The Market: A Fresh Perspective in the New World

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The Construction Market and Key Indicators

Evolving Design

Evolving Construction

Introductions01.

Questions + Answers

02.

03.

04.

05.

AGENDA

OBJECTIVES

• Understand and identify the key market indicators for the construction

industry and how they interplay

• Understand how we can learn from previous market conditions along with

identifying the differences those conditions make on future planning.

• Understand and develop approaches for differing scenarios across the

markets and how to incorporate those within future plans

YOUR PRESENTERS

Daniel Pomfrett, FRICSVice President

Cumming Group

dpomfrett@cumming-group.com312-858-0385

Randy KeiserVice President & National Healthcare Director

Turner Construction

rkeiser@tcco.com615-812-5145

Gary Hamilton, PE, PMP, LEED AP, FASHE, CxASenior Vice President & Healthcare Practice Lead

WSP

Gary.Hamilton@wsp.com202-607-9294

“Building cost escalation” as the anticipated increase, over a defined period of time, in the cost of constructing a building

Building cost increases usually occur as a result of market forces and reflect increases in the cost of labor and materials. In general, escalation is indicative of higher levels of construction activity driving up prices.

THE CONSTRUCTION MARKET: ESCALATION

Region Annual Escalation 2021 Healthcare Escalation 2021

Illinois 4.909% 5.607%

Indiana 4.519% 4.991%

Iowa 5.313% 5.469%

Kansas 3.415% 3.231%

Michigan 4.778% 3.660%

Minnesota 4.505% 3.684%

Missouri 3.595% 3.456%

Nebraska 4.542% 5.316%

North Dakota 5.260% 5.024%

Ohio 4.494% 4.966%

South Dakota 4.086% 5.304%

Wisconsin 4.563% 3.880%

28

30

32

34

36

38

40

42

44

46

48

50

52

54

56

58

60

62

Jan

-16

Ap

r-1

6

Jul-

16

Oct

-16

Jan

-17

Ap

r-1

7

Jul-

17

Oct

-17

Jan

-18

Ap

r-1

8

Jul-

18

Oct

-18

Jan

-19

Ap

r-1

9

Jul-

19

Oct

-19

Jan

-20

Ap

r-2

0

Jul-

20

Oct

-20

Jan

-21

Ap

r-2

1

Jul-

21

AIA Architectural Billing Index-National (2016-Current)

THE CONSTRUCTION MARKET: KEY INDICATORS

22

26

30

34

38

42

46

50

54

58

62

66N

ov-

18

Dec

-18

Jan

-19

Feb

-19

Mar

-19

Ap

r-1

9

May

-19

Jun

-19

Jul-

19

Au

g-1

9

Sep

-19

Oct

-19

No

v-1

9

Dec

-19

Jan

-20

Feb

-20

Mar

-20

Ap

r-2

0

May

-20

Jun

-20

Jul-

20

Au

g-2

0

Sep

-20

Oct

-20

No

v-2

0

Dec

-20

Jan

-21

Feb

-21

Mar

-21

Ap

r-2

1

May

-21

Jun

-21

Jul-

21

AIA Architectural Billing Index-Regional (12 Months)

West South Northeast Midwest

THE CONSTRUCTION MARKET: KEY INDICATORS

0%

2%

4%

6%

8%

10%

12%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

THE CONSTRUCTION MARKET: LABOR

The U.S. economy managed to recover faster than many experts predicted. Unemployment was expected to average 15% in 2020, but the actual figure was closer to 8%. It is to be 3.6% in 2022 – slightly below 2019 levels

Construction has proven to be one of the most resilient industries, with employment making an almost full recovery. The labor market remains tight, however, and projects may face difficulty filling key positions and finding materials

Non-agricultural private wage and salary workers 5.2%

Mining, quarrying, and oil and gas extraction 10.2%

Construction 4.6%

Manufacturing 3.6%

Wholesale and Retail Trade 6.1%

Transportation and utilities 5.9%

Information 4.4%

Financial Activities 3.2%

Professional and business services 4.6%

Education and health services 4.3%

Leisure and hospitality 9.1%

Other services 5.0%

Agricultural and related private wage and salary workers 5.7%

Government workers 3.6%

Self-employed workers, unincorporated, and unpaid family workers 4.9%

THE CONSTRUCTION MARKET: LABOR

56.8%

49.0%

48.8%

38.2%

33.2%

32.5%

26.7%

23.2%

21.6%

11.8%

10.9%

9.9%

9.3%

9.2%

7.3%

5.9%

4.5%

4.3%

4.0%

2.8%

2.7%

-15% -5% 5% 15% 25% 35% 45% 55% 65%

Lumber and plywood

Copper and brass mill shapes

Steel pipe and tube

Metal bar joists & rebar

Aluminum mill shapes

Fabricated structural steel

Plastic construction products

Sheet metal products

Gypsum products

Insulation materials

Asphalt roofing & siding

Architectural coatings

Prestressed concrete products

Precast concrete products

Flat glass

AC paving mixtures and blocks

Construction machinery & eqpmt

Brick and structural clay tile

Concrete block and brick

Ready-mixed concrete

Concrete pipe

Construction Materials Price Movement - Last 12 Months

THE CONSTRUCTION MARKET: MATERIALS

Delivery times have increased after receiving a double hit of demand and supply issues

Item Pre-COVID Delivery Time Current Delivery Time Future Delivery Time

Prestressed concrete products 3-4 months 6-7 months 6-7 months

Asphalt roofing & siding 2-4 weeks 2-3 months 2-3 months

Concrete block and brick 2-4 weeks plus 1-2 weeks plus 1-2 weeks

Ready-mixed concrete 1-2 days 1-2 weeks 1-2 weeks

Precast concrete products 2-4 weeks 4-6 weeks 4-6 weeks

Brick and structural clay tile 3-4 weeks 16-20 weeks 16-20 weeks

Flat glass 3-4 weeks 8-16 weeks 8-16 weeks

Gypsum products 3-4 weeks 5-6 weeks 5-6 weeks

Insulation materials 2-4 weeks 4-5 months 4-5 months

Steel pipe and tube 4-8 weeks 4-5 months 4-5 months

Aluminum mill shapes 4-8 weeks 4-5 months 4-5 months

Sheet metal products 2-4 weeks 4-6 weeks 4-6 weeks

Fabricated structural steel 6-8 weeks 5-6 months 5-6 months

Metal bar joists & rebar 2-3 months 6+ months 6+ months

Construction machinery & equipment

12 months for AHUs18 weeks for generators

8 weeks for lighting22 week for switchgear

25 weeks for environmental cold rooms

18-20 weeks for lab casework

12 months for AHUs18 weeks for generators

8 weeks for lighting22 week for switchgear

25 weeks for environmental cold rooms

18-20 weeks for lab casework

THE CONSTRUCTION MARKET: LOGISTICS

Evolving Design

• Touchless technology an integral part of most healthcare design

• More negative isolation rooms are included patient tower design

• Design now focus on how we can quickly they can modify existing patient rooms

• How can we design spaces to quickly convert newly design patients' rooms to negative pressure rooms

• Telemedicine has become an important mode of healthcare delivery

• New hospital are designing more robust IT infrastructure to meet IOT & AI requirements

• Designing universal patients' rooms that can be easily switch to ICU rooms

• Engineering design is now focus on enhance filtration and enhanced ventilation HVAC systems

• Enhancing Medical Gas design

HOW HAS DESIGN BEEN EVOLVING SINCE THE PANDEMIC

Adopt Destination Control system(DCS) for staff/bed Lifts

Adopt Automatic sensors for touchless control

TOUCHLESS TECHNOLOGIES

Ward

Ward Floors

Program Floors

Ward

A&E

OT

Radiology

Before SARS(prior 2003)

Isolation Beds(total 90 beds in HK)

Iso. Ward

A&E / Iso. Zone

OT / Iso. OT

After SARS(2004 - 2019)Isolation Beds

(total 1,000+ beds in HK)

Ward

Ward

Ward

Ward

Ward

Ward

Ward

Ward

Ward

Ward

Ward

Ward

Ward

ICU

Radiology / Iso. Rad

ICU / Iso. ICU

OT OT

Iso. Ward

A&E / Iso. Zone

OT / Iso. OT

Ward

convertible Iso. Ward

Ward

Ward

Ward

Radiology / Iso. Rad

ICU / Iso. ICU

OT

Iso. Ward

convertible Iso. Ward

AII

AII

AII

AII

AII

AII

AII

+AII

+AII

AII

AII

AII

AII

AII = Airborne Infection

Isolation Room

Future (post COVID-19)(2020 & beyond)

Isolation Beds (may be 2,000+ beds in HK)

HISTORICAL CHANGES IN HONG KONG PUBLIC HOSPITALS

Mount Sinai Hospital – Guggenheim Pavilion – 6th Floor

SWITCHABLE ISOLATION ROOMS

Normal ModeDucted to R/F for

discharge

(CLOSE)

(OPEN)

(Remove Filter)

2ND TIER ISOLATION FACILITIES – EXAMPLE

Pandemic Mode

Preferable ducted to

R/F for discharge

(OPEN)

(CLOSE)

(Insert Filter)

HOSPITAL DESIGN

Evolving Construction

AVERAGE COST/SP FOR HOSPITALS, THROUGH 2021

$60/SF

$120/SF

$200/SF

$350/SF

$550/SF

$600/SF

$100/SF $130/SF

$175/SF

$260/SF$285/SF

$0/SF

$100/SF

$200/SF

$300/SF

$400/SF

$500/SF

$600/SF

$700/SF

1980 1990 2000 2010 2020 2021

($)C

ost

/SF

Year

Cost/SF

EscalationAdjusted

Why the Variance?

- Codes

- Wants vs. Needs

- Technology

INFLATION VS. RECESSION (1965-2021)

3.3

%3

.2%

3.1

%6

.0%

10

.4%

10

.3%

11

.6%

6.3

%6

.5%

16

.6%

4.2

%2

.0%

3.5

%6

.2%

10

.8%

11

.0%

10

.3%

8.0

%5

.2%

5.3

% 3.9

% 2.7

%3

.4%

3.8

%3

.4%

3.5

%1

.6% 0

.4%

2.2

%3

.0%

3.8

% 2.6

%4

.0%

4.6

% 3.8

%4

.4% 3

.0%

1.0

%0

.3%

5.5

%9

.5%

10

.6%

7.7

%6

.3%

-8.4

%-4

.0%

1.6

%2

.2%

4.1

%4

.4%

4.5

%4

.9%

5.0

%5

.6%

5.5

%1

.3%

9.0

%

1970, 129

1974, 190

1980, 273

1981, 301

1990, 441

2001, 613

2008, 908

0

200

400

600

800

1000

1200

1400

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020-12.0%

-9.0%

-6.0%

-3.0%

0.0%

3.0%

6.0%

9.0%

12.0%

15.0%

18.0%

TUR

NER

CO

ST IN

DEX

ESC

ALA

TIO

N

Turner Cost Index vs Recession

Escalation Turner Cost Index

CONSTRUCTION INFLATION BY CITY (3.9% - 16%)

PREFABRICATION

PREFABRICATION

Cincinnati – Mercy Health, West | MEP Racks

New York – NYU Kimmel | Bathroom PODs

Tampa – James A Haley VA Hospital | OH Racks, Risers & Electrical Pods

University of Kentucky | Exterior Panels

Children’s MOB | Stairwells Owensboro | Headwalls

Electrical | Prefab Components

Interiors | Preassemble Door Hardware

Interiors | Soffits & Ceilings

Citizen M

461 Dean Street

THINKING BIG – MODULAR / VOLUMETRIC

Questions + Answers

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