enr 3q cost report 2013

5/28/2018 Enr 3q Cost Report 2013

1/11

.

1913 1918

19231928

19331938

19431948

19531958

19631968

19731978

19831988 1993

19982003

20082

1

CONSTRUCTION

COST

INDEXHISTOR

Y

(ANNUALAVERA

GE)

BUILDINGCOS

T

INDEXHISTORY

(ANNUALAVERAG

E)

9,552

(0

100

5,285

100

SKILLED

LABOR

38%

STEEL

38%

LUMBER

17%

CEMENT

7%

SKILLED

LABOR

65%

STEEL

24%

LUMBER

9%

CEMENT

2%

SHIFTING TIDE OF INFLATION

REDISTRIBUTED THE INDEX COMPONENTS

1913 2013

BUILDING COST INDEX

A Hundred Years of

ENR Cost IndexesA century of cost leadership through depression and expansionWhenever anything or anyone turns 100, its a big deal.

With a base year of 1913, ENRs cost ind exes have

joined that category after a century of measuring con-struction cost fluctuations and reflecting the industrys most important trends. The

use of the cost indexes has grown almost as dramatically as the indexes themselves.

They captured, for example, the explosion in union wages that caused costs to jumpin the 1970s, and they tracked the record drop in steel prices and its effects on overall

uses the ENR Construction Cost Index

to adjust our connection fees annually forinflation in construction of capital proj-

ects. The fees are used to pay for water

and sewer facilities needed for system ex-

pansion to accommodate new users.Mike Clark, senior project manager in

Oklahoma Citys Public Works Dept.,

says, Over the last three years, I have

used the Construction Cost Index as aninflation-type index for approximately 30

procurement contracts.

Says Leonard J. Goodwin, public-works director for Springfield, Ore., We

use the ENR CCI as an inflation adjust-

ment factor for our system development

charges [impact fees]. Our methodologyallows us to administratively increase fees

by the change in the CCI. I think a fair

number of jurisdictions in Oregon dothe same.

Federal agencies also find the indexes

valuable. T he indexes are an ex pertisemultiplier. Regularly publishing the

data from multiple locations not only

shows industry and cost trends but also

allows comparison of my personal andprofessional knowledge of the local cost

data with the indexes, says Rick Rus-

sell, cost engineering team lead, U.S.

Army Corp s of Engin eers, Portl and,Ore. The CCI and [Building Cost In-

dex] provide expertise to make judg-

ments for costs among a wide variety ofmaterials and projects. Although the

indexes are not an exact match to t he

projects in my job, they help by provid-

ing vetted background information onthe cost components.

The ENR indexes are an excellent

By Scott Lewis with Tim Grogan

3Q COST REPORT 100TH ANNIVERSARY

enr.com Septemb er 30, 2013 E

construction costs in 2004.

Over the years, ENR has labored to

ensure the indexes are accurate, objective,transparent and flexible so that they can

serve as a benchmark to assess the health

of the construction industrys most impor-

tant sectors. This includes deep-diveanalysis that interprets the numbers and

tells readers the stories behind them.

These days, they help many municipalofficials make the most informed decision

they can about their costs of engineering,

construction and maintenance work.

John Pedersen, district engineer withthe Mammoth Community Water Dis-

trict in California, says, The MCWD

1913-2013

SOURCE:MCGRAW HILL CONSTRUCTION RESEARCH & ANALYTICS/ENR


2/11

resource. I have used them to accuratelyescalate contract pricing for the future

where the Corps Index is not really ap-

plicable. The Corps cost index system is

more long term. This is not as current and

accurate as using the ENR for short-term

trends and projections, says Jerry Welch,

chief of the Cost & Relocations Team,

U.S. Army Engineer District, Memphis.ENR indexes are very helpful as they

represent actual market conditions based

on labor and materials. I have used ENR

indexes on various civil and MILCON

projects as these indexes catch up to price

fluctuations on actual materials rather

swiftly. During the past decade, steel, ce-

ment, lumber and copper prices saw un-usual swings, and ENRs [Materials Cost

Index] was my first choice to develop es-

calation factors for projects that required

use of these materials, says Mukesh Ku-

mar, chief cost engineer with the U.S.

Army Engineer District, New York.

3Q COST REPORT 100TH ANNIVERSARY

Elsie Eaves (1898-1983): Cost Pioneer

Elsie Eaves joined ENR in 1926, five years

after the magazine introduced its Con-

struction Cost Index, but she soon made

them her own. Elsie Eaves was the one who

made ENRs cost indexes the industry standard,

says Ken Humphreys, the retired ex-

ecutive director of the American As-sociation of Cost Engineers, of which

Eaves was a founding member, in

1956. She was one of the first women

to become a civil engineer and played

a prominent role in the construction

industry, but none more important

than developing the esteem and relevance of

ENRs construction cost indexes.

For three decades, she was the manager of

ENRs Business News Dept., where she pio-

neered ways of measuring the market for con-

struction materials and wages. Eaves made the

first national inventory of municipal and indus-

trial sewage-disposal facilities, in 1929. From

1933-35, she organized and directed an inven-

tory of needed construction projects that could

go ahead if federal funding were provided. This

helped Congress pass the Federal Loan-Grant

legislation used to revive construction activity

and break the Great Depression.

At the height of her career, she over-saw 25 members of ENRs Business

News Dept., Construction Methods &

Equipment magazine and 125 construc-

tion-project field reporters collecting

information.

In 1927, Eaves became the first

woman to be a full member of the American

Society of Civil Engineers. After retiring from ENR

in 1963, she served as an adviser on housing

costs to the National Commission on Urban

Problems and, in her role as a International

Executive Service Corps volunteer, to the gov-

ernment of Iran on construction cost indexes.

By Scott Lewis

EAVES


3/11

C

ant quite figure out where prices are

going? Prices tied to the housing

market, such as lumber, plywoodand gypsum wallboard, are bouncing back

from record lows with impressive year-to-

year gains; however, they remain below

previous highs. Steel prices are dropping,

and everything else is going sideways.

Once again, the U.S. Congress, fighting

over the budget, is threatening to throw

a monkey wrench into the works by eithershutting down the federal government or

refusing to raise the federal debt ceiling.

Either step could derail a fragile recovery

and drastically change the coming years

cost picture.

For now, economists are still optimis-

tic the recovery will continue to gain

McCarren, construction materials analyst

for the Washington, D.C.-based forecast-

ing firm IHS Global Insight. However,

there will be some dips, he adds. For

instance Global Insight has downgraded

construction materials. Prices will

continue to advance, but the rate of

increase is going to slow, says McCarren.

Products such as lumber, plywood and

wallboard are not going to be as volatile

3Q COST REPORT ECONOMICS

Costs: Hit, Miss and a GuessLumber prices are up, steel prices are down. D.C. politics will determine what comes next.

By Tim Grogan

Cement

SOURCE:BUREAU OF LABOR STATISTICS. FORECAST FOR 2013 BY IHS GLOBAL INSIGHT. ANNUAL PERCENT CHANGE FOR PRODUCER PRICE INDEXES.

10

0

-5

-10

20

15

5

2010 2011 2012 2013

-5.6% -3.5% 0.9%

5.3%

Structural Steel

10

0

-5

-10

20

15

5

2010 2011 2012 2013

1.0%

14.4%

-9.3% -6.1%

Market Drives Cement Prices Up and Steel Prices Down


4/11

housing market. It expects lumber prices

to jump 16.7% this year, following a 7%gain last year. However, it forecasts only

a 4.2% increase in lumber prices in 2014.

Likewise, gypsum-wallboard prices are

predicted to increase just 3.9% next year,

after rising 14.4% in 2013. Plywood

prices are expected to experience a

5.4% increase in 2014, following a 6.0%

increase this year and a 10.4% jumpduring 2012.

The rebound in housing has given

cement producers the marginal demand

needed to raise prices after they took a

big hit during the recession. In August,

the producer price index for cement was

up 4.2% above a year ago, according to

the Bureau of Labor Statistics. GlobalInsight estimates cement prices will end

the year 5.3% higher than in 2012. It pre-

dicts another 4.4% increase next year.

These upticks follow historically large

price declines of 5.6% in 2010 and 3.5%

in 2011. Last year, cement prices

rebounded a modest 0 9%

CONSTRUCTION MATERIALS PRICE MOVEMENT IN 2013AUG.MAYMARCH JULYFEB. JUNEAPRIL

AGGREGATES MONTHLY % CHG. +0.7 +0.3 +0.5 0.5 +0.2 +0.4 +0.6 0.5

ANNUAL % CHG. +2.7 +2.3 +2.0 +1.2 +1.7 +2.0 +1.8 +1.4

ALUMINUM SHEET MONTHLY % CHG. 0.1 +0.2 +0.1 2.1 0.9 0.0 1.1 0.3

ANNUAL % CHG. +1.0 0.6 1.9 3.3 2.2 1.6 2.2 1.8

ASPHALT PAVING MONTHLY % CHG. +0.5 0.2 0.1 0.6 +0.6 0.3 +0.7 +0.8

ANNUAL % CHG. +3.4 +1.0 +0.7 1.7 0.9 1.7 0.9 +0.5

CEMENT MONTHLY % CHG. +3.4 0.2 +0.1 +0.8 +1.3 0.4 0.0 0.6

ANNUAL % CHG. +5.0 +4.6 +5.1 +4.8 +5.4 +4.9 +5.2 +4.2

CONCRETE PIPE MONTHLY % CHG. +0.4 +0.2 0.0 +0.2 0.1 +0.4 +0.7 +0.1

ANNUAL % CHG. +4.8 +5.0 +4.3 +4.5 +3.6 +4.2 +4.4 +4.5

COPPER PIPE MONTHLY % CHG. 0.4 +0.6 2.5 3.1 2.5 0.4 2.2 +3.9

ANNUAL % CHG. +2.7 2.5 5.7 7.1 7.3 3.3 5.9 1.5

DIESEL FUEL MONTHLY % CHG. +0.5 +7.3 6.2 0.8 3.2 0.7 +1.9 +2.3

ANNUAL % CHG. 0.9 +4.0 6.8 6.2 5.4 +3.6 +4.4 1.6

DUCTILE- IRON PIPE MONTHLY % CHG. 0.0 +0.4 +0.4 0.2 0.2 0.3 +0.2 +0.1

ANNUAL % CHG. +0.8 +0.4 +0.8 +0.5 +0.3 0.7 0.5 0.2

FABRICATED STEEL MONTHLY % CHG. 0.2 0.0 0.0 +0.2 0.0 0.2 +0.1 +0.1

ANNUAL % CHG. +0.3 0.1 0.3 0.6 0.7 0.9 0.0 +0.1

GYPSUM PRODUCTS MONTHLY % CHG. +10.5 +3.2 +1.1 +0.7 0.1 +0.1 1.6 +0.3

ANNUAL % CHG. +18.7 +15.6 +15.7 +17.1 +16.5 +13.7 +12.4 +13.1

LUMBER, SOFTWOOD MONTHLY % CHG. +6.9 +3.8 +5.2 +2.4 7.2 7.6 2.3 +2.6

ANNUAL % CHG. +25.4 +27.5 +30.3 +32.5 +16.7 +8.0 +9.9 +8.4

PLYWOOD MONTHLY % CHG. +2.5 +1.3 +2.0 +1.6 2.8 +1.9 4.8 0.3

JAN.

3Q COST REPORT ECONOMICS


5/11

Confidence Remains HighThat the Market Is RecoveringFew think the market is booming, but most believe it is headed in the right direction

Like Charlie Brown trying to kick that

football, construction executives in

recent years have hoped for different

resultsevery year hoping that this would

be year the industry would bounce back

from the prolonged doldrums that began

in 2008. But just like Lucy snatching back

the pigskin, by the third quarter of eachyear, economic reality would set in and

market confidence would plummet.

The ENR Construction Industry

Confidence Index survey has tracked the

trend. In 2010, for the first time, the CICI

index entered positive territory in the sec-

ond quarter only to plummet back to a

ceived recovering market. In

the second quarter, the index

hit 69, an indication of a

growing market. Now,

ENRs most recent CICI

survey shows the indus-

try still believes the

market is experiencing a

sustained recovery.

The third-quarter 2013

CICI did decline, but only by two

points, to 67 on a scale of 100, which still

represents a growing market. A vast ma-

jority of the 375 executives of large con-

struction and design firms responding to

out to more than 3,000 U.S.

firms on ENRs lists of the

leading contractors, sub-

contractors and design

firms. The latest results

are based on a survey

conducted from Aug. 27

to Sept. 16.For the second quarter

in a row, the surveyed indus-

try executives believe nearly all the

market sectors measured by the CICI are

now in a growth mode. For the CICI sur-

vey, execs were asked to assess current and

future market prospects in general and

By Gary J. Tulacz

3Q COST REPORT CONFIDENCE SURVEY

67

INDUSTRY

CONFIDENCE INDEX

DECREASES TWOPOINTS


6/11

3Q COST REPORT CONFIDENCE SURVEY

Quarterly Cost Report Confidence Index

SOURCE:MCGRAW HILL CONSTRUCTION RESEARCH & ANALYTICS / ENR.

10 11 12 13

60

45

30

15

00

Q2 Q3Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

58

69 67

43

51

46

3742

56

50 50

6475

the highest rated, with a CICI rating of

81, followed by multi-unit residential and

power, both at 74, and the environmental/

hazardous-waste market, at 67.

The K-12 education market and the

entertainment/theme parks/cultural

market were both judged to the be the

weakest, with a rating of 55. The biggest

drop in ratingsdown five pointswas

multi-unit residential, last quarters

strongest market Many executives

the third quarter, 39.1% said project

financing was somewhat easier or

much easier than it was six months ago,

up from 37.6% in the second quarter and

only 31.9% in the first quarter. Only 9.6%

said project financing was tougher to

come by in the third quarter.

Many survey respondents commented

that financial institutions are beginning

to open up to project financing. This loos-

ening has brought back developers to the

How Different Types of FirmsView the Overall Market

Improving DecliningStable

Designers

Present 3-6Months

12-18Months

3 Years

General Contractors,

Construction Managers,Engineer-Constructors

46% 36%

7% 11%

10%

55%

8%

49%

6%

37%

6%

38%

47% 53%

33% 39%

8% 8%

59% 53%

63U.S. ECONOMYS CICI RATING,which is four points lower than the CICIsurvey part icipants level of optimismabout the construction market.


7/11

Unemployment Rates Decline,Opening Door for Wage HikesConstruction recovery leads to modest wage gains for union and merit-shop workers

As the construction industry outlookgradually improves, craft workers

are starting to see modest improve-ments in their compensation. However,

in light of continuing concerns over ailingpension funds and rising health-care

costs, many union laborers are getting

meager wage increases in their checks.

Carey Peters, executive director of theConstruction Labor Research Council,

says that, this year, union labor continuesto see a modest upward trend in compen-sation increases. Based on agreements

through this past August, total compensa-tion for union labor was up by 2 2%

companies reported that they plan to

freeze wages this year, according to the

2013 Merit Shop Wage and Benefit Sur-

vey compiled by Personnel Administra-

tion Services, Saline, Mich. That marks acontinued slide, from 12% wage freezes

last year, 18% in 2011, 33% in 2010 and

42% in 2009. All good indications are

that contractors are feeling the need to dosomething for their employees, says

Jeff Robinson, president of PAS.

Wages for all journeymen rose 2.7%

from 2012 to 2013, according to the sur-

vey. But Robinson says that statistic is

skewed by much higher increases in craftsthat work in very active sectors, such as

heavy industrial construction, heavy civil,petrochemical and shipbuilding. For ex-

ample, between 2012 and 2013, welders

wages rose by 7.8%, plumbers by 9.6%,

By Bruce Buckley

3Q COST REPORT LABOR

OPEN-SHOP WAGE RATE FOR JOURNEYMEN

BRICKLAYERS CARPENTERS CEMENT MASONS ELECTRICIANS

RATE RATERATE RATEFRINGE FRINGEFRINGE FRINGE


8/11

pipefitters by 6.2% and structural iron-workers by 12%. If there were large

increases in these crafts, some of the civil

trades obviously experienced low changesof, say, 1% to 2%, from 2012 to 2013, to

maintain that 2.7% overall, he says.

While merit-shop labor is seeing somewage improvements, many union workers

continue to see health and pensiondemands gobble up much of what would

otherwise go on their checks.

Ed Kommers, executive director of

MCA of Western Washington, Seattle,

says that, through the recession, local

plumbers and pipefitters saw modest

increases go to benefits, while wages wereheld down.

We were balancing the pressures of

increased costs to benefit plans versus theinability of the market to absorb a higher

cost of labor, Kommers says.

As plumbers and pipefitters head into

negotiations for a new agreement in May,Kommers says he expects wages to be a

putting everything on the benefit side be-cause there is inflation, he says.

People need to get money on their

checks, especially if they are not getting

the hours they used to get.

Other regions are seeing a similar

trend. In May, the Carpenters District

Council and the Builders Association,

both of Kansas City, Mo., agreed to a five-year agreement that offers a 2.25%

increase for the total package. The first-

year increase of 75 was allocated entirelyto benefits: 25 for the health-and-welfarefund and 50 for the pension fund.

In addition, the carpenters union

agreed to a definition of residential/lightcommercial work, with lower compensa-tion rates for those sector workers.

The settlement is essentially a fringe

fund increase and gets us to the parity thatwere needing, says Don Greenwell,

president of the Builders Association.

For the New England Regional Coun-cil of Carpenters the union continues to

pension funds in the hopes of realizingsome economies of scale, says Mark

Erlich, executive secretary-treasurer. He

estimates the plan could save up to $1 mil-lion in fund fees.

Meanwhile, Erlich says the carpentersunion is monitoring the possible effects

of the Affordable Care Act on health

plans. Theres a lot of uncertainty aboutwhat the ultimate impact of ACA will be,he says. Our health plans have good re-

serves, but now there is concern that theremay be unfunded mandates.

Erlich says that while metro areas suchas Boston are booming as they come outof the recession, he expects that future

agreements in the region will follow the

national trend of gradual increases.

Even though the market is heating

up, you wont see dramatic compensationincreases, he says. People are cautious

coming out of the recession. The good

news is that health funds and pensions arein better shape than they were Weve

+2.2WAGE INCREASE. Estimatedaverage annual wage increase forunion workers in 2013, according toCLRC.



9/11


HOURLY UNION PAY SCALES BY CITY, SEPTEMBER 2013

CLEVELAND DENVER KANSAS CITYDALLAS DETROIT LOS ANGELES MINNEAPOLIS

RATE RATE RATE RATE RATE RATE RATE% CHG. % CHG. % CHG. % CHG. % CHG. % CHG. % CHG.

BRICKLAYERS 51.16 +1.5 33.69 NA 32.69 0.0 52.16 +2.3 53.19 0.0 50.46 +1.4 50.26 +2.0

CARPENTERS 43.87 0.0 32.10 +0.3 36.24 0.0 52.30 +2.3 55.13 0.0 51.99 +1.0 52.35 +2.0

CEMENT MASONS 44.70 +1.9 26.48 0.0 34.70 0.0 46.08 0.0 48.55 0.0 52.11 +5.3 48.91 0.0

ELECTRICIANS 55.29 +1.9 35.35 0.0 44.63 +1.0 61.30 0.0 49.54 0.0 63.72 +6.9 52.15 0.0

ELEVATOR CONSTRUCTORS NA NA NA NA 65.28 +3.8 70.40 +8.9 NA NA 77.46 NA 68.76 +3.0

GLAZIERS 49.64 NA 23.50 0.0 36.19 +2.7 46.21 +1.1 41.92 0.0 59.39 +2.5 49.70 +2.0

INSULATION WORKERS 53.78 +3.6 NA NA 43.01 +3.0 59.05 +7.5 52.89 0.0 53.30 NA 64.93 0.0

IRONWORKERS

REINFORCING 49.08 0.0 32.15 0.0 41.87 0.0 57.89 +0.7 55.50 +2.5 61.87 0.0 55.35 0.0

STRUCTURAL 50.39 +1.5 32.15 0.0 41.87 0.0 57.62 +0.3 55.50 +2.5 61.87 0.0 54.96 +1.0

LABORERS

BUILDING 41.32 NA 18.09 0.0 25.97 0.0 42.44 +0.1 43.93 0.0 47.43 NA 43.99 0.0

HEAVY AND HIGHWAY 52.55 0.0 18.09 0.0 25.97 0.0 42.44 +0.1 43.93 0.0 47.43 NA 46.29 +5.2

MILLWRIGHTS 51.29 0.0 NA NA 40.05 0.0 58.81 NA 51.50 0.0 52.49 +5.0 53.56 0.0

OPERATING ENGINEERS

CRANE OPERATORS 48.38 0.0 34.05 0.0 34.10 0.0 63.72 +3.8 53.80 0.0 61.90 +8.2 51.14 0.0

HEAVY EQUIPMENT 49.45 +0.9 34.05 0.0 33.34 0.0 NA NA 43.81 0.0 61.90 +8.2 49.49 0.0

SMALL EQUIPMENT 45.04 +5.3 33.05 0.0 33.19 0.0 NA NA 43.07 0.0 61.45 +8.2 48.40 0.0

PAINTERS 39.63 0.0 NA NA 32.05 0.0 47.34 0.0 43.28 +0.9 41.27 +4.8 50.20 0.0

PIPEFITTERS 56.92 0.0 43.94 0.0 49.87 0.0 64.66 +2.6 58.30 +3.3 64.41 NA 65.09 +4.9

PLASTERERS 43.30 +1.4 NA NA 34.70 0.0 44.99 0.0 45.65 0.0 50.70 +5.7 54.30 +4.6

PLUMBERS 45.78 0.0 39.79 +3.0 49.87 0.0 62.86 +2.4 57.54 +1.0 64.41 NA 63.86 0.0

ROOFERS 44.78 +3.4 NA NA 26.63 0.0 52.89 0.0 48.86 0.0 46.52 +5.6 48.74 0.0


10/11

ALEXA NDRIA BUFFALO HOUSTONALLENT OWN COLUMB US INDIANA POLIS MEMPHI S

RATE RATE RATE RATE RATE RATE RATE% CHG. % CHG. % CHG. % CHG. % CHG. % CHG. % CHG.

HOURLY UNION PAY SCALES BY CITY, SEPTEMBER 2013

BRICKLAYERS 36.20 +1.5 45.25 0.0 51.38 +2.8 42.57 +2.9 32.92 +1.4 39.98 0.0 32.50 0.0

CARPENTERS 33.44 0.0 54.18 +1.1 55.02 +2.9 38.84 0.0 31.42 +3.6 43.86 +2.1 31.54 +3.0

CEMENT MASONS 36.73 0.0 47.53 NA 53.72 +2.3 40.83 NA 27.77 +0.7 38.00 0.0 25.20 0.0

ELECTRICIANS 54.30 +0.5 52.96 +1.0 56.70 +4.3 46.18 +3.7 35.78 +0.4 50.04 +2.9 35.76 +2.2

ELEVATOR CONSTRUCTORS 68.35 +0.1 71.44 +2.3 72.16 +0.8 71.21 +4.9 65.91 +1.2 70.55 +0.1 65.28 +1.2

GLAZIERS 37.25 +4.2 45.54 +4.0 42.07 +1.5 33.62 +2.1 25.53 0.0 38.68 0.0 22.49 0.0

INSULATION WORKERS 46.73 +0.5 54.71 +1.9 49.64 +3.5 40.87 +3.4 29.19 0.0 46.68 +1.9 34.83 +6.7

IRONWORKERS

REINFORCING 46.04 +3.3 57.55 0.0 52.30 +1.8 45.36 +1.7 33.50 0.0 47.99 +2.1 34.11 0.0

STRUCTURAL 46.04 +3.3 57.55 0.0 52.30 +1.8 45.36 +1.7 33.50 0.0 47.99 +2.1 34.11 0.0

LABORERS

BUILDING 27.35 0.0 38.84 +1.2 48.28 +3.5 34.79 0.0 22.54 +4.4 34.63 +1.6 20.50 +4.9

HEAVY AND HIGHWAY 27.35 0.0 38.84 +1.2 48.28 +3.5 34.79 0.0 22.54 +4.4 34.63 +1.6 20.50 +4.9

MILLWRIGHTS 40.16 +3.5 59.97 +2.5 56.37 +2.8 45.65 0.0 40.10 +2.3 43.86 +2.1 35.01 NA

OPERATING ENGINEERS

CRANE OPERATORS 40.85 +2.2 53.82 0.0 59.48 0.0 44.99 +2.6 38.75 NA 46.23 +2.4 32.82 0.0

HEAVY EQUIPMENT 40.85 +2.2 53.82 0.0 59.48 0.0 44.99 +2.6 38.75 NA 46.23 +2.4 32.82 0.0

SMALL EQUIPMENT 40.10 NA 53.34 NA 58.65 0.0 43.83 +2.7 35.60 NA 41.23 +2.7 32.82 0.0

PAINTERS 42.50 0.0 26.87 0.0 46.37 +4.1 34.81 +0.6 25.71 +3.3 36.13 +1.3 22.66 +4.6

PIPEFITTERS 55.69 +1.5 68.97 +5.2 53.23 +3.5 53.37 0.0 39.79 +2.6 49.01 +1.1 43.72 +2.9

PLASTERERS 36.73 0.0 47.54 NA 48.58 0.0 38.60 0.0 21.98 0.0 37.52 0.0 25.20 0.0

PLUMBERS 53.92 +0.5 64.74 +3.5 53.23 +3.5 53.37 0.0 39.79 +2.1 49.01 +1.1 36.32 0.0

ROOFERS 37.08 +4.2 57.50 +2.9 43.45 +1.8 39.05 +3.0 27.90 +4.6 34.00 0.0 21.78 0.0



11/11

Insurance for workers compensation isgetting pricier amid skyrocketing med-

ical costs, industry losses and a revisedexperience rating from the NationalCouncil on Compensation Insurance that

doubles split-point calculations, or cutoff

thresholds, for claims, to $10,000 from$5,000 in 2013. Eventually, that splitpoint will climb to $15,000 in 2015. Thenew formula skews costs for wor kerscompensation more toward the frequencyof accidents than their severity.

A change to the experience rating was

necessary, says Tom Boudreau, vice pres-ident of The Hartfords constructionpractice. But the challenging economicenvironment for the construction indus-try means there needs to be even greateremphasis on business planning goingforward, as changes to a contractorsinsurance costs may impact its ability t o

compete for projects, Boudreau says.As a result, contractors face mounting

pressure to remain accident-free sinceowners and bonding companies rely uponexperience-modification factors for judg-

ing skill, risk, performance and liability.An experience-modification rate of 1.0 isconsidered the industry average, despiteformula revisions. Additionally, experi-ence-modification factors are used asproject prequalifiers, driving greaterinvestment into safety programs and moreunreported out-of-pocket claim settle-ments to keep ratings and premiums low.

Contractors can expect a 10% to 25%premium rate increase next year due tounderwriter losses and medical industrycosts, says Jeffrey W. Cavignac, presidentof Cavignac & Associates, San Diego.Ultimately, through the experiencemodification, you will pay for youractual claims.

The bill wont be cheap. The explosivepopularity of medical treatments and pre-

scription drugs as stopgap solutions forpersistent health issues, including obesityand diabetes, and detrimental lifestyle

choices have tripled average client costsover the past 20 years, says th e NCCI.

Jobsite opiate and legal prescriptiondrug use is a big issue, says Karen Keniff,head of large construction for ZurichNorth America. It can lead workers toharm themselves and others.

We see an increase in workers costclaims when economic recovery begins,Keniff says. That is always prevalent. A

greater demand for labor and a growingsense of job security could mean morecontractor claims since, fearing employer

reprisal, many workers did not report in-juries during the recession, she says. Fur-

ther, a higher incident rate exists amongnew hires during their first 60 days on the

job, and Ke niff expec ts to se e more ofthese types of claims as the constructionindustry rebuilds its workforce.

A matur ing wor kforce onl y exacer-

bates those problems. The average age ofconstruction workers jumped to 41.5

years old from 36 years old between 1985

and 2010, reports the Center for Con-struction Research and Training.

As construction companies utilize anaging workforce, we expect a greaterfrequency in medical claims, as opposedto indemnity, as a proportion of workers,

says Joseph Russo, senior vice presidentof Aon Risk Services construction group.Contractors who do not manage theclaims and push for settlements willget hurt.

Indeed, a demographic shift in thelabor force could spell trouble. Senior

workers and new, inexperienced hires can

present potential jobsite risks that resultin costly claims, says Russo.

For example, over the past three years,

there has been an exodus of experiencedconstruction workers, and during the on-

going recovery, the industry has been ableto hire back only about a third of thosethat left, says Kenneth D. Simonson,

Associated General Contractors of Amer-ica chief economist.

3Q COST REPORT INSURANCE

Comp Costs Rise

By Tony Illia

enr.com September 30, 2013 EN

CARPENTRY

Detached one- and two-family dwellings 14.89 12.57 13.25 17.74 11.80 20.03 18.69 15.75 16.63 20.66 22.33 20.50 12.62 10.17 29.38 18.24 22.98 7.98 13.92 11.58 11.05

Dwellings:three stories or less 15.05 12.57 13.25 17.74 11.80 20.03 15.50 15.75 12.28 18.77 20.09 20.50 16.17 10.78 20.52 18.24 21.59 7.98 12.93 13.40 7.41

Installation of cabinet work,interior trim 15.46 6.63 6.38 11.51 9.01 10.50 13.18 5.88 10.51 8.49 10.74 7.52 10.89 11.05 13.30 13.48 10.49 6.58 5.71 11.39 6.14

CONCRETE

Work:floor,yard or sidewalks 10.15 5.33 6.35 14.47 6.16 10.96 14.30 6.31 23.31 5.71 10.94 7.67 15.93 9.05 8.90 12.18 5.94 7.10 4.52 13.92 3.86

Construction connection with bridges or culverts 20.62 7.74 10.76 18.47 7.53 11.49 21.02 8.27 25.97 16.23 13.78 15.26 12.56 14.89 16.20 17.77 15.35 7.10 5.62 12.13 8.15

E LECTRICAL WIRING WITHIN BUILDING 4.33 3.63 4.10 7.21 4.50 5.15 5.13 4.68 7.69 7.52 7.60 4.70 6.21 4.49 9.11 4.47 5.87 4.68 3.20 3.97 3.49

EXCAVATION

ROCK EXCAVATION AND DRIVER 8.17 7.23 6.61 13.03 8.79 11.42 10.83 4.59 11.90 10.64 12.05 8.60 9.33 9.52 10.73 8.50 11.40 6.25 7.05 9.35 5.64

GRADING OF LAND NOC AND DRIVER 8.17 7.23 6.61 13.03 8.79 11.42 10.83 4.59 11.90 10.64 12.05 8.60 9.33 9.52 10.73 8.50 11.40 6.25 7.05 9.35 5.64

GL AZIER, AWAY FROM SHOP 27.36 8.92 6.41 14.26 7.00 11.94 11.21 7.59 18.33 8.91 13.75 10.70 11.36 11.42 12.18 11.11 11.38 6.71 6.91 12.31 5.74

INSULATION WORK 17.59 6.08 7.66 16.48 10.99 12.17 12.63 6.87 10.65 9.38 13.50 10.51 12.92 15.09 11.64 12.82 10.17 8.59 5.89 12.51 5.22

LATHING AND DRIVING 7.99 3.32 4.40 7.89 4.60 6.65 15.13 4.00 12.59 6.02 6.20 6.01 11.84 5.49 7.88 5.75 7.13 3.97 5.22 5.35 5.61

PAINTING OR PAPERHANGING NOC AND SHOP 11.21 6.40 7.84 15.62 6.45 23.00 11.28 7.22 14.67 9.23 12.32 11.44 13.89 10.54 13.54 9.27 8.95 6.64 6.69 8.03 6.73

PILE-DRIVING 23.84 11.94 8.24 13.05 9.04 15.17 15.79 8.98 19.71 12.50 13.85 10.39 16.17 23.30 13.39 12.41 16.42 9.65 6.81 10.98 7.22

PLASTERING OR STUCCO WORK ON OUTSIDE OF BUILDING 11.58 8.34 9.96 14.64 10.46 16.25 18.71 9.67 20.79 9.06 16.86 12.62 12.56 9.96 12.79 11.51 12.01 7.02 7.36 12.40 5.56

PLUMBING NOC 6.23 5.70 5.92 9.10 5.45 9.64 6.96 4.40 10.60 7.04 7.82 5.60 7.87 6.41 7.62 8.25 5.58 4.55 3.50 7.81 3.94

RO OFING, ALL KINDS 50.27 22.15 23.13 55.91 19.57 35.19 40.10 23.93 35.21 27.50 26.18 23.63 31.69 21.55 39.51 9.68 31.16 14.33 20.80 23.56 19.14

SHEET-METAL WORK: SHOP AND OUTSIDE NOC 13.39 6.57 7.64 11.75 10.96 22.04 7.22 6.44 13.27 13.58 15.17 9.63 7.32 11.95 9.20 17.87 11.42 11.28 5.04 9.96 5.52

S TEEL OR IRON ERECTION

Doors and door frame or sash erectionmetal 7.50 8.68 7.78 13.26 7.56 10.37 29.15 7.56 18.84 9.10 12.25 6.87 8.77 6.74 12.99 11.37 11.19 5.89 5.09 9.28 5.58

Construction of dwellings not over two stories 65.35 57.56 41.55 79.73 56.04 90.11 32.89 48.90 84.85 61.36 107.74 22.66 24.86 63.04 77.23 79.35 52.97 17.78 31.28 74.77 33.50 Interior cap work reference carpenterinterior 15.43 6.63 6.38 12.53 9.01 10.50 12.03 5.88 10.51 8.49 10.74 7.52 10.89 11.27 13.30 13.48 10.55 6.58 5.71 9.93 6.83

Frame structures 80.31 20.02 29.02 35.58 25.79 112.53 17.25 34.68 34.52 43.56 36.46 19.64 24.86 32.07 33.19 34.35 20.02 24.75 22.66 40.07 22.97

Frame structures not over two stories in height 92.87 18.82 61.24 55.93 39.03 47.15 27.50 38.27 49.21 56.76 70.67 23.87 24.86 59.21 34.51 37.32 32.85 9.61 29.93 40.14 35.12

TILE WORK: CERAMIC, STONE, MOSAIC OR TERRAZZO 9.03 5.29 7.14 10.40 4.73 11.82 9.55 4.67 10.14 7.54 7.82 6.73 9.33 5.12 6.56 5.15 7.62 4.32 4.23 7.03 3.69

TIME KEEPERS: CONSTRUCTION OR ERECTION 3.02 5.86 8.44 9.98 5.55 7.25 8.64 5.53 8.71 10.70 11.78 9.46 NA 4.43 10.24 7.65 6.25 NA 11.67 9.11 4.56

WATERPROOFING

Brush- or hand-pressured caulking 11.21 6.40 7.84 15.62 6.45 23.00 11.07 7.22 14.67 9.23 12.32 11.44 13.89 10.33 13.54 9.27 8.91 6.64 6.69 7.93 7.28

Trowel interior of buildings 8.20 6.74 7.57 12.93 7.86 10.16 14.39 9.12 9.81 10.51 18.88 9.31 11.84 8.74 13.26 9.12 11.29 6.64 5.04 8.29 5.52

WRE CKING BUILDINGS OR STRUCTURES

Concrete or concrete-encased buildings or structures 8.60 6.57 7.37 11.82 10.96 22.80 15.51 7.82 23.21 13.58 14.84 9.22 15.93 14.66 9.20 15.81 11.70 7.10 6.52 10.28 7.55

Iron or steel buildings or structures 5.72 5.55 9.87 11.19 13.05 32.41 13.63 14.38 18.68 17.39 20.41 12.02 24.86 22.96 13.15 20.79 20.20 9.61 10.78 20.89 10.52

EFFECTIVE ON AUG.30, 2013CLASSIFICATION OF WORK

COMPENSATION INSURANCE BASE

ALA.

MINN.EFFECTIVE ON AUG.30, 2013CLASSIFICATION OF WORK

ARIZ. ARK. CALIF. COLO. CONN. DEL. D.C. FLA. GA. HAWAII IDAHO ILL. IND. IOWA KAN. KY. LA. MAINE MD. MASS.ALASKA

NEB. N.H. N.J. N.M. N.Y. N.C. OKLA. ORE. PA. R.I. S.C. S.D. TENN. TEXAS UTAH VT. VA.MISS. MO. MONT.

RATES

CARPENTRY

Detached one- and two-family dwellings 18.54 13.95 15.85 9.60 26.81 12.56 22.30 8.86 7.31 14.54 41.19 7.59 14.63 28.72 8.25 10.22 13.52 19.90 17.54 13.71 12.75 8.68

Dwellings:three stories or less 18.29 15.80 13.84 9.42 26.81 12.56 22.30 11.36 7.31 9.33 34.80 7.59 12.77 27.33 8.88 10.22 13.52 13.60 12.96 12.66 12.75 8.68

INSTALLATION OF CABINET WORK, INTERIOR TRIM 8.19 9.61 6.88 3.57 00.00 6.91 14.33 6.53 5.65 8.00 11.78 5.93 6.84 18.75 4.41 8.57 5.84 10.41 10.02 9.89 9.96 5.23

CONCRETE

Work:floor,yard or sidewalks 5.88 9.66 4.01 4.08 8.92 9.49 13.10 9.38 5.70 14.04 10.42 5.62 5.99 13.91 5.18 7.66 5.79 7.56 5.32 7.38 6.08 5.33

Construction connection with bridges or culvert 12.99 9.24 7.50 9.52 15.83 12.39 24.24 10.56 6.53 10.74 12.33 5.80 11.60 28.68 5.07 14.15 8.67 9.14 11.93 18.23 10.07 8.70

ELECTRICAL WIRING WITHIN BUILDING 4.23 5.73 4.50 3.02 10.20 4.09 6.54 3.98 3.19 5.65 6.49 4.11 3.88 8.65 2.84 4.47 4.67 5.65 5.24 5.79 5.85 2.84

EVACUATION

Rock excavation and driver 7.35 8.36 5.24 5.12 14.33 7.70 12.35 7.01 7.18 6.59 10.11 4.61 7.25 12.51 4.41 6.88 4.64 9.30 9.42 10.74 8.09 4.35

Grading of land NOC 7.35 8.36 5.24 5.12 14.33 7.70 12.35 7.01 7.18 6.59 10.11 4.61 7.25 12.51 4.41 6.88 4.64 9.30 9.42 10.74 8.09 4.35

GLAZIERAWAY FROM SHOP 8.74 32.61 8.00 6.11 18.55 8.41 16.86 8.82 9.34 9.56 11.17 7.54 9.01 22.02 5.60 9.20 8.14 14.44 9.97 14.96 10.68 9.58

INSULATION WORK 10.81 14.60 11.10 5.75 12.66 10.20 16.90 10.20 5.17 10.12 10.34 4.78 7.67 18.44 6.39 5.82 6.32 9.65 8.89 15.18 9.51 7.78

LATHING AND DRIVING 5.04 11.94 4.05 2.97 13.71 5.54 8.91 9.86 6.42 4.66 7.04 5.75 6.29 12.33 3.43 4.64 3.76 5.72 5.69 5.80 4.87 5.27

PAINTING OR PAPERHANGING NOC AND SHOP 8.67 10.99 9.47 5.56 18.12 7.93 15.35 11.89 4.66 8.86 17.72 5.68 8.43 16.00 4.61 6.76 7.28 13.38 10.03 14.72 8.94 5.09

PILE-DRIVING 10.12 22.07 8.00 7.11 17.83 9.23 16.83 13.73 12.38 NA 13.53 6.72 9.30 21.14 5.67 8.73 8.60 13.53 13.32 12.79 10.66 12.92

PLASTERING OR STUCCO WORK ON OUTSIDE OF BUILDING 12.97 11.05 9.64 6.22 19.29 11.63 25.02 10.56 7.78 9.77 18.58 6.44 10.55 24.94 4.69 8.40 7.06 7.68 11.56 10.97 9.78 10.55

PLUMBING: NOC 4.76 6.96 4.79 3.39 13.43 5.83 8.85 6.08 5.96 5.31 7.26 4.88 4.27 11.96 2.81 6.40 4.88 5.08 4.74 7.70 6.69 3.50

ROOFING, ALL KINDS 29.81 28.67 18.70 13.75 54.51 21.88 41.61 23.59 12.44 17.10 50.96 15.82 22.62 42.02 10.66 19.92 15.37 33.07 22.88 25.71 29.63 30.99

SHEET-METAL WORK: SHOP AND OUTSIDE NOC 8.09 11.50 7.03 4.47 14.44 8.91 17.86 5.76 8.96 11.45 11.62 6.26 11.76 35.68 5.25 12.72 7.13 10.99 11.43 16.31 12.11 5.72

STEEL OR IRON ERECTION

Doors and door frame or sash erectionmetal 6.82 7.97 10.08 6.25 14.16 7.51 15.24 6.71 15.13 9.25 12.72 6.97 12.31 26.00 4.46 5.70 6.20 7.58 7.45 7.69 9.49 6.89

Construction of dwellings not over two stories 53.53 49.45 39.67 30.11 32.87 4.54 103.50 21.88 62.73 40.52 69.80 36.12 36.89 177.12 31.93 49.99 37.69 53.47 67.31 88.34 55.63 33.00

Interior cap work reference carpenterinterior 9.27 10.32 6.88 3.57 26.81 6.91 13.75 6.53 5.65 8.00 11.78 6.35 6.43 18.81 4.41 8.42 5.84 11.28 11.26 10.44 8.72 5.23

Frame structures 24.18 29.99 19.93 14.79 27.13 33.16 52.58 21.88 17.61 22.79 41.25 24.87 25.42 77.66 12.33 36.26 20.20 29.06 31.54 40.06 33.67 54.08

Frame structures not over two stories in height 32.71 44.09 38.24 18.60 32.87 33.00 71.63 21.88 24.03 57.01 59.42 29.11 28.17 56.95 17.84 43.15 35.29 69.68 53.05 57.72 87.21 33.00

TILE WORK: CERAMIC, STONE, MOSAIC OR TERRAZZO 7.18 5.42 2.99 4.71 11.24 5.76 12.06 7.08 5.89 5.25 7.67 5.98 6.84 21.95 3.07 6.70 5.86 12.05 5.03 6.21 6.21 5.81

TIMEKEEPERS: CONSTRUCTION OR ERECTION 9.49 7.97 5.67 4.08 2.27 7.84 11.77 NA 4.78 6.79 10.48 5.49 7.65 9.69 3.73 5.20 6.69 8.43 6.21 6.95 5.85 5.43

WATERPROOFING

Brush- or hand-pressured caulking 10.50 10.99 9.47 5.56 18.12 9.20 16.01 11.89 4.66 8.86 17.72 6.16 8.43 15.44 4.61 6.76 7.28 13.38 11.78 14.72 8.94 5.09

Trowel:interio r of buildings 9.32 11.51 6.40 9.96 26.92 7.98 14.78 9.86 6.82 10.48 11.74 6.48 10.73 27.62 3.47 10.98 5.56 9.39 7.63 11.26 7.76 4.68

WRECKING BUILDING OR STRUCTURES

Concrete or concrete-encased building or structures 7.11 10.60 7.64 4.84 12.72 9.37 19.12 9.38 10.57 11.88 12.01 6.17 11.76 35.68 5.25 12.72 7.13 10.99 8.92 16.31 12.11 18.85

Iron or steel buildings or structures 13.49 26.50 9.55 10.63 15.15 14.86 21.86 21.88 7.19 11.00 17.52 6.32 8.02 25.64 5.42 14.65 14.48 12.54 8.54 15.85 12.25 33.00

COMPILED BY AON RISK SERVICE,IN SURANCE BROKERS, NEW YORK CITY. RATES ARE TYPICAL WORKERS COMPENSATION INSURANCE RATES APPROVED AND IN USE OF AUG.30, 2013.THESE RATES ARE TYPICAL CURRENT RATES SUBJECT TO EXPERIENCE RATING.MONOPOLISTIC-FUND STATES ARE NOT INCLUDED.NEVADA IS AN ASSIGNED-RISK STATE.RATES ARE VARIABLE.IF SPECIALTY RATES ARE LEFT BLANK,REFER TO COMPANY.*NOC=NOT OTHERWISE CLASSIFIED.

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