Global economic growth, particularlyfrom 2004 to 20071, has fueled an expansion in theconstruction of industrial, power plant, and manufacturingfacilities in the United States and a dramatic escalation inthe construction of these types of heavy constructionprojects overseas. In addition, the increase in demand foroil by rapidly growing countries such as China and India andthe falling value of the dollar has resulted in anunprecedented rise in the price of oil. This hassignificantly accelerated oil exploration and resulted incapacity-expansion projects at existing oil refineries. Thecombination of power plant, infrastructure, and oil-relatedprojects has resulted in significant growth in demand forboilers, rotating equipment, piping, structural steel,concrete, electrical components, and electric wiring. Inlight of this finding, this study compared the cost of powerplants without market demand to the actual costs incurred inconstructing power plants. The results indicate that ownersare purchasing plants in a sellers' market, whereunprecedented demand has resulted in market price premiumsin the range of 15 percentage points above material,equipment, and labor escalation.
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