A March 18, 2013, article from the Lehigh Valley Business (LVB.com) reports construction prices rising in February and the probability of them continuing to rise throughout 2013. http://www.lvb.com/article/20130318/LVB01/130319917/Eastern-Pa-construction-prices-rise-13-percent&template=art .
Contractors are slowly recovering from the economic cliff that stopped most construction over the past few years. There were moderate price swings last year, but this year’s increases will continue to be a challenge due to healthcare cost increases that have also been eroding profit margins.
According to the Associated General Contractors of America, there are tentative signs of a recovery in the construction industry. In 2012, 47% of firms reported that they lowered their bid levels, while 15% were able to raise them. In contrast, over the coming year, only 14% plan to lower their bid levels and 28% plan to raise them. This indicates contractors are more optimistic about their ability to pass along some of the increase in materials and healthcare costs to their clients. While the construction industry still appears to be in for a “bumpy ride,” there is a clear sense that the industry is slowly gaining a foothold.
But what does this mean to the business owner that planned to expand and couldn’t these past 5 years? Well, if you got a price for renovating or building a new facility before the economy tanked, plan on increasing the budget for your project. Say good bye to yesterday’s extreme low construction bids.
Does this mean further postponing that renovation project that is so desperately need? No.
There are ways to get the best value for your dollar in any construction project and, as an Architect, I save our clients money on their overall project investments. How can this be accomplished? By establishing a clear understanding of the client’s needs, quality of construction, project schedule, and overall project goals. This information is utilized to establish the project budget that is passed on an agreed to set of parameters. Space planning and energy management may impact first costs and save overall operational expenditures.
Even thought materials are increasing in price: having a set of complete and well coordinated drawings for several contractors to bid will ensure the lowest price for your project. Most successful design and construction firms have survived tumultuous times due to their ability to meet their client’s budget and time frame.