AGC Chief Economist Advises Construction Industry to “Get Used To” Higher Material Costs

06/15/2006


"Get used to higher materials cost inflation," Ken Simonson, chief economist for The Associated General Contractors of America (AGC), warned earlier this week, following the Bureau of Labor Statistics’ release of its report on the producer price index (PPI) for May.

"Overall, producer prices are remaining well behaved, with only a 0.2% increase in May and a 1.5% increase in the last year, outside of food and energy," Simonson noted. "But the PPI for construction materials and components jumped 1.2% last month and 7.8% over 12 months. By project type, the 12-month increases range from 8% for new single-unit residential construction to 16% for highway construction.

"Many materials are contributing to the increase," Simonson commented. "In the last 12 months, there have been increases of 87% for copper and brass mill shapes, 48% for asphalt, 40% for diesel fuel, 26% for gypsum products, 18% for plastic construction products and 15% for cement.

"I expect a few of these increases to level off as the housing market cools, but most are tied to strong U.S. and world demand for materials and freight transportation," Simonson said. "Thus, I think construction materials costs will keep outstripping the overall inflation rate.

"Public agencies, private owners and contractors need to face this new reality," Simonson concluded. "Budgets must allow for more inflation, for purchasing materials earlier and for sharing the risk and reward from price volatility."





Consulting-Specifying Engineer's Product of the Year (POY) contest is the premier award for new products in the HVAC, fire, electrical, and...
Consulting-Specifying Engineer magazine is dedicated to encouraging and recognizing the most talented young individuals...
The MEP Giants program lists the top mechanical, electrical, plumbing, and fire protection engineering firms in the United States.
Exploring fire pumps and systems; Lighting energy codes; Salary survey; Changes to NFPA 20
How to use IPD; 2017 Commissioning Giants; CFDs and harmonic mitigation; Eight steps to determine plumbing system requirements
2017 MEP Giants; Mergers and acquisitions report; ASHRAE 62.1; LEED v4 updates and tips; Understanding overcurrent protection
Power system design for high-performance buildings; mitigating arc flash hazards
Transformers; Electrical system design; Selecting and sizing transformers; Grounded and ungrounded system design, Paralleling generator systems
Commissioning electrical systems; Designing emergency and standby generator systems; VFDs in high-performance buildings
As brand protection manager for Eaton’s Electrical Sector, Tom Grace oversees counterfeit awareness...
Amara Rozgus is chief editor and content manager of Consulting-Specifier Engineer magazine.
IEEE power industry experts bring their combined experience in the electrical power industry...
Michael Heinsdorf, P.E., LEED AP, CDT is an Engineering Specification Writer at ARCOM MasterSpec.
Automation Engineer; Wood Group
System Integrator; Cross Integrated Systems Group
Fire & Life Safety Engineer; Technip USA Inc.
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me