Construction Cost Estimation Trends in Florida
The significant increase in construction costs during the recent past has impacted the entire construction market in Florida, and has resulted in cost increases both in the public and the private sectors. Besides, these increases have not only impacted costs of buildings, but have been felt throughout the entire local construction industry.
There are various factors that have influenced in the increase in Florida construction costs. Some factors have been consistent with what has increased costs nationally at over 15% during the recent past. Some of the specific factors are:
- Natural calamities like hurricanes require many of the same construction resources that are already being employed on projects for cleanup and reconstruction. Such events also lead to a shortage of materials like rooting, plywood and transformers resulting in increased costs to Owners
- Strong growth in Florida’s construction activity, like housing market including single, multi-family and high rise. It has been noted that in Miami- Dade county more than 60,000 condominium units have been constructed
- Large Capital Improvement Programs for Schools (new schools, class size reduction program, etc.). Public Works Infrastructure, Major Improvements at the South Florida Airports, Rail & Transit, Roads & Bridges, Water & Sewer and other County and City improvements, Performance Arts Center in Miami, etc.
- Aging infrastructure resulting in upgrading and replacing with high investments
- Global material price increases, specially oil, steel and cement
- Limited pool of qualified, bondable contractors and subcontractors, which lessens competition and drives up profit margins and overall project costs
- Limited pool of qualified construction trade workers which increases labor costs
- Increased insurance costs, particularly Builder's Risk, which impacted overall project costs
Along with various other worldwide demands on construction materials and nationwide construction cost trends have come together to result in a significant impact, much greater than the national impact, for construction cost increases in Florida.
Through the recent projections of Florida’s population growth, by as much as 1,100 people per day, it is estimated that this slow down is no permanent and that increased upward pressure on construction prices will return, though the duration for this residential slowdown is not known. On the basis of the impact of residential construction on the general construction market in Florida in recent years, it is crucial that FDOT (The Florida Department of Transportation) keenly monitors residential building activity and analyze any indicators that suggests the resurgence in its rate of growth. Indicators, that FDOT is actively tracking, include the number and value of new residential units permitted and the numbers and prices of home sales in the State.