McGraw-Hill Construction has revised its forecast for construction starts in 2009 based on the impact of federal stimulus. “Stimulus spending will shift public works from a negative to a plus,” says Robert Murray, chief economist. Highway and bridge work will be up 15% this year as opposed to a 5% to 10% decline. Environmental markets will show a 10% increase instead of a 5% decline. + Image SOURCE: MCGRAW-HILL CONSTRUCTION RESEARCH & ANALYTICS
Over the last six months, the deepening recession its accompanying credit crisis have dramatically changed the construction industry’s cost picture. Construction inflation has gone from the double-digit realm just last summer to between 2% and 6% this quarter. Ten of the 14 major industry cost indexes collected by ENR for this report posted declines during the first quarter, ranging from 0.5% to 8.4%. Slide Show Photo: Michael Moore Related Links: Renegotiations Make Bad Times Worse Labor Deals with Uncertainties Finding Cost Data on the Internet What Drives ENR’s Cost Indexes How To Use ENR’s Cost Indexes View Complete Report with
Even as Alabama transportation officials say federal stimulus money will not cover all the state’s necessary projects, the Birmingham region will soon lose access to $100 million in public transit funds because affected municipalities haven’t put together a plan after four years. The Federal Transit Administration money was set aside in a 2005 highway bill with the intent of lessening traffic in the Interstate 65 corridor between Birmingham and northern Shelby County. Disbursement was conditional on an approved plan and 20% local matching funds. Engineers are analyzing traffic-mitigation strategies, but intercommunity cooperation has not coalesced in time for a plan
People needing a new Volvo truck next year will have to pay an extra $9,600 on top of the regular price. Volvo Trucks North America says the surcharge is a result of extra costs associated with selective-catalytic reduction [SCR] in its 2010 diesel engines. SCR uses urea, a diesel exhaust fluid, to scrub nitrogen oxides from the tailpipe. New electronic controls monitor the process. U.S. Environmental Protection Agency rules dictate that by Jan. 1, all onroad diesels will have to meet near-zero NOx levels. Next year, Volvo will offer trucks with its own 11-, 13- and 16-liter engines as well
To Todd Harris, trouble at his local bank is a sign of thin times for his building contracting company, J.C. Harris & Sons, which is based in Elgin, Ill., not far from Chicago. Harris keeps an account at Amcore Bank, a mid-sized regional bank, and has even built its branch buildings. But like banks around the world, Amcore reported a loss for 2008: $97.5 million. William McManaman, Amcore’s CEO, told investors that in the last quarter of 2008, builders and developers accounted for the majority of the bank’s new bad loans. So for now, Amcore, like other banks, is about
At about the 30-day mark since President Obama signed the American Recovery and Reinvestment Act, federal agencies are releasing more of the $787-billion stimulus measure’s construction funding. The Dept. of Energy, Dept. of Transportation and U.S. Environmental Protection Agency on March 12 and 13 detailed plans to distribute more than $1 billion in stimulus aid. Photo: Amtrak Amtrak plans to replace Connecticut bridge (top). The Dept. of Energy said on March 12 that it plans to release to state and local agencies an initial installment of $777.8 million of its $7.8 billion in stimulus funds for home weatherization and aid
What a difference six months can make. During the third quarter of last year construction inflation was still reeling from the impact of record-high steel and oil prices set during the first half of 2008. By the first quarter of 2009, the inflation trend had completely reversed itself. Most major construction cost indexes tracked by ENR declined this quarter. Materials producers are frantically cutting production as prices hit rock bottom. Construction’s unemployment rate jumped into the double digits, and a severe credit crunch is pushing many subcontractors closer to the edge of bankruptcy. Related Links: Inflation Reverses Course As Recession
The three index tables on this page each represent various components of ENR’s two primary indexes. The Materials Price Index is the materials component for both of ENR’s cost indexes. The Common Labor Index is the labor component of ENR’s Construction Cost Index and the Skilled Labor Index is the labor component of ENR’s Building Cost Index. Related Links: Inflation Reverses Course As Recession Floors Prices Renegotiations Make Bad Times Worse Labor Deals with Uncertainties What Drives ENR’s Cost Indexes How To Use ENR’s Cost Indexes View Complete Report with Data and Analysis ENR only publishes cost index history tables
Although ENR’s cost indexes measure the costs of nonresidential buildings, the downturn in the housing market still has a major impact on index movement. During this quarter, lumber prices in the indexes were down another 1.8%, after dropping 23% over the previous four years. Falling lumber prices had been offset by surging steel prices. However, the current recession has sent steel prices tumbling. As a result, the Building Cost Index (BCI) fell 1.8% this quarter, pulling the year-to-year escalation down from 7.3% last fall to 4.3% this month. The Construction Cost Index (CCI) is less affected by these swings in
Governments throughout the world are pouring trillions of dollars into their economies to halt their decline and stimulate recovery. It’s still too early to detect results, and in most places construction has ground to a halt. But in Vietnam, a skyscraper continues to rise. Toronto also is relatively unscathed, thanks to pent-up demand for office space, and Calgary’s market is still floating on oil. Photo: Turner Construction Collapsing world economy has failed to halt the rise of Vietnam’s Bitexco Tower. “On a relative basis there is work in Vietnam, whereas work has stopped in India, Russia, Dubai and other places,”
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