Construction Growth, Price Increases Boost Costs

Turner Construction Co. announced that the First Quarter 2013 Turner Building Cost Index – which measures costs in the non-residential building construction market in the United States – has increased to a value of 849. This reflects a 1.19 percent increase from the Fourth Quarter 2012 and a 3.41 percent increase from the First Quarter 2012. 
 

"The increase in private non-residential construction spending over the past year, material and equipment prices continuing to inch upwards, and a slight increase in labor rates has led to a boost in construction costs," says Karl F. Almstead, the Turner VP responsible for the Turner Building Cost Index. 

About 90 percent of Turner's business is performed under contract arrangements where Turner provides extensive preconstruction planning services before the contract price is fixed and before construction starts. By providing preconstruction services and using enhanced procurement strategies, Turner effectively manages the market risks associated with cost-related issues. 

Turner has prepared the construction cost forecast for more than 80 years. Used widely by the construction industry and Federal and State governments, the building costs and price trends tracked by the Turner Building Cost Index may or may not reflect regional conditions in any given quarter. 

The Cost Index is determined by several factors considered on a nationwide basis, including labor rates and productivity, material prices and the competitive condition of the marketplace. This index does not necessarily conform to other published indices because others do not generally take all of these factors into account.

Turner Construction Survey Shows New Green Building Findings

Turner Construction Co. has announced the results of a new Market Barometer survey that focused on environmentally-sustainable, or green, building, and on sustainable practices in general. Key findings revealed that companies remain committed to constructing green buildings. While executives remained committed to incorporating sustainable building practices into their building programs, fewer said their companies were likely to seek LEED certification from the US Green Building Council when constructing a green building. 
 

Brightening Outlook for Construction Projects
Among real estate owners, developers, and corporate owner-occupants, 64% said they expect to undertake new construction projects over the next 12 months (up from 46% in the 2010 survey), and 71% said they expect to undertake renovation projects over the same period (up from 58% in the 2010 survey).

Widespread Commitment to Sustainable Practices
Ninety percent of respondents said their companies were committed to environmentally-sustainable practices. Of that percentage, 56% of executives said their companies were extremely or very committed to following environmentally-sustainable practices in their operations, while an additional 34% said they were somewhat committed.  In addition to citing financial reasons for this commitment, executives were most likely to cite broader considerations as extremely or very important including belief that it's the 'right thing to do,' (68%), impact on brand/reputation (67%), and customer requirements (61%), along with cost savings (66%).

Reducing Energy Costs and Operating Expenses are the Key Drivers to Green Construction
Executives were most likely to cite financial factors as being important to their companies' decisions on whether to incorporate Green features in a construction project. Respondents indicated that energy efficiency (84%) and ongoing operations and maintenance costs (84%) were extremely or very important to their decisions. 

More than two-thirds of executives also said that non-financial factors were extremely or very important including indoor air quality (74%), health and well-being of occupants (74%), satisfaction of employees/occupants (69%) and employee productivity (67%). However, only 37% of executives said it was extremely or very important to their companies to minimize the carbon footprint of their buildings. 

This suggests that the decision to incorporate Green features is driven by a desire to reduce cost followed by an interest to improve the indoor environment for building occupants, rather than broader concerns about the impact of buildings on the global environment. 

More than half of executives said their companies would be extremely or very likely to invest in improved indoor environmental quality (63%), improved water efficiency (57%), and Green materials (53%) if they were undertaking a construction project.

"Energy efficiency figures prominently in the decision-making process of green building primarily because of its large economic impact. Water efficiency in Green construction was seen as less important.  This is in spite of a growing awareness that water is a finite resource, both in its operational use and its role in the production of goods and materials. While the direct economic impact of water efficiency is less than the savings on energy, its environmental impact is quite significant," said Michael Deane, Vice President and Chief Sustainability Officer at Turner Construction.

Fewer Companies Plan to Seek LEED Certification
Although the vast majority of companies remain committed to Green buildings, the percentage of executives who thought it was extremely or very likely that their company would seek LEED certification if they constructed a Green building was only 48%, down from 53% in the 2010 survey and 61% in the 2008 survey. Among executives who said their companies were not likely to seek LEED certification, the most important reasons cited were the cost of the certification process (82%), staff time required (79%), time required for the process (75%), and the overall perceived difficulty of the process (74%). 

It is apparent that in the last four years many companies seem to have become more knowledgeable about the means and methods of designing and constructing Green buildings and are less reliant on LEED as a checklist or a scorecard, as indicated by 52% of executives saying that they were only somewhat or not likely to seek LEED certification when undertaking a construction project. At the same time, 41% of executives thought it was at least somewhat likely that their companies would consider seeking certification under a rating system other than LEED if they constructed a Green building. Of those executives who indicated they would consider another system, 63% said they would be extremely or very likely to consider seeking certification under ENERGY STAR, which again highlights the importance of energy efficiency.  It should be noted that building owners may elect to certify under more than one rating system.

"We've seen from our own work and the continuing growth of the green building market that in spite of this reduction in enthusiasm for LEED certification, respondents are still building green," said Deane. "While some respondents are relying on their own standards or are considering another rating system, LEED certification remains the most widely used third party verification of achievement that is recognized by consumers and that can be used to market and promote a property."

Concerns Persist about Construction Costs and the Length of the Payback Period
When asked what length of payback period would be acceptable when considering Green features, 44% of executives said they would accept five years and almost 80% of executives said they would accept a payback period of five years or longer. Despite the acceptance by most executives of an extended payback period, 61% of executives still felt that the length of the payback period was an extremely or very significant obstacle to the construction of Green buildings while 62% cited higher construction costs. 

Turner Construction Awarded Ft. Irwin Replacement Hospital

The U.S. Army Corps of Engineers, Los Angeles District selected Turner Construction Co. to build the Fort Irwin Replacement Hospital in San Bernardino, Calif. The $160 million hospital replaces the Weed Army Community Hospital, and marks a significant milestone in the United States Department of Defense commitment to delivering world-class healthcare to all service members and their families.  

The project consists of a 216,000-square-foot hospital, which provides tertiary care, emergency medicine, and clinical support. Additionally, the project includes a 9,000-square-foot renovation of the Mary Walker clinic and construction of a helipad, ambulance shelter, central utilities plant, and photovoltaic farm, which will provide sustainable energy to the hospital and ancillary buildings.

The hospital's design will utilize evidence-based and world-class design principles, and will be designed and constructed to achieve LEED Platinum certification. Ellerbe Becket/RLF Joint Venture will provide full design services for the project.

"The Fort Irwin Replacement Hospital is a significant win for our company because it builds upon Turner's outstanding reputation as the leading builder of premiere healthcare facilities for the government," says Chris Jahrling, VP and general manager of Turner's Federal Services group in Washington, D.C. "We are excited and honored to partner with the U.S. Army Corps of Engineers, and contribute to their mission to provide world class care to service members and their families." 

Turner recently completed the Fort Belvoir Community Hospital in Virginia in a joint venture with Gilbane Building Co. and is constructing the Martin Army Community Hospital at Fort Benning, Ga., and the Department of Veterans Affairs Denver Replacement Hospital in Aurora, Colo., in joint venture with the Kiewit Building Group.  

Turner Construction Receives 2011 Construction Safety and Excellence Award

The Associated General Contractors of America has recognized Turner Construction Co. as one of the safest construction companies in the United States with a 2011 Construction Safety and Excellence Award.

Turner Construction is a general builder in the United States. Its strong safety culture, reinforced through several safety initiatives, is one that promotes an injury-free environment, with a goal to send every worker home safe from each job, every day.

One specific and innovative safety program implemented by Turner is Predictive Solutions’ SafetyNet, which was rolled out to all safety and field personnel in 2004. SafetyNet is a technology for saving lives by predicting workplace injuries. It helps customers collect and analyze safety data to predict and prevent injuries.

Using SafetyNet, Turner collects safety observations across the entire company. Since implementing the Software as a Service (SaaS) solution in 2004, SafetyNet has been used on more than 3,000 projects at Turner. In 2011 alone, almost 1 million observations have been conducted. With such widespread use and an abundance of conducted observations, Turner continues to see a steady decrease in safety incidents since the program’s implementation.

“For many years now, SafetyNet has been an important component to our safety culture at Turner,” says Cindy DePrater, VP, director of employee health & safety for Turner. “It provides us visibility into each of our sites to know where at-risk behaviors and unsafe conditions exist, so that we can eliminate the risk and keep workers safe.”