Cost spikes threaten campus vision

As the cost of construction materials continues to skyrocket, UNC officials now are facing a budget crunch that could result in changes to the University's development plan.

Costs in construction have typically increased 3 to 5 percent each year since the ongoing campus development began in 2000, said Bruce Runberg, associate vice chancellor for construction and planning.

"For the first several years we had minimal cost escalation," Runberg said. "We were actually going in under budget."

But during the last year, construction costs have increased by as much as 8 to 12 percent.

"Because of the two hurricanes it's likely to get much worse," he said, referring to Hurricane Katrina and Hurricane Rita. "This is a significant increase. It's causing us a lot of difficulty in meeting our budget."

Escalating building costs are part of a long-term trend, Runberg said.

Commodity products such as steel, concrete and plywood all have become more expensive during the last year - with a sharp price increase during the past month.

He said plywood has increased in cost by up to 40 percent in just two weeks. The cost of some mechanical work, including projects using steel and other metal products, is up by nearly 50 percent.

UNC's planning officials now are reviewing projects to determine if any should be delayed or canceled.

Sidney Stone, contract administrator for construction management, said some projects in the planning stage could face delays.

He cited the proposed 300-car parking garage planned for the Arts Common, as an example.

But Stone said most construction projects won't face indefinite delays. "They'll just be planned better for the future with realistic up-to-date cost data."

Runberg said the University will try to find bids for remaining construction projects soon to minimize the effects of possible increases.

"We have seen the marketplace become saturated with progressively fewer contractors bidding on each project," he said. "Then you throw in high commodity prices, and those two things are the foremost in what is making it difficult to bring projects within budget."

Officials also worry that contractors who are flocking to rebuild the Gulf Coast region might cause a shortage and raise labor costs.

But officials from T.A. Loving, UNC's general contractor, said they will remain in North Carolina.

The company will try to lock down prices of materials early on in the construction process to minimize costs, said Michael Richter, senior vice president and building division manager for T.A. Loving.

Campus projects often face price increases because they take more time to complete, he said. "Long-term projects are more risky because they are subject to more potential fluctuations and increases."

Only the next few months will determine whether costs will continue to rise, Runberg said.

"Until the marketplace starts to settle out we won't know."

 

Contact the University Editor at udesk@unc.edu.