GILLETTE - In just 10 days, copper prices drove the cost of materials to build Cam-plex's Wyoming Center up by more than $1 million. And then hurricanes skyrocketed oil prices, and steel prices climbed as well.

With all those factors combined, the cost to build the new multi-event center was more than $16 million higher than initially planned. That was more than two years ago and construction costs have continued upward since then, building officials say.

"Just the price of copper was $1 million higher in 10 days," Cam-plex General Manager Dan Barks said. "Imagine the people that are trying to build now with the costs today."

Across the state, contractors and building material companies are dealing with the impact of rising costs of construction materials. Demand in China and India continues to escalate costs, and the increase means new American homes or commercial buildings will cost significantly more than they did several years ago. From steel to electrical wiring to concrete, raw materials for building continue to escalate.

"It's a pretty difficult situation," said Jason Leblanz, a store manager at Home Depot in Cheyenne. "We're seeing increases all across the board."

While the nation's economy continues to slump, construction season is well under way in Wyoming, from Gillette's Wyoming Center to a new library addition in Cody and from highway renovations to new home construction to house a growing workforce.



All hits at once

But contractors say this season is a little different than previous years. Though prices have risen and fallen throughout the years, with oil high or steel increases, now the industry is being hit with swollen prices in almost every type of building material, said Wally Reiman, a principal owner of Reiman Corp. in Cheyenne.

"It used to be that oil went up or steel would fluctuate, but they were never going on at the same time," he said.

The price of construction commodities, especially metals, began to rise in late 2003, and although the market has experienced some fluctuations, the price of construction materials hasn't declined for any significant time since then. While the biggest rise has taken place in all metals, Groathouse Construction President Fred Bronnenberg said there has also been an increase in anything made with petroleum. He added that companies are also hit with a 5 percent to 10 percent fuel surcharge for all materials shipped to project sites.

In response to fluctuating prices, many times contractors try to "lock" in prices by ordering materials after they are awarded a bid.

"After we bid a job, we place all the orders so it locks us in on those prices," Reiman said.  "As soon as we place the order, we get a commitment for the materials."

By using negotiated construction delivery methods, Bronnenberg said they can procure materials much earlier to help save clients money. Bronnenberg also said subcontractors and suppliers are given the construction schedule so they can project prices and are locked into their pricing for the duration of the project by contracts.



Some stockpile materials

But if locking in prices is not possible, companies are buying material before the project begins. And with that comes another issue - storage.

Kodi Mackey, Groathouse Construction estimator, said Groathouse's large shop in Casper is often an extra storage area for upcoming projects and the company often rents locked tool trailers or storage units.

Some contractors are buying land to add additional storage. And all are aware of the importance of keeping material secure. With high prices of so many different materials, theft is always a concern.

"It's tough on some of these guys that are having to buy storage units because that in itself is an additional cost," Reiman said.

While some of the rising costs of construction can be passed on to a customer, some are also absorbed by the contractor. Projecting the inflation of materials and phasing projects to aid in lowering the cost of materials such as structural steel and mechanical equipment is vital, Bronnenberg said.

Those building new roads, commercial buildings or homes usually realize there could be price increases in just a matter of weeks, and Reiman said many will sign an acceleration agreement to deal with fluctuating prices.

"We're getting owners to at least recognize there could be a price increase," he said. "In the last two months, I've seen steel jump 15 percent."



Guaranteed Max Price agreements

But if a project is under way, and a Guaranteed Maximum Price agreement has been signed, Mackey said the contractor takes a hit. And while many public projects such as new schools are built on a limited budget, Mackey said they often spend hours pricing different options for the clients to help reduce the cost of the project without sacrificing quality.

In building material stores across the state, contractors and homeowners alike are experiencing a rise in prices. From copper wire to concrete to lumber, LeBlanz said rising fuel costs to truck the materials in are skyrocketing prices.

But that hasn't slowed the customers shadowing the doors of the state's building material companies. Lately, LeBlanz said, he has talked to many homeowners who have decided to improve their homes. From new decks to a remodeled kitchen, LeBlanz said many say it is more cost-effective to enhance their current home than to buy a new one in an escalated real estate market.

"I'm seeing more customers wanting to improve the home they are in," he said.

While the construction season continues across the state, Reiman said contractors have "to look into their crystal balls" to project their bids. It's not an easy feat. And while they improve roads and build new businesses and homes, Reiman said they are increasingly aware of the market's ups and downs.

"The world economy is really affecting us all the way here in Wyoming," Reiman said.



Wyoming Business Report Correspondent Lisa Bisbee can be reached at news@wyoming.com.