A per-ton price increase at the mill level for structural steel of 56 percent does not equate to increases in project costs of 56 percent. For a typical project, the cost the total structural steel package (material, detailing, fabrication, transportation, and erection) will represent 10 percent to 12 percent of the total project cost. As a percentage of the steel package, the mill material will typically represent 30 to 40 percent. This means that of total project cost, the structural steel material will account for only 3 to 4 percent. An increase in mill product costs of 56 percent will translate into an increase in project cost of about 2 percent.

But the increase in the price of the steel package and overall project costs are increasing more than 1.5 percent. The reason behind the higher rates of increase is that there are other types of steel (plates, tubes, and metal decking) often included in the steel package and that, as far as the overall project is concerned, many other components are affected by rising steel prices. When all of these (piping, sprinklers, elevators, door frames, HVAC ductwork, reinforcing bar) are taken into account, the anticipated increase in project cost for a steel-framed project is 3.6 percent per $100 increase in steel price.

In the past 12 months, steel (average of all types) has increased by about $250 per ton. The resulting price increase on a steel-framed project is in the neighborhood of 12 percent. Does this mean the value of using steel in a project has decreased by 10 percent? No. Because of the amount of steel still utilized in a concrete framed building for other building and structural systems (often the amount of steel used to reinforce concrete columns and beams can exceed 50 percent of the equivalent weight of a steel beam or column) the average increase to project cost is estimated to be 3.3 percent per $100/ton increase in steel price or resulting project price increase of 8 percent. But this 8 percent does not take into account recent increases in plywood forming costs and cement costs. When these additional factors are taken into account, the cost differential between steel and concrete construction disappears.

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