Hermanson's Estimating Department began tracking mechanical construction cost indicators in 2017 to share quarterly with the AEC community. Based on costs to complete a comprehensive, representative PNW region project, this information assists general contractors, developers, and owners make informed decisions about project costs. 

After posting the highest gain recorded since 2017 in Q1 2021, the construction cost index continued to rise in Q2 2021 at a quarter-over-quarter increase of 12.1%. This brings the total incurred cost increases for 2021 so far to 25.5%.

These increases are being felt across the county.  Hermanson is in regular contact with a Peer Group made up of companies throughout the U.S. who report similar increases. 

FACTORS:

• Supply Chain Issues on the manufacturing side (for example, PVC producers unable to obtain needed resin)
• Manufacturing Plant Capacity due COVID restrictions (for example, a plant typically runs with 3-foot distance between workers and now must provide six feet, and as a result are operating at 50% capacity and producing 50% of the product).
• Noted Commodity Cost Increases since January 2021 include:
  •  PVC has doubled in price
  • Galvanized Sheet Metal Coil and Flat Stock has doubled in price (this impacts the equipment markets for AHUs, VAVs, GRDs, etc. with price increases of 10-20%)
  • Copper is at an all-time high (up over 40%+)
  • Steel is up 20%+