July 10, 2008
Inflation Hits Statehouse Renovations
By James Carlson
By James CarlsonTHE CAPITAL-JOURNAL
A spike in material costs threatens again to increase the price tag on Statehouse renovations, a construction official told a legislative committee Wednesday.
Cost inflation had been holding steady at around 7 percent annually through 2007, but the increasing price of such goods as steel, copper, aluminum and oil have officials projecting a 15 percent jump for 2008.
"They all impact our construction costs," said Jim Miller, vice president of JE Dunn Construction Co., which is leading the Statehouse effort.
He told the Capital Restoration Commission that the current trend actually shows a 20 percent increase in material costs, but that the company projects a stabilization of costs during the final two quarters of 2008.
He said labor costs also have gone up slightly, but he said the rising price of materials, caused by global supply and demand, is the predominant culprit.
The cost of steel, which constitutes nearly one-fifth of the overall renovation costs, jumped by 35 percent in the first six months of 2008. Likewise, oil prices increased by 39 percent, aluminum by 29 percent and copper by 21 percent.
"We didn't anticipate the big spike we're having this year," Miller said.
The Statehouse renovation has caused some lawmakers concern as the price tag mushroomed from $120 million in 2000 to $285 million in 2008. Most agree, however, that the money is needed to properly complete the project.
JE Dunn was able to lock in prices at a relatively inexpensive price for current work on the Statehouse.
"We beat the market," Miller said.
But the ripple of increasing material costs could reach the Statehouse when the company puts out bids for new work in August 2009. Statehouse architect Barry Greis said the state could have to shell out more money for the project at that time.
"It's a cause for concern, but we just have to plan for it," he said.
Legislators wondered aloud when the inflation rate would stabilize.
"We project it will come back down to 7 percent," Miller said. "But not this year."
James Carlson can be reached at (785) 233-7470 or email@example.com.
(c) 2008 Topeka Capital Journal. Provided by ProQuest Information and Learning. All rights Reserved.