It's too soon to tell but I'm going to guess firms will have a small spike in billings soon? I say this because the article suggest that people have a limited time frame to sign contracts and lock prices down.
Let's say wood, copper and diesel keep increasing in cost... would a 3% increase every month for 12-months shift costs so dramatically that other materials become cost competitive?
I think this is something to keep in mind while designing!
peak copper has already happened. if we get serious about climate change, then preserving forests for carbon sequestration will cause lumber and food prices (ie amazonian soy & asian palm oil) to rise. peak oil is on its way. so yes, construction (& everything else) will be getting more expensive.
copper is probably peaked, but other metals like steel are going up... as the recovery happens, and with increasing demand in places like china, commodities prices are on the rise
this means increasing demand on building materials - which could be a good sign for our industry. either projects that were on hold are finally moving ahead, or it reflects pent-up demand from not building for a couple years.
I say this because the article suggest that people have a limited time frame to sign contracts and lock prices down.
we could start seeing more fast-track projects pop up in the short term - but I think it will mostly affect GC's pushing to order materials before they get screwed on their low bids on existing projects - or more change orders...
besides - anyone who is out of work right now should want construction costs to rise because that means firms could start increasing their billings and be able to afford to properly staff projects. even though the real cost of our services remain relatively constant regardless of the construction costs, our fees are entirely dependent on the psychology of how much a client is willing to pay us as a percentage of the total cost of the project.
don't agree with the sentiment it will force work our way - the fundamentals of the financing market haven't changed and i don't think there are a lot of owners waiting to pull the trigger on the design of projects because they're waiting for construction costs to fall any further. if anything, i think this is going to halt even more projects, as the proforma's just won't work.
don't think this will correlate to fees at all, unless you had a fee that's directly tied as a percentage of the construction cost. the assumption you're taking (@ toaster) is that owner's are willingly going to accept project cost increases and pay out accordingly down the chain. my guess is that they will have every incentive to squeeze all the other aspects of the project costs to try and keep the overall price the same.
if anything, this will put even more pressure on the labor components of most projects, both on the design and construction ends.
fast tracking - absolutely. especially for cm-risk work. in fact, it'll probably turn most work this year into 'fast track' mode.
now, if you're a firm, you should absolutely go ask for more fees if the owner wants to switch from a bid to a negotiated bid/fast track phasing arrangement. there's more work in the latter - we just had a project switch from bid to cm-risk in the last two months. we negotiated an extra 1% of c.c. as an add service to make it happen on our end.
Copper, diesel and plywood prices expect to increase
Browsing around today I found this from the Associated General Contractors of America today.
NEW DATA SHOWS LOW CONSTRUCTION PRICES MAY SOON BE COMING TO AN END AS DIESEL, PLYWOORD AND COPPER PRICES JUMP IN NOVEMBER-- dated Dec. 15, 2009
Anyone experience the effect yet?
It's too soon to tell but I'm going to guess firms will have a small spike in billings soon? I say this because the article suggest that people have a limited time frame to sign contracts and lock prices down.
Let's say wood, copper and diesel keep increasing in cost... would a 3% increase every month for 12-months shift costs so dramatically that other materials become cost competitive?
I think this is something to keep in mind while designing!
Discuss your thoughts.
peak copper has already happened. if we get serious about climate change, then preserving forests for carbon sequestration will cause lumber and food prices (ie amazonian soy & asian palm oil) to rise. peak oil is on its way. so yes, construction (& everything else) will be getting more expensive.
copper is probably peaked, but other metals like steel are going up... as the recovery happens, and with increasing demand in places like china, commodities prices are on the rise
also eventually we are going to see inflation...
invest in commodities stocks for long term...
this means increasing demand on building materials - which could be a good sign for our industry. either projects that were on hold are finally moving ahead, or it reflects pent-up demand from not building for a couple years.
I say this because the article suggest that people have a limited time frame to sign contracts and lock prices down.
we could start seeing more fast-track projects pop up in the short term - but I think it will mostly affect GC's pushing to order materials before they get screwed on their low bids on existing projects - or more change orders...
besides - anyone who is out of work right now should want construction costs to rise because that means firms could start increasing their billings and be able to afford to properly staff projects. even though the real cost of our services remain relatively constant regardless of the construction costs, our fees are entirely dependent on the psychology of how much a client is willing to pay us as a percentage of the total cost of the project.
don't agree with the sentiment it will force work our way - the fundamentals of the financing market haven't changed and i don't think there are a lot of owners waiting to pull the trigger on the design of projects because they're waiting for construction costs to fall any further. if anything, i think this is going to halt even more projects, as the proforma's just won't work.
don't think this will correlate to fees at all, unless you had a fee that's directly tied as a percentage of the construction cost. the assumption you're taking (@ toaster) is that owner's are willingly going to accept project cost increases and pay out accordingly down the chain. my guess is that they will have every incentive to squeeze all the other aspects of the project costs to try and keep the overall price the same.
if anything, this will put even more pressure on the labor components of most projects, both on the design and construction ends.
fast tracking - absolutely. especially for cm-risk work. in fact, it'll probably turn most work this year into 'fast track' mode.
now, if you're a firm, you should absolutely go ask for more fees if the owner wants to switch from a bid to a negotiated bid/fast track phasing arrangement. there's more work in the latter - we just had a project switch from bid to cm-risk in the last two months. we negotiated an extra 1% of c.c. as an add service to make it happen on our end.
on a side note...anything that is oil based has been rising over the past years... i.e. acrylics
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