Recent Construction Cost Update

2009-11-15T20:12:00.000-08:00

Construction Cost Update: Still a Great Time to Build
By: Chris Kilpatrick, Foothill Construction General Contractors, Inc.

A frequent question by our clients deals with construction cost as a trend and how it relates to the economy.

For a given project, there are two major areas that impact cost: labor and material costs.

In the past two years, many general construction firms such as Foothill Construction have seen a mild reduction in labor costs. This is mainly driven by lack of demand in the market for unskilled labor (i.e. the same workforce is willing to accept less). Much of the most highly skilled workforce still demands the same wage and there has been no major reduction in skilled labor.

The biggest reduction in overall construction cost has been seen in materials. With lower demand in the construction materials market, construction firms have seen about a 15-20% reduction in materials cost. Some of the largest vendors are also offering price reductions to keep sales up.

With mild reduction in labor costs and deeper reductions in materials costs, overall construction costs have dropped about 10-15% for residential projects (the specialty of Foothill Construction General Construction, Inc.) This represents a major value for many of our clients and is making projects feasible that were not previously. In many respects, there has been no better time to build!