2006-03-13 Regular Meeting and Public Hearing

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2006 labor & Materials - Cost Survey Results The following are results to the annual survey regarding labor and materials cost increases in commercial construction. AGC makes no representations that this is a "scientific" study. The results are based on a survey of a representative sample of member companies for each CSI division. If you have any questions, please contact Tamara Hancock at 713-843-3700. 2005 RESULTS 2005 LABOR COSTS: PTQjected cost inaease 6.9% 2005 MATERIAL COSTS: Proiected cost increase 11.9% Actual Increase 7.04% Variance 0.14% MORE than projected* Actual Increase 16.2%++ Variance 4.3% MORE than projected** 2006 PROJECTIONS 2006 LABOR COSTS: 2006 MATERIAL COSTS: Projected Average increase: Projected Average increase: 5.8%" 9.55% ** ++According to the Bureau of Labor Statistics (BLS), the A verage Producer Price Index for Construction Materials & Components for 2005 renects an increase of 10.2% over the 2004 average. .. Seasonally adjusted construction employment in the U.S. slipped by 9, 000 in December, according to the Bureau of Labor Statistics (BLS). It was the first monthly drop in nearly two years. Over the past 12 months, industry employment swelled by 246, 000 or 3.5%, more than double the 1.5% growth rate for total nonfarm payroll employment. Employment in all five BLS construction categories grew: residential specialty trade contractors, 5.4%, residential building, 4.5%; heavy and civil engineering, 4.2%; nonresidential building, 2.4%; and nonresidential specialty trade contractors, 1.5%. Seasonally adjusted BV8fll{/11 hourly BBmings in construction rose to $19.69 in December, a gain of 2. 1 % over the course of the year and 18% more than the average for all private-sector production or nonsupervisory employees. .... According to Ken Simonson, AGCA Chief Economist, the price increases and shortages for resins, particularly those for construction plastics such as polyvinyl chloride (PVC) pipe are attributable in part to shortfalls in natuml gas output from producing platforms in the Gulf of Mexico destroyed by Hurricanes Rita and Katrina. According to the Minerals Management Service of the Interior Department, 18% of the natural gas production and 26% of the oil production from the Gulf were still shut in as of January ". While the U.S. can buy oil and petroleum products elsewhere, there is almost no way to make up the loss of natural gas. In addition, a survey conducted by PinnacleOne, one of the nation~ leading construction consulting firms, shows that the average price increase in construction project bidding (mainly due to materials cost increases as a result costs of oil and steel) in 2005 was 13.2% - more than four times the rate of innation. AGe Houston I 3825 Dacoma Street I Hous1Dn. Texas 17092 I Tel (713) 843-3700 I Fax (713) 843-3177 I www.agchouston.org