1. CONSTRUCTION COST TRENDS Central Texas Conference – November 13, 2009

2. Construction Cost Trends 1. The Last 18 Months 2. Current Economic Factors 3. Stimulus Efforts/Effect 4. CEFPI Project Cost Tracking 5. What Lies Ahead

3. 1. The Last 18 Months Producer price index (PPI) for construction vs. consumer price index, 2003-09 PPI for inputs to construction industries: 33% Consumer price index: 17% Source: BLS (CPI, PPI) and The Associated General Contractors of America

4. 1. The Last 18 Months Source: Gerdau Ameristeel

5. 1. The Last 18 Months  Tail end of an overheated market  Soaring demand and pricing  Collapse of the housing market  Financial market implosion  Government Intervention  Dust begins to settle  Chasing the market

6. 1. The Last 18 Months $ Time Historical Inflation % Budgets Cost Chasing the Market

7. 1. The Last 18 Months $/SF PPI for inputs to construction industries: 33% Elementary School Case Study Consumer price index: 17%

8. 2. Current Economic Factors  Foreign demand  Petroleum price  Texas employment  School enrollments  Single family housing market  Commercial construction market  Availability of financing  P&P bonding availability  Political environment

9. 3. Stimulus Efforts/Effect  Federal program  Status of funds  Results

10. 3. Stimulus Efforts/Effect Economic stimulus package Total : $787 billion in spending increases, tax cuts  $308 billion in appropriated spending  $267 billion in direct spending (refundable portion of tax credits, unemployment benefits, Medicaid reimbursement to states, etc.)  $212 billion in tax cuts Source: The Associated General Contractors of America

11. 3. Stimulus Efforts/Effect

12. Local Project Costs and Inflation History As maintained by the local CEFPI organization 4. CEFPI Project Cost Tracking

13.  General Information o District Name o Grade Level o Bldg Square Footage o Student Capacity o Square Footage per Student o Bid Date o Completion Date o Project Delivery Method  Cost Information o Site work/Site Athletics o Building Cost  Other Costs o Offsite Roads/Utilities/Land o Design & Testing  Differentiating Features o Site conditions, etc. Project Information Sheet contains Basic Information

14. o Furniture o Movable Equipment o Library Shelving o Computers o Security Systems o Telephone Systems o Playground Equipment o P.A. System o Computer Software o Textbooks o Projector Screens o Landscaping o Televisions o Computer Hardware o Library Books  Items Budgeted/ Furnished Separately by the Owner 4. CEFPI Project Cost Tracking Project Information Sheet contains Basic Information

15. 4. CEFPI Project Cost Tracking Sample of Project Information Sheet

16. 4. CEFPI Project Cost Tracking Inflation History Revised 10/27/2009Capacit y Grade Level Square Footag e Constructio n Costs Cost / SF Cost / Student SF / Student Bid Date or Final GMP Approv al Date 1997199819992000200120022003200420052006200720082009201020112012201320142015 0.030.010.0050.020.0050.0150.050.10.070.060.050.120.010.06 projected RRISDBlackland Prairie Elem.800PK - 594535 $ 10,617,030 $ 112.31 $ 13,271 118.17 Apr-00 $ 10,617,030 $ 10,670,115 $ 10,830,167 $ 11,371,675 $ 12,508,843 $ 13,384,462 $ 14,187,529 $ 14,896,906 $ 16,684,535 $ 16,851,380 $ 17,862,463 $ 18,934,211 $ 20,070,263 $ 21,274,479 $ 22,550,948 $ 23,904,0 05 $ 112.31 $ 113 114.56 120.29 132.32 141.58 150.08 157.58 176.49 178.26 188.95 200.29 212.31 225.04 238.55 252.86 RRISDCactus Ranch Elem.800PK - 594535 $ 11,214,619 $ 118.63 $ 14,018 118.17 Aug-00 $ 11,214,619 $ 11,270,692 $ 11,439,752 $ 12,011,740 $ 13,212,914 $ 14,137,818 $ 14,986,087 $ 15,735,392 $ 17,623,639 $ 17,799,875 $ 18,867,867 $ 19,999,939 $ 21,199,936 $ 22,471,932 $ 23,820,248 $ 25,249,4 63 $ 118.63 $ 119 121.01 127.06 139.77 149.55 158.52 166.45 186.42 188.29 199.59 211.56 224.25 237.71 251.97 267.09 RRISDUnion Hill Elem.900PK - 5106764 $ 14,120,000 $ 132.25 $ 15,689 118.63 Jun-01 $ 14,120,000 $ 14,331,800 $ 15,048,390 $ 16,553,229 $ 17,711,955 $ 18,774,672 $ 19,713,406 $ 22,079,015 $ 22,299,805 $ 23,637,793 $ 25,056,061 $ 26,559,424 $ 28,152,990 $ 29,842,169 $ 31,632,6 99 $ 132.25 134.24 140.95 155.05 165.90 175.85 184.64 206.80 208.87 221.40 234.69 248.77 263.69 279.52 296.29 HCISDNew Elementary (Negley ES) 8801 - 592222 $ 10,514,000 $ 114.01 $ 11,948 104.80 Feb-05 $ 10,514,000 $ 11,144,840 $ 11,702,082 $ 13,106,332 $ 13,237,395 $ 14,031,639 $ 14,873,537 $ 15,765,949 $ 16,711,906 $ 17,714,621 $ 18,777,4 98 114.01 120.85 126.89 142.12 143.54 152.15 161.28 170.96 181.21 192.09 203.61 HCISDNew Elementary (Science Hall) 8001 - 586884 $ 10,443,649 $ 120.20 $ 13,055 108.61 Mar-05 $ 10,443,649 $ 11,070,268 $ 11,623,781 $ 13,018,635 $ 13,148,821 $ 13,937,751 $ 14,774,016 $ 15,660,457 $ 16,600,084 $ 17,596,089 $ 18,651,8 55 120.20 127.41 133.79 149.84 151.34 160.42 170.04 180.25 191.06 202.52 214.68 LISDNew Elementary No. 16877PK - 5100472 $ 13,477,555 $ 134.14 $ 15,368 114.56 May-05 13,477,555 $ 14,286,208 15,000,519 16,800,581 16,968,587 17,986,702 19,065,904 20,209,858 21,422,450 22,707,797 24,070,2 65 134.14 142.19 149.30 167.22 168.89 179.02 189.76 201.15 213.22 226.01 239.57 LISDNew Elementary No. 17877PK - 5100472 $ 14,019,581 $ 139.54 $ 15,986 114.56 May-05 14,019,581 $ 14,860,756 15,603,794 17,476,249 17,651,011 18,710,072 19,832,676 21,022,637 22,283,995 23,621,035 25,038,2 97 139.54 147.91 155.30 173.94 175.68 186.22 197.40 209.24 221.79 235.10 249.21 SMISDNew Elementary (Bowie)700K-580888 $ 10,026,911 $ 123.96 $ 14,324 115.55 May-05 10,026,911 10,628,526 11,159,952 12,499,146 12,624,138 13,381,586 14,184,481 15,035,550 15,937,683 16,893,944 17,907,5 81 123.96 131.40 137.97 154.52 156.07 165.43 175.36 185.88 197.03 208.86 221.39 Project Information Spreadsheet Overall

17. Revised 10/27/2009CapacityGrade Level Square Footage Construction Costs Cost / SFCost / Student SF / Student Bid Date or Final GMP Approval Date RRISDBlackland Prairie Elem.800PK - 594535 $ 10,617,030 $ 112.31 $ 13,271118.17 Apr-00 RRISDCactus Ranch Elem.800PK - 594535 $ 11,214,619 $ 118.63 $ 14,018118.17 Aug-00 RRISDUnion Hill Elem.900PK - 5106764 $ 14,120,000 $ 132.25 $ 15,689118.63 Jun-01 HCISDNew Elementary (Negley ES)8801 - 592222 $ 10,514,000 $ 114.01 $ 11,948104.80 Feb-05 HCISDNew Elementary (Science Hall)8001 - 586884 $ 10,443,649 $ 120.20 $ 13,055108.61 Mar-05 LISDNew Elementary No. 16877PK - 5100472 $ 13,477,555 $ 134.14 $ 15,368114.56 May-05 LISDNew Elementary No. 17877PK - 5100472 $ 14,019,581 $ 139.54 $ 15,986114.56 May-05 SMISDNew Elementary (Bowie)700K-580888 $ 10,026,911 $ 123.96 $ 14,324115.55 May-05 4. CEFPI Project Cost Tracking Project Information Spreadsheet Project Information

18. Project Information Spreadsheet Bid Date by Year and Actual Inflation Rate Inflation History 1997199819992000200120022003200420052006200720082009 0.030.010.0050.020.0050.0150.050.10.070.060.050.120.01 projected $ 10,617,030 $ 10,670,115 $ 10,830,167 $ 11,371,675 $ 12,508,843 $ 13,384,462 $ 14,187,529 $ 14,896,906 $ 16,684,535 $ 16,851,380 $ 112.31 $ 113 114.56 120.29 132.32 141.58 150.08 157.58 176.49 178.26 $ 11,214,619 $ 11,270,692 $ 11,439,752 $ 12,011,740 $ 13,212,914 $ 14,137,818 $ 14,986,087 $ 15,735,392 $ 17,623,639 $ 17,799,875 $ 118.63 $ 119 121.01 127.06 139.77 149.55 158.52 166.45 186.42 188.29 $ 14,120,000 $ 14,331,800 $ 15,048,390 $ 16,553,229 $ 17,711,955 $ 18,774,672 $ 19,713,406 $ 22,079,015 $ 22,299,805 $ 132.25 134.24 140.95 155.05 165.90 175.85 184.64 206.80 208.87 $ 10,514,000 $ 11,144,840 $ 11,702,082 $ 13,106,332 $ 13,237,395 114.01 120.85 126.89 142.12 143.54 $ 10,443,649 $ 11,070,268 $ 11,623,781 $ 13,018,635 $ 13,148,821 120.20 127.41 133.79 149.84 151.34 13,477,555 $ 14,286,208 15,000,519 16,800,581 16,968,587 134.14 142.19 149.30 167.22 168.89 14,019,581 $ 14,860,756 15,603,794 17,476,249 17,651,011 139.54 147.91 155.30 173.94 175.68 4. CEFPI Project Cost Tracking

19. 200920102011201220132014 0.010.06 projected $ 16,851,380 $ 18,934,211 $ 20,070,263 $ 21,274,479 $ 22,550,948 $ 23,904,005 178.26 200.29 212.31 225.04 238.55 252.86 $ 17,799,875 $ 19,999,939 $ 21,199,936 $ 22,471,932 $ 23,820,248 $ 25,249,463 188.29 211.56 224.25 237.71 251.97 267.09 $ 22,299,805 $ 25,056,061 $ 26,559,424 $ 28,152,990 $ 29,842,169 $ 31,632,699 208.87 234.69 248.77 263.69 279.52 296.29 $ 13,237,395 $ 14,873,537 $ 15,765,949 $ 16,711,906 $ 17,714,621 $ 18,777,498 143.54 161.28 170.96 181.21 192.09 203.61 $ 13,148,821 $ 14,774,016 $ 15,660,457 $ 16,600,084 $ 17,596,089 $ 18,651,855 151.34 170.04 180.25 191.06 202.52 214.68 16,968,587 19,065,904 20,209,858 21,422,450 22,707,797 24,070,265 168.89 189.76 201.15 213.22 226.01 239.57 17,651,011 19,832,676 21,022,637 22,283,995 23,621,035 25,038,297 175.68 197.40 209.24 221.79 235.10 249.21 Project Information Spreadsheet Inflation Rate Projected

20. 5. What Lies Ahead  Short Term  Long Term

21. 5. What Lies Ahead Aluminum Copper West Texas Crude Oil Price History November 1999 thru October 2009

22. 5. What Lies Ahead  Industry depends on specific materials that:  Are in demand worldwide  Have erratic supply growth  Are heavy, bulky or hard to transport  Construction requires physical delivery  Thus, industry is subject to price spurts, transport bottlenecks, fuel price swings  Expect 6 to 8% PPI increases, higher spikes Outlook for materials (beyond ‘09) Source: The Associated General Contractors of America

23. 5. What Lies Ahead  Nonres spending: 0 to -5% (more stimulus put in place, maybe gains in retail, higher ed, hospitals)  Res: +5 to +10% (SF up, MF down all year)  Total construction spending: -4% to +2%  Materials costs: 0% to +8%  Labor costs: +3% or less Summary for 2010 Source: The Associated General Contractors of America

24. 5. What Lies Ahead

25. Presented by: Jimmy Disler, Leander ISD Jimmy.Disler@leanderisd.org Ed Sevcik, Round Rock ISD Ed_Sevcik@roundrockisd.org Marty Burger, American Constructors MBurger@acitexas.com Steve McCleskey, Bartlett Cocke SMcCleskey@bartlettcocke.com CEFPI School Construction Cost Summary http://media.cefpi.org/southern/texasnorth/CTConstructionCostReport102709.xls Construction Cost Trends