Oil, gas and steel costs drive project bidding up.

According to a new study by PinnacleOne, one of the nation's leading construction consulting firms, an overwhelming majority (92%) of public owners have experienced a price increase in construction project bidding during the past year.

The average price increase for the 167 owners interviewed

was 13.2 percent, more than four times the rate of inflation. A majority (60%) of the owners reported average price increases of 10 percent or more, with better than a quarter (27%) experiencing an average increase over 15 percent and almost a fifth of respondents (18%) saw their average bid price jump by more than 20 percent. The cost of both oil/gas and steel were viewed a/s the primary drivers of the project price increases.

"There are many factors driving major inflation on public construction projects. The primary reason is the ever increasing spiral of crude oil cost' which affect every material an trade of the construction industry," said John Dunkerley, Director of Cost Management Services at PinnacleOne. "Until the price of oil is under control, inflation will be a major concern to all public owners."

These are just a few of the findings in The 2005 PinnacleOne Pulse of U.S. Public Construction survey which examined the opinions of 167 public owners involved in construction projects throughout the United States.

Other findings showed that, when asked to identify the primary cost component driving project price increases in the past year, almost half (48%) of the owners cited oil and gas, while more than a third (35%) pointed to steel prices. No other cost component generated a double digit response as the primary factor. Looking forward, almost two-thirds (64%) of the owners view oil and gas as the cost component that will increase the most in the upcoming year. While still the second greatest cost concern overall, only 15 percent of the owners see the cost of steel increasing more than other components in the next year.

No region has been hit harder by construction price increases than the Midwest, according to the survey.

And, while oil fuels transportation, steel drives education.

A strong majority (61%) of owners in the transportation sector cited oil and gas as the primary cost component driving price increases. Public owners in the education sector were the only vertical group that identified steel (48%) as the cost component experiencing the greatest price increase in the past year. One-third of the education vertical (33%) cited oil and gas. In contrast, almost two-thirds (74%) of the owners in education cited oil and gas as the project component likely to experience the greatest price increase in the coming year.

Concrete (8%) was a distant third to oil/gas and steel as the cost component experiencing the greatest price increase in the past year, and only 7 percent of the owners see it as experiencing the greatest price increase in the coming year.