Area Engineers Try To Bend Around Steel

Developers in Northwest Arkansas have felt a pinch in construction costs because of skyrocketing steel prices.

Gary Jackson, principle at Hight-Jackson Associates of Rogers, quoted research from a magazine called Construction Week that said overall construction costs in Northwest Arkansas are up 8 percent in the first quarter alone, primarily due to steel prices.

According to the Northwest Arkansas Regional Planning Commission, the Fayetteville-Springdale-Rogers Metropolitan Statistical Area permitted $89 million in commercial and public building projects during the third quarter of 2003. Total permits, including residential (and those labeled as “other”) came to $279.8 million.

If some estimates are correct, and permit values remain about the same as in the third quarter, the steel price increase could translate to a $7.1 million cost increase for the commercial segment and another $22.4 million for the rest.

Permit values aren’t indicative of construction costs or building values, but the numbers can be used as a barometer to gauge growth.

Jackson said his firm has noted pricing on steel columns and beams up 44 percent, re-bar and mesh up 55 percent and metal studs leaped from 38 cents a foot to 55 cents, an almost 45 percent increase.

“It is just almost impossible to determine what steel is going to do,” Jackson said. Because of the commodity aspect of steel, he said he’s recently seen bids with five-day expirations.

Total projected costs for an elementary school the firm bid on in April were up 20 to 25 percent compared with two similar-sized schools that Hight-Jackson has designed since 2001, Jackson said.

The increase has been significant enough to cause his firm to look at alternatives, Jackson said.

“We have two large projects that are due to bid in September and October and we have converted the steel column and beam system to a load bearing masonry wall system,” he said.

But, if builders start using a lot of masonry it could present problems with shortage of skilled labor in the area.

Jackson said that shortage was one of the reasons engineers began using steel beams and columns in the first place.

He said that even if steel prices drop by the time the projects are submitted this fall, it will be too late to convert the plans back to steel.

Due to the need to use fire-rated products, “you’re pretty much stuck with masonry and steel,” he said.

Jackson said the increase hasn’t affected his firm’s margins, but general contractors do feel the squeeze. He said the worst part for his firm is trying to hit an owner’s price on a project that may not even start for 18 months.

David Swearingen, principal at Crafton Tull & Associates Inc. of Rogers, echoed Jackson, “What a number of architects are doing is trying to use load bearing masonry,” he said.

The cost of getting materials into the area have also affected the bottom line Swearingen said. As of April 26, on-highway diesel had risen 21 cents a gallon from the same period in 2003, according to the U.S. Department of Energy’s Energy Information Administration.

Nathan Fairchild, partner in Fairchild Inc., said the steel shortage has affected his business. The company specializes in building pre-engineered metal buildings with architectural facades.

A steel building he bid in January was ordered in April and it went up $42,000 or 31 percent in that time, he said.

It’s not only expensive, but some orders are starting to get shorted, he added.

But for the time being, he’s not too concerned. Fairchild said the people they’re building for are bucking up and paying for the increase.