Market Alert

MARKET ALERT - SCHEDULE AND BUDGET BUSTERS:



April 7, 2017 - The Public Sector construction market in the Mid-Atlantic Region (and across the US) has seen rapid and significant increases in project costs (as much as 15% to 20% in some instances). We have updated our data base and changed certain categories on recent submissions for projects to capture these rapid market changes. Accordingly, we will continue to read the current labor and materials market with regular updates to our cost data base. This information has been gathered through discussions with numerous Construction Owners, General Contractors and Subcontractors. We continue to evaluate the situation utilizing market surveys and interviews.

  • Skilled trade labor shortages (in most specialty trades) are causing significant delays to projects in construction and wildly divergent labor pricing in projects being bid
     
  • The Construction Industry has lost skilled workers and the expanded market recovery has created a situation where contractors cannot keep up
     
  • Labor shortage & aging Labor forces = major increases in direct labor costs (wages) and burden rates for most specialty trades
     
  • An excess of public projects to bid resulting in contractors being more selective on what projects to bid and bidding them at much higher margins
     
  • Less competition - contractors bidding projects, particularly at the subcontractor level
     
  • Past market materials pricing has been relatively flat, but 2017 is seeing significant upward trend in material costs due to increased production costs & labor shortages
     
  • Major increases in salaries (wages) for experienced Project Managers and Superintendents
     
  • Increase in mark-ups and profit margins for all trades and General Contractors

Construction industry leaders are calling upon public officials to act without delay to step up investments in skills based education programs and increase funding for Career and Technical Education / Workforce Development Plans. If you have a project pending which was estimated prior to Spring 2017 of this year, we would be happy to discuss a “limited update” which would address these factors driving today’s changed Bid Market. Please contact either myself, D. Daigle or Joe Adams to discuss these changes happening in the market.

Sincerely,

Bill Downey
William G. Downey
Managing Principal
billd@downeyscott.com

SWaM: Small, Women and Minority-Owned ASPE ASHRAE CMAA CSI: Building Knowledge. Improving Project Delivery SAVE: Adding Value. Enhancing Ideas.