Turner’s First Quarter 2016 Building Cost Index Reflects Continued Growth in Construction Activity

The First Quarter 2016 Turner Building Cost Index—which measures costs in the nonresidential building construction market in the United States—has increased to a value of 970, according to Turner Construction Company. This reflects a 1.15 percent increase from fourth quarter 2015 and a 4.64 percent yearly increase from first quarter 2015.

“The shortage of skilled labor is outweighing the impact of declining material prices,” said Attilio Rivetti, Turner’s vice president responsible for preparing the cost index. “As the volume of work remains relatively high, we expect subcontractors to continue to be strategic in pursuits, ultimately resulting in upward cost pressures.”

Approximately 90 percent 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 preconstruction services and utilizing enhanced procurement strategies, Turner effectively manages the market risks associated with cost-related issues.

Turner has prepared the construction cost forecast for more than 80 years. The building costs and price trends tracked may or may not reflect regional conditions in any given quarter. The index is determined by several factors considered on a nationwide basis, including 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.

Photo caption: Increases in construction costs are driven by an increasing level of construction activity and limited availability of skilled labor in busier markets in the South and Northwest.