It's that time of year again! Annually, ICI publishes the predicted rate of construction cost escalation for the coming year, authored by Vice President of Preconstruction Marc Poskin:
When planning a future construction project, factoring in cost escalation is vital to mitigating surprises when the bids come in. Far too often, the ICI team sees cost escalation and related factors disregarded or forgotten. The excitement of the planning phase can overshadow the reality that material and labor costs fluctuate. To remain within budget, it is imperative to take into account cost escalation; especially when a construction project is more than a year from the date when shovels will meet the dirt.
2017 Predictor – Forecasting Cost Escalation for the Chicagoland Market
A perceived shortage of skilled labor and a rising volume of local work are driving construction costs up in the Chicagoland commercial marketplace.
When trying to predict cost escalation between now and the next 12 months, we need to look at historical trends in national and local cost indices.
At a national level, R.S. Means published a 2015 cost index of 206.2 and a 2016 cost index of 207.3 – a very modest 12-month escalation of only 0.53%. The most recently published 2017 index sits at 208.5 – again a very modest 0.58% rise from July of last year.
Interested in reading more? Download the full report: