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DENVER, CO, FEBRUARY 24, 2016-SINCE 2006, VERMEULENS has been reporting on the state and direction of the construction market. Our guiding philosophy in forecasting is that inflation targets will propel monetary policy, and subsequently construction prices. This approach has been successful at forecasting price movements through the last recession, and current economic cycle.
The end of quantitative easing has reduced financial asset prices. Monetary authorities are looking towards continued growth and productivity increases to substantiate and soak up eased money supply.
Portions of key information from Vermeulens most recent Beyond Estimation Market Outlook Quarter 4 include reviewing regional imbalances and hot labor markets.
Regional imbalances in capacity utilization are decreasing. The Capacity Utilization Rate is calculated by taking the ratio of current construction employment to the peak construction employment, and allowing for a sustainable rate of growth. The top 20 US Cities (by GDP) is close to 60% of capacity utilization. A rate greater than 85% begins to put upward pressure on construction labor costs.
The hottest labor utilization rate is occurring in Denver above the 100% employment rate. In parts of Wyoming, the utilization rate is 105 %. This situation impacts construction costs in a major way. . In another region of the country, Boston is an example of soaring construction rates. Previous budgets no longer apply.
The downturn in the economy resulted in a loss of construction workers. Almost 30% moved to other jobs. Climbing out of the recession has resulted in serious reduction in the available construction workforce. The industry lost so much and now there is a critical labor need. Inflation remains low but could rise to 2% over the medium term. This too could present another challenge in construction costs.
How can construction costs be managed in these demanding times? Information, education and preparation.
Bearing in mind the unique conditions within the construction industry, Vermeulens is offering a Beyond Estimation® California Region Escalation Forum 1:45-2:45 pm on March 1st. Construction costs are rising fast, forcing owners nationwide to revamp projects, boost spending, or even delay construction. Institutions are seeing project costs often come in more than 15% above initial projections.
Join Richard Vermeulen for this forum of thought leaders, and decision makers in the institutional, commercial, and industrial construction industries, to explore what is driving the rapidly escalating costs in the California region and the nation. Learn how market cycles, labor rates, bigger profit margins, materials markets, and local construction climates are affecting your project. Share and discover strategies to battle higher costs and avoid unwelcome surprises. https://www.coaa.org/chapters/california
Join us for The Save - Save process forum that shares vision, and implementation methodology to create the opportunity to develop all project types at quantifiable lower costs whilst achieving sustainability by improving the environment.
All registered attendees get a FREE International Amazon Bestseller digital book: Green at No Cost. Economic and cost control strategies for No Cost Sustainability by Richard Vermeulen edited and illustrated by Peter Lucking.
Cost Control – The Save-Save Process - Join us for this Webinar - Thursday, March 17th, 2016 12:00 - 01:30 PM PSTl; register at VERMEULENS.COM
Vermeulens is a leader in construction cost control since 1972. With over $5 billion in annual construction cost estimating, an extensive and continually expanded database, and their innovative parallel estimating system, the firm is committed to identifying and controlling project costs throughout the design process. Peter Lucking, Business Development and Sustainability Associate, head of Vermeulen’s Denver Office, can be reached at 303-386-2530.
For details or to attend the webinar check www.Vermeulens.com
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Architectural Resources Cambridge
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McGill University Health Centre
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- McGill University Health Centre
"Your team's ability to address cost issues as they related to the ever-changing technology of healthcare is impressive."
- Partners (Healthcare)
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Perkins + Will
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- Perkins + Will
The University of Chicago
"The accuracy of your estimate on our $200 million dollar (job) gave the University the confidence to test our project in the construction market. This strategy resulted in the University saving more than $10 million from the estimates provided by others. This is quite a return on the investment we made in your fee."
- The University of Chicago
Truex Cullins & Partners Architects
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- Truex Cullins & Partners Architects
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Virginia Performing Arts Foundation
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