Primary Cost Influences
Construction costs are influenced by three major components: materials, labor and margins.
The total cost of a construction project can vary over time due to cost escalation, the change in the price of a specific good or service in a given economy. Between the years 2000 and 2018, the National Construction Cost Index saw an average increase in cost escalation of 2.4% per year. In 2018 alone, the increase in price was over 5%. Recently, the price of goods has escalated due to global commodity shortages and supply chain disruptions due to the COVID-19 pandemic. Despite this, FMD has been able to ensure the timely completion of various projects all over campus. As the effects of these circumstances begin to wane, CBRE forecasts commodity price growth will slow to a minimal, more predictble pace in the near future.
Locally, the cost of labor has increased due to the lack of skilled subcontractors and tradespeople available for work. Escalation has seen an upward trend of 2% per quarter, especially during peak project periods like the summer.