Why Does It Cost So Much To Build?

[jyl]

This is not a well formed question, more of a frustration inviting discussion.

Why does it cost so much to build things now?

In Portland, the lamentable state of roads and infrastructure is a constant topic. We're told that for a simple concrete median island to make a safer pedestrian crosswalk, it costs $20,000. A flashing yield to pedestrian signal costs $25,000. A traffic signal at a dangerous intersection costs $200,000. A 1/4 mile of painted-stripe curb-adjacent bike lane costs half a million.

Other infrastructure projects seem equally expensive.

Private construction too. Building conventional 4-5 story apartments - wood frame over a first story podium - costs $200,000 per unit. Building a house or duplex - wood frame, level lot - costs $180-220 per square foot.

And of course we've heard about the staggering costs of large projects like a new bridge across the Columbia (estimated $3-5 billion, they spent $250 million just on preliminary studies and planning), LA to SF high speed rail line (est $80 billion), etc.

Why do these things cost so much? Can we bring the cost down? Is it a hard or soft cost issue? I've tried to look at hard vs soft costs and generally find that soft costs are at least 1/3 of the total.

[sammyg2]

lawyers, politicians, regulations, laws, insurance, taxes,

do I need to continue?

[LakeCleElum]

It's not cheap having 20 guys standing around a backhoe scratching their asses....

[GH85Carrera]

It cost so much money to do a road project, and then it is done with the cheapest method possible, and lasts a few years before it is falling apart and needs to be redone. The contractors annuity system.

[p911dad]

I spent a career in roadbuilding and infrastructure, so I can speak to public improvement. There was a time a highway or bridge could go through a quick planning phase, design phase and ROW acquistion in a fairly short time, relative to today. There were so many abuses of this approach, jamming roads through neighborhoods and wetlands cutting them in half that eventually people got fed up with it and the pendulum went the other way, far to the other way. In the old days, the surveyors would lay out the alignment and everything in between would get leveled. Now it twists and turns through all the various obstacls like cemetaries, wetlands, Indian sites, historically significant things, etc. For the last 30+ years or so the planning and public hearing phases, predesign and design phases, ROW acquisition, environmental research and objections, lawsuits, etc. put a brand new road location or bridge out at least 10 years from idea to concrete. All this drives costs up. This is all with heavy Federal oversight because the Feds usually pay 80% or so of the tab and without their phase approvals, the project will not go forward until they are happy. All this is very expensive and getting worse. It's so expensive now that States and locals have trouble budgeting their "share" (20%) of the total so projects get delayed or shelved forever.

[URY914]

Originally Posted by sammyg2

lawyers, politicians, regulations, laws, insurance, taxes,

do I need to continue?

Small business set asides, mat'l price increases due to trade polices, increased minimum wages, lack of skilled labor.....

[Nickshu]

A couple years ago I planned a commercial development. The build cost per square foot far (far being an understatement) exceeded what the building would appraise for after construction. In our area there is so much residential building (mostly by national builders) that the subcontractors can basically charge whatever they want. Since it's a wide region with different demographics the build cost is determined by the most expensive area, but the comps for financing appraisal are only determined by the immediate build area.

We tabled the project. I still own the land. Ironically I am hoping for a recession so the build costs will drop, then we can proceed with the project.

[Sebscst]

This is why in Florida! A friend of mine does construction cleanup and debris hauling. From one subdivision in 8 months he collected enough leftover materials “trash” to build a 1800sg,ft 3 bed 2 bath with 5 car garage. This was a block house. Only thing he came out of pocket for was concrete,trusses, and cabinets and countertops. Everything else came from job sites where there is so much leftover. The supers never adjust the takeoffs. Too much work. The trades don’t care they make a percentage on that material. Recently the drywallers got smart. The houses would average about 30 to 50 4x12 sheets too many. Yes that many,well they would get paid only for however many sheets were ordered minus what was left over. Well guess what all of a sudden there are no more sheets left over,instead they cut them all up and throw them away. Don’t get me started on framing. Btw I do cabinetry and trim.

[Jeff Hail]

The #1 rule in Government spending is why buy one when you can have two at twice the price. Everyone has to get a slice of the pie. Everyone gets paid even those indirectly who have nothing to do with the project. Waste? Of course left overs cost money too. Lots of mouths to feed. Its all part of the food chain.

[drkshdw]

Same reason healthcare is expensive...because it can be. When the government pays the bill there is no conscience behind the check writing. If it costs more, just raise taxes to pay for it. It's not like we have any say in the matter.

[jcommin]

Originally Posted by URY914

Small business set asides, mat'l price increases due to trade polices, increased minimum wages, lack of skilled labor.....

Yes and what Sammy wrote - all of the above

[Brando]

Anything government does costs way more than what private sector does. John Stossell actually covered this pretty well.

[pwd72s]

Originally Posted by sammyg2

lawyers, politicians, regulations, laws, insurance, taxes,

do I need to continue?

You left out corruption...

[cmccuist]

They’ve been “building” the same stretch of I-10 between Vidor and Orange, TX for the last 30 years. It looks worse now then ever!

[asphaltgambler]

To sum things up...........in days of yor....technology was expensive and skilled labor was both cheap and plentiful. Just the opposite today.

Also add safety and EPA compliance which was nonexistent then...

[masraum]

Originally Posted by cmccuist

They’ve been “building” the same stretch of I-10 between Vidor and Orange, TX for the last 30 years. It looks worse now then ever!

Why would anyone want to go to Vidor Texas? I've heard stories. I'm not a minority, but I wouldn't want to go there.

Maybe that's what the interstate is for, so people can get the hell out.

[dad911]

Why does it cost so much to build things now?

Treehuggers and Lobbyists.

[GH85Carrera]

Originally Posted by cmccuist

They’ve been “building” the same stretch of I-10 between Vidor and Orange, TX for the last 30 years. It looks worse now then ever!

The stretch of I-35 from Norman, OK to Oklahoma City has been under construction since 1978 when I moved to OKC area. My theory is two brothers have the contract, and they work a while, then go do a different project, of course leaving the course up, and then come back with DOT raises a stink. It has been improved a lot in 40+ years, but still under construction.