New-York tribune., 1922-01-08
Spot Cash Gets
Much Lower
!DuildingPrices
q. 5. Labor Departments
Figures Arc Held To Be
Not. tho Minimum Of
Quotations by Dealers

"Prcecnt conditions in the building
conctruction market are such that our
index curve for cost Of finished build
,ngs' no longer represents the lowest
obtainahle. cost" say Monks &: John
son. architects and engineers.
The building materials index fig
arcs of tho United States Department
ct Labor are not based upon competi-
tive prices. They arc obtained by get
t;nc quotations from material dcalers
ell over the country and averaging tho
prices in each material. Then the
,arous materials arc properly weight
ed and combined and ii single index
figure, referred TO 1919 as base, is
obtained each month.
Quoted prices obtained in this way
from dealers arc n indicative of tho
true market in time ike those througl,
which VIC have just passed. In hard
times, when business is poor, a ma
terial dealer will make very much
closer prices with the man who has
real spot cash to spend than with the
man who is merely collecting general
market information. He may even sell
at loss to move his stock or raise
cash.
I'VE have indicated the cost of fin
ished buildings as being so per cent
materials and 40 per cent labor. AS a
matter of fact. ether clements than
these two enter into tho contract cost
such as contractors plant rental,
materials. Nevertheless. in normal
times 6Of0 ratio between costs Of
materials and building trades labor
gives a close approx mation Of the in.
dex of finished building costs.
But now work is and mas been very
scarce. Competition has been corrc-
spondngly keen and contractors arc
willing to make lesser charge for
profits and overhead. They arc scaling
these items down to minimum and
are submitting very different lump sun,
have been handed in for the same prof
ects in the ampler bygone days Of out
imit-cost plus figures.
"Accordingly our index curve OF
cost of finished buildings indicates
market quotations rather than prices
obtained by purchasers willing to place
immediate orders.
From our experience and that OF
other engineers and of engineering con
tractors for competitive bids during the
construction work under our supervj-
months NE have made approximate in
deX figures for winning competitive
lump bids on complete buildings
"At present the competitive indea
is at about 1856, as compared witt
our index based on government figures
Of about ISL.
IAN adequate set of plans and speci
f7cations sent out to several good con
traitors for competitive bids during tho
next two months should bring in ;
low bid, very little more than half a.
great again as would have been secured
in 1913.
"Here is a definite example of re
cent competitive prices of industria
buildings. In May, 1921, we securct
about ten bids in competition on ,
medium sized. reinforced concret,
manufacturing building.
"The lowest bid obtained was ap
preximately S235,o00. The plans ane
specifications were again figured il
November. The lowest bid then oh
tanned was $4,000. The work viii
probably go ahead on that basis.
I'm the spring fair resumption o
building activity will tend to stiffe,
prices, and the red line will rise an'
tend to coincide with the black line.