction phase services and utilizing alternative procurement strategies, Turner continues to effectively serve its clients and manage the market risks associated with cost escalation issues.
Used widely by the construction industry and Federal and State governments, the building costs and price trends tracked by The Turner Building Cost Index may or may not reflect regional conditions in any given quarter. The Cost Index is determined by several factors considered on a nationwide basis—labor rates and productivity, material prices and the competitive condition of the marketplace. This index does not necessarily conform to other published indices because others do not generally take all of these factors into account.
