2012 Business Plan A Weak Recovery Checks Inflation 23 830 56 BPlan 2012Library Ch3 4th Qrt Forcast

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52 ENR December 27, 2010 enr.com
By Tim Grogan with Bruce Buckley
notes that short-term deals have been
common. “So many one-year deals were
negotiated in 2010 that 2011 will be a
heavy bargaining year,” he adds. Those
agreements will be negotiated under the
cloud of historically high unemployment,
which in November was still stuck at
18.8% for construction, according to the
Bureau of Labor Statistics.
Denise Gold, associate general counsel
for labor and employment law for the As-
sociated General Contractors of America,
says many AGC members expect that
2011 settlements will remain consistent
with 2010 levels. A year ago, ENR pre-
dicted that the skilled labor component of
the BCI would increase 3.0%; it ended
the year with a 3.3% gain. The labor com-
ponent of the CCI was projected to in-
crease 3.3% this year but ended 2010 with
a 3.5% gain.
Next year, ENR believes wage settle-
ments will be hard-pressed to match the
3.0% increase already agreed to in multi-
A Weak Recovery
Checks Inflation
Treading Water
The accuracy of ENR’s forecast is
heavily influenced by union wage settle-
ments, which account for 80% of the CCI
and 65% of the BCI. With the economy
still limping along and construction starts
in a slump, there is little confidence that
labor wages and benefits could improve
significantly in 2011. Union settlements
through 2011 will see an average increase
of 3%, according to the Construction La-
bor Research Council, Washington, D.C.
Bob Gasperow, president of the CLRC,
notes that some of those increases were
settled three years ago, before the eco-
nomic downturn. “Those settlements
[from three years ago] are still working
through the system,” he says.
In light of the downturn, Gasperow
N
o more federal stimulus money, no highway bill, a weak
economic recovery, a stalled housing market, a non-
residential building market yet to bottom out, gridlock
in government, continued high unemployment—it
could add up to no inflation in 2011. That is about as
simple as a cost forecast can be. Inflation? Not so much. Engineer-
ing News-Record expects its Building Cost Index to increase just
1.3% next year after rising 3.6% in a difficult 2010 market. ENR
projects its Construction Cost Index to increase 2.0% in 2011
following this year’s 3.6% gain.
[ 4Q Cost RepoRt ] Forecast
ENR’s 2011 Cost Forecast
% CHG.
2010 2011 09-11 10-11
Building Cost index 4969.92 5032.60 +3.6 +1.3
skillled lABeR index 8634.23 8893.26 +3.3 +3.0
WAge, $/hR. 47.92 49.36 +3.3 +3.0
Const. Cost index 8952.40 9127.36 +3.6 +2.0
CoMon lABoR index 19103.29 19657.29 +3.5 +2.9
WAge, $/hR. 36.30 37.35 +3.5 +2.9
MAteRiAls Cost index 2730.89 2673.54 +4.3 – 2.1
PoRtlAnd CeMent, ton 102.62 102.11 – 0.9 +0.5
luMBeR, 2x4, MBf 396.27 390.33 – 2.1 +1.5
stRuCtuRAl steel, CWt 45.85 44.70 +5.5 –2.5
ENR’S COST INDEXES FORECASTED TO DECEMBER 2010;
PERCENT CHANGES ARE DECEMBER VS. DECEMBER.
Materials Price Inflation Through 2012
2007 2008 2009 2010 2011 2012
AsPhAlt PAVing 9.2 22.3 0.7 4.6 0.9 1.2
CeMent 5.4 –0.3 –1.7 –5.3 0.3 3.9
ReinfoRCing BARs 12.3 38.6 –36.8 13.9 –2.6 9.9
Const. MAChineRY 2.9 3.2 3.6 –0.3 2.6 3.2
fABRiCAted PiPe –1.3 7.6 5.2 11.8 1.1 3.1
gYPsuM PRoduCts –15,2 –9.8 –0.6 –2.6 –0.9 3.5
luMBeR, softWood –9.9 –8.4 –9.5 13.1 –0.4 10.8
PlYWood 2.0 –0.7 –6.3 8.4 –1.0 7.0
AggRegAtes 8.7 6.6 4.6 1.1 0.5 1.8
sheet-MetAl WoRk 3.1 6.1 –2.7 –0.6 –0.8 4.1
stRuCtuRAls, steel 16.4 31.3 –26.6 0.8 –2.5 3.3
SOURCE: IHS GLOBAL INSIGHT INC., NOTE: ESCALATION RATES ARE ANNUAL AVERAGES
ENR12272010QCR_For.indd 52 12/20/10 9:00:58 PM
A Weak Recovery
Checks Inflation
Construction Materials Price Movement in 2010
APR. MAY JUNE JULY AUG. SEP. OCT.
AggRegAtes Monthly % chg. +0.2 +0.4 –0.2 –0.1 +0.7 +0.6 –0.5
Annual % chg. +0.1 +0.6 +0.6 +0.6 +1.5 +1.8 +2.1
AluMinuM sheet Monthly % chg. +3.7 –1.3 –2.8 –1.5 +2.4 +0.9 +2.0
Annual % chg. +19.7 +16.6 +13.0 +9.8 +9.2 +7.7 +9.9
AsPhAlt PAVing Monthly % chg. +2.1 +0.4 0.0 –0.2 –0.4 –0.3 –0.6
Annual % chg. +8.2 +5.8 +7.8 +6.8 +5.3 +5.5 +5.1
CeMent Monthly % chg. –0.9 –0.7 –0.5 0.0 +0.7 –1.1 –0.4
Annual % chg. –7.1 –6.9 –6.1 –5.3 –4.2 –5.1 –4.9
CoPPeR PiPe Monthly % chg. +5.0 –5.8 –7.0 –0.2 +6.1 +5.4 +5.5
Annual % chg. +31.0 +21.4 +14.9 +16.5 +5.2 +5.9 +15.4
diesel fuel Monthly % chg. +6.4 –1.8 –5.9 –1.5 +5.8 –1.5 +7.2
Annual % chg. +43.4 +41.7 +16.1 +26.4 +13.2 +17.8 +20.3
duCtile iRon PiPe Monthly % chg. +1.3 +2.4 0.0 +1.1 –1.8 +0.9 +1.7
Annual % chg. +7.4 +11.5 +9.2 +10.8 +6.6 +7.3 +8.4
fABRiCAted steel Monthly % chg. –0.1 –0.1 –0.5 +0.5 +0.1 +0.2 –0.8
Annual % chg. –6.7 –5.7 –4.6 –2.9 –2.3 –1.0 –0.8
gYPsuM PRoduCts Monthly % chg. +2.2 +2.6 +3.3 –3.6 –0.1 –3.1 +0.6
Annual % chg. –5.8 –2.1 +2.0 +0.6 +0.4 –1.8 +0.5
luMBeR, softWood Monthly % chg. +5.2 +2.7 –9.6 –1.9 –3.1 –1.3 –1.1
Annual % chg. +28.9 +34.5 +20.1 +10.1 +6.8 +4.7 +4.9
PlYWood Monthly % chg. +8.7 +4.1 –4.8 –0.9 –3.6 –1.9 –1.4
Annual % chg. +16.8 +21.2 +16.2 +13.3 +8.3 +4.7 +5.1
PVC PRoduCts Monthly % chg. +0.7 0.0 –0.2 –0.5 –0.3 –0.2 +0.7
Annual % chg. +3.6 +3.3 +3.3 +2.7 +2.9 +1.6 +2.0
ReAdY-Mix ConCRete Monthly % chg. –0.8 –0.1 0.0 –0.5 +0.5 +0.1 –0.1
Annual % chg. –2.8 –2.8 –2.8 –3.2 –2.0 –1.7 –1.0
sheet MetAl Monthly % chg. +0.6 +0.4 –0.2 –0.1 +0.3 –0.1 +0.1
Annual % chg. 0.0 +0.8 +1.2 +0.7 +1.0 +1.1 +0.3
SOURCE: BUREAU OF LABOR STATISTICS
year contracts. ENR’s forecast is for the
labor component of the BCI to increase
3.0% next year, while the CCI’s labor
component is expected at 2.9%.
The materials component of ENR’s
cost indexes is expected to see little infla-
tionary pressure next year. The most com-
mon themes voiced by economist inter-
viewed by ENR were that prices were
“bottoming out, flat or trending side-
ways.” In ENR’s forecast, that translates
to a 2.1% decline in the MCI, which in-
creased 4.3% this year.
The Portland Cement Association,
Skokie, Ill., forecast that cement con-
sumption in 2011 will inch up just 1.4%,
following a 27% decline in 2009 and a
mere 0.3% gain this year. That will not
be enough to budge prices. The forecast-
ing firm IHS Global Insight, Washing-
ton., D.C., predicts that cement prices
will increase just 0.3% next year after fall-
ing the previous three years. Overall,
ENR’s forecast calls for a 0.5% decline in
cement prices.
Lumber prices, which experienced
some volatile swings this year, are ex-
pected to be relatively calm in 2011. The
composite lumber price tracked by the
Bedford, Mass.-based forecasting firm
RISI peaked last April at $357 per thou-
sand board ft, which was up 85% from the
previous year. By this month, that price
was back down to $263. “After some sea-
sonal movement we expect prices to end
next year at $260,” says Robert Berg, an
RISI economist. “The industry is operat-
ing at 60% capacity, and that won’t get
above 70% next year,” he says. “It’s hard
to sustain price increases in that environ-
ment.” ENR’s forecast calls for lumber
prices to decline 1.5% next year.
Steel prices will also trend sideways in
2011, says John Anton, analyst for Global
Insight. He says scrap prices are very high
right now. “Demand is so bad that scrap
prices should come down and with it
prices for structural steel.” He says prices
have already fallen from a peak of $736 a
ton last summer and expects prices to hit
$664 a ton by the fourth quarter of next
year. ENR’s forecast calls for 2.5% decline
in steel prices.
Builders’ Construction Cost Indexes
oCt. jAn. APRil julY oCt. % ChAnge
nAMe, AReA And tYPe 2009 2010 2010 2010 2010 QuARteR YeAR
GENERAL-PURPOSE COST INDEXES
ENR 20-City: Construction Cost1 800.28 806.22 807.76 823.31 830.46 +0.9 +3.8
ENR 20-City: Building Cost1 704.84 710.53 712.93 726.72 732.20 +0.8 +3.9
BuRec: General Buildings2 305.00 307.00 314.00 316.00 317.00 +0.3 +3.9
FM Global: Industrial3 283.00 278.00 na na na
LSI, Sierra West: Material/Labor1 823.52 824.50 822.23 830.56 836.42p +1.0 +1.8
Means: Construction Cost4 181.00 181.60 182.30 183.50 184.00 +0.3 +1.7
ECC, Edwartoski Cost Consulting5 160.05 160.55 na na na na na
SELLING PRICE INDEXES—BUILDING
LSI, Sierra West: Subcontractor1 912.07 888.65 883.30 870.60 870.51p –1.2 –4.9
Turner: General Building1 803.00 799.00 798.00 798.00 801.00 +0.4 –0.3
Rider Levett Bucknall6 142.48 141.80 142.21 142.58 142.60 0.0 +0.1
SPECIAL-PURPOSE BUILDING COST INDEXES
U.S. Commerce: One-Family House7 97.20 97.80 95.70 96.00 96.70 +0.3 – 0.5
U.S. Commerce: New Warehouses7 123.80 123.50 123.30 123.60 124.10 +0.4 +0.2
U.S. Commerce: New School Buildings7 130.40 131.10 132.00 131.80 131.90 +0.4 +1.2
U.S. Commerce: New Office Buildings7 112.70 112.60 112.20 112.60 112.30 – 0.1 – 0.4
PowerAdvocate: Powerplant8 170.60 172.20 173.90 175.50 175.60 +0.1 +2.9
1BASE: 1967=100; 2BASE: 1977=100; 3BASE: 1980=100; 4BASE: 1993=100; 5FORMERLY SMITH GROUP, 1992=100; 6BASE: APRIL 2001=100;
7BASE: 1992=100; 8POWERPLANT FOR A 550-MW COMBINED-CYCLE FACILITY. P=PRELIMINARY REPRESENTS SEPTEMBER DATA FOR LSI.
enr.com December 27, 2010 ENR 53
ENR12272010QCR_For.indd 53 12/20/10 9:00:58 PM
54 ENR December 27, 2010 enr.com
[ 4Q Cost RepoRt ] Confidence Index
By Gary J. Tulacz
Heads of Major Firms Believe
Market Is Nearing Stability
Industry executives’ consensus on the prospects for recovery: maybe not now, but soon
Maybe it is the gains on Wall
Street. Maybe it is the re-
cent midterm elections.
Maybe it is the general op-
timism of the construction
industry at work. Whatever the reason,
major contractors, design firms and sub-
contractors are feeling decidedly less pes-
simistic about construction market pros-
pects than they did just three months ago,
according to the ENR Construction In-
dustry Confidence Index survey for the
fourth quarter of 2010.
The ENR Construction Industry
Confidence Index (CICI) for the fourth
quarter of 2010 spiked to 43 on a scale of
100 from 32 in the third quarter (ENR
9/27 p. 33). An index of 50 would mean a
stable market. The 756 executives of large
construction and design firms responding
to the survey believe that
the market is moving out
of free fall and may soon
be stable.
The CICI measures
executives sentiment
about the current market
and projections for where
it will be in the next three
to six months and over a
12- to 18-month period.
The index is based on responses to sur-
veys sent to more than 3,000 U.S. firms
on ENR’s lists of the leading contractors,
subcontractors and design firms. The cur-
rent index is based on a survey conducted
from Nov. 23 to Dec. 13.
This quarter, 46% of all respondents
say the market is still in decline, down
from 63% in last quarter’s survey. Design
Outlook for Individual Sectors by Firms Working in Those Markets
Market
No. of
Firms
Currently (%) 3-6 Months (%) 12-18 Months (%)
Declining
Activity
Stable
Activity
Improving
Activity
Declining
Activity
Stable
Activity
Improving
Activity
Declining
Activity
Stable
Activity
Improving
Activity
Commercial Offices 526 71 27 348 46 714 52 34
Distribution/Warehouse 293 54 41 635 52 13 12 49 39
Education K-12 406 32 58 10 27 54 19 13 50 37
Entertainment 205 48 43 933 56 12 14 57 29
Health Care 475 14 56 31 849 43 334 63
Higher Education 485 21 62 16 17 54 28 645 48
Hotels 332 52 39 934 51 15 13 48 39
Multi-Unit Residential 273 39 44 17 26 45 29 745 48
Retail 388 57 36 740 44 16 12 48 40
Industrial/Manufacturing 373 36 49 16 22 52 25 841 51
Transportation 259 30 57 13 24 49 27 942 49
Water, Sewer and Waste 243 21 58 21 14 56 30 644 49
Power 181 15 53 31 843 49 322 75
Petroleum 92 20 65 15 762 32 333 64
Environmental/Haz. Waste 103 23 59 17 12 58 30 540 55
SOURCE: ENR FIGURES MAY NOT ADD UP TO 100% DUE TO ROUNDING.
firms continue to be more
optimistic about a turn-
around in the near term
than general contractors
or subcontractors (see
chart, p. 55).
Applying the CICI for-
mula to individual market
sectors, respondents felt
more optimistic in all
markets except for trans-
portation, which remained unchanged at
a level of 50. Markets in which respon-
dents see growth either currently or in the
near future include health care, rated at
66 on the CICI scale, higher education
(55), petroleum (59), power (67), water/
sewer/waste (57), and hazardous waste
(56).
Another survey that sees an increase in
CONSTRUCTION INDUSTRY
CONFIDENCE INDEX
ENR
43
UP 11 POINTS
ENR12272010QCR_Conf.indd 54 12/20/10 8:53:31 PM
Declining Stable Improving
Designers
Currently 3-6
Months
12-18
Months
3 Years
Subcontractors
Currently 3-6
Months
12-18
Months
3 Years
General Contractors/Construction Managers/
Engineer-Constructors
Currently 3-6
Months
12-18
Months
3 Years
All
Currently 3-6
Months
12-18
Months
3 Years
12%
7%
46%
47%
17%
60%
23%
47%
47%
6%
17%
2%
81%
47%
54%
42%
23%
44%
29%
9%
3%
9% 17%
48%
74%
42%
50%
42%
74%
49%
32% 22%
9% 19%
48%
4%
10%
46%
28%
9%
3%
45%
54%
44%
76%
8% 17%
48%
21%
enr.com December 27, 2010 ENR 55
industry optimism is the most recent
CONFINDEX survey, which is about to
be released by the Construction Financial
Management Association, Princeton, N.J.
CFMA polls 200 chief financial officers
from general contractors, subcontractors
and heavy and civil contractors. “Our
CONFINDEX went from 106 to 117 in
the fourth quarter,” says Brian Summers,
CFMA chief operating officer.
Timing Is Everything
Like ENR’s CICI, CFMAs CONFIN-
DEX dropped in the third quarter, only
to rebound strongly in the fourth quarter.
“Part of this drop may have been the tim-
ing of the survey responses,” says Sum-
mers. He notes that both the CICI and
CONFINDEX surveys were collected in
late August, during a plunge in stock
prices and concerns over economic fun-
damentals, which may account for both
indexes’ plunge last quarter. “Wall Street
in not a reflection of the construction
market, but falling stock prices have a psy-
chological effect on people,” he says.
The CONFINDEX is broken down
into four indices. The strongest rise in
optimism concerned business conditions,
which surged from to 129 from 110 on a
scale of 200, indicating the belief that the
market is ready for a turnaround. How-
ever, the survey’s “financial-conditions”
index inched up to 105 from 101. The
results suggest industry CFOs believe fi-
nancing may still be a problem in 2011.
CICI survey respondents are also wor-
ried about project financing. ENR once
again asked about client access to capital
for project financing. In the fourth quar-
ter, 34.5% of respondents said the credit
markets continued to tighten for con-
struction projects over the past six months,
while 51.2% said the availability of credit
was unchanged during that period. While
still troubling, these figures are an im-
provement over the last quarter when
45.2% respondents said the credit market
was continuing to tighten.
Post-Election Hangover
The CICI survey also asked industry ex-
ecutives about the potential impact of the
congressional midterm elections. Of the
756 respondents, 401 (53.0%) thought
the election would be good for the overall
economy, while 64 (8.5%) said it would
be bad, and 160 (21.2%) did not believe
it would have any impact. When asked
about the election’s impact on the con-
struction industry, 40.5% said the indus-
try would benefit, while 12.2% said the
impact would be bad; 26.5% said it would
have no impact.
The favorable response to the mid-
term elections may have buoyed industry
confidence a bit. However, the election
may be a double-edged sword. “There are
many in the industry who believe that
gridlock in Washington [with the Repub-
licans now a majority in the House] is a
good thing, but gridlock may hurt com-
panies in the infrastructure sector that are
hoping for additional federal funds for
sectors like transportation, water and
sewer work,” says Anirban Basu, CEO of
Baltimore-based economic consultant
Sage Policy Group Inc. and an economic
advisor to CFMA. He says partisan poli-
tics may further stall bills such as the fed-
eral transportation reauthorization bill.
Many CICI participants continue to
worry about inflation. In this quarter,
52.1% of respondents said they had seen
upward price pressure in at least some ma-
terials or equipment. Copper and steel
were the most frequently mentioned items
experiencing price increases, along with
concrete, drywall, fuel and petroleum-
based products.
“These findings are consistent with the
November [Producer Price Index] re-
port,” which rose by 0.8%, says Basu. He
says that, while materials prices have been
creeping up recently, there continues to
be heavy competition for work, leading to
a further squeeze on profit margins.
Summers notes that there is another
element for construction firms to con-
sider: staff salaries. “Many top staff peo-
ple, including CFOs, have gone without
raises for two years or more. Now that the
market is beginning to brighten a little,
they will expect increases.”
How Different Types of Firms View the Overall Market
Outlook for Individual Sectors by Firms Working in Those Markets
Market
No. of
Firms
Currently (%) 3-6 Months (%) 12-18 Months (%)
Declining
Activity
Stable
Activity
Improving
Activity
Declining
Activity
Stable
Activity
Improving
Activity
Declining
Activity
Stable
Activity
Improving
Activity
Commercial Offices 526 71 27 348 46 714 52 34
Distribution/Warehouse 293 54 41 635 52 13 12 49 39
Education K-12 406 32 58 10 27 54 19 13 50 37
Entertainment 205 48 43 933 56 12 14 57 29
Health Care 475 14 56 31 849 43 334 63
Higher Education 485 21 62 16 17 54 28 645 48
Hotels 332 52 39 934 51 15 13 48 39
Multi-Unit Residential 273 39 44 17 26 45 29 745 48
Retail 388 57 36 740 44 16 12 48 40
Industrial/Manufacturing 373 36 49 16 22 52 25 841 51
Transportation 259 30 57 13 24 49 27 942 49
Water, Sewer and Waste 243 21 58 21 14 56 30 644 49
Power 181 15 53 31 843 49 322 75
Petroleum 92 20 65 15 762 32 333 64
Environmental/Haz. Waste 103 23 59 17 12 58 30 540 55
SOURCE: ENR FIGURES MAY NOT ADD UP TO 100% DUE TO ROUNDING.
ENR12272010QCR_Conf.indd 55 12/20/10 8:53:32 PM
Why Few Are Debating the New
Federal Fuel Economy Rules
G
etting stakeholders to agree on
a clean-air rule is no easy feat.
So it may come as a surprise
that the equipment industry is
getting behind new federal
greenhouse-gas targets for big trucks.
One reason for the lack of debate is
economics. “The new, more-efficient
trucks will run more cleanly, and their sav-
ings at the fuel pump will far outweigh the
cost of the technology needed to create
those savings,” says Luke Tonachel, a se-
nior analyst at the Natural Resources De-
fense Council.
Another reason? The needed technol-
ogy already exists. “The trucking industry
supports fuel economy standards that are
both economically and technologically
feasible as one of several preferred meth-
ods in reducing its carbon footprint,” says
Brandon Borgna, spokesman for the
American Trucking Association.
The U.S. Environmental Protection
Agency and National Highway Transpor-
tation Safety Administration jointly pro-
posed the new rules in October, targeting
trucks in Class 2b through Class 8—ev-
erything from heavy-duty pickups to trac-
tor-trailers. These categories were previ-
ously unregulated in terms of fuel
economy. The regulation would divide
the trucks into three groups: Heavy Duty
pickups and utility vans, vocational trucks
(such as dump trucks and concrete mixers)
and combination semi-trailers.
The targets for all these groups focus
on fuel economy, which has a direct im-
pact on greenhouse gas emissions, accord-
ing to environmental experts. The cuts
will kick in with the 2014 model year and
run through 2018. They are seen as just
the first step in improving fuel economy
and reducing greenhouse gas emissions
from these kinds of heavy vehicles.
The targets would cut heavy-duty
pickup and van CO2 emissions by 10%
for gasoline engines and 15% for diesels.
Vocational trucks would emit 10% less
CO2 while increasing fuel economy 20%.
Combination trucks would emit 20% less
CO2 while using 20% less fuel.
Looking for Payback
Regulators estimate the program would
cost $7.7 billion initially but produce $49
billion in benefits for a net gain of $41
billion over the lifetime of the model-year
2014 to 2018 vehicles. The new technol-
ogy the trucks will need in order to meet
the standards would increase the cost of a
typical heavy-duty pickup truck by an es-
timated 4%, the proposal says. For a typ-
ical vocational vehicle, the cost bump is
an estimated 1% and about 6% more for
a typical combination tractor-trailer truck.
How those figures will translate to retail
prices is a guess at this point.
Despite the anticipated cost increases,
the rule could provide payback. Expected
fuel efficiency gains ranging from 7% to
20% would pay back most new-truck buy-
ers in one to two years. Buyers whose
mileage is considered below daily aver-
ages would see payback in four to five
years, according to the proposal.
Kevin Healy, equipment procurement
manager for contractor Skanska USA
Civil Northeast Inc., Whitestone, N.Y.,
agrees with the rule but would like to see
it simplified. “We need to clean up the air,
but the rules for doing it should be sim-
pler and clearer,” he says.
Both NRDC and ATA would like to
see further steps. “One of the largest op-
portunities for more savings is to improve
trailers, which are not included in this
proposal,” says NRDC’s Tonachel. “The
technology to boost fuel efficiency with
aerodynamic improvements and easier-
rolling tires already exists, so it wouldn’t
take a lot of lead time for manufacturers
to employ it.”
Borgna says that future rules should
concentrate on a 65-mph national speed
limit for all vehicles, laws allowing more-
productive truck weights and combina-
tions that safely improve fuel economy,
and improvements to the Interstate high-
way system that will reduce congestion
and cut truck idling time.
The proposed regulation is in the pub-
lic comment stage until January 31. After
that, EPA and NHTSA will analyze the
public input, make any adjustments the
agencies feel is warranted, and then make
the rule final. n
Estimated Cost Per Truck to
Comply With New Standards
(2008 dollars) HD Pickups Vocational Semi-Tractors
Year and Vans
2014 $225 $374 $5,896
2015 $292 $367 $5,733
2016 $567 $400 $5,480
2017 $848 $392 $6,150
2018 $1,411 $359 $5,901
2020 $1,406 $343 $5,661
SOURCE: EPA, NHTSA. ESTIMATED COST PER VEHICLE FOR PRODUCERS IN
2008 DOLLARS, CLASS 2B THROUGH CLASS 8.
[ 4Q Cost RepoRt ] Equipment
By Mike Larson
56 n ENR n December 27, 2010 enr.com
PAYOFF Improved fuel efficiency will help defray
the cost of meeting new environmental standards.
PHOTO BY MIKE LARSON
ENR12272010QCR_Equ.indd 56 12/20/10 8:51:26 PM
Chinese Demand Props Up Prices
Exports put a 12% premium on western spruce prices despite a weak domestic market
By Mike Moore
C
ontractors on the West Coast
may be scratching their heads,
asking why lumber prices are
rising when they are falling ev-
ery where else. The answer is
China. The Chinese have more than
doubled their purchases of lumber from
Canada and the U.S. within the last year,
according to industry specialist Random
Lengths, Eugene, Ore. That demand
drives a price disparity in the Pacific
Northwest, especially for spruce products,
and prices in the rest of the country.
“Between 2000 and 2009, western
spruce 2 X 4 prices averaged about 12%
less than our national composite price,”
says Robert Berg, an economist with the
Bedford, Mass.-based forecasting firm
RISI. “It’s now selling at parity to the
composite price, which is a 12% premium,
and that strength is really tied to the Chi-
nese market.”
Nationwide, RISI’s composite price
fell from a peak of $357 per thousand
board ft last April to $263 this month.
Berg predicts prices will end 2011 at about
where they are now (see p. 22).
Prices for lumber and logs from the
western United States and Canada have
jumped more than 25% since July of this
year due to Chinese presence in the mar-
ket, says Random Lengths.
“We have had domestic builders and
industrial users cancel and postpone proj-
ects because of the sharp increases in lum-
ber costs since July,” an executive with a
large U.S. lumber distributor said. “Prices
could increase another 8 % to 10% within
the next few months—who knows? Peo-
ple don’t realize how much product is
leaving the continent.”
China’s North American purchases
have focused on lower grades of lumber,
which are destined for use in concrete
forms for high-rise construction. But re-
cent purchasing trends have seen more
higher-grade lumber included in the
mix, says Random Lengths. Logs are
destined for China’s domestic mills
to supply the country’s enormous
market for composites, plywood and
veneers as well as lumber.
The seeds for the unexpected rise
in western lumber and logs were
sown in 2007 when Russia imposed
an export tax on logs. The tax started
at 6.5% but quickly increased to 25%
by mid-2008. Chinese buyers of
wood fiber then turned to North
American forest products, made dou-
bly attractive by low prices and a
weak dollar. China’s impact on North
American prices is further amplified by
the recession, which drove production
cuts at West Coast mills.
China’s potential fiber-supply gap (the
difference between total demand and total
domestic supply) is projected to reach ap-
proximately 150 million cubic meters by
2015, according to a report by Interna-
tional Wood Markets Group of Vancou-
ver, B.C. That volume is more than the
entire Canadian timber harvest in 2009—a
strong indication that China’s wood im-
ports must continue to rise in the short- to
medium-term period to match with pro-
jected consumption.
“China is expected to be the fastest-
growing lumber producer, importer and
consumer nation in the world over the
next half-decade,” says Gerry Van Leeu-
wen, vice president of International Wood
Markets Group. He forecasts an average
annual increase in Chinese lumber con-
sumption of more than three billion board
ft per year and says that meeting the needs
of its growing middle class will require
huge raw material imports over the next
five years. This fast-paced consumption
growth is expected to have a significant
impact on global wood demand, especially
as the major global economies begin to
emerge from the current recession.
A key question is whether higher
North American lumber prices could
cause Chinese buyers to scale back their
purchases from U.S. and Canadian mills.
This does not appear to be the case, ac-
cording Random Lengths. Concerns that
the Chinese would pull back when mill
prices for West Coast hemlock hit $260
per thousand board ft several weeks ago
were overcome when the price blew
through that level due to new orders from
China.
Russia now is now considering drop-
ping the log export tax as that country
moves toward meeting World Trade Or-
ganization membership requirements.
Thanks to China’s soaring demand, the
impact of that move would probably not
be felt until 2012, with little downward
price movement expected.
Prices for eastern U.S. pine may be
starting to feel the effects of Chinese buy-
ing as prices for western Ponderosa Pine
have risen.
Trucks and containers in western ports
are also in short supply to move Chinese
purchases from the producers to the ports.
This has led to an increase of $10 per
thousand board feet for lumber deliveries
from the northwest to California. n
enr.com December 27, 2010 n ENR n 57
Lumber [ 4Q Cost RepoRt ]
Lumber and Panel Prices
Lumber ($/MBF)
Panel ($/MSF)
190
242
294
346
398
$450
J F M A M J J A S O N D J F M A M J J A S O N
2009 2010
SOURCE: RANDOM LENGTHS.
COMPOSITE PRICE FOR FRAMING LUMBER, PLYWOOD AND OSB PANEL.
ENR12272010QCR_Lum.indd 57 12/20/10 8:52:31 PM
58 ENR December 27, 2010 enr.com
T
he global recession’s vise grip on
construction costs is starting to
loesen in several countries, ac-
cording to the London-based
international project and cost-
management firm Gardiner & Theobald
Inc. The nineteenth annual survey of costs
is conducted exclusively for Engineering
News-Record. G&T surveys its 51 offices
and affiliates worldwide.
Of the 28 countries reporting building
cost inflation through 2010, all but two
saw either a bump in inflation or an easing
in de-escalation. Eastern Europe appears
to be the hardest hit by the global reces-
sion, with four of five countries reporting
declining costs for the second consecutive
year. However, the declines were less se-
vere, averaging 7.3% this year compared
to a 12.6% decline during 2009.
In western Europe, building costs con-
tinued to decline in Ireland and the
United Kingdom, but less sharply than
the previous year. Not counting Portugal,
which reported a whopping 13% jump in
building costs, the average inflation rate
for countries reporting increases rose to
2.2% from 1.1% last year.
In other areas of the world, inflation
also started to make a modest comeback
from the pounding it took from the reces-
sion in 2009 (see Asia story, p. 62). Build-
ing costs in Egypt bounced back 8.8%,
[ 4Q Cost RepoRt ] International
Costs continue to fall in six countries with biggest declines in Eastern Europe
Recession Relinquishes Grip
On Global Construction Costs
Building Inflation
PERCENT CHANGE
2003 2004 2005 2006 2007 2008 2009 2010
EASTERN EUROPE
BULGARIA: Sofia 3.4 5.3 2.4 2.3 35.1 28.5 –25.4 –5.0
CROATIA: Zagreb 2.2 2.7 2.2 3.0 5.0 6.5 –15.0
CZECH REPUBLIC: Prague 2.2 2.8 1.9 2.9 4.1 4.5 –15.0 –10.0
HUNGARY: Budapest –0.6 5.3 7.1 8.1 6.0 2.2 –4.5 –5.0
POLAND: Warsaw 18.6 9.0 7.0 20.0 12.0 8.0
ROMANIA: Bucharest –3.4 15.0 16.9 19.7 7.1 –2.6 –4.7 2.2
SLOVAKIA: Bratislava 2.3 8.0 2.5 3.5 4.9 3.4 –11.1 –9.0
WESTERN EUROPE
FINLAND: Helsinki 1.5 –0.2 2.1 4.2 11.2 0.0 –1.3 1.7
FRANCE: Paris 3.1 6.2 2.6 5.3 4.0 4.0 0.8 0.6
GERMANY: Berlin 0.1 1.8 0.5 3.3 5.9 2.7 0.3 1.2
IRELAND: Dublin –0.6 7.8 3.8 4.8 –4.3 –10.4 –17.1
–8.4
ITALY: Milan 1.8 4.5 4.3 1.6 2.4 3.1 –4.6 1.6
THE NETHERLANDS: Amsterdam 1.3 3.2 0.6 6.0 7.2 4.0 –2.4 1.4
NORWAY: Oslo 2.1 4.0 2.9 4.4 4.8 3.3 0.5 2.4
PORTUGAL: Lisbon 3.4 15.0 16.9 19.7 7.1 –3.1 2.1 13.0
SPAIN: Barcelona 3.3 2.4 3.9 3.8 3.6 1.4 0.7 2.1
SWEDEN: Stockholm 2.7 4.4 3.4 6.6 5.4 4.4 2.1 6.2
SWITZERLAND: Zurich –2.1 1.6 1.1 3.3 4.2 3.9 –1.1
UNITED KINGDOM: London 4.5 3.4 5.8 5.5 5.9 5.8 –8.6 –4.3
MIDDLE EAST/AFRICA/ASIA/SOUTH AND NORTH AMERICA
ARGENTINA: Buenos Aires 21.2 25.0 10.0 23.6 21.8 20.8 15.0 20.0
AUSTRALIA: Melboume 5.0 4.0 3.1 3.0 3.6 4.2
BRAZIL: São Paulo 14.4 11.3 6.5 5.0 6.4 11.5 3.6 7.8
CHINA: Shanghai 0.1 0.2 –4.9 0.2 7.0 7.4 –3.4 1.4
Hong Kong 2.7 2.6 2.6 5.0 11.9 16.0 –3.7 4.8
EGYPT: Alexandria 7.6 25.4 10.1 26.0 30.0 23.0 –25.0 8.8
INDIA: New Delhi 3.8 6.7 8.3 6.2 18.6 15.7 13.6 11.9
ISRAEL: Tel Aviv 2.4 4.9 5.9 3.5 3.1 3.3 0.0 3.9
JAPAN: Tokyo 3.5 1.9 –2.9 2.0 2.3 0.1 –0.7 2.3
LEBANON: Beruit 4.8 29.4 –4.5 2.7 11.0 12.2 7.9
NEW ZEALAND: Auckland 1.1 10.0 3.1 5.8 4.4 5.2
SOUTH AFRICA: Various 2.5 18.1 14.3 6.8 7.3 13.1 1.7 7.4
SRI LANKA: Colombo 0.0 12.1 32.4 7.5 19.2 19.5 10.0 2.1
TURKEY: Ankara 34.9 20.0 12.0 8.0 9.8 7.8 0.6 7.9
USA: New York City 3.1 11.0 8.1 11.7 7.5 6.9 –11.7 0.0
SOURCE: GARDINER & THEOBALD INC.
NOTE: RATES ARE ANNUAL CHANGE FOR BUILDING TENDER PRICE INFLATION.
Building Cost
Forecast 2011
BRAZIL: São Paulo 6.6
BULGARIA: Sofia –3.0
DENMARK: Copenhagen 0.4
EGYPT: Alexandria 8.1
FINLAND: Helsinki 1.5
FRANCE: Paris 2.3
HUNGARY: Budapest 1.0
INDIA: New Delhi 6.3
IRELAND: Dublin –1.2
ISRAEL: Tel Aviv 5.5
ITALY: Milan 1.6
THE NETHERLANDS: Amsterdam 2.1
NORWAY: Oslo 1.4
ROMANIA: Bucharest 10.3
SOUTH AFRICA: Various 5.7
SWEDEN: Stockholm 5.8
TURKEY: Ankara 9.3
SOURCE: GARDINER & THEOBALD INC. NOTE: RATES ARE ANNUAL
CHANGE FOR BUILDING TENDER PRICE INFLATION.
By Peter Reina with Tim Grogan
ENR12272010QCR_Inte.indd 58 12/20/10 11:43:39 PM
enr.com December 27, 2010 ENR 59
are similar in eastern and western Ger-
many, but demand is hotter in larger cit-
ies, such as Hamburg and Munich, he
adds.
In Poland, with public finances in rel-
atively good order, “there is a lot of infra-
structure work taking place [with] a lot of
the money coming from the European
Union,” says Jan Holyst, an analyst at
G&T in Warsaw.
However, infrastructure work fails to
compensate for severely depressed build-
ing-sector demand, adds Holyst. Polish
after falling 25% last year. Cost in China
and Japan also increased again, after fall-
ing in 2009. In New York City, building
costs tracked by G&T held steady this
year, following 2009’s 11.7% decline.
Euro Crisis
European construction is now a mixed
bag, with some countries experiencing
growth while others struggle to avert eco-
nomic disaster. However, currency tur-
moil in the euro zone, caused by unsus-
tainable government debt in some
countries, is having little or no impact on
construction prices, according to cost
consultants in the region.
The Irish Republic’s recent bailout by
European Union countries and the Inter-
national Monetary Fund has created great
uncertainty over construction prospects,
says Kevin James of G&T in Dublin.
“Everyone is waiting” for the impact
of the “unprecedented” $20-billion public
spending cuts over the next four years,
announced by the government last month,
says James. Already, “infrastructure spend-
ing is all but gone,” he adds.
Contractors are bidding sub-economic
prices to keep going. Sales are “down dra-
matically,” adds James. “Financial robust-
ness of contractors is more important to
some clients than the lowest price.”
Across the Irish Sea, the U.K.’s con-
struction market “seems to be bumping
along the bottom still,” says Gavin Mur-
gatroyd, a G&T partner in London.
Prices will be stable to negative in the first
half of 2011 and are expected to rise in the
second half, he forecasts.
Underlying inflationary pressures from
rising commodity prices have “not really
fed through yet,” adds Murgatroyd. That’s
because contractors are bidding so keenly
that “they are going into negative mar-
gins,” he explains.
In continental Europe, the construc-
tion market is generally slow, with some
exceptions. German construction prices
currently are rising, says Jürgen Bartels, a
senior project manager with G&T in Ber-
lin.
“Every company has a lot [of work] to
do,” explains Bartels. Market conditions
World Labor Rates
BASIC RATES ($/HR) TOTAL BILLING RATE ($/HR)
COUNTRY UNSKILLED APPRENTICE SKILLED UNSKILLED APPRENTICE SKILLED
EASTERN EUROPE
CROATIA: Zagreb 3.61 5.48 7.21 6.12 9.31 12.26
CZECH REPUBLIC: Prague 6.56 15.75 27.57 13.13 26.26 44.64
HUNGARY: Budapest 3.84 7.73 14.69 6.64 13.74 16.40
POLAND: Warsaw 5.55 5.88 9.79 8.16 8.49 14.69
ROMANIA: Bucharest 2.02 3.25 4.98 3.06 4.98 6.74
SLOVAKIA: Bratislava 9.07 13.62 18.55 13.07 18.16 26.66
WESTERN EUROPE
CYPRUS: Nicosia 10.41 11.33 12.52 18.55 19.77 22.01
FINLAND: Helsinki 14.76 19.26 23.85 25.05 32.68 40.47
GERMANY: Berlin 14.36 21.35 24.52 24.06 36.59 42.56
GREECE: Athens 8.57 9.88 12.52 14.49 16.47 21.08
IRELAND: Dublin 19.61 22.31 24.51 35.50 40.55 44.55
ITALY: Milan 20.75 23.52 26.35 38.74 42.69 45.72
NETHERLANDS: Amsterdam 39.39 45.97 52.56 43.48 50.07 56.66
NORWAY: Oslo 21.45 30.85 39.60 53.79 63.85 69.79
SPAIN: Barcelona 28.99 28.99 30.31 32.94 34.26 38.21
SWEDEN: Stockholm 27.62 28.78 54.23 56.40
UNITED KINGDOM: London 12.39 14.36 16.70 15.85 18.37 22.29
MIDDLE EAST/AFRICA/ASIA
CHINA: Shanghai 1.16 1.40 1.65 1.98 2.39 2.84
Hong Kong 9.26 14.80 10.68 17.11
INDIA: New Delhi 0.41 0.55 0.69 0.55 0.69 0.83
INDONESIA: Jakarta 1.05 1.16 1.33 1.47 1.64 1.89
ISRAEL: Tel Aviv 12.98 15.19 16.57 19.88
JAPAN: Tokyo 20.61 25.02 28.59 30.97 37.76 43.60
QATAR: Doha 1.92 2.06 2.47 2.34 2.61 2.75
SOUTH AFRICA: Durban 11.94 18.12 32.61 14.57 22.10 39.78
SRI LANKA: Colombo 0.70 0.82 0.94 0.84 0.99 1.13
TURKEY: Ankara 4.97 5.63 5.96 6.62 7.28 8.28
U.A.E.: Dubai 1.09 1.36 2.18 2.18 2.72 4.36
NORTH AND SOUTH AMERICA
ARGENTINA: Buenos Aires 11.78 12.81 13.91 24.75 26.91 29.22
BRAZIL: São Paulo 2.28 2.82 4.81 6.27 7.77 13.23
CAYMAN ISLANDS: George Town 21.93 30.07 45.91 24.15 32.17 52.46
U.S.: New York City 53.00 65.00 74.00 76.00 90.00 112.00
Los Angeles 34.00 42.00 53.00 54.00 68.00 85.00
Seattle 36.40 44.84 51.39 42.22 51.57 59.10
SOURCE: GARDINER & THEOBALD INC.
NOTE: RATES FOR TOTAL BILLING INCLUDE GUARANTEED OVERTIME, STATUTORY AND INSURANCE CONTRIBUTIONS AND IMPORTATION OF LABOR. RATES ARE
BASED UPON A STANDARD WORK WEEK, WHICH VARIES.
By Peter Reina with Tim Grogan
bid levels “are very competitive at the
moment,” he says. But with “glimpses of
things maybe starting to pick up,” condi-
tions are better than they were a year ago,
he adds.
“[The French] have not really had a
year of recession,” says G&T’s Chris
Gilmore in Paris. “Government spending,
which has always been the motor of the
general construction market, has been
reasonably resilient,” he adds.
Nevertheless, competition is stiff, with
bid prices “in the region of 7.5% to 10%
ENR12272010QCR_Inte.indd 59 12/20/10 11:43:40 PM
60 ENR December 27, 2010 enr.com
[ 4Q Cost RepoRt ] International
International Commercial and Industrial Building Costs
OFFICE INDUSTRIAL BUSINESS PARK HOTEL
$/SQ FT $/SQ FT $/SQ FT $/SQ FT
LOW HIGH FLOOR LOW HIGH FLOOR LOW HIGH FLOOR LOW HIGH FLOOR
EASTERN EUROPE
BULGARIA: Sofia 135 135 6 51 71 1 116 128 7 110 152 10
CROATIA: Zagrab 97 141 20 46 64 1 78 98 1 122 183 7
CZECH REPUBLIC: Prague 90 137 6 49 85 1 88 132 6 117 220 8
HUNGARY: Budapest 89 130 7 54 67 1 79 97 166 299 5
POLAND: Warsaw 102 144 55 76 135 174
ROMANIA: Bucharest 100 129 15 48 52 1 80 98 4 153 226 7
SLOVAKIA: Bratislava 92 132 10 49 82 1 82 110 5 116 212 7
WESTERN EUROPE
CYPRUS: Nicosia 147 245 110 184 122 196 220 282
FINLAND: Helsinki 189 238 5 105 131 1 166 208 5 239 275 7
DENMARK: Copenhagen 236 295 5 214 268 4 216 270 2 269 253 10
GERMANY: Berlin 201 279 5 67 134 1 147 209 4 202 336 6
GREECE: Athens 147 294 86 165 147 220 245 367
IRLAND: Dublin 196 257 5 84 122 1 80 110 2 220 343 6
ITALY: Milan 192 318 88 212 257 379 273 404
NETHERLAND: Amsterdam 110 163 104 115 98 107 178 196
NORWAY: Oslo 224 368 107 236 196 307 337 460
SPAIN: Barcelona 150 239 10 77 138 132 214 220 312
SWEDEN: Stockholm 242 289 3 128 134 1 195 275 1 302 363 3
UNITED KINGDOM: London 175 321 12 37 73 1 110 146 3 212 292 8
MIDDLE EAST/AFRICA/ASIA
CHINA: Shanghai 86 128 35 45 77 1 145 186 25
Hong Kong 171 234 100 151 265 322
INDIA: New Delhi 72 103 10 41 62 2 72 113 5 72 92 15
INDONESIA: Jakarta 62 88 50 55 50 55 82 100
JAPAN: Tokyo 276 364 15 104 199 1 10 418 554 20
LEBANON: Beruit 92 116 14 63 76 1 82 105 4 193 232 18
QATAR: Doha 153 179 30 96 108 166 191 217 255 20
SOUTH AFRICA: Durban 81 123 36 71 121 169
SRILANKA: Colombo 36 41 8 25 27 1 28 34 2 32 35 14
TURKEY: Ankara 9 12 15 4 7 3 7 8 5 8 11 10
U.A.E.: Dubai 96 132 20 71 104 91 126 228 304
NORTH AND SOUTH AMERICA
ARGENTINA: Buenos Aires 37 80 1 102 115 10
BRAZIL: São Paulo 68 153 10 57 74 1 65 153 3 98 131 20
CAYMAN ISLANDS: George Town 252 375 6 76 95 1 252 314 5
U.S.: New York City 279 650 45 93 214 139 279 269 595 40
Los Angeles 274 534 15 102 177 1 153 348 1 251 548 25
Seattle 255 715 45 105 230 165 350 235 510 40
SOURCE: GARDINER & THEOBOLD INC., NEW YORK CITY, LONDON WORLDWIDE.
NOTE: OFFICES INCLUDE RAISED FLOORS, CARPETING, SUSPENDED CEILINGS, HVAC, LIGHTING AND POWER, BUT EXCLUDE DRYWALL. OFFICE BUILDING HEIGHT IS TYPICAL OF A MAJOR CITY IN THE COUNTRY. INDUSTRIAL BUILDING IS FOR A LARGE,
SINGLE-STORY UNIT WITH A STEEL FRAME AND ALUMINUM CLADDING. BUSINESS PARK IS TWO-STORY, WITH A FIRST-FLOOR WAREHOUSE AND SECOND-FLOOR SUITABLE FOR HIGH-TECH WORK.”
below budget,” says Gilmore. Large con-
tractors are bidding low to “cover their
overheads,” he adds. Professionals’ fees
generally are increasing slightly but fall-
ing substantially in the private sector.
Sweden is also one of Europe’s better
economic performers, says Anders Kivi-
jarvi, chief executive of Stockholm-based
cost consultant Bygganalys A.B. But
“overall we had a decrease in the [con-
struction] market in 2009 and a small de-
crease this year as well,” he adds.
The decline in Swedish residential
construction has obscured the rise in pub-
licly funded infrastructure work, adds
Kivijarvi. But weak demand “has not had
a big effect on costs because we are short
of resources,” he adds.
With the notable exception of Poland,
construction market conditions across
Eastern Europe are tough. Hungary’s
construction market, for example, remains
“very depressed,” says Jim McDaid in
G&T’s Budapest office. Few commercial
building jobs are going forward, he adds.
At the same time, residential construction
is being hit by a wave of mortgage de-
faults.
Construction prices have dropped
since 2008 but now are steadying, says
McDaid. “Everybody has stripped out all
the fat, all the profit and all the overhead
that they can.”
International residential and retail building cost
APARTMENT SHOPPING CENTER HEATED OFFICES SUBURBAN HOTEL
$/SQ FT $/SQ FT $/SQ FT $/SQ FT
LOW HIGH FLOOR LOW HIGH FLOOR LOW HIGH FLOOR LOW HIGH FLOOR
EASTERN EUROPE
BULGARIA: Sofia 113 113 7 62 75 4 102 102 6 46 55 4
CROATIA: Zagrab 79 135 8 75 98 3 83 122 8 98 183 4
CZECH REPUBLIC: Prague 76 132 10 73 122 2 80 117 6 93 161 3
HUNGARY: Budapest 70 117 8 81 108 3 86 132 4
POLAND: Warsaw 89 138 79 132 88 138 106 141
ROMANIA: Bucharest 60 73 10 71 104 2 83 110 5 98 122 4
SLOVAKIA: Bratislava 89 122 12 77 110 2 82 113 6 86 135 5
WESTERN EUROPE
CYPRUS: Nicosia 122 184 110 184 110 159
FINLAND: Helsinki 200 250 5 179 216 3 171 219 5 177 235 5
DENMARK: Copenhagen 291 364 10 226 283 2 227 285 5 234 293 3
GERMANY: Berlin 101 153 6 118 184 2 155 219 5 146 218 4
GREECE: Athens 135 220 122 245 159 245
IRLAND: Dublin 110 184 7 214 318 4 147 196 5 190 288 4
ITALY: Milan 193 340 269 422 160 202 176 282
NETHERLAND: Amsterdam 214 245 122 141 104 141 153 171
NORWAY: Oslo 253 368 135 199 208 322 268 353
SPAIN: Barcelona 159 275 125 263 150 275
SWEDEN: Stockholm 165 171 3 242 296 3 235 275 3 262 322 3
UNITED KINGDOM: London 153 270 139 190 132 205 7 146 219 4
MIDDLE EAST/AFRICA/ASIA
CHINA: Shanghai 47 66 25 96 147 7 106 133 15
Hong Kong 147 197 234 279
INDIA: New Delhi 72 113 80 62 92 10 51 72
INDONESIA: Jakarta 67 77 50 55 72 90
JAPAN: Tokyo 20 103 226 5 311 504 10
LEBANON: Beruit 101 130 25 89 101 4 92 116 14 140 176 4
QATAR: Doha 172 198 25 166 191 204 223
SOUTH AFRICA: Durban 101 142 64 101 101 128
SRILANKA: Colombo 33 40 10 29 34 3 28 30 8 28 36 2
U.A.E.: Dubai 137 182 121 172 202 253
NORTH AND SOUTH AMERICA
ARGENTINA: Buenos Aires 55 97 15 70 84 4
BRAZIL: Sao Paulo 55 125 15 98 109 3 71 98 15
U.S.: New York City 223 632 45 177 353 8
Los Angeles 200 502 25 130 302 1 230 488 15 186 399 8
Seattle 250 675 45 125 335 160 380 8
CAYMAN ISLANDS: George Town 171 295 5 137 252 2 157 247 2
SOURCE: GARDINER & THEOBOLD INC., NEW YORK CITY, LONDON WORLDWIDE.
NOTE: OFFICES INCLUDE RAISED FLOORS, CARPETING, SUSPENDED CEILINGS, HVAC, LIGHTING AND POWER, BUT EXCLUDE DRYWALL. OFFICE BUILDING HEIGHT IS TYPICAL OF A MAJOR CITY IN THE COUNTRY. INDUSTRIAL BUILDING IS FOR A LARGE,
SINGLE-STORY UNIT WITH A STEEL FRAME AND ALUMINUM CLADDING. RESEARCH FACILITY IS TWO-STORY, WITH A FIRST FLOOR WAREHOUSE AND SECOND FLOOR SUITABLE FOR HIGH TECH WORK.”
ENR12272010QCR_Inte.indd 60 12/20/10 11:43:40 PM
enr.com December 27, 2010 ENR 61
This is going to be dummy copy for
2the rather complicated master pages 3of
this magazine. Hopefully, there will 4be
no rivers nor any other such stuff to 5intk
it will come to be any 16of the dummy
text that is included 17within the walls of
this kind of work 18This is going to be
dummy
copy for19the rather complicated mas-
ter pages 20of this magazine.
Subhead
Hopefully, there 21be no rivers nor
any other such stuff 22to interfere with
the way the text 23dummy text looks.
There should be 24no paragraph breaks
and the voices
25the masses to find dummy text like
26this and make it look so easy. So easy
27that no person would ever know that
28it took so much effort to create the
29dummy file. And people who find it
30solace in the complicated master 31peo-
ple who find solace in the ability 32com-
pose dummy text. The pages of 33the
book comprise dummy copy and 34the
notion of goodness will not be 35what we
think it will come to be any 36of the
International Materials Prices
REBAR STEEL CEMENT CONCRETE AGGREGATE SAND PLASTER LUMBER BRICKS BLOCKS GLASS
$/TON $/TON $/TON $/TON $/TON $/TON $/CU YD $/CU YD $1,000 $/CU YD $/CU YD
EASTERN EUROPE
BULGARIA: Sofia 552.00 751.00 87.00 55.00 11.00 21.00 350.00 196.00 216.00 11.00 6.00
CZECH REPUBLIC: Prague 1,050.00 1,575.00 126.00 96.00 18.00 26.00 147.00 289.00 394.00 22.00 23.00
CROATIA: Zagreb 1,155.00 109.00 64.00 21.00 33.00 181.00 528.00 7.00 18.00
HUNGARY: Budapest 730.00 1,616.00 114.00 68.00 15.00 14.00 191.00 203.00 270.00 22.00 31.00
POLAND: Warsaw 702.00 800.00 134.00 62.00 24.00 11.00 232.00 200.00 359.00 18.00 23.00
ROMANIA: Bucharest 1,094.00 1,943.00 126.00 58.00 16.00 13.00 184.00 98.00 415.00 35.00 31.00
SLOVAKIA: Bratislava 1,048.00 1,131.00 142.00 77.00 13.00 16.00 166.00 212.00 408.00 26.00 22.00
WESTERN EUROPE
CYPRUS: Nicosia 540.00 1,054.00 90.00 69.00 16.00 16.00 158.00 544.00 632.00 13.00 13.00
DENMARK: Copenhagen 1,714.00 2,769.00 214.00 187.00 27.00 21.00 815.00 685.00 20.00 110.00
FINLAND: Helsinki 966.00 1,916.00 167.00 75.00 16.00 16.00 505.00 359.00 721.00 15.00 50.00
GERMANY: Berlin 1,664.00 2,194.00 265.00 63.00 24.00 27.00 195.00 322.00 583.00 25.00 19.00
GREECE: Athens 527.00 988.00 72.00 60.00 16.00 16.00 145.00 403.00 105.00 17.00
IRELAND: Dublin 602.00 755.00 175.00 66.00 20.00 22.00 186.00 245.00 573.00 6.00 45.00
ITALY: Milan 988.00 1,647.00 179.00 101.00 24.00 28.00 200.00 201.00 198.00 13.00 23.00
THE NETHERLANDS: Amsterdam 1,120.00 2,240.00 290.00 79.00 9.00 8.00 435.00 378.00 461.00 22.00 17.00
NORWAY: Oslo 1,320.00 2,805.00 231.00 111.00 19.00 19.00 305.00 404.00 1,072.00 36.00 62.00
SPAIN: Barcelona 1,186.00 2,372.00 158.00 86.00 21.00 22.00 94.00 191.00 182.00 14.00 47.00
SWEDEN: Stockholm 1,591.00 268.00 177.00 18.00 13.00 557.00 1,072.00 752.00 24.00
UNITED KINGDOM: London 944.00 1,101.00 142.00 96.00 16.00 16.00 315.00 361.00 315.00 46.00 20.00
MIDDLE EAST/AFRICA/ASIA
CHINA: Shanghai 610.00 973.00 51.00 41.00 10.00 12.00 236.00 83.00 3.00 4.00
Hong Kong 664.00 77.00 6.00 10.00 6.00 13.00
INDIA: New Delhi 818.00 840.00 122.00 76.00 15.00 24.00 221.00 710.00 100.00 4.00 7.00
INDONESIA: Jakarta 943.00 1,165.00 122.00 54.00 22.00 22.00 50.00 636.00 42.00 4.00 9.00
ISRAEL: Tel Aviv 815.00 2,706.00 181.00 58.00 19.00 20.00 203.00 6.00 26.00
JAPAN: Tokyo 715.00 1,191.00 120.00 114.00 28.00 31.00 542.00 483.00 941.00 14.00 17.00
KENYA: Nairobi 1,059.00 1,863.00 179.00 85.00 20.00 17.00 89.00 435.00 8.00 12.00
LEBANON: Beruit 700.00 1,150.00 86.00 63.00 20.00 20.00 535.00 12.00 10.00 12.00
QATAR: Doha 687.00 2,748.00 110.00 63.00 21.00 19.00 20.00 138.00
SOUTH AFRICA: Durban 908.00 2,760.00 174.00 111.00 29.00 23.00 610.00 500.00 269.00 10.00 48.00
SRI LANKA: Colombo 881.00 1,514.00 116.00 63.00 18.00 19.00 4.00 14.00
TURKEY: Ankara 573.00 384.00 86.00 35.00 10.00 11.00 79.00 132.00 17.00 19.00
U.A.E.: Dubai 517.00 2,042.00 79.00 44.00 17.00 33.00 76.00 176.00 10.00
NORTH AND SOUTH AMERICA
ARGENTINA: Buenos Aires 4,810.00 396.00 279.00 38.00 70.00 928.00 1,481.00 516.00 56.00 119.00
BARAZIL: São Paulo 2,936.00 5,871.00 178.00 94.00 49.00 87.00 185.00 105.00 793.00 7.00 61.00
CAYMAN ISLANDS: George Town 893.00 4,939.00 190.00 193.00 42.00 45.00 261.00 11.00 51.00
U.S.: New York City 1,120.00 1,125.00 150.00 103.00 20.00 18.00 510.00 18.00 79.00
Los Angeles 1,140.00 1,030.00 110.00 111.00 11.00 12.00 143.00 149.00 420.00 18.00 71.00
Seattle 948.00 937.00 101.00 99.00 12.00 11.00 138.00 136.00 425.00 19.00 67.00
SOURCE: GARDINER & THEOBOLD., NEW YORK CITY, LONDON AND WORLDWIDE.
NOTES: PRICES INCLUDE DELIVERY TO SITE AND LOCAL DISCOUNTS, BUT EXCLUDES VAT AND LOCAL TAXES. PRICE ARE FOR HIGH-YIELD STEEL REBAR, STRUCTURAL STEEL, ALL GRADES OF AGGREGATE, COARSE SAND, FRAMING LUMBER, CLAY
BRICK, 4-IN. CONCRETE BLOCKS,14-IN. GLASS.
How To Use the International Cost Survey
Comparing construction cost data among countries with vastly differ-
ent economic, political and social systems poses several hazards of
which readers should be aware. Due to constantly changing market con-
ditions and fluctuations in exchange rates, the above data should be
used for broad “comparative purposes only, cautions Gardner &
Theobald Inc., London. G&T compiled the international constuction-cost
survey from its worldwide network of offices and associated companies.
All costs were provided in local currency and converted to U.S. dollars
using the exchange rates in effect on Dec. 9, 2010. The information on
building costs includes contractors’ overhead and equipment costs.
ENR12272010QCR_Inte.indd 61 12/20/10 11:43:41 PM
Overseas, Inflation Creeps Back
T
he global recession knocked
down building costs in many
Asian countries in 2009, but in-
flation appears to be making a
modest comeback in the region
this year. The London-based interna-
tional cost consultant Gardiner &
Theobald Inc. reports that building costs
in Shanghai declined 3.4% in 2009 after
increasing about 7% in both 2007 and
2008. This year, building costs in Shang-
hai increased 1.4%, says G&T.
In Hong Kong, G&T saw building
costs fall 3.7% in 2009 after posting dou-
ble-digit gains during each of the previous
two years. In 2010, building costs in Hong
Kong were back up 4.8%, says G&T. The
firm reports a similar trend in Japan.
In India, building cost escalation is
slowly coming under control. It has been
declining from an annual rate of 19% in
2007 to 12% for this year, according to
G&T’s report.
Vietnam is experiencing its own build-
ing boom, and Turner Construction Co.,
New York City, is there working on sev-
eral projects, ranging in size from 74,500
sq meters to 930,000 sq m. This activity
is starting to drive costs up in Vietnam,
says Ken Osterland, Turner’s project man-
ager in Hanoi.
Osterland says the overall market has
been impacted by 12% inflation of the
dong, which in turn has had an impact on
material prices. In Ho Chi Minh City and
Hanoi, Osterland says, contractors face
price hikes of 23% for structural steel
since last January, which has pushed prices
in Vietnam to $792 per tonne.
During the same period, Turner saw
prices for concrete reinforcing bar go up
19% for medium-sized bar and 13% for
larger bar, while prices for cement in-
creased 3%. Local contractors on Turn-
er’s projects “are starting to ask for 5%
price-escalation clauses in their contracts
as a result of inflation,” says Osterland.
China’s relentless growth is starting to
push prices back up after 2009’s set-back.
Prices for concrete reinforcing bar in
Shanghai increased from 3,682 Renminbi
per tonne in December 2009 to 4,346
RMB per tonne this December, according
to the international cost consultant Rider,
Levett and Bucknall, which is headquar-
tered in Phoenix. RLB notes that, during
the same period, cement prices in Shang-
hai went to 398 RMB from 367 RMB per
tonne.
For rebar in China, “the trends are go-
ing up despite a downward adjustment in
rebar prices in the middle of this year,”
says H.K. Yu, analyst in RLB’s Hong
Kong office. “Although the Chinese gov-
ernment has recently implemented strin-
gent measures to curb the rising property
[ 4Q Cost RepoRt ] Asia
By Tom Nicholson
62 ENR December 27, 2010 enr.com
market, construction activities in China
appear not to have been affected, and
there is still a strong demand on construc-
tion materials,” he says.
On average, cement prices in China
this year have risen by about 500 RMB
per tonne, says Liu Zuoyi, spokesman for
the China Cement Association in Beijing.
He cites “increases in demand and pro-
duction costs, along with electricity-use
restrictions imposed by the government
this quarter on energy-intensive indus-
tries,” as the reasons behind the recent
price increases for cement.
The same dynamics are also pushing
up steel prices in China. Iron-ore prices
went from $60 per ton in December 2009
to $170 per ton currently, says Gan Yong,
spokesman for the China Iron & Steel As-
sociation in Beijing. “Robust global de-
mand plays a role,” says Yong. “This year,
steel operations recovered significantly in
South Korea and Japan, resulting in a
surge in demand for iron ore which re-
mains huge,” he says.
Despite higher production costs that
impact Chinese steel mills, construction
costs in China are being driven by “a de-
mand pull rather than a cost push,” says
Peter Morris, an analyst with London-
based Davis Langdon. “Rising costs in
China have everything to do with demand
for a limited resource.”
CHINA HONG KONG INDIA JAPAN
-4
-2
0
2
4
6
8
% Chg.
5
8
11
14
17
20
-1.0
-0.5
0
0.5
1.0
1.5
2.0
2.5
3.0
Asian Construction Cost Inflation
% Chg. % Chg. % Chg.
SOURCE: GARDINER & THEOBALD INC.. ANNUUAL PERCENT CHANGE FOR BUILDING TENDER PRICES.
-4
0
4
8
12
16
20
2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010
ENR12272010QCR_Asia.indd 62 12/20/10 8:55:05 PM
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