Co$t 2006Construction costs are increasing at an alarming rate due to materials shortages, labor shortages and costs of meeting increased regulations. These are examined below. Equipment and Project Costs Construction Off Road equipment is expensive. New large earth-moving equipment can cost in the range of $1.6 million each. “Repowering” older equipment with new engines is also costly. A single CAT 657E scraper engine retrofit (from 1996 Tier 0 to 2001 Tier 1, for example) recently cost approximately $250,000 through Caterpillar. In response to proposed CARB Off Road Diesel emissions regulations, if contractors could not afford to “repower” old equipment or to purchase new cleaner equipment, they might be forced to use smaller equipment. · Current way: a moderately large $2 million tract home earthmoving contract might have 2-3 bulldozers, 8 scrapers, 1 wheel dozer, a motor grader and 3-4 water trucks moving 20,000 CY of dirt per day for a cost of $1.25 per CY. · New way using smaller equipment: Same project but using one bulldozer, 4 articulated trucks, 1 wheel dozer, a motor grader and 2 water trucks moving 4,500 CY per day – to meet stricter engine requirements, this cost per CY could nearly triple to $3.25 CY. (Source: EGCA estimate) Three-year CARB regulation cost impact to industry: $13.9 Billion Long Beach-based Justice & Associates (www.justiceassociates.com) recently compiled a study of 19 contractors’ costs to meet proposed CARB regulations set to go into effect 12/31/06 and found the cost of compliance could reach $13.9 Billion or $77,222 per piece of construction equipment. To see the Executive Summary of their report, as published by CIAQC, click here. Added costs for transportation projects Engineering & General Contractors Association (www.egca.org) recently surveyed several of its members to identify additional pressures on construction costs for SANDAG (San Diego Association of Governments) which is in charge of freeway expansion under the TransNet program. To see EGCA’s cost increase estimate report, click here. Construction Industry Air Quality Coalition - Summary of Justice Associates Study on Cost of Compliance April 27, 2006 Transportation Construction Cost Impacts of Air Quality Regulations - EGCA Report to SANDAG March 7, 2006 |
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Call To Action
We have a Category 5 challenge bearing down on the construction industry. It can make obsolete 90% of the equipment in use today. The biggest asset most construction companies have is their equipment, and much of that is about to become worthless.
The Cost 
