Construction business
Construction business
Construction Costs Climb with Interest

While the commercial construction industry has been gaining positive momentum recently, the growth has resulting outcomes for certain factors – especially costs. Research has indicated that for the past six years, overall construction costs have been relatively flat but throughout this year, that trend is beginning to go away.

For many, this shift is both welcoming and challenging and at Leon Williams Contractors, our sentiment is no different. We look forward to the increased growth and are fully prepared to alter our building strategies to accommodate the resulting increase in overall costs.

According to The Associated General Contractors (AGC) of America, construction spending in July 2014 reached its highest level since 2008. A total of $981 billion at a seasonally adjusted annual rate was spent by the construction industry during July – up by 1.8 percent compared to the previous month. When compared to the previous year’s July, 2014’s spending saw an 8.2 percent increase and much of that came from private commercial construction. This increase is impressive and a true indicator of the growing industry but it could very well bring all-new challenges design-build firms must face for the next year.

Despite the fast jump in spending, the construction labor force has yet to see similar growth rates as a result. Another AGC survey conducted in conjunction with SmartBrief found that 25 percent of the participating firms indicated they have been turning down projects due to labor shortages. Additionally, two-thirds said they have been seeing difficulty in simply finding workers for projects.

Because of this catch-22, many design-build firms are revising their project strategies to overcome rising costs. In the first quarter of 2014, U.S. construction prices increased by 1.15 percent which, as reports have indicated, is the largest three-month increase since 2008. Adopting new strategies such as LEAN construction techniques and incorporating longer lasting and more sustainable materials can help alleviate the pressure felt by some design-build firms.

Despite the increase in costs, commercial construction is booming once again and breaking ground on your next expansion or project shouldn’t be conducted with doubt. At Leon Williams Contractors, we pride ourselves on value-engineering and will ensure your next build is conducted with quality and your bottom line set as top priorities.

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