COST PROJECTIONS BEGINNING FY22
Building Cost Projections FY22
The Past Year
2020 started out strong with new construction starts increasing. The spread of COVID-19 in March drastically effected construction as most construction sites closed down for several weeks. By May, most construction project were back in production, but new construction starts reduced. The longer COVID-19 restrictions in place, the worse the projections for new work. Material costs and availability are severely impacting the construction industry.
Wildfires also are impacting the availability and cost of primarily wood products. If available, costs for lumber, plywood and wood related materials will be extremely high.
In September Multi-Family Design and Construction reported “It’s been a wild ride in 2020 for the U.S. timber industry, and the run up in prices shows no sign of easing. First, mills temporarily shut down in March due to the COVID-19 pandemic. Then, in September in the timber nexus of the Northwest, wildfires have burned out of control threatening some timber plants.”
In May, Architectural firms were reporting business conditions at remained extremely poor. Their outlook for new work was low.
The building design and construction industry organizations do not agree on when “business will return to normal”.
Attilio Rivetti, Vice President for Turner Construction stated “The vast majority of construction projects were deemed essential business operations during the COVID-19 pandemic. Many of the projects that were paused or slowed earlier this year have ramped up and are back on track. We are witnessing minor increases for fabricated commercial building materials, which is being offset as we continue to see subcontractor competitiveness increasing in efforts to secure backlog for their business.”
(Above data compiled from AGC and Turner Construction Company)
While Kansas had some construction slow down, agencies took the opportunity to continue with construction projects that were enhanced by employees working from home, leaving buildings and parking lots empty. Future construction projects remain in limbo due to a reduction in state revenues.
The Forecast for FY22
COVID-19 has left a lot of questions unanswerable. State agencies are proceeding with caution.
| ||Yearly Cost Projections|
|Monthly Cost Projections|
|FY22 ||5.0% ||0.00417 / month (5% / 12 months). |
|FY23 ||9.0% ||0.00375 / month (9% / 24 months) |
|FY24 ||12.0% ||0.00333 / month (12% / 36 months) |
|FY25 ||17% ||0.00354 / month (14% / 48 months) |
|FY26 ||21.0% ||0.00350 / month (17% / 60 months) |
These projections were compiled from multiple sources including AGC of America, US Bureau of Labor Statistics and Engineering News Record
Historical Cost Indexes
|Year beginning in January ||Average Index ||% change ||Year beginning in January ||Average Index ||% change |
|2020 (3rd quarter) ||1171 ||-0.51 ||2009 ||832 ||-8.40 |
|2019 ||1156 ||5.5 ||2008 ||908 ||6.30 |
|2018 ||1096 ||5.60 ||2007 ||854 ||7.70 |
|2017 ||1038 ||5.00 ||2006 ||793 ||10.60 |
|2016 ||989 ||4.70 ||2005 ||717 ||9.50 |
|2015 ||943 ||4.50 ||2004 ||655 ||5.40 |
|2014 ||902 ||4.40 ||2003 ||621 ||0.30 |
|2013 ||864 ||4.10 ||2002 ||619 ||1.00 |
|2012 ||830 ||2.10 ||2001 ||61 ||3.00 |
|2011 ||812 ||1.60 ||2000 ||595 ||4.40 |
|2010 ||799 ||-4.00 ||1999 ||570 ||3.80 |
(The above historical cost data was obtained at www.turnerconstruction.com/cost-index.)