Accounting for Rising Construction Costs

Controlling construction costs is always a prime concern for churches, and even more so during the current recession. Those costs continue to rise in 2010, which church leaders should note as they seek a loan, bonds, or other form of funding for a pending project.

As of September, the cost of construction was up 3.1 percent compared with the same point in 2009, according to the Engineering News Record. The main culprits: higher costs for materials due to cutbacks in production and increased global demand for materials.

"Between hurricanes, earthquakes, wars, and other things, we have shifted a lot of our materials to other places," says construction consultant Tim Cool. "That has created a supply-and-demand issue."

The labor situation remains in flux. The recession claimed many contractors and subcontractors and forced some of the survivors to enter markets they wouldn't otherwise consider, including the church market.

"Because the economy has everyone thinking cost consciously, churches are willing to look at someone who has less qualification but has a cheaper price," Cool says.

Labor rates are reasonable, but the law of supply and demand may be forcing them to rise. Due to the sharp decline in subcontractors, the survivors are beginning to charge more.

"Subcontractors were doing work at a loss to keep busy. But you can only do that so long. A lot of those 'too good to be true' deals are starting to dissipate," says Ed Bahler, chief executive officer of The Aspen Group, a church design-build firm.

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November 28, 2010
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