The trends that were evident in the first quarter of 2008 have continued almost unchanged through the second quarter of 2008. Construction markets have remained weak; in most regions the rate of decline has stabilized, but there are no signs of any broad-based recovery in construction activity. The market weakness is most pronounced in the residential and commercial sectors, and in the Southeast and Western states, areas which had seen the greatest growth in preceding years. Commodity prices, most particularly steel and oil, remained volatile, and prices for many raw materials are continuing to rise steadily.

The uncertainty in the broader economy also continues to disrupt the construction market. While there is some evidence of a minor easing of the liquidity crisis, with cash beginning to flow again and borrowing becoming slightly easier, widespread economic weakness remains a major challenge. Both in the public and private sectors, active projects are being delayed or canceled, and prospective projects put on hold, due to a combination of lack of project funding, and uncertainty over project revenues. Because the delays and cancellations are now occurring throughout the project lifespan, even during construction, project teams can not be as confident in secured work and backlogs. Contractors also face risks in funding, and could find themselves less able to bridge short term cash flow shortfalls.

Overall, construction markets and escalation will experience a high degree of uncertainty and volatility. Escalation planning will be marked more by the need to manage the uncertainty than to accommodate the actual escalation rate, and projects will need to recognize that increased risk in the planning process. In many respects the construction market is entering entirely new territory, with factors and conditions that are unprecedented. Traditional responses to these new challenges are unlikely to be adequate.