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Home My WebLink AboutCORRESPONDENCE - BID - 6046 CONCRETE MAINTENANCE PROJECT (4)March 10, 2008 City of Fort Collins Purchasing 215 North Mason Street P.O. Box 580 Fort Collins, Colorado Attn: John Stephen RE: Price adjustments for Concrete Maintenance Project, Bid 6046 Dear Mr. Stephens: Attached is our price adjustment for the 2008 project season. Because of the varying increases on the products used in this project, we did not think that an across the board percentage increase was reasonable. In our adjustments we attempted to individually calculate the increases using the items that most affected the costs related to producing that particular product. Based on information and forecasts that we have reviewed we, think the adjustments may even be conservative considering some of the forecasts for the coming year. One of the most significant increases is the cost of oil and fuel along with concrete, aggregate, forming materials and equipment expenses. Attached please find a copy of the Data Digest, a weekly newsletter we look at to help us get an overview of what's going on in the construction industry as a whole, as you can see this weeks report specifically address what went on with cost of highway and road construction during 2007. Also I've attached information regarding fuel price trends. I don't think it comes as much of a surprise to any of us. Thank you for considering our request and the factors on which they are based. John H. Nelson Vogel Concrete, Inc. 1313 Blue Spruce Fort Collins, CO 80524 Fax 970-407-9484 vogelconcrete(a)aol.com Vol. 8, No. 8 February 19-26, 2008 The Data DlGest Ken Simonson, Chief Economist, Associated General Contractors of America Phone: 703-837-5313 • Fax: 703-837-5407 • simonsonk(a)agc.org Overall, construction PPls jump; McGraw-Hill starts increase but other signs weaken The producer price index (PPi) for finished goods jumped 1.0% in January, seasonally adjusted, and 7.4% over the past 12 months, the Bureau of Labor Statistics (BLS) reported today. The "core" index, which omits food and energy, was up 0.4% and 23%. The PPI for inputs to construction industries, which includes all materials used in construction plus items consumed by contractors, such as diesel fuel, rose 0.9% and 5.5%. Among construction segments, the largest increases were for highway and street construction, 1.5% and 12%, followed by other heavy construction, 1.0% and 8.1 %, nonresidential buildings, 0.8% and 5.6%; multi -unit residential, 0.7% and 3.9%, and single -unit, 0.6% and 2.6%. The gains, especially for diesel -intensive highway construction, were propelled by the PPI for diesel fuel, 3.2% and 55%. Other commodities whose PPI increased included steel mill products, 1.3% and 4.2%; copper avd brass mill shapes, 2.1 % and 4. l %; a.sphall paving mixtures and blocks, 1.9% and 3.6%; and concrete products, 0.6% rind 3.6%. Holding down the gain irh building costs were decreases for gypswn products, -0.3% and -22%; hunber and plywood, -1.8% and -5.4%; aluntimmn mill shapes, -0.6% and -4.0%, insulation materials, -0.4% and -3.6%; and brick and structural clay tile, -0.3% and -0.7%. BLS introduced a PPI for new industrial building construction, based on quarterly estimates of materials, labor and equipment costs plus monthly estimates from contractors as to costs for overhead and profit. Several construction input prices appear likely to star much higher for now than a year ago. The average retail price of on -highway diesel fuel soared 16 cents per gallon to a record $3.55, $I (39%) higher than a year earlier, the Energy Information Administration (EiA) reported yesterday. On February 12, EIA forecasted that diesel would average $3.21 in 2008, up 1 1 % from 2007. EIA also forecasted that the Henry Hub spot price for natural gas, the feedstock for the resins for minus construction plastics, would average $8.18 this quarter, 10% higher than in the first quarter of 2007. Whether resin and plastics makers can pass the cost increase through to construction materials such as polyvinyl chloride pipe or insulation depends on demand as well as input cost. "Rebar prices from the Commonwealth of Independent States, a major export market made up of many former Soviet republics, have risen 30% to $585 a ton through January," the Wall Street Journal reported yesterday in a story on the rollout of a steel -futures contract on the London Metals Exchange. The spot price for copper closed yesterday at $3.74 per pound, up sharply in recent weeks and up 30% from a year earlier. New construction starts increased 8% in January, seasonally adjusted, but was down 19%from January 2007, McGraw-Hill Construction reported on February 79, using its own database ofprojects. Nonresidential building rose 20% ,frrom December and 4%from .January 2007. Nonbuilding construction was up 27%for the month but down 6%from ayear earlier. Residential building fell 11 % and 41 %. Two private indexes that are suggestive of future construction turned down this month. The American Institute of Architects (AiA)'s Architectural Billings Index slumped from 55 in December to 50.7 in January, the AiA reported on Wednesday. The index measures the difference between the number of firms reporting an increase or decrease of more than 5% in billings from the prior month, with 50 being an even balance, but the index does not weight the answers by the size of the firm or the change. Three-month moving averages for firms with multi -family residential, conunercial/indusnial, institutional and mixed practices all registered above 51, The National Association of Realtors (NAR) reported on Wednesday that its Commercial Leading Indicator for Brokerage Activity slipped 0.4% in the fourth quarter of 2007 but remained 0.1 % above the fourth quarter of 2006, "The index incorporates 13 variables that reflect commercial real estate activity" drawn from government and trade association series. "The latest data imply that investment in private nonresidential structures... could show only minimal growth or even decline in 2008," NAR Chief Economist Lawrence Yun said. "Realtor members who specialize in office and industrial properties indicate in a separate survey that they anticipate a measurably lower level of business activity in the upcoming quarters." Recent articles suggest possible slowdowns in three still -vibrant construction markets: New York Citr, Utah and Washington, DC. The New York Times reported on Saturday that a "$14 billion proposal to transform Permsyhunhia Station and the district around it is in danger of collapse because of the softening economy, shortfalls in government financing, political inertia and daunting logistical problems, government of and real estate executives involved in the project said this week. " The Times reported on Sunday that economic forecasting,frrnr Moody's Economy coin expects the "Rocky Mountain West, partly led downward by Utah,...to have the biggest percentage decline (of any region) in construction jobs and housing starts this year, while the Southeast is likely to srtffer least in Iota! job growth.... But the Church ofJesus Christ oftatter-Day Saints will spend more than $1.5 billion in Sall Lake Chy over the next few years on a complete renovation of several downtown blocks. That is going to happen no natter what, said Malt Knold, the senior economist for the Utah Department of Workforce Services. " The Washington Post reported yesterday, "The Washington region's ina•ket for commercial real estate slowed notably in 2007... The slowdown in both leasing and sales is u•oubling for the local commercial real estate industry as 129 buildings with 15.8 million square feet of space are under construction throughout the area. Much of the space is being built on speculation, according to real estate professionals. " The Data DlGest is a weekly summary of economic news; ilenrs most relevant to construction ere in italics. All rights reserved Gasoline and Diesel Fuel Update Energy Information Administration fl ' G �rpq Stm -. Ir+' IAa tIS. ('n o rnt-n' Income > P volou!n > Gasoline and Diesel Fuel Update Gasoline and Diesel Fuel Update Gasoline Diesel U.S. Gasoline and Diesel Fuel Prices, 03/10/08 U.S. Regular Gasoline Prices 400 Cotsp_er Gallen _.-_ EIA 350 300 250 200 AV JW Oct Jan AV -+-2006-07>_2007-0e U.S. Orr-WithwAy Diesel Fuel latices, 426 Cede pn GaSon ____ EW 376 325 1 275 225 Apr Jd Cm Jan AN -+-2000,07->-2007A8 Gasoline (Cents per Gallon) Diesel Fuel (cents per Gallon) 03/10/08 Change from 03/10/08 Change from Price Week Ago Year Ago Price Week Ago Year Ago U.S. 322.5 ¢ 6.3 $ 66.6 U.S. 381.9 $ 16.1 $ 113.4 East Coast 319.4 $ 2.6 $ 66.1 East Coast 387.0 ¢ 17.0 $ 120.1 New England 317.0 ¢ 2.4 ¢ 60.3 New England 393.8 $ 12.5 $ 120.8 Central Atlantic 318.5 $ 2.1 $ 60.7 Central Atlantic 398.9 $ 16.4 $ 127.0 Lower Atlantic 320.8 ¢ 3.1 $ 71.9 Lower Atlantic 381.4 $ 17.8 $ 117.1 Midwest 319.1 $ 11.1 $ 70.4 Midwest 378.4 $ 14.5 ¢ 111.1 Gulf Coast 313.1 $ 4.3 $ 72.9 Gulf Coast 379.8 $ 18.9 $ 115.4 Rocky Mountain 310.9 $ 2.1 $ 69.7 Rocky Mountain 373.2 $ 15.9 $ 99.6 West Coast 345.7 $ 7.1 $ 53J West Coast 388.5 $ 14.9 $ 107.4 California 353.7 $ ].8 ¢ 46.9 Caifornla 395.5 ¢ 15.2 1 $ 105.6 Glossary Release Schedule sign_pP for Email ydatoe -- History What We Pay For in A Gallon Or Regular Gasoline Distnbulion 8 Crude Explanation of Terms Gasoline Pump Data History Page I of 2 http://tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asp 3/12/2008 Gasoline and Diesel Fuel Update Regional Regular Gasoline PUces IW _CemspHGallonEIA_ 350 300 250 200 160 Aq-06 Oco06 Apr-0I O .01 Axa --.—East Coast Midwest _..._GuICoast- Rooky Movm —Weft Coast Retail Gasoline Prices 24-hour hotline: 202-586-6966 On -Highway Diesel Prices 24-hour hotline: 202-586-6966 A Primer on Gasoline Prices A Primer on Diesel Fuel Prices Where Does My Gasoline Come From? Primer on Gasoline Sources and Markets Mat4 Regional Diesel Fuel Ps ses 125 -Cents pr Gallon __. EIA i 3]5 325 Disinbulion 275 225 Ap-06 Cet-06 AprOi Oet-O] Aq-08 -- East Coan - Mkwan - "Coast--.--Roagalowaln Wet Coast This Week In Petroleum Short -Tenn Energy Outlook Real Petroleum Prices Does EIA calculate diesel fuel surcharges? Frequently Asked Questions Explapatiep_ef Termf Diesel Fuel Pump Dpta Hstery Ethanol, Gasoline, and Ultra Low Sulfur Diesel Supply Issues in 2006 Eliminating MTBE in Gasoline in 2006 Can U.S. Supply Accommodate Shifts to Diesel -Fueled Light -Duty Vehicles? Distillate in Depth —The Supply, Demand, and Price Picture Relemaa SFhedule;, The prices are published by 5:00 P.M. Monday (Eastern time), except on government holidays, when the data are released on Tuesday (but still represent Monday's price). Sign Up for Email Updates Contact Us . Feedback • Privacy/Security • Jobs • About Us Page 2 of 2 http://tonto.cia.doe.gov/oog/info/gdu/gasdiesel.asp 3/12/2008