beyond estimation market outlook
TRANSCRIPT
Beyond Estimation Market Outlook® Presentation
Since 1972
®
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B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s
Service Beyond Estimation
2
Learning Objectives
Cost Reconciliation Tracker Present trends in median trade costs from January 2009 – Current
Macro Economics Understand the Macro Economic impacts on Construction Volume and Cost
Forecast Forecast for Future Construction Costs
Procurement Strategy In light of current market conditions, recommendations on project procurement
Beyond Estimation Market Outlook
N o r t h A m e r i c a ’ s C o n s t r u c ti o n E c o n o m i s t
2000 - Current
3
20002001
20022003
20042005
20062007
20082009
20102011
20122013
20142015
20162017
120
VCC Construction Cost Index
Construction Cost Trendline (3.1%)
CPI
CPI Trendline (2.7%)
Vermeulens Construction Cost IndexBeyond Estimation Market Outlook
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s
Jan-90Jan-92
Jan-94Jan-96
Jan-98Jan-00
Jan-02Jan-04
Jan-06Jan-08
Jan-10Jan-12
Jan-14Jan-16
7,500
8,500
9,500
10,500
11,500
12,500
13,500
14,500
15,500
16,500
17,5002.5% Trend Line
GDP
(Bill
ions
)
4
High/Low-4.3%
Low/Current+14.3%
Growth Rate of 2.1% for the last 6 Years
US Real GDP
N o r t h A m e r i c a ’ s C o n s t r u c ti o n E c o n o m i s t
Beyond Estimation Market Outlook
5
Code Group VCC CM CM-VCC VCC CM CM-VCC
01 Allowances $1,156,805 $2,422,380 $1,265,575 $2,651,790 $2,672,730 $20,940
02 Site Work $2,636,810 $3,773,428 $1,136,618 $2,918,155 $2,882,279 ($35,876)
03 Concrete $5,840,270 $5,065,081 ($775,190) $5,065,361 $5,065,081 ($280)
04 Masonry $1,547,241 $1,767,385 $220,144 $1,615,526 $1,609,395 ($6,130)
05 Metals $17,945,452 $17,804,383 ($141,069) $15,675,089 $15,577,004 ($98,085)
06 Wood/Plastic $3,172,732 $3,831,671 $658,939 $3,694,276 $3,600,999 ($93,277)
07 Thermal/Moisture Protection $2,903,951 $3,046,873 $142,922 $3,099,398 $3,086,080 ($13,319)
08 Doors/Windows $17,219,666 $15,756,579 ($1,463,087) $15,214,307 $15,299,926 $85,619
09 Finishes $9,635,770 $9,399,224 ($236,546) $10,135,975 $10,137,758 $1,782
10 Specialties $1,335,983 $1,163,012 ($172,971) $1,410,825 $1,418,709 $7,884
11 Equipment $1,127,700 $1,852,358 $724,658 $1,692,000 $1,693,414 $1,414
12 Furnishings $784,846 $302,393 ($482,453) $559,342 $573,596 $14,255
13 Special Construction $300,000 $148,575 ($151,425) $150,000 $148,575 ($1,425)
14 Conveying Systems $4,858,875 $7,212,645 $2,353,770 $5,963,888 $5,993,138 $29,250
15 Mechanical $28,949,381 $35,232,816 $6,283,436 $29,127,187 $29,493,221 $366,034
16 Electrical $15,451,608 $16,700,277 $1,248,669 $16,476,313 $16,451,613 ($24,700)
17 Permits & Fees $19,075,543 $20,452,111 $1,376,568 $20,043,336 $20,051,467 $8,130
18 Contingencies $16,841,472 $14,102,030 ($2,739,443) $15,684,472 $15,697,176 $12,704
19 Enabling $22,704,456 $22,704,458 $2 $22,704,458 $22,704,458 $0
20 Total Construction Costs $173,488,558 $182,737,674 $9,249,116 $173,881,696 $174,156,616 $274,920
Beyond Estimation Market OutlookCost Reconciliation Tracker®
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s
Typical Institutional Project – Direct Trade Cost
Recession Decline -14.0%2011 +2.0%2012 +4.0%2013 +5.0%2014 +6.0%
2015 +7.0%
Assumes trade-weighted average of individual percentage trade reduction
6
Construction Cost ImpactBeyond Estimation Market Outlook
N o r t h A m e r i c a ’ s C o n s t r u c ti o n E c o n o m i s t
High Growth Market Adjustment Cost Recovery High Growth0
250
500
750
1000
1250
1500
1750
2000
2250
2500
2750
3000
3250
3500
3750
950675 675 750 750
1150
1075 10501150 1250
1300
1000650
9501300
MarkupLaborMaterial
3,400
2,750
2,375
2,850
3,300
7
Structural Steel PricingBeyond Estimation Market Outlook
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s
8
Contingency
N o r t h A m e r i c a ’ s C o n s t r u c ti o n E c o n o m i s t
Beyond Estimation Market Outlook
Project Contingency and Escalation Recommendations
Design Contingency
Preliminary Design 10% to 15%
Schematic Design 6% to 9%
Design Development 3% to 6%
Contract Documents 0% to 3%
Construction Contingency 3% to 5%
Escalation - based on the Market Outlook and Local index
3% to 9%
Bidding Contingency 0% to 5%
Project Contingency (Owner) 5% - 15%
9
20002001
20022003
20042005
20062007
20082009
20102011
20122013
20142015
20162017
80
90
100
110
120
130
140
150
160
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
US Dollar and NYSE
US Dollar and NYSE
Beyond Estimation Market Outlook
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s
20002001
20022003
20042005
20062007
20082009
20102011
20122013
20142015
20162017
80
90
100
110
120
130
140
150
160
0
5
10
15
20
25
30
35
40
45
50
10
US Dollar Impact on Commodities
N o r t h A m e r i c a ’ s C o n s t r u c ti o n E c o n o m i s t
Beyond Estimation Market Outlook
11
10,000
10,500
11,000
11,500
12,000
12,500
13,000
13,500
14,000
14,500
15,000
15,500
16,000
16,500
17,000
0
2,000
4,000
6,000
8,000
10,000
12,000
GDP (Billions) and NYSEBeyond Estimation Market Outlook
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s
12
128,000
129,000
130,000
131,000
132,000
133,000
134,000
135,000
136,000
137,000
138,000
139,000
140,000
141,000
142,000
143,000
144,000
0
2,000
4,000
6,000
8,000
10,000
12,000
8.7 M Jobs
13.6M Jobs18
3,000
/ m
th
208,
000 /
mth
3.0% G
DP G
rowth
2.1%
GDP
Gro
wth
221,000 / month
US Employment (Thousands) and NYSE
N o r t h A m e r i c a ’ s C o n s t r u c ti o n E c o n o m i s t
Beyond Estimation Market Outlook
13
20002001
20022003
20042005
20062007
20082009
20102011
20122013
20142015
20162017
128,000
129,000
130,000
131,000
132,000
133,000
134,000
135,000
136,000
137,000
138,000
139,000
140,000
141,000
142,000
143,000
7.0%
9.0%
11.0%
13.0%
15.0%
17.0%
19.0%
BANK ANNOUNCEMENT
21.6 M Jobs 22.4 M Jobs 22.5 M Jobs 22.0M Jobs
US Employment (Thousands) Public vs PrivateBeyond Estimation Market Outlook
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s
14
90,000
95,000
100,000
105,000
110,000
115,000
120,000
125,000
130,000
135,000
140,000
145,000
150,000
90,000
95,000
100,000
105,000
110,000
115,000
120,000
125,000
130,000
135,000
140,000
145,000
150,000
3.7% GDP Growth Rate
US Total Employment (Thousands)
N o r t h A m e r i c a ’ s C o n s t r u c ti o n E c o n o m i s t
Beyond Estimation Market Outlook
15
01/01/01 09/28/03 06/24/06 03/20/09 12/15/11 09/10/14 06/06/17
100,000
105,000
110,000
115,000
120,000
125,000
130,000
135,000
140,000
145,000
150,000
155,000
160,000
100,000
105,000
110,000
115,000
120,000
125,000
130,000
135,000
140,000
145,000
150,000
155,000
160,000
6.2M
6.2M
221,000 / month
Beyond Estimation Market OutlookUS Total Employment (Thousands)
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s
16
20112012
20132014
20152016
20170
50
100
150
200
250
300
350
400
450
208K AVG
N o r t h A m e r i c a ’ s C o n s t r u c ti o n E c o n o m i s t
Beyond Estimation Market OutlookUS Total Employment (Thousands)
17
20022003
20042005
20062007
20082009
20102011
20122013
20142015
20160
1
2
3
4
5
6
7
8
9
10
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Reserve Assets (trillion) Unemployment Rate (%)
Federal Asset Monthly PurchaseBeyond Estimation Market Outlook
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s
18
US Job Growth
2 -Jan -8 7 2 -Jan -8 8 1 -Jan -8 9 1 -Jan -9 0 1 -Jan -9 1 1 -Jan -9 2 3 1 -Dec-9 2 3 1 -D ec-9 3 3 1 -Dec-9 4 3 1 -Dec-9 5 3 0 -D ec-9 6 3 0 -Dec-9 7 3 0 -Dec-9 8 3 0 -Dec-9 9 2 9 -Dec-0 0 2 9 -D ec-0 1 2 9 -Dec-0 2 2 9 -Dec-0 3 2 8 -D ec-0 4 2 8 -Dec-0 5 2 8 -D ec-0 6 2 8 -Dec-0 7 2 7 -Dec-0 8 2 7 -D ec-0 9 2 7 -Dec-1 0 2 7 -Dec-1 1 2 6 -Dec-1 2 2 6 -Dec-1 3 2 6 -D ec-1 4 2 6 -Dec-1 5 2 5 -Dec-1 6
-200
-100
0
100
200
300
400
500
600
1,000
10,000
6 Month Average Job Growth NYSE Vermeulens
N o r t h A m e r i c a ’ s C o n s t r u c ti o n E c o n o m i s t
Beyond Estimation Market Outlook
19861988
19901992
19941996
19982000
20022004
20062008
20102012
20142016
4,000
4,500
5,000
5,500
6,000
6,500
7,000
7,500
8,000
0
50
100
150
200
250
300
High/LowTotal
-8.7M (-6%)
Construction-2.3M (-30%)
Low/CurrentTotal
+13.6M (+10%)
Construction+1.1M (+20%)
19
US Construction Employment (Thousands)Beyond Estimation Market Outlook
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s
19861987
19881989
19901991
19921993
19941995
19961997
19981999
20002001
20022003
20042005
20062007
20082009
20102011
20122013
20142015
20162017
4,000
4,500
5,000
5,500
6,000
6,500
7,000
7,500
8,000
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
20
Construction Employment and Percent of Total
N o r t h A m e r i c a ’ s C o n s t r u c ti o n E c o n o m i s t
Beyond Estimation Market Outlook
21
5000
5500
6000
6500
7000
7500
8000
0.0
5.0
10.0
15.0
20.0
25.0
30.0
Employment
Unemployment Rate
Construction Employment and Unemployment RateBeyond Estimation Market Outlook
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s
22
Construction Labor Utilization RateBeyond Estimation Market Outlook
N o r t h A m e r i c a ’ s C o n s t r u c ti o n E c o n o m i s t
23
Beyond Estimation Market Outlook
<70%
70% to 79%
80% to 89%
90% to 105%
>105%
Top Cities by GDP
Construction Labor Utilization Rate
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s
Regional Construction Labor (Thousands)
National(-32% + 27%)
Denver(-26% + 47%)
Houston(-19% + 24%)
Dallas(-19% + 21%)
Boston(-25% + 31%)
24
140
150
160
170
180
190
200
210
220 Dallas
Houston
60
70
80
90
100
110
120 Boston
Denver
Beyond Estimation Market Outlook
<70%
70% to 79%
80% to 89%
90% to 105%
>105%
140
150
160
170
180
190
200
210
220
60
70
80
90
100
110
120
N o r t h A m e r i c a ’ s C o n s t r u c ti o n E c o n o m i s t
Regional Construction Labor (Thousands)
National(-32% + 27%)
San Jose(-33% + 37%)
New York(-20% + 23%)
San Francisco(-33% + 37%)
Baltimore(-20% + 13%)
25
200
220
240
260
280
300
320
340
360
380
400 New York
50
60
70
80
90
100
110
120
130
140 San Francisco2000
20012002
20032004
20052006
20072008
20092010
20112012
20132014
20152016
20
25
30
35
40
45
50
55
60 San Jose
Beyond Estimation Market Outlook
<70%
70% to 79%
80% to 89%
90% to 105%
>105%
50
55
60
65
70
75
80
85
90
95
100 Baltimore
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s
Regional Construction Labor (Thousands)
National(-32% + 27%)
Philadelphia(-25% + 16%)
Portland(-31% + 26%)
Seattle(-37% + 35%) Los Angeles
(-35% + 29%)
26
20002001
20022003
20042005
20062007
20082009
20102011
20122013
20142015
2016
20
30
40
50
60
70
80 Portland
150
170
190
210
230
250
270
290 Los Angeles
60
70
80
90
100
110
120
130
140 Seattle
Beyond Estimation Market Outlook
<70%
70% to 79%
80% to 89%
90% to 105%
>105%
60
70
80
90
100
110
120
130
140 Philadelphia
N o r t h A m e r i c a ’ s C o n s t r u c ti o n E c o n o m i s t
Regional Construction Labor (Thousands)
National(-32% + 27%)
Detroit(-41% + 39%)
Washington DC(-26% + 10%)Minneapolis
(-37% + 29%) Atlanta
(-37% + 22%)
27
80
100
120
140
Atlanta
100
120
140
160
180
200 Minneapolis
100
110
120
130
140
150
160
170
180
190
200Washington DC
40
60
80
100
120 Detroit
Beyond Estimation Market Outlook
<70%
70% to 79%
80% to 89%
90% to 105%
>105%
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s
National(-30% + 18%)
San Diego(-41% + 28%)
Chicago(-32% + 12%)
Miami(-49% + 30%)
Phoenix(-53% + 27%)
28
50
70
90
110
130
150
170
190
Miami
Regional Construction Labor (Thousands)
20002001
20022003
20042005
20062007
20082009
20102011
20122013
20142015
201650
70
90
San Diego Chicago
Beyond Estimation Market Outlook
<70%
70% to 79%
80% to 89%
90% to 105%
>105%
50
70
90
110
130
150
170
190
100
120
140
160
180
200
220
240
Phoenix
N o r t h A m e r i c a ’ s C o n s t r u c ti o n E c o n o m i s t
High/Low
Total -37%Infra -15%Res -66%Non Res -41%
Low/Current
Total +47%Infra +20%Res +86%Non Res +47%
29
Jan-02Jan-03
Jan-04Jan-05
Jan-06Jan-07
Jan-08Jan-09
Jan-10Jan-11
Jan-12Jan-13
Jan-14Jan-15
Jan-16Jan-17
0
250
500
750
1,000
1,250
Put In Place Construction Annualized Billions)Non Residential Residential Infrastructure
Beyond Estimation Market OutlookUS Construction Volume
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s
Jan-93Jan-95
Jan-97Jan-99
Jan-01Jan-03
Jan-05Jan-07
Jan-09Jan-11
Jan-13Jan-15
Jan-170.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%5.5%6.0%6.5%7.0%7.5%8.0%8.5%9.0%
Put In Place Construction (% of GDP)Non Residential Residential Infrastructure
PeakTotal 8.2%Infra 2.0%Res 4.7%Non Res 3.0%
CurrentTotal 6.6%Infra 1.8%Res 2.4%Non Res 2.4%
30
US Construction Volume
N o r t h A m e r i c a ’ s C o n s t r u c ti o n E c o n o m i s t
Beyond Estimation Market Outlook
20002001
20022003
20042005
20062007
20082009
20102011
20122013
20142015
20162017
1 -Jan -0 0 3 1 -D ec-0 0 3 1 -D ec-0 1 3 1 -D ec-0 2 3 1 -D ec-0 3 3 0 -D ec-0 4 3 0 -D ec-0 5 3 0 -D ec-0 6 3 0 -D ec-0 7 2 9 -D ec-0 8 2 9 -D ec-0 9 2 9 -D ec-1 0 2 9 -D ec-1 1 2 8 -D ec-1 2 2 8 -D ec-1 3 2 8 -D ec-1 4 2 8 -D ec-1 5 2 7 -D ec-1 6
700,000
800,000
900,000
1,000,000
1,100,000
1,200,000
1,300,000
0
2,000
4,000
6,000
8,000
10,000
12,000
31
Construction Volume (Millions) and NYSEBeyond Estimation Market Outlook
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s
32
Indicator Bottom Increase
Equities March 2009 +120%Commodities February 2009 - 30%GDP Q2 2009 2.1% Annual Employment February 2010 13.6MNon Res Volume February 2011 + 47%
Economic Summary
N o r t h A m e r i c a ’ s C o n s t r u c ti o n E c o n o m i s t
Beyond Estimation Market Outlook
33
ForecastBeyond Estimation Market Outlook
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s
34
2008 Peak to Bottom 2010: - 14.0%Change in 2011: + 2.0%Change in 2012: + 4.0%Change in 2013: + 5.0%Change in 2014: + 6.0%Change in 2015: +7.0%
Low Growth
MarketAverage
High Growth
Market
+ 4% + 6%2016: + 9%
Forecast
+ 3% + 5%2017: + 8%
N o r t h A m e r i c a ’ s C o n s t r u c ti o n E c o n o m i s t
Beyond Estimation Market Outlook
35
Contact your local Vermeulens office for an in depth presentation to the thought leaders in your office
Beyond Estimation Market Outlook® Presentation
Since 1972
®
Service Beyond Estimation
North America’s Construction EconomistVermeulens.com
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s