The document provides an overview and analysis of construction market trends from 2009 to the present. It discusses macroeconomic indicators that impact construction costs, such as GDP, employment, and currency exchange rates. The document also examines specific cost indices and forecasts a continued modest rise in construction costs over the next few years, recommending contractors account for potential cost increases through contingencies in bidding and project budgets.

1. Beyond Estimation Market Outlook®
Since 1972
®
James Vermeulen – Co-CEO
Blair Tennant, LEED AP – Associate Principal
Zach Bergeron – Senior Project Manager
Karima Maloney – Senior Project Manager
North America’s Construction Economist
Vermeulens.com
Service Beyond Estimation
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

2. 2
Vermeulens is a Registered Provider with The American Institute of Architects
Continuing Education Systems. Credit earned on completion of this program
will be reported to CES Records for AIA members. Certificates of Completion
for non-AIA members are available on request.
This program is registered with the AIA/CES for continuing professional
education. As such, it does not include content that may be deemed or
construed to be an approval or endorsement by the AIA of any material of
construction or any method or manner of handling, using, distributing, or
dealing in any material or product. Questions related to specific materials,
methods, and services will be addressed at the conclusion of this presentation.
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook
AIA Continuing Education

3. 3
Learning Objectives
Cost Reconciliation Tracker
 Present trends in median trade costs from January 2009 – Current
Macro Economics
 Understand the Macro Economic impacts on Construction Volume and Cost
Forecast
 Forecast for Future Construction Costs
Procurement Strategy
 In light of current market conditions, recommendations on project procurement
Beyond Estimation Market Outlook
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

4. 4
Where We Are…
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook

5. 2000 - Current
5
Vermeulens Construction Cost Index Beyond Estimation Market Outlook
120
VCC Construction Cost Index
CPI
Construction Cost Trendline (3.1%)
CPI Trendline (2.7%)
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

6. 7,500
8,500
9,500
10,500
11,500
12,500
13,500
14,500
15,500
16,500
17,500 GDP(Billions)
2.5% Trend Line
6
High/Low
-4.3%
Low/Current
+14.9%
Growth Rate of 2.0% for
the last 6 Years
US Real GDP
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook

7. 7
Code Group VCC CM CM-VCC VCC CM CM-VCC
01 Allowances $1,156,805 $2,422,380 $1,265,575 $2,651,790 $2,672,730 $20,940
02 Site Work $2,636,810 $3,773,428 $1,136,618 $2,918,155 $2,882,279 ($35,876)
03 Concrete $5,840,270 $5,065,081 ($775,190) $5,065,361 $5,065,081 ($280)
04 Masonry $1,547,241 $1,767,385 $220,144 $1,615,526 $1,609,395 ($6,130)
05 Metals $17,945,452 $17,804,383 ($141,069) $15,675,089 $15,577,004 ($98,085)
06 Wood/Plastic $3,172,732 $3,831,671 $658,939 $3,694,276 $3,600,999 ($93,277)
07 Thermal/Moisture Protection $2,903,951 $3,046,873 $142,922 $3,099,398 $3,086,080 ($13,319)
08 Doors/Windows $17,219,666 $15,756,579 ($1,463,087) $15,214,307 $15,299,926 $85,619
09 Finishes $9,635,770 $9,399,224 ($236,546) $10,135,975 $10,137,758 $1,782
10 Specialties $1,335,983 $1,163,012 ($172,971) $1,410,825 $1,418,709 $7,884
11 Equipment $1,127,700 $1,852,358 $724,658 $1,692,000 $1,693,414 $1,414
12 Furnishings $784,846 $302,393 ($482,453) $559,342 $573,596 $14,255
13 Special Construction $300,000 $148,575 ($151,425) $150,000 $148,575 ($1,425)
14 Conveying Systems $4,858,875 $7,212,645 $2,353,770 $5,963,888 $5,993,138 $29,250
15 Mechanical $28,949,381 $35,232,816 $6,283,436 $29,127,187 $29,493,221 $366,034
16 Electrical $15,451,608 $16,700,277 $1,248,669 $16,476,313 $16,451,613 ($24,700)
17 Permits & Fees $19,075,543 $20,452,111 $1,376,568 $20,043,336 $20,051,467 $8,130
18 Contingencies $16,841,472 $14,102,030 ($2,739,443) $15,684,472 $15,697,176 $12,704
19 Enabling $22,704,456 $22,704,458 $2 $22,704,458 $22,704,458 $0
20 Total Construction Costs $173,488,558 $182,737,674 $9,249,116 $173,881,696 $174,156,616 $274,920
Beyond Estimation Market Outlook
Cost Reconciliation Tracker®
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

8. 8
Cost Reconciliation Tracker®
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook

9. Typical Institutional Project – Direct Trade Cost
Recession Decline -14.0%
2011 +2.0%
2012 +4.0%
2013 +5.0%
2014 +6.0%
2015 +7.0%
2016 Q1+Q2 +3.0%
Assumes trade-weighted average of individual percentage trade reduction
9
Construction Cost Impact Beyond Estimation Market Outlook
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

10. 10
http://www.turnerconstruction.com/cost-index
Recession
Decline
-13.2%
2011 + 2.1%
2012 + 2.6%
2013 + 4.7%
2014 + 4.4%
2015 + 4.6%
2016 + TBD
-14%
+2.0%
+4.0%
+5.0%
+6.0%
Turner Construction Cost Index
Turner Construction Cost Index
+7.0%
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook
+ TBD

11. 950
675 675 750 750
1150
1075 1050
1150 1250
1300
1000
650
950
1300
0
250
500
750
1000
1250
1500
1750
2000
2250
2500
2750
3000
3250
3500
3750
High Growth Market Adjustment Cost Recovery High Growth
Markup
Labor
Material
3,400
2,750
2,375
2,850
3,300
11
Structural Steel Pricing Beyond Estimation Market Outlook
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

12. 12
Contingency
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook
Project Contingency and Escalation Recommendations
Design Contingency
Preliminary Design 10% to 15%
Schematic Design 6% to 9%
Design Development 3% to 6%
Contract Documents 0% to 3%
Construction Contingency 3% to 5%
Escalation - based on the Market Outlook
and Local index
3% to 9%
Bidding Contingency 0% to 5%
Project Contingency (Owner) 5% - 15%

13. 13
What’s Next?
100
Vermeulens Turner ENR
Beyond Estimation Market Outlook
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

14. 80
90
100
110
120
130
140
Nominal US Dollar Broad Index
14
-27% +21% -18% +28%
US Dollar Risk Hedge
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook

15. 0
2,000
4,000
6,000
8,000
10,000
12,000
NYSE
15
+123% -58% +144%
Beyond Estimation Market Outlook
US Dollar Risk Hedge
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

16. 16
US Dollar and NYSE
US Dollar and NYSE
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
80
90
100
110
120
130
140
USD NYSE

17. 0
5
10
15
20
25
30
35
40
45
50
Dow Jones Commodity Index
17
+168% -57% +72%
US Dollar Impact on Commodities
-53%
Beyond Estimation Market Outlook
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

18. 18
US Dollar Impact on Commodities
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook
0
5
10
15
20
25
30
35
40
45
50
80
90
100
110
120
130
140

19. 19
GDP (Billions) and NYSE Beyond Estimation Market Outlook
Jan-00Jan-01Jan-02Jan-03Jan-04Jan-05Jan-06Jan-07Jan-08Jan-09Jan-10Jan-11Jan-12Jan-13Jan-14Jan-15Jan-16Jan-17
0
2,000
4,000
6,000
8,000
10,000
12,000
10,000
10,500
11,000
11,500
12,000
12,500
13,000
13,500
14,000
14,500
15,000
15,500
16,000
16,500
17,000
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

20. 2/05/002/05/002/06/002/06/002/06/002/07/002/07/002/08/002/08/002/08/002/09/002/09/002/09/002/10/002/10/002/10/002/11/002/11/00
0
2,000
4,000
6,000
8,000
10,000
12,000
128,000
129,000
130,000
131,000
132,000
133,000
134,000
135,000
136,000
137,000
138,000
139,000
140,000
141,000
142,000
143,000
144,000
Thousands
8.7 M Jobs
13.6M Jobs
8.7 M Jobs
14.4M Jobs
20
200,000 / month
US Employment (Thousands) and NYSE
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook

21. 7.0%
9.0%
11.0%
13.0%
15.0%
17.0%
19.0%
128,000
129,000
130,000
131,000
132,000
133,000
134,000
135,000
136,000
137,000
138,000
139,000
140,000
141,000
142,000
143,000
144,000
BANK ANNOUNCEMENT
21
21.6 M Jobs 22.4 M Jobs 22.5 M Jobs 22.1M Jobs
US Employment (Thousands) Public vs Private Beyond Estimation Market Outlook
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

22. 22
01/31/0001/31/0002/01/0002/01/0002/01/0002/02/0002/02/0002/02/0002/03/0002/03/0002/04/0002/04/0002/04/0002/05/0002/05/0002/05/0002/06/0002/06/0002/06/0002/07/0002/07/0002/08/0002/08/0002/08/0002/09/0002/09/0002/09/0002/10/0002/10/0002/10/0002/11/0002/11/00
90,000
95,000
100,000
105,000
110,000
115,000
120,000
125,000
130,000
135,000
140,000
145,000
150,000
90,000
95,000
100,000
105,000
110,000
115,000
120,000
125,000
130,000
135,000
140,000
145,000
150,000
Thousands
Population(inthousands)
US Total Employment (Thousands)
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook

23. 01/01/01 09/28/03 06/24/06 03/20/09 12/15/11 09/10/14 06/06/17
100,000
105,000
110,000
115,000
120,000
125,000
130,000
135,000
140,000
145,000
150,000
155,000
160,000
100,000
105,000
110,000
115,000
120,000
125,000
130,000
135,000
140,000
145,000
150,000
155,000
160,000
6.2M
6.2M
200,000 / month
23
Beyond Estimation Market Outlook
US Total Employment (Thousands)
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

24. 0
50
100
150
200
250
300
350
400
450
24
202K AVG
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook
US Total Employment (Thousands)
200K AVG

25. 0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
0
1
2
3
4
5
6
7
8
9
10
25
Federal Asset Monthly Purchase Beyond Estimation Market Outlook
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

26. 26
US Job Growth
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook
02-Jan-87 02-Jan-88 01-Jan-89 01-Jan-90 01-Jan-91 01-Jan-92 31-Dec-92 31-Dec-93 31-Dec-94 31-Dec-95 30-Dec-96 30-Dec-97 30-Dec-98 30-Dec-99 29-Dec-00 29-Dec-01 29-Dec-02 29-Dec-03 28-Dec-04 28-Dec-05 28-Dec-06 28-Dec-07 27-Dec-08 27-Dec-09 27-Dec-10 27-Dec-11 26-Dec-12 26-Dec-13 26-Dec-14 26-Dec-15 25-Dec-16
1,000
10,000
-200
-100
0
100
200
300
400
500
600
6 Month Average Job Growth NYSE Vermeulens

27. High/Low
Total
-8.7M (-6%)
Construction
-2.3M (-30%)
Low/Current
Total
+14.4M (+11%)
Construction
+1.2M (+23%)
27
US Construction Employment (Thousands) Beyond Estimation Market Outlook
0
50
100
150
200
250
300
350
4,000
4,500
5,000
5,500
6,000
6,500
7,000
7,500
8,000
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

28. 28
Construction Employment and Percent of Total
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
4,000
4,500
5,000
5,500
6,000
6,500
7,000
7,500
8,000

29. 29
Construction Employment and Unemployment Rate
Beyond Estimation Market Outlook
0.0
2.0
4.0
6.0
8.0
10.0
12.0
01-Jan-0102-Jan-0203-Jan-0304-Jan-0404-Jan-0505-Jan-0606-Jan-0707-Jan-0807-Jan-0908-Jan-1009-Jan-1110-Jan-1210-Jan-1311-Jan-1412-Jan-1513-Jan-1613-Jan-17
5000
5500
6000
6500
7000
7500
8000
Employment
Unemployment Rate
0.0
5.0
10.0
15.0
20.0
25.0
30.0
01-Jan-0102-Jan-0203-Jan-0304-Jan-0404-Jan-0505-Jan-0606-Jan-0707-Jan-0807-Jan-0908-Jan-1009-Jan-1110-Jan-1210-Jan-1311-Jan-1412-Jan-1513-Jan-1613-Jan-17
5000
5500
6000
6500
7000
7500
8000
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

30. 30
Construction Labor Utilization Rate
Beyond Estimation Market Outlook
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t

31. 31
Beyond Estimation Market Outlook
<70%
70% to 79%
80% to 89%
90% to 105%
>105%
Top Cities by GDP
Construction Labor Utilization Rate
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

32. Regional Construction Labor (Thousands)
National
(-32% + 27%)
Denver
(-27% + 38%)
Boston
(-27% + 36%)
Houston
(-18% + 28%)
San Francisco
(-33% + 43%)
32
Houston
BostonDenver
San Francisco
Beyond Estimation Market Outlook
<70%
70% to 79%
80% to 89%
90% to 105%
>105%
140
150
160
170
180
190
200
210
220
230
60
70
80
90
100
110
120
60
70
80
90
100
110
120
50
60
70
80
90
100
110
120
130
140
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t

33. Regional Construction Labor (Thousands)
National
(-32% + 27%)
New York
(-20% + 24%)
Dallas
(-20% + 25%)
San Jose
(-34% + 40%)
Portland
(-31% + 23%)
33
Dallas
San Jose
New York
Beyond Estimation Market Outlook
<70%
70% to 79%
80% to 89%
90% to 105%
>105%
Portland
200
240
280
320
360
400
120
140
160
180
200
220
20
30
40
50
60
20
30
40
50
60
70
80
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

34. Regional Construction Labor (Thousands)
National
(-32% + 27%)
Baltimore
(-21% + 12%)
Seattle
(-37% + 35%)
Los Angeles
(-35% + 28%)
Minneapolis
(-38% + 39%)
34
Seattle
MinneapolisLos Angeles
Beyond Estimation Market Outlook
<70%
70% to 79%
80% to 89%
90% to 105%
>105%
Baltimore
40
50
60
70
80
90
100
60
80
100
120
140
150
170
190
210
230
250
270
290
40
50
60
70
80
90
100
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t

35. Regional Construction Labor (Thousands)
National
(-32% + 27%)
Philadelphia
(-24% + 12%)
Washington DC
(-27% + 8%)
Atlanta
(-38% + 26%)
San Diego
(-41% + 29%)
35
San DiegoAtlanta
Washington DCPhiladelphia
Beyond Estimation Market Outlook
<70%
70% to 79%
80% to 89%
90% to 105%
>105%
60
80
100
120
140
100
120
140
160
180
200
80
100
120
140
160
50
60
70
80
90
100
110
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

36. National
(-30% + 18%)
Detroit
(-44% + 30%)
Chicago
(-34% + 15%)
Miami
(-49% + 35%)
Phoenix
(-55% + 23%)
36
Miami
Regional Construction Labor (Thousands)
Detroit Chicago
Beyond Estimation Market Outlook
<70%
70% to 79%
80% to 89%
90% to 105%
>105%
Phoenix
40
60
80
100
120
100
120
140
160
180
200
220
240
50
70
90
110
130
150
170
190
50
70
90
110
130
150
170
190
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t

37. High/Low
Total -37%
Infra -12%
Res -66%
Non Res -28%
Low/Current
Total +49%
Infra +24%
Res +91%
Non Res +32%
37
0
250
500
750
1,000
1,250
Put In Place Construction (Annualized Billions)
Non Residential Residential Infrastructure
Beyond Estimation Market Outlook
US Construction Volume
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

38. 0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
8.5%
9.0%
Put In Place Construction (% of GDP)
Non Residential Residential Infrastructure
Peak
Total 8.2%
Infra 2.0%
Res 4.7%
Non Res 3.0%
Current
Total 6.9%
Infra 1.9%
Res 2.7%
Non Res 2.3%
38
US Construction Volume
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook

39. 05-Feb-00 05-Feb-00 06-Feb-00 06-Feb-00 06-Feb-00 07-Feb-00 07-Feb-00 08-Feb-00 08-Feb-00 08-Feb-00 09-Feb-00 09-Feb-00 09-Feb-00 10-Feb-00 10-Feb-00 11-Feb-00 11-Feb-00 11-Feb-00
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
700,000
800,000
900,000
1,000,000
1,100,000
1,200,000
1,300,000
39
Construction Volume (Millions) and NYSE Beyond Estimation Market Outlook
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

40. 40
Indicator Bottom Increase
Equities March 2009 +144%
Commodities February 2009 - 20%
GDP Q2 2009 2.0% Annual
Employment February 2010 14.4M
Non Res Volume April 2011 + 32%
Economic Summary
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook

41. 41
Forecast Beyond Estimation Market Outlook
100
200
Construction Trendline (3.1%)
High
Low
Vermeulens Index
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

42. 42
2008 Peak to Bottom 2010: - 14.0%
Change in 2011: + 2.0%
Change in 2012: + 4.0%
Change in 2013: + 5.0%
Change in 2014: + 6.0%
Change in 2015: + 7.0%
+ 4.0% + 6.0%2016: + 9.0%
Forecast
+ 3.5% + 5.5%2017: + 8.0%
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook

43. 43
Fast track projects
no time for 100% Contract Documents prior to starting construction
Busy construction markets
CM relationships required to get subcontractors to bid on your project
Financing requires a GMP in order to proceed
Complicated renovations or additions interfacing with operating
facilities
Beyond Estimation Market Outlook
CM @ Risk
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

44. 44
15%
10%
5%
0%
>
>
>
>
1. GMP at DD • 10-15% premium
• End costs vary depending on completeness of
documents, relationship of Owner to CM, cost
control process
2. GMP at CD • 5-10% premium
• Proponents provide estimate of costs and
commit to general requirements and fee
3. Modified Bid • 0-5% premium
• Proponents provide GMP based on completed
construction documents
4. Lump-Sum Bid • 6-8 pre-qualified general contractors submit
lump-sum bids for complete scope of work
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook
CM @ Risk

45. 45
What Are The Added Costs
CM @ Risk
Construction Contingency 2% to 5%
General Conditions & Requirements 2% to 5%
Higher Service Level
Higher Insurance Levels
Fees 0% to 1%
Sub Contractor Selection/Pricing 2% to 5%
High Level of Service & Quality
Highly Qualified
Scope Holds
Beyond Estimation Market Outlook
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

46. 46
Procurement Strategy Texas A&M Engineering Education Center
430,000sf Project
150,000sf Addition
340,000sf Fitout
90,000sf Shell
565,000sf Project
230,000sf Addition
415,000sf Fitout
150,000sf Shell
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook

47. 47
Procurement Strategy Texas A&M Engineering Education Center
80
85
90
95
100
105
110
115
120
125
130
135
140
145
150
155
160
Cost Model Concept SD DD CD 100% CD
$Millions
V Draft
V Reconciled
CM Draft
CM Reconciled
Budget
Anticpated Buyout
Jan 2014 Jul 2014 Sep 2014 Feb 2015 Aug 2015 Oct 2015
$50M MEP
$48M MEP
$40M MEP
Beyond Estimation Market Outlook

48. 48
Procurement Strategy Texas A&M Engineering Education Center
180
190
200
210
220
230
240
250
260
270
Vermeulens Index Estimates
Revised GMP
BP3 Remainder Structural
Initital GMP
(DD)
BP1 Demo & Utilities
BP2 Structural
BP3 Remainder Structural
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook

49. 49
Procurement Strategy Texas A&M Engineering Education Center Beyond Estimation Market Outlook
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

50. 50
Procurement Strategy Texas A&M Engineering Education Center
Procurement Outcome
 CM @ Risk with DD GMP cost premium of 8% - 10%
CM Fee & Markup 1.5% - 2.0%
CM Holds & Changes 1.5% - 2.0%
Change Order Pricing: BP-3: 2.5% - 3.0%
CM Contingency: 2.5% - 3.0%
8.0% - 10%
 GMP held no significance
 Cross Pollination of Trades (Steel & Electrical) cost $3M-$4M
 Early Steel Package saved the Schedule 6 months – 8 months
 Owner should be able to buy +$5M of alternates
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook

51. 51
Procurement Strategy Texas A&M Engineering Education Center
 Mitigate market risk and scope creep with Design Alternates
Target 10% from Program: ‘90% - 105%’
 Carefully Plan and Co-ordinate Bid Packages
Requires Timely input from Users
 Ensure the CM has MEP preconstruction estimating talent
Potential to eliminate with Bidding Contingency
Recommendations
Beyond Estimation Market Outlook
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

52. 52
150.0
170.0
190.0
210.0
230.0
250.0
270.0
Enabling Package (Slurry Wall &
Excavation)
100% CD GMP
Early Steel, Elevators and
Design Assist Enclosure
+0.6% +8.5% per year -14.0%
Procurement Strategy Dana Farber
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook

53. 53
Recommendations
 Distinct early packages (no cross pollination)
 Detailed concept design options to marry program and budget
 Timely decision making at conceptual design – avoid escalation
 Use of bidding contingency to mitigate market risk
 GMP 100% Documentation = lowest cost
Beyond Estimation Market Outlook
Procurement Strategy Dana Farber
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

54. 220
440
Construction Trendline (3.1%)
CPI Trendline (2.7%)
High
Low
Vermeulens Index
54
SD DD CD
Enabling
Structure & Envelope Interiors & MEP
Concept Design
Procurement Strategy
N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook

55. Strategic Early Procurement Packages
Escalation is extremely variable across the country
Plan and Program ‘90 to 105’
Watch Job Creation for Continued Growth
55
Recommendations
Beyond Estimation Market Outlook
B o s t o n T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

56. Track Record
Project Volume & Benchmarking
Consensus Approach in Reconciliation
Market Outlook
Conceptual Estimating
Trusted Advisor
Why Vermeulens
56N o r t h A m e r i c a ’ s C o n s t r u c t i o n E c o n o m i s t
Beyond Estimation Market Outlook

57. Beyond Estimation Market Outlook
Service Beyond Estimation
James Vermeulen – Co-CEO
Blair Tennant, LEED AP – Associate Principal
Zach Bergeron – Senior Project Manager
North America’s Construction Economists
Vermeulens.com
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