Construction Cost

Construction prices increased an average of 6 percent in 2016, as energy and commodity prices remained at levels not seen since the 1990s, due in large part to the strength of the U.S. dollar. Five consecutive years of above-average cost escalation has driven the construction cost trendline to 3.3 percent. Price increases are attributed to robust construction activity allowing contractors to increase their margins as demand grows. The construction sector is also reaching full employment levels, which is expected to drive wage increases in the near to mid-term.

Value engineering (VE) can save money on a BSL-3 project without compromising facility operations, lifecycle costs, regulatory compliance, or biocontainment requirements; if managed correctly, VE is an opportunity to improve a project, not just a cost-cutting tactic.

3D Robotics (3DR) has created Site Scan, a drone-based aerial analytics platform that can be used as a Building Information Modeling (BIM) tool to digitize the construction site. Featuring Autodesk integration, Site Scan creates a 3D model from aerial photographs which is then overlaid on the original CAD designs to enable the construction team to identify problems and optimize scheduling operations. PCL Constructors is currently using 3DR’s Site Scan to enhance the project delivery process. 

Non-residential construction spending has dropped 6 percent since the beginning of 2016. This reduction was offset by a nearly equal increase in infrastructure spending and steady residential construction. Increases in construction prices for 2016 are now trending towards 6 percent annually, depending on location, while job growth saw a slight up-tick with an average of 192,000 jobs added per month in the third quarter of 2016 versus the 171,000 jobs per month averaged in the first half of the year.

DYNALABS completed a 15,500-sf expansion of its pharmaceutical testing facility in St. Louis in July of 2016. The $1.5 million project added wet and dry labs, offices, conference rooms, a glass wash, sample management and inspection areas, and storage and distribution space. Designed and constructed by The Artisan Building Co., the facility was delivered for less than half of the original cost estimates from other contractors, enabling DYNALABS to invest in further capital improvements such as the planned renovation of an existing cleanroom.

Retrofit or renovate? It’s a common question facing many owners of laboratory facilities built in the 1970s, and the answer isn’t always obvious. A simple retrofit of building systems can improve reliability and cut energy consumption significantly, but a gut renovation can be transformative by enhancing performance and providing associated benefits in recruitment and retention, quality of life, and scientific productivity––benefits that can more than offset the higher initial cost.

After a soft May, second quarter data indicates that job gains were stronger in June 2016, while economic activity has been expanding at a moderate rate. Overall job growth in the first two quarters of 2016 declined from an average of 245,000 per month to 172,000 per month. The slowing trend could be part of a cycle witnessed in previous expansions. Commodity prices appear to have stabilized at a reduced level, which increases room for inflation in construction and other sectors.

The Pennsylvania State University is planning a $44.5 million renovation and expansion of the Agricultural Engineering Building in University Park. Providing multidisciplinary laboratories and classrooms, the project will add 35,000 sf to the existing 64,533-sf (44,581-asf) structure. The building houses the Department of Agricultural and Biological Engineering, a department jointly administered by the College of Agricultural Sciences and the College of Engineering.

Oregon Health & Science University broke ground in June of 2016 on the $160 Knight Cancer Institute in Portland. Designed by SRG Partnership to foster multidisciplinary collaboration, the seven-story, 320,000-sf facility is located on the South Waterfront Campus and will provide biomedical laboratories, administrative offices, interaction hubs, core labs, a 200-seat auditorium, and space for clinical trials.

Pfizer broke ground in late June of 2016 on the $350 million Global Biotechnology Center in China. Located in the Hangzhou Economic Development Area (HEDA), the facility will manufacture pharmaceutical biosimilars, which are drugs designed with similar active properties to existing licensed therapies. The project will feature a modular production facility created by GE Healthcare that utilizes flexible, single-use biomanufacturing technologies. The duration of construction will be 18 months with completion expected in early 2018.

Embry-Riddle Aeronautical University began construction in late June of 2016 on the $22 million STEM Education Center in Prescott, Ariz. Designed by LEO A DALY, the 52,500-sf addition will feature 20 laboratories, including specialized facilities for the study of robotics, aerial engineering, space technologies, and high-speed computation and simulation. The teaching and research building will also provide classrooms, undergraduate science labs, meeting rooms, an auditorium, a multimedia center, and a planetarium.

The economy started out the first quarter of 2016 in good shape, as energy and commodity prices stabilized at reduced levels. This led to more construction activity nationwide, with average prices coming in at an annual escalation rate of around 6 percent, depending on location. Construction job growth and dollar volume both continued upward trends as non-residential construction spending rebounded 48 percent from its most recent bottom in 2011. On balance, current indicators support stable construction growth over the short-term.

Dubai Electricity and Water Authority is planning to construct the $136 million Research & Development Center at the Mohammed Bin Rashid Al Maktoum Solar Park in Dubai. The four-building facility will be constructed using 3D printing and will support the creation of drones and 3D printing technologies for applications including solar power, energy efficiency, smart grids, and photovoltaic desalination.

JHL Biotech opened a biopharmaceutical manufacturing facility in May of 2016 in Wuhan, China. Featuring single-use bioprocessing technologies, the cGMP facility utilizes GE Healthcare's prefabricated KUBio system to produce biosimilars and monoclonal antibodies for late–stage clinical trials and commercial supply. The project was completed in just 18 months.

Embry-Riddle Aeronautical University has awarded Sundt Construction the design-bid-build contract for a new teaching and research facility in Prescott, Ariz. The 52,570-sf addition will provide classrooms, an auditorium, and labs for robotics testing, optics research, and high-speed computation and simulation. Featuring advanced building systems and exterior finishes, the project will support programs in applied science, aviation, business, engineering, space, computing, cybersecurity, and defense. Completion is expected in just 13 months.