IHS PEG Engineering and Construction Cost Index showed another decline in prices

IHS PEG Engineering and Construction Cost Index showed another decline in prices
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Oil prices and their influence on the construction sector

Oil prices have a great influence on the construction sector. According to the data for March 2015, the construction costs became lower affected by the situation with the crude oil. According to ECCI, there was a slight rise detected a bit earlier. It demonstrates that the situation is not good but it still does not become worse. As the economists claim, the respondents of their survey are still optimistic about the future. They hope that the construction projects can be delayed but not canceled. At the same time, many companies (such as Shutterstock construction and others) felt the impact of the situation.

The index registered in March totaled 43.0, while it was lower in February reaching 39.6. At the same time, lots of products are being sold at lower prices, such as:

  • copper-based wire and cables
  • carbon steel pipe
  • fabricated structural steel
  • alloy steel pipes, etc.

The only exception was ready-mix concrete, the prices of which became even higher. It is influenced by several factors:

  • the better demand environment
  • better concentration on the product
  • CAPEX investments in the industry.

As for the labor costs, they stay flat in the majority of regions. A small change is detected in the eastern part of Canada. The index demonstrates the weakness of the current market situation with the decline from 48.7 to 45.9.

IHS PEG Engineering and Construction Cost Index

The index under consideration consists of the information, which the specialists receive independently from the procurement executives of the leading EPC organizations. Every response for the survey totals $2 billion. IHS requires information concerning the transactions, current prices, materials, equipment, regional subcontractor rates, etc. They also ask for the expectations of the company concerning the issue of prices.

When the information is obtained, the specialists compile it into the diffusion of indexes. There are data concerning the current situation and the expectations of the specialists in six months.

The index under consideration is released every month. There is a strict schedule, according to which it is required to release it no later than the last Friday of the current month.

More information concerning this issue and the list of the members of the organization can be found on the official website.