Construction Cost Escalation Continues to be Fueled by Volatility in Material and Labor Markets

Turner Construction Company’s First Quarter Building Cost Index—which measures costs in the non-residential building construction market in the United States—had increased to the value of 1255. This represents a 2.03% quarterly increase from the fourth quarter 2021 and a 7.08% yearly increase from the first quarter 2021.

“Overall Supply Chain stability and the ‘return-to-normal’ state has not yet been established. Some key materials continue to be in short supply due to supply chain disruptions in manufacturing and computer chip shortages. Higher transportation costs are due to the rising price of gasoline and diesel fuels,” said Attilio Rivetti, the Turner vice president responsible for compiling the cost index.

Rivetti continued, “We see alternative means of construction on the rise such as prefabrication and modular solutions that offer work environments that appeal to the labor workforce entering our industry. Our experience has shown that offsite construction can also result in gains in efficiency of installation, as well as potential reductions to project durations.”

Turner has prepared the construction cost forecast for more than 80 years. The building costs and price trends tracked by the 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, including labor rates and productivity, material prices and the competitive condition of the marketplace.