Chicago’s Leopardo Companies, Inc. today released its 2015 Construction Economics Report and Outlook, a guide to help business leaders, healthcare administrators and government decision-makers understand the factors that impact construction costs.
This year’s report shows that low oil prices are reducing the cost of construction, and some material costs have come down over the past year thanks in part to them. But these factors reducing cost are more than offset by the strong increase in labor costs, brought on by a shortage of skilled workers as more than 25 percent of construction workers left the industry during the past five years.
The overall effect in several large markets, like Chicago, is that construction costs are rising as development volume increases.
“Organizations that are considering new construction and renovation projects need to understand the factors in the economy and in the construction industry that may affect the timing and cost of their projects,” said Leopardo president Rick Mattioda.
To create the report, Leopardo analyzed economic and construction industry data. The company also relied on the experience of the firm’s principals to forecast the direction of construction costs over the next year.
“Despite the impact of higher construction costs, the current market is relatively favorable for companies and institutions with expansion plans,” said Mattioda. “For one thing, labor costs are not about to decline again, and will only continue to increase over the next few years, so sooner is better than later for new construction or renovation plans to be carried out. For those who expect to finance developments, it’s worth noting that interest rates are expected to rise later this year, which can have a big impact on project financing.”
To view the full report, click here.
