2022 Construction Industry Update
We’ve all personally felt the pain of significant inflation in 2022. It’s no surprise that this also affected the construction industry.
Many challenges that began in 2021 continued through 2022, along with added hardships from the war in Ukraine, rising fuel and transportation costs, and an insufficient amount of skilled labor. Supply shortages for many materials continue today, whether due to raw material deficiencies impacting concrete, paints, and metals, or manufactured components that are not readily available like electronic mechanisms used in mechanical systems and other products.[5] The demand for these scarce materials results in higher costs and creates longer lead times, increasing the duration of project schedules. (Linbeck Figure 1)
Beginning in the latter half of 2021 and through 2022, contractors began to pass the material price increases on to customers and recover from losses over the previous year. Even while material costs rose 22% overall in 2021, through 2020 and into 2021, contractors absorbed most of that, leaving them with a 7.1% deficit at the end of 2021. Since then, their rate has risen another 8% to 19.8% to make up for those shortfalls. [2],[4] (Linbeck Figure 5, AGC Table 8)
A near-record shorthanded labor market has been another considerable burden in 2022. There are 334,000 unfilled positions in the industry. To try to retain skilled workers, labor costs are going up. Where there are a sizeable number of unfilled positions, project schedules are lagging. [4]
2021 experienced extreme cost increases of 22% over 2020. 2022 continued to far exceed normal rates of escalation. Those numbers are expected before the end of the first quarter in 2023.
The Federal Reserve’s interest rate increases through 2022 are beginning to have an impact on the rate of growth in many areas of the country. As the pace of construction slows, escalation rates are expected to decline in 2023 but will remain higher than normal in busy areas like North Texas. [1] Other factors that will continue to plague the industry in 2023 and result in increased prices include limited material availability, labor shortages, and labor rates. [3]
For more information, reference any of the sources listed below.
Godley 2021 Bond Update
January 2023
The past two years have presented factors no one could have anticipated. Despite the challenges, Godley ISD prioritized learners, and in doing so, is successfully delivering all learning spaces proposed in the $168,500,000 bond package approved by voters in May 2021. Pleasant View Elementary School opened in January 2023 within its original budget. Godley High School Phases 2 and 3 are both under construction with anticipated openings in January 2024. Phase 2 will offer an exciting environment for 500 CTE students to advance in many programs of study and utilize a variety of indoor and outdoor learning spaces that are integrated into the home side of the stadium. The stadium itself will grow to serve 5,800 spectators. A 1,900-seat arena, including a 300-seat multi-purpose presentation space, will be the new prime venue for indoor high school sports. This addition will also house some classrooms and locker rooms. Because Godley’s growth (and thus tax base) has exceeded earlier predictions, the Phase 3 timeline could be accelerated, and students will be able to utilize new fine arts spaces two years earlier than planned.
There are many successes to celebrate in this onerous climate. Nonetheless, as a result of unprecedented price increases, Godley ISD has had to delay some projects to a future bond cycle. Delayed projects consist of replacing aging systems such as roofs and mechanical equipment; updating floor, wall, and ceiling finishes that are at the end of their life-cycle; and building a new transportation facility to support current and coming growth. At Godley High School, SPED classrooms and offices, space for a new choir program and a practice gym were postponed, but the high school can sufficiently support their current programs until the next academic addition is needed. As discussion developed over the long-term functions and needs at the 6th Grade and Godley Middle School campuses, it made sense to postpone those small renovations and incorporate them into larger projects in the next bond cycle.
In the fall of 2022, Godley’s community-driven Long Range Facilities Planning Committee heard from demographers, GISD staff, administration, and students, architects, and financial advisors about the upcoming enrollment growth and facility needs to support that growth. In December 2022, the LRFPC presented a recommendation to the School Board for another bond program, which includes all postponed projects from the 2021 bond program as well as projects to support the growth of an additional 5,000 students that are anticipated to arrive in the next 8-10 years.
As Godley ISD plans for the future, they will use conservative escalation rates, conservative timelines, and sufficient bond and project contingencies to do everything within their control to deliver all proposed projects in a future bond program. Godley ISD has successfully delivered on all bond projects in all previous bond cycles and has always been transparent about the challenges of this bond program. Maintaining the community’s trust is a top priority, and their utmost intent is and will always be to provide facilities that Empower Students to Lead.
