Construction Cost Estimating Presents New Challenges

The past two years have been marked by dramatic extremes for our economy and the construction industry. As a result, this period may be one of the most volatile on record when it comes to pricing of construction supplies, materials and services.
From the general contractor's perspective, the good news is that America's demand for new commercial and residential building has been on the increase in 2005. According to the U.S. Census Bureau of the Department of Commerce, as of August 2005 construction spending was estimated at a seasonally adjusted annual rate of $1,108.5 billion, 6.1 percent above August 2004. During the first eight months of 2005, construction spending amounted to $723.7 billion, 9.0 percent above the same period in 2004. From July to August 2005, the fastest growing segments of the construction industry were highways and nonresidential private construction, outpacing the rate of growth in residential and all other facets of public construction.
Demand for new construction is growing at a healthy, but not excessive rate, which should bode well for stable construction costs, right? Unfortunately, this is not the case. External forces have resulted in phenomenal rate increases for a wide range of integral construction supplies, raw materials and services. This fact has made the process for long term cost projections more difficult now than it's ever been.