"a hundred years of enr cost indexes ... - … cost index source: mcgraw hill construction...

Source: McGraw Hill ConstructionResearch & Analytics / ENR.

(Measured $ millions)

Total 2012 Revenue = $44.67 billion

Retail$416.9 0.9%

19131918

19231928

19331938

19431948

19531958

19631968

19731978

19831988

19931998

20032008

2013

10,000

8,000

6,000

4,000

2,000

9,000

7,000

5,000

3,000

1,000

CONSTRUCTION COST

INDEX HISTORY

(ANNUAL AVERAGE)

BUILDING COST

INDEX HISTORY

(ANNUAL AVERAGE)

9,552

(09/13)

100

5,285

100

SKILLEDLABOR38%

STEEL38%

LUMBER17%

CEMENT7%

SKILLEDLABOR65%

STEEL24%

LUMBER9%

CEMENT2%

SHIFTING TIDE OF INFLATIONREDISTRIBUTED THE INDEX COMPONENTS

1913 2013

BUILDING COST INDEX

Source: McGraw Hill ConstructionResearch & Analytics / ENR.

A Hundred Years of ENR Cost Indexes A century of cost leadership through depression and expansion

Whenever anything or anyone turns 100, it’s a big deal. With a base year of 1913, ENR’s cost indexes have joined that category after a century of measuring con-

struction cost fluctuations and reflecting the industry’s most important trends. The use of the cost indexes has grown almost as dramatically as the indexes themselves.They captured, for example, the explosion in union wages that caused costs to jump in the 1970s, and they tracked the record drop in steel prices and its effects on overall

uses the ENR Construction Cost Index to adjust our connection fees annually for inflation in construction of capital proj-ects. The fees are used to pay for water and sewer facilities needed for system ex-pansion to accommodate new users.”

Mike Clark, senior project manager in Oklahoma City’s Public Works Dept., says, “Over the last three years, I have used the Construction Cost Index as an inflation-type index for approximately 30 procurement contracts.”

Says Leonard J. Goodwin, public- works director for Springfield, Ore., “We use the ENR CCI as an inflation adjust-

ment factor for our system development charges [impact fees]. Our methodology allows us to administratively increase fees by the change in the CCI. I think a fair number of jurisdictions in Oregon do the same.”

Federal agencies also find the indexes valuable. “The indexes are an expertise multiplier. Regularly publishing the data from multiple locations not only shows industry and cost trends but also allows comparison of my personal and professional knowledge of the local cost data with the indexes,” says Rick Rus-sell, cost engineering team lead, U.S. Army Corps of Engineers, Portland, Ore. “The CCI and [Building Cost In-dex] provide expertise to make judg-ments for costs among a wide variety of materials and projects. Although the indexes are not an exact match to the projects in my job, they help by provid-ing vetted background information on the cost components.”

“The ENR indexes are an excellent

By Scott Lewis with Tim Grogan

3Q COST REPORT 100TH ANNIVERSARY

enr.com September 30, 2013 ENR 1

construction costs in 2004.Over the years, ENR has labored to

ensure the indexes are accurate, objective, transparent and flexible so that they can serve as a benchmark to assess the health of the construction industry’s most impor-tant sectors. This includes deep-dive analysis that interprets the numbers and tells readers the stories behind them.

These days, they help many municipal officials make the most informed decision they can about their costs of engineering, construction and maintenance work.

John Pedersen, district engineer with the Mammoth Community Water Dis-trict in California, says, “The MCWD

★ 1913 - 2013 ★

1913 - 2013

★ 1913 - 2013 ★

SOURCE: MCGRAW HILL CONSTRUCTION RESEARCH & ANALYTICS/ENR

resource. I have used them to accurately escalate contract pricing for the future where the Corps Index is not really ap-plicable. The Corps cost index system is more long term. This is not as current and accurate as using the ENR for short-term trends and projections,” says Jerry Welch, chief of the Cost & Relocations Team, U.S. Army Engineer District, Memphis.

“ENR indexes are very helpful as they represent actual market conditions based on labor and materials. I have used ENR indexes on various civil and MILCON projects as these indexes catch up to price fluctuations on actual materials rather swiftly. During the past decade, steel, ce-ment, lumber and copper prices saw un-usual swings, and ENR’s [Materials Cost Index] was my first choice to develop es-calation factors for projects that required use of these materials,” says Mukesh Ku-mar, chief cost engineer with the U.S. Army Engineer District, New York. n

3Q COST REPORT 100TH ANNIVERSARY

Elsie Eaves (1898-1983): Cost Pioneer

E lsie Eaves joined ENR in 1926, five years after the magazine introduced its Con-struction Cost Index, but she soon made

them her own. “Elsie Eaves was the one who made ENR’s cost indexes the industry standard,” says Ken Humphreys, the retired ex-ecutive director of the American As-sociation of Cost Engineers, of which Eaves was a founding member, in 1956. She was one of the first women to become a civil engineer and played a prominent role in the construction industry, but none more important than developing the esteem and relevance of ENR’s construction cost indexes.

For three decades, she was the manager of ENR’s Business News Dept., where she pio-neered ways of measuring the market for con-struction materials and wages. Eaves made the first national inventory of municipal and indus-trial sewage-disposal facilities, in 1929. From

1933-35, she organized and directed an inven-tory of needed construction projects that could go ahead if federal funding were provided. This helped Congress pass the Federal Loan-Grant legislation used to revive construction activity

and break the Great Depression. At the height of her career, she over-

saw 25 members of ENR’s Business News Dept., Construction Methods & Equipment magazine and 125 construc-tion-project field reporters collecting information.

In 1927, Eaves became the first woman to be a full member of the American Society of Civil Engineers. After retiring from ENR in 1963, she served as an adviser on housing costs to the National Commission on Urban Problems and, in her role as a International Executive Service Corps volunteer, to the gov-ernment of Iran on construction cost indexes. n

By Scott Lewis

EAVES

enr.com September 30, 2013 n ENR n 2

C an’t quite figure out where prices are going? Prices tied to the housing market, such as lumber, plywood

and gypsum wallboard, are bouncing back from record lows with impressive year-to-year gains; however, they remain below previous highs. Steel prices are dropping, and everything else is going sideways. Once again, the U.S. Congress, fighting over the budget, is threatening to throw a monkey wrench into the works by either shutting down the federal government or refusing to raise the federal debt ceiling. Either step could derail a fragile recovery and drastically change the coming year’s cost picture.

For now, economists are still optimis-tic the recovery will continue to gain momentum slowly. The Dodge division of McGraw Hill Construction is sticking to its forecast for a 6% increase in the contract value of new construction starts this year, according to its midyear update, released last August. However, most of that increase comes from a predicted 27% jump in the housing market. The non-residential building market is expected to increase just 1%, while the non-building construction declines 11%.

“We are sticking to the story that it is going to be a long, slow recovery and we are nowhere near the peak,” says Charlie

McCarren, construction materials analyst for the Washington, D.C.-based forecast-ing firm IHS Global Insight. However, there will be some dips, he adds. For instance, Global Insight has downgraded its 2013 forecast for housing starts to 628,000 units from 649,000 units previ-ously. That would still compute to a 17% increase for the year.

Likewise, Global Insight has down-graded it housing-starts forecast for 2014, to 823,000 units from 842,000, which computes to a 31% annual increase. “Pent-up demand should be released over the next few years, and, by 2016, we expect to see slower growth but [with] stable, solid high numbers.”

This slower track for recovery moder-ates Global Insight’s forecast for many

construction materials. “Prices will continue to advance, but the rate of increase is going to slow,” says McCarren. “Products such as lumber, plywood and wallboard are not going to be as volatile as in previous years. Producers have learned to curb their enthusiasm.”

“What we have seen over the last several quarters is that the difference between production and shipments have become tighter,” says McCarren. “Our takeaway is that lumber mills are interpreting the market better. The gradual recovery in housing will bring a steady rise in demand, and the key word is ‘steady.’ It will be predict-able.”

As a result, Global Insight is seeing inflation cooling for products tied to the

3Q COST REPORT ECONOMICS

Costs: Hit, Miss and a Guess Lumber prices are up, steel prices are down. D.C. politics will determine what comes next.

By Tim Grogan

Cement

SOURCE: BUREAU OF LABOR STATISTICS. FORECAST FOR 2013 BY IHS GLOBAL INSIGHT. ANNUAL PERCENT CHANGE FOR PRODUCER PRICE INDEXES.

10

0

-5

-10

20

15

5

2010 2011 2012 2013

-5.6% -3.5% 0.9%

5.3%

Structural Steel

10

0

-5

-10

20

15

5

2010 2011 2012 2013

1.0%

14.4%

-9.3% -6.1%

Gypsum

SOURCE: BUREAU OF LABOR STATISTICS. FORECAST FOR 2013 BY IHS GLOBAL INSIGHT. ANNUAL PERCENT CHANGE FOR PRODUCER PRICE INDEXES.

10

0

-5

-10

20

15

5

2010 2011 2012 2013

Plywood

10

0

-5

-10

20

15

5

2010 2011 2012 2013

Softwood Lumber

10

0

-5

-10

20

15

5

2010 2011 2012 2013

13.7%

-0.2%

7.0%

16.7%

-2.7% -2.2%

12.5%

14.4%

7.9%

-3.0%

10.4%

6.0%

Market Drives Cement Prices Up and Steel Prices Down

Housing Rebound Continues To Drive Wallboard, Plywood and Lumber Prices



housing market. It expects lumber prices to jump 16.7% this year, following a 7% gain last year. However, it forecasts only a 4.2% increase in lumber prices in 2014. Likewise, gypsum-wallboard prices are predicted to increase just 3.9% next year, after rising 14.4% in 2013. Plywood prices are expected to experience a 5.4% increase in 2014, following a 6.0% increase this year and a 10.4% jump during 2012.

The rebound in housing has given cement producers the marginal demand needed to raise prices after they took a big hit during the recession. In August, the producer price index for cement was up 4.2% above a year ago, according to the Bureau of Labor Statistics. Global Insight estimates cement prices will end the year 5.3% higher than in 2012. It pre-dicts another 4.4% increase next year. These upticks follow historically large price declines of 5.6% in 2010 and 3.5% in 2011. Last year, cement prices rebounded a modest 0.9%.

In contrast, prices for structural steel and concrete reinforcing bars have been falling. Prices for structural steel fell 9.3% last year and are expected to decline another 6.1% this year, according to Global Insight. Rebar is following a similar pattern with last year’s 5.0% decline, followed by another 7.3% drop in 2013, the firm predicts.

“Steel prices are bottoming out,” says Paul Robinson, Global Insight’s steel analyst. He predicts structural-steel prices will rebound 1.6% in 2014, while rebar prices will jump 9.9% next year. He says, “Producers are being hit by rising raw-material costs and will try to pass those along. Buyers currently have very low inventory and will not be in a position to say no.”

The recovery and falling unemploy-ment rates are not having much of an ef-fect on labor costs, says Julian Anderson, principal of Rider Levett Bucknall, Phoenix. “There is no doubt that unem-ployment rates are coming down, but I’m not so sure employment rates are going up as quickly,” he says. The RLB cost index is up 3.6% for the year.

.

CONSTRUCTION MATERIALS PRICE MOVEMENT IN 2013AUG.MAYMARCH JULYFEB. JUNEAPRIL

SOURCE: BUREAU OF LABOR STATISTICS. MONTHLY AND YEAR-TO-YEAR PERCENT CHANGES FOR PRODUCER PRICE INDEXES FOR LATEST EIGHT MONTH PERIOD.

AGGREGATES MONTHLY % CHG. +0.7 +0.3 +0.5 –0.5 +0.2 +0.4 +0.6 –0.5

ANNUAL % CHG. +2.7 +2.3 +2.0 +1.2 +1.7 +2.0 +1.8 +1.4

ALUMINUM SHEET MONTHLY % CHG. –0.1 +0.2 +0.1 –2.1 –0.9 0.0 –1.1 –0.3

ANNUAL % CHG. +1.0 –0.6 –1.9 –3.3 –2.2 –1.6 –2.2 –1.8

ASPHALT PAVING MONTHLY % CHG. +0.5 –0.2 –0.1 –0.6 +0.6 –0.3 +0.7 +0.8

ANNUAL % CHG. +3.4 +1.0 +0.7 –1.7 –0.9 –1.7 –0.9 +0.5

CEMENT MONTHLY % CHG. +3.4 –0.2 +0.1 +0.8 +1.3 –0.4 0.0 –0.6

ANNUAL % CHG. +5.0 +4.6 +5.1 +4.8 +5.4 +4.9 +5.2 +4.2

CONCRETE PIPE MONTHLY % CHG. +0.4 +0.2 0.0 +0.2 –0.1 +0.4 +0.7 +0.1

ANNUAL % CHG. +4.8 +5.0 +4.3 +4.5 +3.6 +4.2 +4.4 +4.5

COPPER PIPE MONTHLY % CHG. –0.4 +0.6 –2.5 –3.1 –2.5 –0.4 –2.2 +3.9

ANNUAL % CHG. +2.7 –2.5 –5.7 –7.1 –7.3 –3.3 –5.9 –1.5

DIESEL FUEL MONTHLY % CHG. +0.5 +7.3 –6.2 –0.8 –3.2 –0.7 +1.9 +2.3

ANNUAL % CHG. –0.9 +4.0 –6.8 –6.2 –5.4 +3.6 +4.4 –1.6

DUCTILE-IRON PIPE MONTHLY % CHG. 0.0 +0.4 +0.4 –0.2 –0.2 –0.3 +0.2 +0.1

ANNUAL % CHG. +0.8 +0.4 +0.8 +0.5 +0.3 –0.7 –0.5 –0.2

FABRICATED STEEL MONTHLY % CHG. –0.2 0.0 0.0 +0.2 0.0 –0.2 +0.1 +0.1

ANNUAL % CHG. +0.3 –0.1 –0.3 –0.6 –0.7 –0.9 0.0 +0.1

GYPSUM PRODUCTS MONTHLY % CHG. +10.5 +3.2 +1.1 +0.7 –0.1 +0.1 –1.6 +0.3

ANNUAL % CHG. +18.7 +15.6 +15.7 +17.1 +16.5 +13.7 +12.4 +13.1

LUMBER, SOFTWOOD MONTHLY % CHG. +6.9 +3.8 +5.2 +2.4 –7.2 –7.6 –2.3 +2.6

ANNUAL % CHG. +25.4 +27.5 +30.3 +32.5 +16.7 +8.0 +9.9 +8.4

PLYWOOD MONTHLY % CHG. +2.5 +1.3 +2.0 +1.6 –2.8 +1.9 –4.8 –0.3

ANNUAL % CHG. +12.7 +11.1 +10.2 +9.9 +6.7 +8.4 +3.2 +1.2

PVC PRODUCTS MONTHLY % CHG. 0.0 +1.1 –0.6 –0.5 +0.1 +0.2 –0.9 –0.1

ANNUAL % CHG. +3.5 +2.1 +1.1 +0.4 +0.4 +0.3 –0.1 –0.1

READY-MIX CONCRETE MONTHLY % CHG. +0.5 +0.2 0.0 +1.0 +0.1 –0.1 +0.4 +0.1

ANNUAL % CHG. +2.4 +2.4 +2.0 +3.2 +3.3 +3.2 +3.4 +3.5

SHEET METAL MONTHLY % CHG. +0.2 +0.1 –0.1 –0.7 +0.1 –0.3 –0.2 +0.1

ANNUAL % CHG. –0.8 –0.5 –0.6 –1.3 –1.8 –1.7 –1.8 –1.5

BUILDERS’ CONSTRUCTION COST INDEXES BY QUARTERNAME, AREA AND TYPE

JULY2012

JULY 2013

JAN. 2013 YEAR

OCT.2012 QRT.

APRIL2013

% CHANGE

1BASE: 1967=100; 2BASE: 1977=100; 3BASE: 1980=100; 4BASE: 1993=100; 5FORMERLY SMITH GROUP, 1992=100; 6BASE: APRIL 2005=100; 7BASE: 1992=100; 8POWERPLANT FOR A 550-MW COMBINED-CYCLE FACILITY.

GENERAL-PURPOSE COST INDEXES ENR 20-CITY: CONSTRUCTION COST1 867.98 872.82 878.57 882.89 889.23 +0.7 +2.5

ENR 20-CITY: BUILDING COST1 767.30 770.24 773.50 778.13 781.69 +0.5 +1.9

BUREC: GENERAL BUILDINGS2 332.00 334.00 339.00 344.00 341.00 – 0.9 +2.7

FM GLOBAL: INDUSTRIAL3 293.00 NA 294.00 NA 301.00 +1.2 +2.7

MEANS: CONSTRUCTION COST4 194.60 196.10 196.90 197.90 ___201.20 +1.7 +3.4

ECC: EDWARTOSKI COST CONSULTING5 169.13 169.56 169.85 170.78 171.35 +0.3 +1.3

SELLING PRICES INDEXES: BUILDING TURNER: GENERAL BUILDING1 832.00 839.00 849.00 859.00 868.00 +1.1 +4.3

RIDER LEVETT BUCKNALL6 146.67 147.74 149.10 150.75 151.89 +0.8 +3.6

SPECIAL-PURPOSE BUILDING COST INDEXES U.S. COMMERCE: ONE-FAMILY HOUSING7 98.40 99.40 100.90 103.50 104.00 +0.5 +5.7

U.S. COMMERCE: NEW WAREHOUSES7 131.50 132.20 133.30 133.60 135.30 +1.3 +2.9

U.S. COMMERCE: NEW SCHOOL BUILDINGS7 139.90 140.10 140.10 140.60 141,60 +0.7 +1.2

U.S. COMMERCE: NEW OFFICE BUILDINGS7 118.00 118.10 118.70 119.00 119.60 +0.5 +1.4

POWER ADVOCATE: POWERPLANT8 182.87 183.72 183.63 183.93 184.68 +0.4 +1.0

JAN.

3Q COST REPORT ECONOMICS

Confidence Remains High That the Market Is RecoveringFew think the market is booming, but most believe it is headed in the right direction

L ike Charlie Brown trying to kick that football, construction executives in recent years have hoped for different

results—every year hoping that this would be year the industry would bounce back from the prolonged doldrums that began in 2008. But just like Lucy snatching back the pigskin, by the third quarter of each year, economic reality would set in and market confidence would plummet.

The ENR Construction Industry Confidence Index survey has tracked the trend. In 2010, for the first time, the CICI index entered positive territory in the sec-ond quarter, only to plummet back to a negative outlook in the third quarter. In 2011, the CICI hit a record high for op-timism in the first quarter, only to drop precipitously in the third quarter. The CICI again started 2012 with high hopes, only to fall to neutral by the third quarter.

This year, things are different. In the first quarter, the CICI index stood at 59 on a scale of 100, an indicator of a per-

ceived recovering market. In the second quarter, the index hit 69, an indication of a growing market. Now, ENR’s most recent CICI survey shows the indus-try still believes the market is experiencing a sustained recovery.

The third-quarter 2013 CICI did decline, but only by two points, to 67 on a scale of 100, which still represents a growing market. A vast ma-jority of the 375 executives of large con-struction and design firms responding to the survey believe the market is in full recovery. Only 11% believe the market is currently in decline, while 39% believe it is growing.

The CICI measures executive senti-ment about the current market and where it will be in the next three to six months and over a 12- to 18-month period. The index is based on responses to surveys sent

out to more than 3,000 U.S. firms on ENR’s lists of the

leading contractors, sub-contractors and design firms. The latest results are based on a survey conducted from Aug. 27 to Sept. 16.

For the second quarter in a row, the surveyed indus-

try executives believe nearly all the market sectors measured by the CICI are now in a growth mode. For the CICI sur-vey, execs were asked to assess current and future market prospects in general and any of 15 market sectors in which they currently work. In all 15 of the survey’s markets, more executives saw growth in their particular market sector than those in the same sector saw decline.

Another positive sign is that all market sectors had a CICI rating over 50, indicat-ing expected market growth over the next 18 months. The petroleum market was

By Gary J. Tulacz

3Q COST REPORT CONFIDENCE SURVEY

IMPROVINGACTIVITY

12-18 MONTHS (%)

NUMBEROF FIRMSMARKET

DECLININGACTIVITY

CURRENTLY (%) 3-6 MONTHS (%)

DECLININGACTIVITY

STABLEACTIVITY

IMPROVINGACTIVITY

DECLININGACTIVITY

STABLEACTIVITY

STABLEACTIVITY

IMPROVINGACTIVITY

ENR FIGURES MAY NOT ADD UP TO 100% DUE TO ROUNDING.

PROSPECTS BY INDIVIDUAL SECTORS BY FIRMS WORKING IN THOSE MARKETS

67INDUSTRY

CONFIDENCE INDEX

DECREASES TWOPOINTS


COMMERCIAL OFFICES 255 16 54 30 11 50 39 8 45 47

DISTRIBUTION/WAREHOUSE 144 16 55 29 15 45 40 10 49 42

EDUCATION K-12 188 21 54 25 18 55 28 9 56 36

ENTERTAINMENT/THEME PARKS/CULTURAL 88 16 60 24 16 56 28 18 56 26

HOSPITALS/HEALTH CARE 233 15 48 37 10 42 47 9 42 50

HIGHER EDUCATION 235 14 56 30 12 50 38 9 49 41

HOTELS/HOSPITALITY 155 8 55 36 10 48 43 13 49 38

MULTI-UNIT RESIDENTIAL 145 7 34 59 8 32 59 17 38 45

RETAIL 175 16 55 29 11 54 35 10 43 47

INDUSTRIAL/MANUFACTURING 167 12 52 36 10 46 44 7 47 46

TRANSPORTATION 113 18 54 28 17 45 38 11 44 45

WATER, SEWER AND WASTE 92 20 50 30 18 48 34 12 45 43

POWER 98 8 42 50 8 32 60 5 36 59

PETROLEUM/PETROCHEMICAL 63 5 35 60 3 27 70 3 27 70

ENVIRONMENTAL/HAZARDOUS WASTE 38 8 55 37 5 50 45 8 45 47

3Q COST REPORT CONFIDENCE SURVEY

Quarterly Cost Report Confidence Index

SOURCE: MCGRAW HILL CONSTRUCTION RESEARCH & ANALYTICS / ENR.

’10 ’11 ’12 ’13

60

45

30

15

00Q2 Q3Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

58

69 67

43

5146

3742

5650 50

6475


the highest rated, with a CICI rating of 81, followed by multi-unit residential and power, both at 74, and the environmental/hazardous-waste market, at 67.

The K-12 education market and the entertainment/theme parks/cultural market were both judged to the be the weakest, with a rating of 55. The biggest drop in ratings—down five points—was multi-unit residential, last quarter’s strongest market. Many executives responding to the survey worried this market is becoming overbuilt.

CFMA Survey Indicates Slow RecoveryThe CICI findings parallel the soon-to-be-released results of the latest Confindex survey from the Construction Financial Management Association, Princeton, N.J. CFMA polls 200 CFOs from general con-tractors, subcontractors and civil contrac-tors. While a Confindex rating of 100 indicates a stable market, higher ratings show growth is expected.

“Our Confindex declined to 127 from 128 [on a scale of 200] for the third quar-ter,” says Stuart Binstock, CEO of CFMA. “There is a consistent feeling among our members that things are getting better but that the market is not recovering as fast as previous recessions.” He also notes that many CFOs answering the CFMA survey are concerned that margins are not improving as quickly as it has during past recoveries.

The CICI survey also asked construc-tion executives if their clients’ access to capital for project financing has improved or gotten worse in the past six months. In

the third quarter, 39.1% said project financing was “somewhat easier” or “much easier” than it was six months ago, up from 37.6% in the second quarter and only 31.9% in the first quarter. Only 9.6% said project financing was tougher to come by in the third quarter.

Many survey respondents commented that financial institutions are beginning to open up to project financing. This loos-ening has brought back developers to the market, says one. However, there is a con-cern that lenders are remaining cautious. “There is capital [for project financing] out there, but it is not confident capital,” says Anirban Basu, CEO of economic consultant Sage Policy Group Inc., Balti-more, and CFMA economic adviser.

Basu says interest rates have been creeping up slowly over the past few months. “The problem now is not the availability of money for projects but the cost of that money. The last thing the in-dustry needs in trying to recover is an increase in interest rates, and that is what we have been seeing,” he says.

Surprisingly, few construction execu-tives who participated in either the CICI or Confindex survey raised the issue of the federal budget debt-limit debate as an issue in the industry recovery. “I think that people have just become numb to the issue. Every September it comes up and is eventually resolved,” says Basu.

However, Binstock is frustrated at the non-stop political brinkmanship between Congress and the administration. “I think the industry is tired of Washington playing chicken with the economy.” n

How Different Types of FirmsView the Overall Market

SOURCE: MCGRAW HILL CONSTRUCTION RESEARCH & ANALYTICS / ENR.FIGURES MAY NOT ADD UP TO 100% DUE TO ROUNDING.

Improving DecliningStable

Designers

Present 3-6Months

12-18Months

3 Years

Subcontractors

Present 3-6Months

12-18Months

3 Years

General Contractors,Construction Managers,Engineer-Constructors

46% 36%

7% 11%

35%

10%

55%

37%

17%

46%

41%

14%

46%

48%

11% 7%

41%

55%

37%

43%

8%

49%

58%

6%

37%

55%

6%

38%

11%

49%

39%

11%

44%

45%

8%

37%

55%

7%

38%

54%

47% 53%

33% 39%

8% 8%

59% 53%

Present 3-6Months

12-18Months

3 Years

All Firms

Present 3-6Months

12-18Months

3 Years

63U.S. ECONOMY’S CICI RATING, which is four points lower than the CICI survey participants’ level of optimism about the construction market.

Unemployment Rates Decline, Opening Door for Wage Hikes Construction recovery leads to modest wage gains for union and merit-shop workers

A s the construction industry outlook gradually improves, craft workers are starting to see modest improve-

ments in their compensation. However, in light of continuing concerns over ailing pension funds and rising health-care costs, many union laborers are getting meager wage increases in their checks.

Carey Peters, executive director of the Construction Labor Research Council, says that, this year, union labor “continues to see a modest upward trend in compen-sation increases.” Based on agreements through this past August, total compensa-tion for union labor was up by 2.2% nationwide—an average of $1.10, accord-ing to the Construction Labor Research Council. That increase is on par with 2012 settlements, which averaged 2%—or 88¢—for the year. That uptick marked a reversal of a three-year decline from the peak of 4.6% in 2008.

Peters notes that, this year, most regions of the country are seeing similar increases, with the Northwest at the low end, at 1.7%, and the North Central region having the highest average, at 2.3%. Further, different crafts are seeing little variance in settlements, all falling within a narrow range of 2.1% to 2.5% nationwide.

Peters also notes that unions and em-ployers are agreeing to longer settlement terms, suggesting greater confidence in the market going forward. Through August, 43% of settlements in 2013 were one-year agreements, down from a peak of 68% in 2011. “This all suggests that both parties are more confident in the economy and the future,” he says.

The upward trend for union labor mirrors improved compensation for merit-shop labor. Eight percent of

companies reported that they plan to freeze wages this year, according to the 2013 Merit Shop Wage and Benefit Sur-vey compiled by Personnel Administra-tion Services, Saline, Mich. That marks a continued slide, from 12% wage freezes last year, 18% in 2011, 33% in 2010 and 42% in 2009. “All good indications are that contractors are feeling the need to do something for their employees,” says

Jeff Robinson, president of PAS.Wages for all journeymen rose 2.7%

from 2012 to 2013, according to the sur-vey. But Robinson says that statistic is skewed by much higher increases in crafts that work in very active sectors, such as heavy industrial construction, heavy civil, petrochemical and shipbuilding. For ex-ample, between 2012 and 2013, welders’ wages rose by 7.8%, plumbers’ by 9.6%,

By Bruce Buckley

3Q COST REPORT LABOR

OPEN-SHOP WAGE RATE FOR JOURNEYMEN

LOCATION

BRICKLAYERS CARPENTERS CEMENT MASONS ELECTRICIANS

RATE($)

RATE($)

RATE($)

RATE($)

FRINGE%

FRINGE%

FRINGE%

FRINGE%

LOCATION

HVY. EQUIP. OPERATOR LABORERS PLUMBERS IRONWORKERS

RATE($)

RATE($)

RATE($)

RATE($)

FRINGE%

FRINGE%

FRINGE%

FRINGE%

SOURCE: PERSONNEL ADMINISTRATION SERVICES INC., SALINE, MICH. WAGE RATES SHOWN ARE AVERAGE HOURLY BASE RATES EXCLUDING FRINGES. BASE. 1CONN., MASS., MAINE, N.H., R.I., VT., 2DEL., MD., PA., W.VA., D.C. 3ALA., FLA., GA., KY., MISS., N.C., S.C., TENN., 4ILL., IND., MICH., MINN., OHIO, WIS., 5ARK., LA., N.M., OKLA., TEXAS, 6IOWA, KAN., MO., NEB., 7COLO., MONT., N.D., S.D., UTAH, WYO., 8ARI., CALIF., HAWAII, NEV., 9ALASKA, IDAHO, ORE., WASH.

NEW ENGLAND1 25.58 21.2 15.23 18.4 25.75 22.0 26.75 21.4

NEW YORK / NEW JERSEY 28.21 22.9 14.78 19.0 26.52 17.8 26.10 21.6

MID-ATLANTIC2 26.98 20.7 14.42 18.3 24.89 18.6 26.67 20.4

SOUTHEAST3 24.85 17.9 13.61 16.8 20.31 21.6 24.88 18.0

GREAT LAKES4 25.66 20.2 16.84 18.4 26.87 20.6 25.00 21.6

SOUTH CENTRAL5 25.70 18.8 14.28 17.9 22.33 20.8 25.0 19.1

CENTRAL6 25.03 18.9 15.23 18.4 26.38 21.0 24.24 20.7

CENTRAL MOUNTAIN7 25.30 17.8 14.78 16.8 26.38 21.0 25.07 17.3

WESTERN8 26.43 20.8 15.58 18.1 --- --- 25.22 19.8

NORTHWEST9 24.59 18.1 16.48 17.7 27.01 24.5 27.26 19.6

2013 U.S. AVERAGE 21.85 19.5 13.22 17.9 21.8 20.9 24.2 19.9

ANNUAL PERCENT CHANGE +3.3 — +3.2 — +3.1 — +3.4 —

NEW ENGLAND1 27.63 26.0 22.60 22.1 22.99 21.2 25.71 21.5

NEW YORK / NEW JERSEY 26.32 14.5 22.96 22.4 20.61 17.8 25.93 20.3

MID-ATLANTIC2 --- --- 22.64 21.8 23.09 18.9 24.13 20.6

SOUTHEAST3 21.63 20.4 20.64 19.3 21.11 19.8 23.32 19.6

GREAT LAKES4 23.11 20.9 22.30 20.3 22.59 19.6 24.32 21.9

SOUTH CENTRAL5 22.64 21.0 20.96 20.0 21.39 19.6 25.00 20.1

CENTRAL6 21.28 16.7 21.06 20.4 20.09 19.0 24.84 23.2

CENTRAL MOUNTAIN7 21.94 15.0 21.34 18.4 21.59 17.5 25.97 16.7

WESTERN8 21.55 22.0 22.07 20.4 21.63 20.4 25.25 19.5

NORTHWEST9 --- --- 22.59 17.6 22.09 18.3 28.74 18.6

2013 U.S. AVERAGE 20.48 17.2 19.00 19.8 19.39 18.9 22.57 20.7

ANNUAL PERCENT CHANGE +2.8 — +3.2 — +2.9 — +3.4 —


pipefitters’ by 6.2% and structural iron-workers’ by 12%. “If there were large increases in these crafts, some of the civil trades obviously experienced low changes of, say, 1% to 2%, from 2012 to 2013, to maintain that 2.7% overall,” he says.

While merit-shop labor is seeing some wage improvements, many union workers continue to see health and pension demands gobble up much of what would otherwise go on their checks.

Ed Kommers, executive director of MCA of Western Washington, Seattle, says that, through the recession, local plumbers and pipefitters saw modest increases go to benefits, while wages were held down.

“We were balancing the pressures of increased costs to benefit plans versus the inability of the market to absorb a higher cost of labor,” Kommers says.

As plumbers and pipefitters head into negotiations for a new agreement in May, Kommers says he expects wages to be a significant sticking point. “The employ-ers, along with the unions, can’t keep

putting everything on the benefit side be-cause there is inflation,” he says. “People need to get money on their checks, especially if they are not getting the hours they used to get.”

Other regions are seeing a similar trend. In May, the Carpenters’ District Council and the Builders’ Association, both of Kansas City, Mo., agreed to a five-year agreement that offers a 2.25% increase for the total package. The first-year increase of 75¢ was allocated entirely to benefits: 25¢ for the health-and-welfare fund and 50¢ for the pension fund.

In addition, the carpenters union agreed to a definition of “residential/light commercial” work, with lower compensa-tion rates for those sector workers.

“The settlement is essentially a fringe fund increase and gets us to the parity that we’re needing,” says Don Greenwell, president of the Builders’ Association.

For the New England Regional Coun-cil of Carpenters, the union continues to focus much of its attention on benefits. The carpenters are proposing to merge

pension funds in the hopes of realizing some economies of scale, says Mark Erlich, executive secretary-treasurer. He estimates the plan could save up to $1 mil-lion in fund fees.

Meanwhile, Erlich says the carpenters union is monitoring the possible effects of the Affordable Care Act on health plans. “There’s a lot of uncertainty about what the ultimate impact of ACA will be,” he says. “Our health plans have good re-serves, but now there is concern that there may be unfunded mandates.”

Erlich says that while metro areas such as Boston are “booming” as they come out of the recession, he expects that future agreements in the region will follow the national trend of gradual increases.

“Even though the market is heating up, you won’t see dramatic compensation increases,” he says. “People are cautious coming out of the recession. The good news is that health funds and pensions are in better shape than they were. We’ve emerged from the crisis, and we’re pretty optimistic about the future.”


+2.2WAGE INCREASE. Estimated average annual wage increase for union workers in 2013, according to CLRC.

BRICKLAYERS 48.48 +2.1 27.60 0.0 35.91 0.0 31.70 0.0 74.43 0.0 62.18 0.0 37.80 0.0

CARPENTERS 49.36 +2.0 31.51 0.0 38.98 0.0 32.81 +6.7 67.10 +7.5 69.52 0.0 39.65 +0.6

CEMENT MASONS 45.72 +1.8 28.34 0.0 34.25 +3.0 25.87 0.0 74.43 0.0 65.51 0.0 33.85 +0.7

ELECTRICIANS 55.73 +2.0 37.12 +0.1 49.80 0.0 32.00 +8.7 71.25 +2.2 69.54 +0.1 41.96 0.0

ELEVATOR CONSTRUCTORS 69.63 +4.5 61.72 +3.0 66.58 0.0 47.98 0.0 76.61 +3.0 74.57 +0.4 60.70 0.0

GLAZIERS 47.90 +2.6 29.80 +1.0 46.12 0.0 22.45 0.0 60.70 0.0 72.57 +7.6 42.67 0.0

INSULATION WORKERS 55.01 +4.2 0.0 NA 50.40 +4.3 35.75 +2.9 64.04 +3.6 70.80 +2.7 42.62 +1.9

IRONWORKERS REINFORCING 53.25 +1.0 33.92 0.0 46.12 0.0 34.59 0.0 67.94 +0.3 76.06 +2.4 45.08 +1.8

STRUCTURAL 54.15 +1.2 37.51 0.0 46.12 0.0 34.59 0.0 67.94 +0.3 75.81 +2.0 45.08 +1.8

LABORERS BUILDING 38.88 +3.8 22.05 +2.0 24.60 0.0 24.66 +6.3 52.70 +3.7 58.77 0.0 32.70 +0.8

HEAVY AND HIGHWAY 39.57 +3.3 19.62 0.0 24.60 +9.7 24.47 +3.2 52.95 +2.7 58.77 0.0 35.27 0.0

MILLWRIGHTS 51.87 +2.9 34.37 0.0 48.12 NA 33.05 0.0 58.57 0.0 69.52 0.0 45.20 +2.1

OPERATING ENGINEERS CRANE OPERATORS 51.76 +1.8 37.60 0.0 44.91 0.0 25.76 0.0 64.73 +2.2 72.33 0.0 43.84 +0.6

HEAVY EQUIPMENT 50.14 +1.9 0.0 NA 40.15 0.0 24.46 0.0 64.35 +2.2 71.03 0.0 43.72 +2.5

SMALL EQUIPMENT 47.64 +2.2 0.0 NA 34.77 0.0 23.94 0.0 52.58 +1.9 68.48 0.0 42.68 +2.5

PAINTERS 44.45 +1.1 32.23 0.0 40.03 0.0 24.10 +1.3 65.41 0.0 63.39 +5.1 31.80 +1.1

PIPEFITTERS 58.18 +3.7 42.46 0.0 53.62 +1.5 37.09 +1.8 72.26 +2.8 70.53 +0.6 46.81 +1.7

PLASTERERS 45.83 +1.7 28.09 0.0 34.28 0.0 25.11 0.0 74.43 0.0 65.46 +2.2 33.30 +0.8

PLUMBERS 58.07 +1.8 42.46 +1.9 53.62 +1.5 37.09 +1.8 69.32 0.0 70.87 +1.1 46.81 +1.7

ROOFERS 44.32 +2.2 25.57 0.0 39.55 0.0 32.18 0.0 58.43 +3.5 56.22 +1.4 38.81 +8.5

SHEET-METAL WORKERS 57.00 +2.0 43.11 0.0 46.84 0.0 35.13 0.0 69.62 0.0 69.98 0.0 44.92 +5.3

TEAMSTERS 41.99 +1.4 0.0 NA 48.39 0.0 20.82 0.0 47.37 +0.6 56.64 0.0 36.92 0.0

HOURLY UNION PAY SCALES BY CITY, SEPTEMBER 2013 20-CITY AVG. BALTIMORE BOSTONATLANTA BIRMINGHAM CHICAGO CINCINNATI

RATE RATE RATE RATE RATE RATE RATE% CHG. % CHG. % CHG. % CHG. % CHG. % CHG. % CHG.

SOURCE: ENR CONSTRUCTION / ECONOMICS DEPT. RATE PER HOUR INCLUDES BASE RATE PLUS FRINGE BENEFITS; NA=NOT AVAILABLE.



BRICKLAYERS 27.57 +2.8 75.94 +3.0 58.46 +2.3 49.18 +1.9 50.53 0.0 66.00 +6.7 48.67 +2.5

CARPENTERS 31.54 0.0 81.35 +3.0 64.84 +1.2 43.90 +1.6 46.39 +2.0 66.12 +6.1 49.57 +1.9

CEMENT MASONS 29.74 +6.6 66.58 0.0 61.41 +3.6 42.49 +1.8 47.03 +1.0 52.11 NA 51.18 +2.1

ELECTRICIANS 37.74 +1.8 79.16 0.0 78.95 +3.0 55.14 0.0 55.97 0.0 84.11 NA 59.85 +0.6

ELEVATOR CONSTRUCTORS NA NA 66.43 0.0 75.03 +3.0 70.80 NA 68.89 +3.0 88.58 NA 74.21 +5.9

GLAZIERS 26.44 0.0 61.76 0.0 63.50 +5.8 47.10 0.0 60.12 +1.7 64.60 +5.7 53.65 +1.9

INSULATION WORKERS 28.55 0.0 68.76 0.0 70.69 +2.2 45.85 0.0 55.57 NA 73.37 +9.2 56.81 +3.7

IRONWORKERS REINFORCING 27.72 +0.7 76.85 0.0 71.85 0.0 56.70 +7.5 54.22 0.0 60.84 +1.3 59.49 +1.2

STRUCTURAL 27.72 +0.7 94.85 +1.7 72.85 0.0 56.70 +7.5 49.11 +1.2 60.84 +1.3 59.49 +1.2

LABORERS BUILDING 19.94 0.0 68.29 +8.7 48.70 0.0 33.51 +5.7 41.49 +4.9 45.33 +6.1 41.61 +9.2

HEAVY AND HIGHWAY 19.94 0.0 68.29 +8.7 48.90 0.0 33.51 +5.7 41.49 0.0 45.33 +6.1 41.61 +9.2

MILLWRIGHTS 35.30 NA 74.08 0.0 63.99 +2.2 52.55 +3.6 42.01 +5.5 70.39 NA 50.67 +2.4

OPERATING ENGINEERS CRANE OPERATORS 34.10 0.0 82.15 0.0 66.36 +2.2 45.53 0.0 50.47 0.0 67.93 NA 52.44 +1.8

HEAVY EQUIPMENT 33.10 0.0 80.15 0.0 70.25 +2.1 47.29 0.0 37.95 0.0 67.93 NA NA NA

SMALL EQUIPMENT 32.50 0.0 79.15 0.0 66.04 +2.2 34.13 0.0 50.47 0.0 60.90 NA NA NA

PAINTERS 24.32 0.0 53.51 0.0 65.83 0.0 44.60 +1.0 48.10 +0.1 58.12 +5.0 39.40 0.0

PIPEFITTERS 40.08 +0.4 77.32 0.0 75.76 +6.5 55.47 NA 59.28 +7.0 53.12 0.0 74.51 0.0

PLASTERERS 27.30 0.0 58.56 0.0 58.75 0.0 39.18 +0.1 40.48 0.0 60.99 +7.5 51.18 +6.7

PLUMBERS 37.85 +1.5 73.45 0.0 73.74 +3.1 54.92 +2.1 59.28 +3.2 83.44 0.0 74.51 0.0

ROOFERS 25.63 0.0 56.12 0.0 57.50 +8.9 40.77 0.0 51.10 0.0 47.92 +8.5 43.88 +0.5

SHEET-METAL WORKERS 38.33 +8.8 73.18 0.0 72.08 0.0 57.04 0.0 57.06 0.0 88.14 NA 66.93 +0.7

TEAMSTERS 28.36 0.0 59.21 0.0 42.99 +5.4 29.04 0.0 NA NA 50.57 +7.3 47.91 0.0

HOURLY UNION PAY SCALES BY CITY, SEPTEMBER 2013 NEW ORLEANS PHILADELPHIA ST. LOUISNEW YORK PITTSBURGH SAN FRANCISCO SEATTLE


HOURLY UNION PAY SCALES BY CITY, SEPTEMBER 2013 CLEVELAND DENVER KANSAS CITYDALLAS DETROIT LOS ANGELES MINNEAPOLIS


SOURCES: ENR CONSTRUCTION ECONOMICS DEPT., RATE PER HOUR INCLUDES BASE RATE PLUS FRINGE BENEFITS: NA=NOT AVALILABLE

BRICKLAYERS 51.16 +1.5 33.69 NA 32.69 0.0 52.16 +2.3 53.19 0.0 50.46 +1.4 50.26 +2.0

CARPENTERS 43.87 0.0 32.10 +0.3 36.24 0.0 52.30 +2.3 55.13 0.0 51.99 +1.0 52.35 +2.0

CEMENT MASONS 44.70 +1.9 26.48 0.0 34.70 0.0 46.08 0.0 48.55 0.0 52.11 +5.3 48.91 0.0

ELECTRICIANS 55.29 +1.9 35.35 0.0 44.63 +1.0 61.30 0.0 49.54 0.0 63.72 +6.9 52.15 0.0

ELEVATOR CONSTRUCTORS NA NA NA NA 65.28 +3.8 70.40 +8.9 NA NA 77.46 NA 68.76 +3.0

GLAZIERS 49.64 NA 23.50 0.0 36.19 +2.7 46.21 +1.1 41.92 0.0 59.39 +2.5 49.70 +2.0

INSULATION WORKERS 53.78 +3.6 NA NA 43.01 +3.0 59.05 +7.5 52.89 0.0 53.30 NA 64.93 0.0

IRONWORKERS REINFORCING 49.08 0.0 32.15 0.0 41.87 0.0 57.89 +0.7 55.50 +2.5 61.87 0.0 55.35 0.0

STRUCTURAL 50.39 +1.5 32.15 0.0 41.87 0.0 57.62 +0.3 55.50 +2.5 61.87 0.0 54.96 +1.0

LABORERS BUILDING 41.32 NA 18.09 0.0 25.97 0.0 42.44 +0.1 43.93 0.0 47.43 NA 43.99 0.0

HEAVY AND HIGHWAY 52.55 0.0 18.09 0.0 25.97 0.0 42.44 +0.1 43.93 0.0 47.43 NA 46.29 +5.2

MILLWRIGHTS 51.29 0.0 NA NA 40.05 0.0 58.81 NA 51.50 0.0 52.49 +5.0 53.56 0.0

OPERATING ENGINEERS CRANE OPERATORS 48.38 0.0 34.05 0.0 34.10 0.0 63.72 +3.8 53.80 0.0 61.90 +8.2 51.14 0.0

HEAVY EQUIPMENT 49.45 +0.9 34.05 0.0 33.34 0.0 NA NA 43.81 0.0 61.90 +8.2 49.49 0.0

SMALL EQUIPMENT 45.04 +5.3 33.05 0.0 33.19 0.0 NA NA 43.07 0.0 61.45 +8.2 48.40 0.0

PAINTERS 39.63 0.0 NA NA 32.05 0.0 47.34 0.0 43.28 +0.9 41.27 +4.8 50.20 0.0

PIPEFITTERS 56.92 0.0 43.94 0.0 49.87 0.0 64.66 +2.6 58.30 +3.3 64.41 NA 65.09 +4.9

PLASTERERS 43.30 +1.4 NA NA 34.70 0.0 44.99 0.0 45.65 0.0 50.70 +5.7 54.30 +4.6

PLUMBERS 45.78 0.0 39.79 +3.0 49.87 0.0 62.86 +2.4 57.54 +1.0 64.41 NA 63.86 0.0

ROOFERS 44.78 +3.4 NA NA 26.63 0.0 52.89 0.0 48.86 0.0 46.52 +5.6 48.74 0.0

SHEET-METAL WORKERS 54.93 0.0 37.46 0.0 43.87 0.0 61.43 +0.1 56.50 0.0 64.42 +6.4 59.00 0.0

TEAMSTERS 39.25 0.0 NA NA 23.63 NA NA NA 42.20 0.0 50.31 +7.6 48.29 0.0



MILWAUKEE PORTLAND, ORE. SAN DIEGOPHOENIX SAN ANTONIO SYRACUSE WASHINGTON, D.C.


ALEXANDRIA BUFFALO HOUSTONALLENTOWN COLUMBUS INDIANAPOLIS MEMPHIS


HOURLY UNION PAY SCALES BY CITY, SEPTEMBER 2013

HOURLY UNION PAY SCALES BY CITY, SEPTEMBER 2013

SOURCES: R.S. MEANS CO. INC., RATE PER HOUR INCLUDES BASE RATE PLUS FRINGE BENEFITS: NA=NOT AVALILABLE

BRICKLAYERS 54.02 +0.9 31.61 0.0 50.32 0.0 33.69 0.0 49.75 +5.0 46.98 0.0 36.20 +1.5

CARPENTERS 55.44 0.0 32.24 +2.2 47.20 +2.1 24.77 0.0 50.13 +4.2 41.45 +3.2 34.94 +1.5

CEMENT MASONS 50.17 +0.8 31.41 0.0 47.74 0.0 27.57 0.0 43.35 0.0 46.56 0.0 36.73 0.0

ELECTRICIANS 55.33 +2.0 37.18 0.0 56.49 +3.7 32.20 +1.6 52.47 +3.6 54.42 +3.3 55.07 +1.9

ELEVATOR CONSTRUCTORS 71.86 +0.8 66.45 +0.3 75.58 0.0 63.95 +1.0 80.07 +4.2 69.30 +2.3 70.83 +3.7

GLAZIERS 52.44 0.0 33.78 +0.3 49.69 +3.8 24.80 +2.5 56.15 +3.2 27.92 0.0 37.75 0.0

INSULATION WORKERS 59.24 +3.6 50.68 +1.0 55.87 +2.0 29.94 +4.8 53.30 +3.9 48.48 +3.6 46.73 +0.5

IRONWORKERS

REINFORCING 53.76 0.0 48.16 +0.8 55.47 +1.4 25.72 +3.1 60.84 +1.3 49.35 +4.7 46.04 +2.2

STRUCTURAL 53.76 0.0 48.16 +0.8 55.47 +1.4 25.72 +3.1 60.84 +1.3 49.35 +4.7 46.04 +2.2

LABORERS

BUILDING 45.10 +1.1 23.71 +5.3 38.36 0.0 21.53 0.0 44.52 +2.9 38.47 +3.4 28.34 +3.6

HEAVY AND HIGHWAY 45.10 +1.1 23.71 +5.3 38.36 0.0 21.53 0.0 44.52 +2.9 38.47 +3.4 28.34 +3.6

MILLWRIGHTS 53.72 +1.4 24.43 0.0 47.55 +2.9 28.64 0.0 50.79 +2.0 38.91 +0.1 40.16 0.0

OPERATING ENGINEERS

CRANE OPERATORS 59.18 +2.0 37.12 0.0 48.51 +1.7 38.50 0.0 61.78 +7.9 53.53 +3.5 41.01 +2.6

HEAVY EQUIPMENT 59.18 +2.0 37.12 0.0 48.51 +1.7 38.50 0.0 61.78 0.0 53.53 +3.5 41.01 +2.6

SMALL EQUIPMENT 56.11 +2.3 36.09 0.0 46.43 +3.3 33.22 0.0 59.96 0.0 51.65 +3.7 37.79 0.0

PAINTERS 51.56 +1.2 26.65 0.0 26.83 0.0 22.37 0.0 40.52 0.0 40.19 +2.8 34.49 0.0

PIPEFITTERS 59.17 +1.9 50.60 +0.6 61.81 NA 39.13 +3.0 64.41 +4.1 52.43 +2.7 55.69 +1.5

PLASTERERS 50.23 +0.8 31.41 +1.0 47.74 NA 24.35 0.0 50.20 +1.0 40.27 0.0 36.73 0.0

PLUMBERS 55.94 +2.4 50.60 +0.6 61.81 NA 39.13 +0.6 64.41 +4.1 52.43 +2.7 53.92 0.0

ROOFERS 46.56 +3.3 21.91 NA 37.58 +2.7 23.03 0.0 32.36 0.0 41.57 0.0 37.08 +4.2

SHEET-METAL WORKERS 55.97 +2.6 46.46 +2.7 51.42 0.0 38.93 +1.3 56.23 +2.7 45.13 +1.1 55.31 +1.5

TEAMSTERS 48.50 +3.4 28.50 NA 41.74 +2.9 31.48 0.0 46.39 0.0 36.74 0.0 20.02 0.0

BRICKLAYERS 36.20 +1.5 45.25 0.0 51.38 +2.8 42.57 +2.9 32.92 +1.4 39.98 0.0 32.50 0.0

CARPENTERS 33.44 0.0 54.18 +1.1 55.02 +2.9 38.84 0.0 31.42 +3.6 43.86 +2.1 31.54 +3.0

CEMENT MASONS 36.73 0.0 47.53 NA 53.72 +2.3 40.83 NA 27.77 +0.7 38.00 0.0 25.20 0.0

ELECTRICIANS 54.30 +0.5 52.96 +1.0 56.70 +4.3 46.18 +3.7 35.78 +0.4 50.04 +2.9 35.76 +2.2

ELEVATOR CONSTRUCTORS 68.35 +0.1 71.44 +2.3 72.16 +0.8 71.21 +4.9 65.91 +1.2 70.55 +0.1 65.28 +1.2

GLAZIERS 37.25 +4.2 45.54 +4.0 42.07 +1.5 33.62 +2.1 25.53 0.0 38.68 0.0 22.49 0.0

INSULATION WORKERS 46.73 +0.5 54.71 +1.9 49.64 +3.5 40.87 +3.4 29.19 0.0 46.68 +1.9 34.83 +6.7

IRONWORKERS

REINFORCING 46.04 +3.3 57.55 0.0 52.30 +1.8 45.36 +1.7 33.50 0.0 47.99 +2.1 34.11 0.0

STRUCTURAL 46.04 +3.3 57.55 0.0 52.30 +1.8 45.36 +1.7 33.50 0.0 47.99 +2.1 34.11 0.0

LABORERS

BUILDING 27.35 0.0 38.84 +1.2 48.28 +3.5 34.79 0.0 22.54 +4.4 34.63 +1.6 20.50 +4.9

HEAVY AND HIGHWAY 27.35 0.0 38.84 +1.2 48.28 +3.5 34.79 0.0 22.54 +4.4 34.63 +1.6 20.50 +4.9

MILLWRIGHTS 40.16 +3.5 59.97 +2.5 56.37 +2.8 45.65 0.0 40.10 +2.3 43.86 +2.1 35.01 NA

OPERATING ENGINEERS

CRANE OPERATORS 40.85 +2.2 53.82 0.0 59.48 0.0 44.99 +2.6 38.75 NA 46.23 +2.4 32.82 0.0

HEAVY EQUIPMENT 40.85 +2.2 53.82 0.0 59.48 0.0 44.99 +2.6 38.75 NA 46.23 +2.4 32.82 0.0

SMALL EQUIPMENT 40.10 NA 53.34 NA 58.65 0.0 43.83 +2.7 35.60 NA 41.23 +2.7 32.82 0.0

PAINTERS 42.50 0.0 26.87 0.0 46.37 +4.1 34.81 +0.6 25.71 +3.3 36.13 +1.3 22.66 +4.6

PIPEFITTERS 55.69 +1.5 68.97 +5.2 53.23 +3.5 53.37 0.0 39.79 +2.6 49.01 +1.1 43.72 +2.9

PLASTERERS 36.73 0.0 47.54 NA 48.58 0.0 38.60 0.0 21.98 0.0 37.52 0.0 25.20 0.0

PLUMBERS 53.92 +0.5 64.74 +3.5 53.23 +3.5 53.37 0.0 39.79 +2.1 49.01 +1.1 36.32 0.0

ROOFERS 37.08 +4.2 57.50 +2.9 43.45 +1.8 39.05 +3.0 27.90 +4.6 34.00 0.0 21.78 0.0

SHEET-METAL WORKERS 55.31 +1.5 60.66 +3.9 51.50 0.0 47.79 +2.6 37.46 +4.3 48.23 0.0 39.93 0.0

TEAMSTERS 20.02 0.0 22.39 0.0 41.54 0.0 38.94 +2.4 34.85 NA 39.87 +3.0 15.62 0.0


Insurance for workers’ compensation is getting pricier amid skyrocketing med-ical costs, industry losses and a revised

experience rating from the National Council on Compensation Insurance that doubles split-point calculations, or cutoff thresholds, for claims, to $10,000 from $5,000 in 2013. Eventually, that split point will climb to $15,000 in 2015. The new formula skews costs for workers’ compensation more toward the frequency of accidents than their severity.

“A change to the experience rating was necessary,” says Tom Boudreau, vice pres-ident of The Hartford’s construction practice. “But the challenging economic environment for the construction indus-try means there needs to be even greater emphasis on business planning going forward, as changes to a contractor’s insurance costs may impact its ability to compete for projects,” Boudreau says.

As a result, contractors face mounting pressure to remain accident-free since owners and bonding companies rely upon experience-modification factors for judg-ing skill, risk, performance and liability. An experience-modification rate of 1.0 is considered the industry average, despite formula revisions. Additionally, experi-ence-modification factors are used as project prequalifiers, driving greater investment into safety programs and more unreported out-of-pocket claim settle-ments to keep ratings and premiums low.

“Contractors can expect a 10% to 25% premium rate increase next year due to underwriter losses and medical industry costs,” says Jeffrey W. Cavignac, president of Cavignac & Associates, San Diego. “Ultimately, through the experience modification, you will pay for your actual claims.”

The bill won’t be cheap. The explosive popularity of medical treatments and pre-scription drugs as stopgap solutions for persistent health issues, including obesity and diabetes, and detrimental lifestyle

choices have tripled average client costs over the past 20 years, says the NCCI.

“Jobsite opiate and legal prescription drug use is a big issue,” says Karen Keniff, head of large construction for Zurich North America. “It can lead workers to harm themselves and others.”

“We see an increase in workers’ cost claims when economic recovery begins,” Keniff says. “That is always prevalent.” A greater demand for labor and a growing sense of job security could mean more contractor claims since, fearing employer reprisal, many workers did not report in-juries during the recession, she says. Fur-ther, a higher incident rate exists among new hires during their first 60 days on the job, and Keniff expects to see more of these types of claims as the construction industry rebuilds its workforce.

A maturing workforce only exacer-bates those problems. The average age of construction workers jumped to 41.5 years old from 36 years old between 1985 and 2010, reports the Center for Con-struction Research and Training.

“As construction companies utilize an aging workforce, we expect a greater frequency in medical claims, as opposed to indemnity, as a proportion of workers,” says Joseph Russo, senior vice president of Aon Risk Services’ construction group. “Contractors who do not manage the claims and push for settlements will get hurt.”

Indeed, a demographic shift in the labor force could spell trouble. Senior workers and new, inexperienced hires can present potential jobsite risks that result in costly claims, says Russo.

For example, over the past three years, there has been an exodus of experienced construction workers, and during the on-going recovery, the industry has been able to hire back only about a third of those that left, says Kenneth D. Simonson, Associated General Contractors of Amer-ica chief economist. n

3Q COST REPORT INSURANCE

Comp Costs RiseBy Tony Illia

enr.com September 30, 2013 n ENR n 11

CARPENTRY Detachedone-andtwo-familydwellings 14.89 12.57 13.25 17.74 11.80 20.03 18.69 15.75 16.63 20.66 22.33 20.50 12.62 10.17 29.38 18.24 22.98 7.98 13.92 11.58 11.05 16.37 Dwellings:threestoriesorless 15.05 12.57 13.25 17.74 11.80 20.03 15.50 15.75 12.28 18.77 20.09 20.50 16.17 10.78 20.52 18.24 21.59 7.98 12.93 13.40 7.41 11.59 Installationofcabinetwork,interiortrim 15.46 6.63 6.38 11.51 9.01 10.50 13.18 5.88 10.51 8.49 10.74 7.52 10.89 11.05 13.30 13.48 10.49 6.58 5.71 11.39 6.14 12.19 CONCRETE Work:floor,yardorsidewalks 10.15 5.33 6.35 14.47 6.16 10.96 14.30 6.31 23.31 5.71 10.94 7.67 15.93 9.05 8.90 12.18 5.94 7.10 4.52 13.92 3.86 15.29 Constructionconnectionwithbridgesorculverts 20.62 7.74 10.76 18.47 7.53 11.49 21.02 8.27 25.97 16.23 13.78 15.26 12.56 14.89 16.20 17.77 15.35 7.10 5.62 12.13 8.15 13.56 ELECTRICAL WIRING WITHIN BUILDING 4.33 3.63 4.10 7.21 4.50 5.15 5.13 4.68 7.69 7.52 7.60 4.70 6.21 4.49 9.11 4.47 5.87 4.68 3.20 3.97 3.49 5.40 EXCAVATION ROCK EXCAVATION AND DRIVER 8.17 7.23 6.61 13.03 8.79 11.42 10.83 4.59 11.90 10.64 12.05 8.60 9.33 9.52 10.73 8.50 11.40 6.25 7.05 9.35 5.64 7.88 GRADING OF LAND NOC AND DRIVER 8.17 7.23 6.61 13.03 8.79 11.42 10.83 4.59 11.90 10.64 12.05 8.60 9.33 9.52 10.73 8.50 11.40 6.25 7.05 9.35 5.64 7.88 GLAZIER, AWAY FROM SHOP 27.36 8.92 6.41 14.26 7.00 11.94 11.21 7.59 18.33 8.91 13.75 10.70 11.36 11.42 12.18 11.11 11.38 6.71 6.91 12.31 5.74 12.04 INSULATION WORK 17.59 6.08 7.66 16.48 10.99 12.17 12.63 6.87 10.65 9.38 13.50 10.51 12.92 15.09 11.64 12.82 10.17 8.59 5.89 12.51 5.22 12.28 LATHING AND DRIVING 7.99 3.32 4.40 7.89 4.60 6.65 15.13 4.00 12.59 6.02 6.20 6.01 11.84 5.49 7.88 5.75 7.13 3.97 5.22 5.35 5.61 4.23 PAINTING OR PAPERHANGING NOC AND SHOP 11.21 6.40 7.84 15.62 6.45 23.00 11.28 7.22 14.67 9.23 12.32 11.44 13.89 10.54 13.54 9.27 8.95 6.64 6.69 8.03 6.73 12.86 PILE-DRIVING 23.84 11.94 8.24 13.05 9.04 15.17 15.79 8.98 19.71 12.50 13.85 10.39 16.17 23.30 13.39 12.41 16.42 9.65 6.81 10.98 7.22 27.64 PLASTERING OR STUCCO WORK ON OUTSIDE OF BUILDING 11.58 8.34 9.96 14.64 10.46 16.25 18.71 9.67 20.79 9.06 16.86 12.62 12.56 9.96 12.79 11.51 12.01 7.02 7.36 12.40 5.56 15.07 PLUMBING NOC 6.23 5.70 5.92 9.10 5.45 9.64 6.96 4.40 10.60 7.04 7.82 5.60 7.87 6.41 7.62 8.25 5.58 4.55 3.50 7.81 3.94 6.29 ROOFING, ALL KINDS 50.27 22.15 23.13 55.91 19.57 35.19 40.10 23.93 35.21 27.50 26.18 23.63 31.69 21.55 39.51 9.68 31.16 14.33 20.80 23.56 19.14 26.71 SHEET-METAL WORK: SHOP AND OUTSIDE NOC 13.39 6.57 7.64 11.75 10.96 22.04 7.22 6.44 13.27 13.58 15.17 9.63 7.32 11.95 9.20 17.87 11.42 11.28 5.04 9.96 5.52 9.04 STEEL OR IRON ERECTION Doorsanddoorframeorsasherection—metal 7.50 8.68 7.78 13.26 7.56 10.37 29.15 7.56 18.84 9.10 12.25 6.87 8.77 6.74 12.99 11.37 11.19 5.89 5.09 9.28 5.58 11.42 Constructionofdwellingsnotovertwostories 65.35 57.56 41.55 79.73 56.04 90.11 32.89 48.90 84.85 61.36 107.74 22.66 24.86 63.04 77.23 79.35 52.97 17.78 31.28 74.77 33.50 23.59 Interiorcapworkreferencecarpenter—interior 15.43 6.63 6.38 12.53 9.01 10.50 12.03 5.88 10.51 8.49 10.74 7.52 10.89 11.27 13.30 13.48 10.55 6.58 5.71 9.93 6.83 12.19 Framestructures 80.31 20.02 29.02 35.58 25.79 112.53 17.25 34.68 34.52 43.56 36.46 19.64 24.86 32.07 33.19 34.35 20.02 24.75 22.66 40.07 22.97 20.66 Framestructuresnotovertwostoriesinheight 92.87 18.82 61.24 55.93 39.03 47.15 27.50 38.27 49.21 56.76 70.67 23.87 24.86 59.21 34.51 37.32 32.85 9.61 29.93 40.14 35.12 31.64 TILE WORK: CERAMIC, STONE, MOSAIC OR TERRAZZO 9.03 5.29 7.14 10.40 4.73 11.82 9.55 4.67 10.14 7.54 7.82 6.73 9.33 5.12 6.56 5.15 7.62 4.32 4.23 7.03 3.69 15.04 TIMEKEEPERS: CONSTRUCTION OR ERECTION 3.02 5.86 8.44 9.98 5.55 7.25 8.64 5.53 8.71 10.70 11.78 9.46 NA 4.43 10.24 7.65 6.25 NA 11.67 9.11 4.56 11.39 WATERPROOFING Brush-orhand-pressuredcaulking 11.21 6.40 7.84 15.62 6.45 23.00 11.07 7.22 14.67 9.23 12.32 11.44 13.89 10.33 13.54 9.27 8.91 6.64 6.69 7.93 7.28 12.86 Trowelinteriorofbuildings 8.20 6.74 7.57 12.93 7.86 10.16 14.39 9.12 9.81 10.51 18.88 9.31 11.84 8.74 13.26 9.12 11.29 6.64 5.04 8.29 5.52 10.08 WRECKING BUILDINGS OR STRUCTURES Concreteorconcrete-encasedbuildingsorstructures 8.60 6.57 7.37 11.82 10.96 22.80 15.51 7.82 23.21 13.58 14.84 9.22 15.93 14.66 9.20 15.81 11.70 7.10 6.52 10.28 7.55 11.25 Ironorsteelbuildingsorstructures 5.72 5.55 9.87 11.19 13.05 32.41 13.63 14.38 18.68 17.39 20.41 12.02 24.86 22.96 13.15 20.79 20.20 9.61 10.78 20.89 10.52 22.20

EFFECTIVEONAUG.30,2013CLASSIFICATIONOFWORK

COMPENSATION INSURANCE BASE

ALA.

MINN.EFFECTIVEONAUG.30,2013CLASSIFICATIONOFWORK

ARIZ. ARK. CALIF. COLO. CONN. DEL. D.C. FLA. GA. HAWAII IDAHO ILL. IND. IOWA KAN. KY. LA. MAINE MD. MASS. MICH.ALASKA

NEB. N.H. N.J. N.M. N.Y. N.C. OKLA. ORE. PA. R.I. S.C. S.D. TENN. TEXAS UTAH VT. VA. WIS.MISS. MO. MONT.

RATES

CARPENTRY Detachedone-andtwo-familydwellings 18.54 13.95 15.85 9.60 26.81 12.56 22.30 8.86 7.31 14.54 41.19 7.59 14.63 28.72 8.25 10.22 13.52 19.90 17.54 13.71 12.75 8.68 16.53 Dwellings:threestoriesorless 18.29 15.80 13.84 9.42 26.81 12.56 22.30 11.36 7.31 9.33 34.80 7.59 12.77 27.33 8.88 10.22 13.52 13.60 12.96 12.66 12.75 8.68 15.40 INSTALLATION OF CABINET WORK, INTERIOR TRIM 8.19 9.61 6.88 3.57 00.00 6.91 14.33 6.53 5.65 8.00 11.78 5.93 6.84 18.75 4.41 8.57 5.84 10.41 10.02 9.89 9.96 5.23 9.48 CONCRETE Work:floor,yardorsidewalks 5.88 9.66 4.01 4.08 8.92 9.49 13.10 9.38 5.70 14.04 10.42 5.62 5.99 13.91 5.18 7.66 5.79 7.56 5.32 7.38 6.08 5.33 13.50 Constructionconnectionwithbridgesorculvert 12.99 9.24 7.50 9.52 15.83 12.39 24.24 10.56 6.53 10.74 12.33 5.80 11.60 28.68 5.07 14.15 8.67 9.14 11.93 18.23 10.07 8.70 20.48 ELECTRICAL WIRING WITHIN BUILDING 4.23 5.73 4.50 3.02 10.20 4.09 6.54 3.98 3.19 5.65 6.49 4.11 3.88 8.65 2.84 4.47 4.67 5.65 5.24 5.79 5.85 2.84 4.67 EVACUATION Rockexcavationanddriver 7.35 8.36 5.24 5.12 14.33 7.70 12.35 7.01 7.18 6.59 10.11 4.61 7.25 12.51 4.41 6.88 4.64 9.30 9.42 10.74 8.09 4.35 11.14 GradingoflandNOC 7.35 8.36 5.24 5.12 14.33 7.70 12.35 7.01 7.18 6.59 10.11 4.61 7.25 12.51 4.41 6.88 4.64 9.30 9.42 10.74 8.09 4.35 11.14 GLAZIER—AWAY FROM SHOP 8.74 32.61 8.00 6.11 18.55 8.41 16.86 8.82 9.34 9.56 11.17 7.54 9.01 22.02 5.60 9.20 8.14 14.44 9.97 14.96 10.68 9.58 9.50 INSULATION WORK 10.81 14.60 11.10 5.75 12.66 10.20 16.90 10.20 5.17 10.12 10.34 4.78 7.67 18.44 6.39 5.82 6.32 9.65 8.89 15.18 9.51 7.78 9.62 LATHING AND DRIVING 5.04 11.94 4.05 2.97 13.71 5.54 8.91 9.86 6.42 4.66 7.04 5.75 6.29 12.33 3.43 4.64 3.76 5.72 5.69 5.80 4.87 5.27 12.70 PAINTING OR PAPERHANGING NOC AND SHOP 8.67 10.99 9.47 5.56 18.12 7.93 15.35 11.89 4.66 8.86 17.72 5.68 8.43 16.00 4.61 6.76 7.28 13.38 10.03 14.72 8.94 5.09 9.74 PILE-DRIVING 10.12 22.07 8.00 7.11 17.83 9.23 16.83 13.73 12.38 NA 13.53 6.72 9.30 21.14 5.67 8.73 8.60 13.53 13.32 12.79 10.66 12.92 43.54 PLASTERING OR STUCCO WORK ON OUTSIDE OF BUILDING 12.97 11.05 9.64 6.22 19.29 11.63 25.02 10.56 7.78 9.77 18.58 6.44 10.55 24.94 4.69 8.40 7.06 7.68 11.56 10.97 9.78 10.55 13.48 PLUMBING: NOC 4.76 6.96 4.79 3.39 13.43 5.83 8.85 6.08 5.96 5.31 7.26 4.88 4.27 11.96 2.81 6.40 4.88 5.08 4.74 7.70 6.69 3.50 5.68 ROOFING, ALL KINDS 29.81 28.67 18.70 13.75 54.51 21.88 41.61 23.59 12.44 17.10 50.96 15.82 22.62 42.02 10.66 19.92 15.37 33.07 22.88 25.71 29.63 30.99 32.11 SHEET-METAL WORK: SHOP AND OUTSIDE NOC 8.09 11.50 7.03 4.47 14.44 8.91 17.86 5.76 8.96 11.45 11.62 6.26 11.76 35.68 5.25 12.72 7.13 10.99 11.43 16.31 12.11 5.72 9.22 STEEL OR IRON ERECTION Doorsanddoorframeorsasherection—metal 6.82 7.97 10.08 6.25 14.16 7.51 15.24 6.71 15.13 9.25 12.72 6.97 12.31 26.00 4.46 5.70 6.20 7.58 7.45 7.69 9.49 6.89 8.87 Constructionofdwellingsnotovertwostories 53.53 49.45 39.67 30.11 32.87 4.54 103.50 21.88 62.73 40.52 69.80 36.12 36.89 177.12 31.93 49.99 37.69 53.47 67.31 88.34 55.63 33.00 48.77 Interiorcapworkreferencecarpenter—interior 9.27 10.32 6.88 3.57 26.81 6.91 13.75 6.53 5.65 8.00 11.78 6.35 6.43 18.81 4.41 8.42 5.84 11.28 11.26 10.44 8.72 5.23 8.80 Framestructures 24.18 29.99 19.93 14.79 27.13 33.16 52.58 21.88 17.61 22.79 41.25 24.87 25.42 77.66 12.33 36.26 20.20 29.06 31.54 40.06 33.67 54.08 38.84 Framestructuresnotovertwostoriesinheight 32.71 44.09 38.24 18.60 32.87 33.00 71.63 21.88 24.03 57.01 59.42 29.11 28.17 56.95 17.84 43.15 35.29 69.68 53.05 57.72 87.21 33.00 63.46 TILE WORK: CERAMIC, STONE, MOSAIC OR TERRAZZO 7.18 5.42 2.99 4.71 11.24 5.76 12.06 7.08 5.89 5.25 7.67 5.98 6.84 21.95 3.07 6.70 5.86 12.05 5.03 6.21 6.21 5.81 8.58 TIMEKEEPERS: CONSTRUCTION OR ERECTION 9.49 7.97 5.67 4.08 2.27 7.84 11.77 NA 4.78 6.79 10.48 5.49 7.65 9.69 3.73 5.20 6.69 8.43 6.21 6.95 5.85 5.43 6.33 WATERPROOFING Brush-orhand-pressuredcaulking 10.50 10.99 9.47 5.56 18.12 9.20 16.01 11.89 4.66 8.86 17.72 6.16 8.43 15.44 4.61 6.76 7.28 13.38 11.78 14.72 8.94 5.09 9.74 Trowel:interiorofbuildings 9.32 11.51 6.40 9.96 26.92 7.98 14.78 9.86 6.82 10.48 11.74 6.48 10.73 27.62 3.47 10.98 5.56 9.39 7.63 11.26 7.76 4.68 7.60 WRECKING BUILDING OR STRUCTURES Concreteorconcrete-encasedbuildingorstructures 7.11 10.60 7.64 4.84 12.72 9.37 19.12 9.38 10.57 11.88 12.01 6.17 11.76 35.68 5.25 12.72 7.13 10.99 8.92 16.31 12.11 18.85 12.70 Ironorsteelbuildingsorstructures 13.49 26.50 9.55 10.63 15.15 14.86 21.86 21.88 7.19 11.00 17.52 6.32 8.02 25.64 5.42 14.65 14.48 12.54 8.54 15.85 12.25 33.00 11.92

COMPILEDBYAONRISKSERVICE,INSURANCEBROKERS,NEWYORKCITY. RATESARETYPICALWORKERS’COMPENSATIONINSURANCERATESAPPROVEDANDINUSEOFAUG.30,2013.THESERATESARETYPICALCURRENTRATESSUBJECTTOEXPERIENCERATING.MONOPOLISTIC-FUNDSTATESARENOTINCLUDED.NEVADAISANASSIGNED-RISKSTATE.RATESAREVARIABLE.IFSPECIALTYRATESARELEFTBLANK,REFERTOCOMPANY.*NOC=NOTOTHERWISECLASSIFIED.

"a hundred years of enr cost indexes ... - … cost index source: mcgraw hill construction...

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