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With Construction Costs Up 7.4 Percent Year Over Year, Drone Data Is More Critical Than Ever.

With Construction Costs Up 7.4 Percent Year Over Year, Drone Data Is More Critical Than Ever

Construction input prices rose 7.4% year over year in July, though the monthly move was mild at just 0.1%, according to producer price index data. The muted monthly number is doing some hiding: crude petroleum dropped 11.9% and unprocessed energy materials fell 7.4% in July, which offset increases elsewhere. Natural gas jumped 10.4% for the month alone, diesel has climbed more than 50 cents a gallon since prices were last measured, and lumber, iron, and steel keep grinding upward under tariffs on aluminum and copper.

ABC’s chief economist expects materials prices to keep climbing as oil rebounds, and the AGC has already flagged that outsized cost increases stacked on tariffs could eventually pull back both private and public construction activity without tariff relief or new infrastructure funding. 

Pair that with backlog sitting at its lowest point since January, and the math on every quantity gets less forgiving. A 2% error on an earthwork estimate cost less when steel and diesel were flat; at today’s prices, that same percentage error is a bigger dollar swing against a thinner contingency. Rework costs the same percentage more as materials, but it hits a budget that has less room to absorb it.

This is exactly the environment where accurate volumes and progress data stop being a nice-to-have and start protecting margin directly. When materials costs are climbing and backlogs are shrinking, the cost of not knowing your actual site conditions goes up right along with everything else on the estimate.

Source: https://www.constructiondive.com/news/construction-costs-producer-price-index-july/827933/ ·

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