Construction Costs in Pennsylvania
By Glenn Manning, P.E.

Central Pennsylvania, regardless of the measurement used, has always been fortunate in terms of relative costs of construction. Work ethic, diverse labor market conditions, geographic dispersion, a large pool of subcontractors, supplier and manufacturer options and in general, living conditions offering an appealing place to live and work, have all fostered a favorable climate for construction. While Pittsburgh and Philadelphia carry slightly higher cost indices, our area has, for years, remained below the national average.

Actually, according to Engineering News-Record, 2002 history and projections for 2003, the spread between the selling price for construction and the cost of labor and materials indices indicates that overall, construction is being discounted against normal conditions. This should carry good news to our area in terms of cost of construction. Within the industry, locally and regionally, construction costs have been constantly escalating approximately 2 - 3 % over the past several years. Continued discounting by contractors and subcontractors, smaller labor wage increases, lowered material prices and design fee competition could keep escalation near the lower end of this range. While construction companies come and go, competition is keen on all major project types throughout our region.

A further differentiator of our market is the fact that the interstate highway network passing through central Pennsylvania fosters the participation of subcontractors, suppliers, consultants, designers and often contractors geographically distant to compete in our market, thereby driving prices down further. Two and three decades ago, the central Pennsylvania market was more provincial, with outside design and construction entities the exception, rather than the norm. This regional expansion has certainly been fostered by computer networking technology.

The increased use of design-build single source contracting has also impacted many markets in terms of project costs. Specifically, the collaborative effect of designers and builders working together from project inception through completion continues to generate cost savings through lower design fees and shorter schedules. The actual facility component costs may not necessarily be lower through the use of design-build project delivery, yet since design-build allows construction to begin long before design is complete, reduced design scopes of responsibility and resultant design fees coupled with accelerated program schedules yields lower project costs. Single source responsibility typically lowers the likelihood of indirect project costs associated with delays and claims, due to one contract with the owner for both design and construction. The Design-Build Institute of America in Washington, DC promotes the cost and schedule advantages of design-build contracting. A recent study of 350 projects by The Construction Industry Institute in collaboration with Pennsylvania State University revealed several interesting facts relative to design-build contracting in contrast to other delivery methods:

- Unit costs are 4.5 to 6% less

- Speed of construction is 7 to 12% faster

- Overall project schedule is 23 to 33% shorter

In terms of specific project unit costs The Quandel Group is experiencing throughout central and northeastern Pennsylvania for new construction, we offer the following:

Project Type $/ Square Foot Range

- Distribution Centers $20 - 40/SF

- Warehouses $15 - 30/s.f.

- Office Building $60 - 110/s.f.

- Student Housing $75 - 110/s.f.

- K-12 Schools $90 - 130/s.f.

- Hospitals $140 - $250/s.f. ++

We recently completed a 40,000 SF pre-engineered metal building Distribution Center with a 2400 SF office in Lebanon County that was constructed under a design-build contract in seven months for $46 per square foot. The construction time was less than 4 months, from groundbreaking to owner occupancy. The warehouse has a clear height of 24 feet and the floor consists of a 10" floor slab with steel fiber reinforcement to support equipment. It also included a series of trench drains and containment walls to contain potential spills. The heating system consists of a gas fired unit for the warehouse. The class A office area has acoustical tile, carpet and vct finishes and gas fired heat and cooling units. The building was built with expansion in mind. The east wall has all the necessary connections for expansion in the future. The owner requested a minimum number of interior columns to avoid fork truck interference.

A three phase 650,000 precast concrete facade Distribution Center in the same geographic vicinity was constructed under a design-build contract for under $24 per square foot. The fully sprinklered building sits on a 109 acre that involved significant rock removal. The building clear height is both 29 and 38 feet with a built up roof. The warehouse space is heated with gas fired air rotation units. The class A office area has acoustical tile, carpet and vct finishes with painted walls.

We don’t expect any significant changes in trends within our design & construction industry or region in the next several years, based on what we know and see resently. All of the conditions we enjoy throughout central Pennsylvania have become ingrained over several decades and should continue to promote a healthy market for all involved in design and construction for years to come.

H. Glenn Manning, PE is Vice President of Sales & Marketing for The Quandel Group, Inc. For more information, contact him at 717.657.0909 or e-mail him at manning@quandel.com.

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