First, let’s define the issue. The following chart, with data from 2013 – 2017, shows the increase of the consumer price index (CPI) at 1.40%, yearly average, or 7.0% overall (blue line). The increase for key construction costs is 4.48%, yearly average, or 22.42% overall – almost three and a half times the CPI!
The “Great Recession” officially took place between 2007 and 2009, but the economy did not fully recover for many years. The GDP did not reach its, pre-crisis level (adjusted for inflation), until late 2011. Seemingly, construction did not recover until almost 2016…but, when it did, it took off like a rocket. When the increase in labor costs are combined with the increase in material costs, the combined yearly increase from 2016 to 2018 is in excess of 10% a year, or more than 30% overall!
The construction market is predicted to be strong for many years to come. The United States Federal Reserve Board is beginning to increase interest rates in an effort to keep inflation in check. The United States Economy and Stock Market are rising at record rates. The United States Unemployment Rate is at record lows. In the foreseeable future, all indicators point towards continued increase in construction costs at a rate that is much higher than the consumer price index (CPI).
With predictions that construction pricing will continue at this rate, what should a church do?
Over the last couple years, T&W has had projects that have decided to wait and save more to cover the increase in costs, only to find that their savings basically went towards the inflationary increase incurred over the year. The result? They were at almost the same exact financial position that they were in the year prior.
First, T&W Church Solutions believes in God’s timing over man’s. The decision by a church to invest millions of dollars in facilities is not to be taken lightly or to be rushed. Personal experience and statistical evidence supports building now if the church is in a financial position to do it. Waiting, it seems, does not solve the “just need a little more money” problem. It only pushes the conundrum further down the road.
Every project that T&W has designed and built is a multi-phased, master planned project. Starting now might mean a smaller phase one than hoped for, but that smaller phase one becomes the emotional catalyst for additional growth that the church is already realizing. Statistically, a healthy church will realize 20% additional growth in the first year of occupying a new facility. Be cautioned that this growth tends to NOT be mature Christians who understand giving/tithing. Therefore a church should understand that attendance may grow by 20%, but the budget typically will not. Over time this additional growth will provide the financial base that will allow the next phase of the master plan to begin, and the cycle repeats itself.
As your church contemplates “To Wait…Or Not To Wait”, T&W Church Solutions suggests that you begin the process of selecting a design-build firm to partner with and guide you through the design and build process. A few suggestions as you begin this journey:
- Select a design-build firm that specializes in the type of building that you want.
- Select a design-build firm that uses current pricing and competitive bid work items.
- Select a design-build firm that has a process to deliver on their commitments.
- Select a design-build firm with experienced people.
- Select a design-build firm that is transparent with all bidding and shows where your sacrificially, hard-earned, funds are going.
- Select a design-build firm that is experienced in controlling costs and finding ways to reduce those costs through “best practice” value engineering.
My sincere belief is that you will find T&W Church Solutions satisfies the above criteria, and more.If you have an upcoming building project or renovation, call us. You will find our People, their Passion to serve your church and our nationally recognized Process will supply you the most cost effective facility possible, phased in a way that will prosper your growing ministry.