b'Business Management CSIA 13work,said ABCChiefEconomist AnirbanBasuPrice increases This year has seen fluctuations in a release about the indicator. ABCs surveyinthepricesofconstructionmaterials,most data indicate that we are in the early stages of arecentlywiththeskyrocketingcostoflumber. nonresidential construction spending downturn,Prices have been rising on most materials since he said. With few exceptions, declines in backlogMay,accordingto ABC.ItsSeptemberlookat have begun to accelerate across all markets andprices found that among 11 subcategories, eight regions. experienced monthly increases. As construction Falling construction costs A variety of pandemic- comes back online around the world, increasing demandforproductscouldkeeppricesonthe related forces have caused construction costs torise, Basu said. Despite the lingering pandemic, decline slightly for the first time in a decade, whichtheglobaleconomyhasbeenrecovering, could lead contractors to feel a pinch in profits. increasingdemandforkeycommodities,he The Turner Building Cost Index, which measuressaid.Rapidviralspread,includinginEurope costsintheU.S.nonresidentialbuildingandpartsofNorthAmerica,rendermaterials construction market, fell to a value of 1171 in theshortages more likely during the winter months. third quarter of 2020, a 1.5% quarterly reductionSome contractors are taking proactive steps to from the beginning of the year. This year markedexpand their supplier network as well as buying the first time the index from Turner Constructionhedges on some materials to protect from upward has reduced in value since 2010. Trade contractorprice swings, according to Joe Natarelli, leader competition has increased in many areas as theyof the national construction industry practice at work to secure backlog due to uncertainty theyaccounting firm Marcum.haveaboutfutureopportunities,saidAttilioSupply chain issues Production is getting back Rivetti, the Turner vice president responsible fortowhereitwasinternationally,Pomfrettsaid, compiling the Cost Index in a press statement. but the strain on supply chains and how to get LessworkVarioussectorsofcommercialmaterialsandequipmentdeliveredremains. construction will continue to experience a declineNatarellisaidhisclientsarebuildingresiliency evenaftertherestoftheeconomybeginstointotheirsupplychainssothattheyrenot recoverfromCOVID-19,economistssay.Forbeholden to a single supplier for any one material. instance, experts predict people will continue toThedaysofhavingonematerialsupplierare work from home more often then they go into agone, he said. Were seeing clients setting up central office, so construction of office buildingsthree separate suppliers, in different geographic remains a gray area in terms of future growth. locations, where in the past they may have had just one or two. Some are even getting as many Theconstructionofnewhealthcarefacilitiesas five in place. CENTRAL STATES INSULATION ASSOCIATIONalso could drop significantly because of changesPlus, the pandemic caused a decline in shipping inlifestylespost-COVID-19,accordingtoKenas well as air travel, which means less air freight Simonson,chiefeconomistfortheAssociatedgetsmovedsoeventhereductioninmoving GeneralContractorsofAmerica.Hospitalusematerials across state lines has caused issues, dropped off drastically in the spring and its nothe said.certain if visits for elective surgery and other non-essential procedures will come back, SimonsonDiminishedstateandlocalgovernment said. Or will we see growth of alternative medicalrevenuesBasusaidthisisoneofthetop carethroughurgentcareorsurgerycenters?challenges facing contractors right now. A report He also questioned if nursing home constructionfrom the Brookings Institution projects that state would fall because people might be more hesitantand local government revenues will decline $155 to check themselves or family members into thebillionin2020,$167billionin2021and$145 facilities. billion in 2022about 5.5%, 5.7% and 4.7%, Travel and hospitality sectors, along with sportsrespectivelyexcluding the declines in fees to or performance venues, also look grim accordinghospitals and higher education. toSimonson.ThatsprimarilybecausetheirThismeansthatstateagenciessuchas revenuesourcessalestaxes,conventiondepartments of transportation have less money to income and tollsare taking a big hit and arentfund infrastructure initiatives like roads, bridges expected to get replenished anytime soon as theand transit projects. Many will look to the federal pandemic begins a third wave of intensity. (continued on pg 14)csiaonline.org'