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  • Writer's picturechris

How Cost Estimators have fun!

I spent a few minutes looking back at the last 4 years of construction cost inflation. Ah the good old days.

The first chart below is the monthly increase in construction cost each month from the ENR BCI, compared with the monthly average trend of 0.28% (since 1990)

We’ve spent a good amount of the last few years way above the average, and the good news is obvious, the last year, except for a blip during the summer, we spent mostly below the average.

Things look a little different in the next chart, which utilizes the annual rate, calculated as a trailing 12 month percentage. No trend line this time, but the average is 3.25%.

This chart is shows better the cumulative damage imposed on construction buyers, and makes it appear that we are still in a bit of trouble.

So that is the interesting question – how do you show (and use) the data? The first chart is much more useful for short term planning – what do we buy now, should we wait a month? 2 months? The second chart is much more macro, and suitable for long term projects, preconstruction assumptions for multiple years, etc.

I prefer to look at both charts and consider both. This makes it look to me like escalation will stay close to the long term average of 3.25%, but I would hedge toward a higher long term number, primarily due to the overall global instability.

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