A Guide to Construction Cost Sources

Transcription

1 A Guide to Construction Cost Sources Commissioned by: Ontario Construction Secretariat Authored by: Prism Economics and Analysis and the Department of Civil Engineering, University of Toronto March 2001

2 As the industrial, commercial and institutional (ICI) marketplace becomes increasingly global, the competition to host new facilities also becomes more intense. Decisions by owners on where to build are often based upon a conceptual estimate, with construction costs being part of that estimate. Other factors include (but are not limited to) projected returns on investment, location-specific tax relief, energy availability, and operating costs. It is important to put construction costs in context. For a new industrial facility, construction cost comprises both the cost of constructing a building and the cost of equipping the facility. The following chart from Richardson Engineering Services, Inc. illustrates the cost breakdown for a Toronto area project. Other Canadian locations would have a similar cost structure. 55% Field Material 20% Buildings & Site 100% Construction Cost 45% Labour 75% Engineering Equipment 80% Process System 15% Labour 10% Field Material Figure from Richardson Engineering Services As can be seen, for a typical processing plant, building and site work accounts for only 20% of the total costs including installation of processing equipment. Labour costs account for 21% of the total construction cost (9% in building and site construction, and 12% in processing installation. For determining the cost of construction in the preliminary stages of project development, several cost indexes are commercially available. These differ in their intended use and their reliability. One index may depict the cost of construction in a certain city or area as very competitive globally, while another may indicate that the same location is uncompetitive. This report discusses the assumptions behind construction cost indexes available in the ICI industry and compares the resulting indication of cost competitiveness using Toronto as the baseline. Normalization Normalization answers the question: what is the base (i.e. 100) for an index. Cost indexes can be normalized on time or location. Often, indexes are normalized to a baseline value of 100 assigned to a specific year and location. For example, an index might take as its baseline 100 as the cost of building a 20 storey office building in Toronto in Locations may be defined as cities, telephone area codes, provinces/states, or countries, depending on the level of detail and the intended use of the index. The assumptions and methodology behind each index is unique, therefore the values are not transferable. Input, Output, and Hybrid Indexes There are several facets of cost indexes that may affect their applicability. First, it is important to know the philosophy

3 behind the index. Generally, they are characterized as input, output, or hybrid indexes 1. Input indexes are compiled from a shopping cart of common materials, equipment, and trade labour hours. They represent the inputs to the construction process and reflect the market prices for these items. For example, an input index may be based upon the cost of 100 m 3 of concrete, 50 hours each for a carpenter, mason, plumber, electrician, and an ironworker, and 200 hours each for a backhoe and a mobile crane. Local costs for the items in the shopping cart are determined for every location covered by the index, and summed. They are then normalized to the baseline to produce the index. Input indexes do not contain any assumptions or adjustments related the local labour productivity although some effort may have been expended to generally proportion the quantities of labour and materials. It is important to note that the quantities are constant in every location. This means that some aspects of the construction process are not captured, such as labour skill levels or practices and local building code requirements. While the use of input indexes is limited, they are the simplest to produce and contain the least error. Local hard costs are collected from collective agreements and material distributors/retailers. Importantly, these indexes are not biased by assumptions or estimates of local conditions. This index may be useful for construction companies that move their own crews between projects and only need to know the differences in the cost of materials. Output indexes attempt to measure the total cost of construction of a completed structure in each location. This is 1 Mohammadian, R., and Seymour, S., 1994, Construction Price Index Methodology, 1994 CSCE Annual Conference, Winnipeg, MB, Canada achieved in one of two ways. First, actual tender prices for projects are collected. Because every project will have different parameters, the costs must be adjusted to account for the different project characteristics. Although these indexes more closely represent real costs, it is extremely difficult to collect this information and to adjustment the costs in a reasonable way to reflect the effects of the different project parameters. For example, the cost of constructing a high rise building will be affected by the footprint size and shape, the building height, the interior finishes, the presence of underground parking, and ground conditions. The second procedure is to estimate the cost of constructing a specific building. The various characteristics of the building are outlined and estimates are solicited from practitioners in each location. While this method produces indexes that reflect location conditions including labour skill, availability, and productivity, it requires significant cost estimating resources. Extreme care must be taken to ensure that the assumptions made in the specifications are acceptable across all locations. This method introduces uncertainty and possibly biases because the estimated costs are dependent upon the practitioners. When tenders are submitted for a project, every bid that is submitted has a different price. The index cost developed by the estimator may affect the perceived competitiveness of that location by the users of that index. Hybrid indexes exploit the ease of input index development and the reliability of output indexes. Instead of providing indexes based on the total cost of a project, hybrid indexes focus on the installed costs of smaller building elements, such as foundation walls, insulation or roof membranes. Building elements are usually organized using MasterFormat. Often, labour cost, material cost, and total cost including overheads are provided.

4 It is important to understand the basis of these indexes. If costs are provided for each location, then they may contain productivity differences. If the cost is ascertained for a single location and then applied across locations using a location index, the assumptions behind the location index must also be considered. Often assumptions are based on labour hourly costs and material costs, with a standard productivity rate and overhead rate applied, making them more similar to an input index than an output index. Compilation Method A second facet of the cost index relates to how the cost information collected over several projects or locations is compiled into a single index. Several schemes have been developed including using simple averages, medians, modes, inverse averages, and product roots. Each method results in a different index value even if the same data are used. In most cases, the mean (the mathematical average) or the mode (the most likely value) is used based on a sample of 3 cost estimates. For example, consider three costs collected as $1.25, $1.30, and $1.75. The mean would result in a cost of $1.43 whereas the mode may be interpreted as $1.30. Because small sample sizes are usually used, some subjective judgement must be used to ensure the results are reasonable. Occasionally, a confidence level is used as the value. Assuming a normal distribution was fit to these data and an 85% confidence value was desired, this would result in a cost of $1.72. It is obvious that the method significantly affects the resulting reported cost, and they are all correct based on their interpretation. Validation Finally, the reliability of the data is always in question. The method used to collect the cost data is very important to ensure the data are representative of the political and economic conditions. Data collection may be done by phone with associated firms (engineers, quantity surveyors, and/or contractors) providing information, by survey of published labour, material, and equipment costs, or by review of completed project files. Where associated firms are providing the information, it is important that they all understand the assumptions that must remain constant for all locations, and to not allow personal or local biases affect the reliability of the process. Method Cost Mean $1.43 Most Likely $ % Confidence $1.72

5 Research Objective The primary objective of this research was to: Develop a reference guide that presents the key characteristics of each construction cost source separately and allows convenient comparisons of results. This was achieved by collecting the cost sources, interviewing analysis and publishers, documenting results and preparing the guide. Additional analysis was performed showing how the indexes compared over time, and by location. How to Use this Guide The cost sources included in this guide are: Boeckh Commercial, Institutional, Light Industrial Building Cost Guide Dodge unit Cost Guide Engineering News Record Hanscomb Yardsticks Hanscomb-Means International Construction Cost Index Helyar Construction Cost Guide KPMG International Cost Comparison Analysis RSMeans Building Construction Cost Data Richardson Construction Cost Trend Reporter Richardson International Cost Index Saylor Current Construction Costs Statistics Canada Construction Price Statistics This Guide is organized in the following manner. Section 2 contains a summary of the cost sources and a comparison of the costs over time and location. Section 3 contains detailed information for each cost source outlining the assumptions, strengths and weaknesses of each source. In addition, a standardized format specific to each index was prepared outlining their characteristics related to labour, material and equipment indexes, assemblies and structures indexes, and location indexes.

6 Summary of Cost Sources Cost Type Cost Labour (Input) Materials (Input) Equip t (Input) Assemblies/ Structures Location Indexes Time Series Source (Output) Boeckh Input Dodge Input ENR Input Hanscomb Input & Output Helyar Output KPMG Output Richardson Output RSMeans Input Saylor Input Statistics Canada

7 Statistics Canada and Helyar Indices (1981=100) Toronto: Commercial Comparison of Time Series Some of the indexes can be expressed as time series that are approximately comparable to the time series published by Statistics Canada. No inference should be made from these comparisons that one index is more reliable than another. The reliability of an index is determined by its suitability to the use to which it is applied and by the validity of the assumptions with respect to that use. In all cases, the comparisons are rates of change from a base year Helyar Statistics Canada Figure 1: Statistics Canada vs. Helyar Statistics Canada and Saylor Indices (1990=100) Statistics Canada: 7 City Average Saylor: Sub-Contractor and Materials & Labour Indices Saylor: Sub-Contractors Statistics Canada Saylor: Materials & Labour Figure 2: Statistics Canada vs. Saylor Statistics Canada / Helyar ( Figure 1) Figure 1 compares changes from 1981 in the cost of constructing a commercial-use building, as measured by Statistics Canada and Helyar & Associates. From 1981 to 1989, the Helyar Index and the Statistics Canada Index closely track one another. The indexes differ on whether construction costs peaked in 1989 or In the 1990,s the indexes diverge significantly. Statistics Canada reports a moderate decline in construction costs approximately 6% from 1990 to Helyar & Associates, however, report a much sharper decline in costs approximately 22% from 1989 to Thereafter, both indexes track a comparable 1½% annual rate of inflation form 1992 to While there are strong similarities in the trends reported by the two indexes, it is significant that they differ on both the turning point of the construction cycle and the extent of cost reductions during the period of contraction from 1991 to Statistics Canada / Saylor (Figure 2) The Statistics Canada and the Saylor indexes exhibit approximately similar patterns. During the contraction of , Statistics Canada reports a reduction in construction costs. This is consistent with the Helyar index and also with expectations. The Saylor indexes, however, show virtually no decline in costs during the recession.

8 Statistics Canada and Boechk Indices (1990=100) Statistics Canada: Toronto Non-Residential Boechk: Unweighted All-Components Average for Ontario Boechk Ontario Average Statistics Canada-Toronto Non-Residential Figure 3: Statistics Canada vs. Boechk Statistics Canada and R.S. Means Indices (1990=100) Statistics Canada: 7-City Average R.S. Means: Historical Cost Index Over the decade, Statistics Canada estimates construction cost increases of 10% compared to 25% and 27% in the Saylor indexes. The Saylor indexes consistently estimate inflation at significantly higher rates that Statistics Canada. Statistics Canada / Boechk (Figure 3) As in the Saylor comparison, the Boechk Index diverges sharply from the cost pattern reported by Statistics Canada for the recession years ( ). During this period, Statistics Canada reported a cost reduction for Toronto Non-Residential construction of approximately 5%. Boechk, however reports a cost increase of 15%. This degree of cost increase is unique among the indexes for the period in question and is also counter-intuitive. For the period 1993 to 1999, the Boechk and Statistics Canada indexes closely track one another. Boechk reports cost inflation of approximately 17% compared to 14.5% for Statistics Canada. In 2000, Statistics Canada identified a sharp increase in costs 6.5%. This is consistent with industry experience. Boechk, however, reports inflation in 2000 of only 1.6%. The indexes appear to track one another during period of moderate expansion, but to diverge during the downturn and at acceleration points in the construction cycle Means Index Statistics Canada Figure 4: Statiscis Canada vs. RSMeans Statistics Canada / R.S. Means (Figure 4) As with the Boechk index, the Means index reports cost increases during the contraction years This contrasts with Statistics Canada and Helyar. For the period , the R.S. Means index and the Statistics Canada 7- City Average track one another closely. Means reports cost inflation of 15.6% during this period, while Statistics Canada estimates the 6-year inflation at 13.7%.

9 Comparison of Location Series Location indexes are an important source of information to compare regional construction costs. Table 1 shows location indexes from eight publications for 12 cities, 4 of which are in Canada. Figure 5 shows the same information in graphical format. These cities were chosen to provide a reasonable geographic sampling as well as to represent major industrial centres. They have all been normalized so that Toronto=100. To fairly compare costs, an adjustment for the Canadian dollar has been made using the exchange rate of C$1.48 = US$1.00. The rightmost column shows the arithmetic average of the location indexes for each city from the publications. The average for each publication is shown under the index list. The bottom row of the table shows whether the location index could be considered an input index or an output index (as defined in the introduction). To facilitate trend analysis, the lowest index value for each location is marked with a single underline, and the highest value marked with a double underline. The values vary widely. Only two of the indexes are from Canadian firms, namely Helyar and Hanscomb. These publications do not provide indexes for US cities. Boeckh is based out of Germany, but has offices in Canada and US that gather information for their publication. KPMG is international and, like Boeckh, has offices in both Canada and US. The other indexes are published by US firms. Only Richardson is specific to industrial process plant construction while the others are general building construction. For this analysis, there was some difficulty getting indexes for all of the cities. In some cases, an index for a particular city was not available, so an available index for another city was used. For example, Richardson provides city indexes in their International Cost manual, but only publishes indexes for states in their Process Plant publication. For this reason, the US cities are represented by their index for the state. Similar substitutions were made for the KPMG data. San Diego was used for Los Angeles, Columbus for Cincinnati, Dallas-Fort Worth for Houston, Saginaw for Detroit, and Newark for New York. These substitutions were deemed reasonable at the time. Of the eight location indexes compared, only three, KPMG, Helyar and Hanscomb, are output indexes. RSMeans explicitly states that productivity is not considered in their location indexes. Saylor, Dodge, and Richardson each mention once in their literature that productivity is considered but do not indicate how. Richardson provides a productivity factor in their International Cost Guide, but it is the same for each Canadian city. Saylor uses the same productivity rate in the calculations of union installed costs and open shop installed costs, and assume that the same crew configuration is used in each location. It is therefore unlikely that they differentiate productivity rates in their location indexes. Dodge stated during their interview that constant productivity rates were used. Because all the publications provide indexes for the chosen Canadian cities, this discussion will first look at them. Then,

10 the US cities will be included, which will require omitting Helyar and Hanscomb from the discussion. Comparing Canadian Cities Only All of the input indexes show Toronto as the most expensive Canadian city. Only one output index, Hanscomb, shows the same trend although the difference between them cannot be considered significant. All three output indexes indicate that Toronto and Montreal are approximately the same. Both KPMG and Helyar indicate Vancouver and Calgary are more expensive than Toronto, although KPMG is much higher. In fact, KPMG has the highest index for each Canadian city Toronto Richardson Dodge Boeckh Saylor RS Means KPMG Hanscomb Helyar Montreal Calgary Vancouver Houston Atlanta Figure 5: Location Cost Indexes Comparing All Cities This discussion does not include Hanscomb and Helyar as they do not provide indexes for the US cities, leaving KPMG as the only output index in the comparison. Cincinnati Chicago Los Angeles Detroit Boston New York KPMG, an output index, publishes the highest value for 7 of the cities and is the highest index on average. Richardson, an input index, is the lowest. Because of the small sample of output indexes (only 1), we cannot conclude that labour productivity varies significantly between these cities, and it has a dramatic effect on costs. It has yet to be determined if and to what degree productivity may differ. Although there an exchange rate of Can$1.48= US$1.00 has been applied, two US cities have indexes significantly lower (approximately 15%) than Toronto. These are Atlanta and Houston from Dodge and Richardson publications. RSMeans, however, published indexes for these two cities approximately 15% higher than Toronto. There does not appear to be any consistency in the indexes across publications, even those that are of the input type. To understand the sensitivity of the US location factors to the exchange rate used, the rate was varied until the average index for each of the US cities was equal to 100. This occurred when $1.00 US = Can $: Houston $1.41 Atlanta $1.38 Cincinnati $1.26 Chicago $1.14 Los Angeles $1.11 Detroit $1.08 Boston $1.06 New York $0.92 Conclusion Using location indexes appears to be a gamble, and the result will vary significantly depending on the index used. There is no obvious consistency between the publications, even those of the same type. This is very concerning as major decisions may be based upon this information.

11 Table 1: Normalized Location Indexes City Richardson Dodge Boeckh Saylor RS Means KPMG Hanscomb Helyar Average Toronto Montreal Calgary Vancouver Houston Atlanta Cincinnati Chicago Los Angeles Detroit Boston New York Average Type of Index Input Input Input Input Input Output Output Output Single Underline: lowest index value per city Double Underline: highest index value per city

12 Boeckh Commercial, Institutional, Light Industrial Building Cost Guide General Information Publisher: Boeckh, A Division of Thomson Canada Limited 100 Sheppard Ave. East Suite 460, Toronto, ON M2N 6N5 Tel: (800) Fax: N/A Website: Years in circulation: Type of index: Intended use by: Canadian City Coverage: 66 years This guide provides unit costs for various building types with adjustments for building parameters and characteristics. Location multipliers for construction costs at various locations are provided to transfer unit costs to other locations. This publication provides insurance adjusters with estimates of the cost of replacing a building. It does not attempt to measure the market value of the building. The information may be used by owners for preliminary construction cost comparisons, but is not detailed enough to be of use to contractors. Of interest are the location multipliers that compare costs in different locations. 940 locations, 53 of which are Canadian cities: BC: Kamloops, Prince George, Vancouver, Victoria AB: Calgary, Edmonton, Lethbridge SK: Prince Albert, Regina, Saskatoon MB: Brandon, Winnipeg ON: Barrie, Hamilton, Kingston, Kitchener, London, Ottawa, Owen Sound, Peterborough, St. Catharines, Sarnia, Sault Ste. Marie, Sudbury, Thunder Bay, Timmins, Toronto, Windsor QC: Chicoutimi, Granby, Hull, Joliette, Montreal, Noranda, Quebec, Rimouski, St. Hyacinthe, St. Jerome, Sherbrooke, Sorel, Trois Rivieres NB: Bathurst, Fredericton, Moncton, Saint John NS: Bridgewater, Halifax, Sydney, Truro, Yarmouth

13 Boeckh Commercial, Institutional, Light Industrial Building Cost Guide General Information PE: Charlottetown NF: Corner Brook, St. John s Other Publications: Residential Building Cost Guide Mobile-Manufactured Housing Cost Guide High-Valued Dwelling Cost Guide Agricultural Building Cost Guide Apartment and Condominium Personal property Cost Guide Description: The Boeckh Cost Guide consists to two major sections: the baseline square foot building costs, and the location multipliers. The baseline for costs is Milwaukee WI in It was chosen because of its historically stable economy and its typical profile of national economic characteristics. Baseline Square Foot Building Costs Boeckh uses an inductive cost estimating method in which they collect elemental costs and combine them in stages to eventually represent a whole building. Boeckh provides square foot building costs in Milwaukee, WI for 120 different building models falling into 10 model types Lodging Offices Mercantile Restaurant/Recreation Professional Services Public Building Services Industrial Processes Basements/Miscellaneous

14 Boeckh Commercial, Institutional, Light Industrial Building Cost Guide General Information Depending on its superstructure construction type Frame Masonry Pre-Engineered Metal Steel Frame Protected Steel Frame Reinforced Concrete Frame Adjustment factors are available to account for other characteristics, such as: Exterior wall material Heating and cooling system type Miscellaneous (elevators, fire systems) Construction quality (economy, average, superior) Building area to perimeter ratio The following constants have been added to the total cost: 20% to account for combined overhead and profit of the general contractor and subcontractors 7% for architect and engineering fees 5% for contingencies The following have not been included: Local impact fees: these are taxes imposed by municipalities for new construction, but should not apply to reconstruction projects Fast track construction: it is assumed that standard design-construct practices are used. Boeckh recommends adding 10-15% for fast track projects Demolition, site work (clearing, paving, landscaping) Location Multipliers Once the base cost of the building is determined, it may be adjusted to a specific location and year using the location multipliers. Boeckh provides location multipliers for over 880 locations, categorized by US state and

15 Boeckh Commercial, Institutional, Light Industrial Building Cost Guide General Information zip codes and Canadian provinces and cities. For each location, nine multipliers are provided: Frame, Masonry, Jointed Masonry Pre-Engineered Metal, Non- Combustible Steel, Protected Steel, Masonry Non-Combustible, Modified Fire Resistive Reinforced Concrete Frame, Fire Resistive Building Items and Site Improvements Group I Group II Group I Group II Group I Group II Group I Group II All Where Group I are structures with occupancy related to Services, Industrial, Processes, and Basements, and Group II are Lodging, Offices, Mercantile, Restaurant/Recreation, Professional Services, and Public Buildings. The location multipliers are calculated based on 115 elemental costs consisting of 19 building trade labour rates, 89 material prices, and 7 other applicable costs. Labour rates for 19 construction trades consisting of prevailing wages (union or open shop depending on the location and property type) plus fringe benefits are gathered from the locations. Wages include the base wage (journeyman) including vacation and holidays. Fringe benefits include health and welfare, pension funds, industry advancement funds, and apprentice training. In addition, workers compensation programs, contractor s/builder s liability insurance, social security and unemployment compensation are determined. Data sources include building trade councils, general contractor organizations, local unions and contractors by writing or telephone interviews. Material prices are collected from local suppliers. The costs of these items include local taxes, freight charges, and contractor discounts. National-supply centres distribute certain materials, and their cost is assumed constant. For each building model, elemental costs as a percentage of the total baseline cost in Milwaukee are calculated. The Boeckh example shows these proportions for the costs of a tree house: 40% Carpenter labour 25% 2x4 lumber

16 Boeckh Commercial, Institutional, Light Industrial Building Cost Guide General Information 20% Plywood 10% Asphalt shingles 5% Paint The local cost of each labour-hour and material unit is then weighted according to the model, summed, and normalized to the Milwaukee 1995 cost to calculate the location multiplier. Of the over 880 location multipliers provided, only 201 are calculated independently. The remainder are modified from a similar, neighbouring zip code using a predetermined hook-up factor which relates the neighbouring locations to the central location by a factor, say, 0.96 or Periodically, the hook-up factors are reviewed for accuracy. The base building is assumed to be in a cold climate and a seismic zone 0. Additional factors are provided to account for special site conditions that are important in the subject location but not captured in the labour/material-based location multipliers. Multipliers for Canadian locations represent Canadian dollars. Assumptions: 1. An allowance is included in the base costs for normal general contractor and subcontractor overhead and profit (O & H) combined and is equal to 20 percent. 2. An allowance is included in the base costs for Architectural fees and is equal to 7 percent. 3. An allowance is included in the base costs for contingencies and is equal to 5 percent. 4. The base cost assumes a seismic zone 0 and a cold climate region.

17 Boeckh Commercial, Institutional, Light Industrial Building Cost Guide General Information Strengths: 1. Cover a large number of Canadian cities (53 cities). 2. No exchange rate is applied for the Canadian locations, which gives flexibility to apply a current or anticipated exchange rate. 3. Provides location and time multipliers. 4. The Boeckh publication recognizes three national building codes and the cost differentials due to building code requirements are taken into consideration. 5. The following factors are reflected in the multipliers: Engineering and architectural costs Building code requirements such as seismic design requirements Climate and weather conditions Weaknesses: 1. Markup for general contractors and subcontractors, architectural costs, and contingencies are reflected as a constant percentage for all locations. 2. The following factors are not reflected in the location multipliers: Work regulation Access and transportation (site conditions) Market competitiveness condition and local discounting practices 3. The following costs are not reflected in the location multipliers: Land and related costs such as land surveys Managerial and supervision costs

18 Boeckh Commerical, Institutional, Light Industrial Location Indexes Location Factor Published Soft Costs Included Design Modified to Local Conditions Same Weighting Of Index Components Over Locations GeneralComments Time-location multipliers are published for each state and province over 10 years. Eight building structure types are detailed plys an overall building and site improvement multiplier. The multipliers take into account labour rates, material prices and other applicable costs such as taxes and insurance. Boeckh states that they apply a productivity adjustment. Ontario Construction Secretariat:

19 Boeckh Commerical, Institutional, Light Industrial Elements, Assemblies, and Buildings Elemental Installations Assembly Installations Complete Structures Individual Location Costs Costs Specific To One Location National Average Costs Number Of Trades Tracked 0 Supplementary Benefits Union Wage Rates Open Shop Wage Rates Wage Rate Source Number Of Sources 1 Data Collection Method Update Frequency annual Constant Productivity Rates Same Crew Composition Supervisory Factor Markup Factor Notes Ontario Construction Secretariat:

20 Boeckh Commerical, Institutional, Light Industrial Labour Cost Indexes Labour Costs Tracked Number Of Trades Tracked 0 Union Wage Rates Open Shop Wage Rates Wage Rate Source Number Of Sources 0 Data Collection Method Update Frequency Notes Costs for Individual Locations Costs Specific To One Location Costs are National Averages Same Crew Composition Supplementary Benefits Included Constant Productivity Rates Supervisory Factor Included Markup Factor Ontario Construction Secretariat:

21 Boeckh Commerical, Institutional, Light Industrial Materials and Equipment Materials Tracked Individual Location Costs Costs Specific To One Location National Average Costs Number Of Materials Tracked 0 Same Materials Across Location Number Of Sources 0 Data Collection Method Update Frequency Notes Equipment Tracked Individual Location Costs Costs Specific To One Location National Average Costs Number Of Equipment Tracked 0 Same Equipment Across Locations Number Of Sources 0 Data Collection Method Update Frequency Notes Ontario Construction Secretariat:

22 Dodge Unit Cost Guide General Information Publisher: Marshall & Swift 911 Wilshire Blvd. Los Angeles, CA Tel: Fax: Website: (213) (213) Years in circulation: 12 years by Marshall & Swift (1988-present) 16 years by McGraw-Hill ( ) Dodge cost indexes have been created since 1932 Type of index: Intended use by: Canadian City Coverage: The Dodge Unit Cost guide provides: Elemental costs: detailed costs categorized by CSI Masterformat Equipment Data: daily, weekly and monthly rental rates Local Multipliers: Multipliers are provided for over 1000 locations in US and Canada These indexes are intended to assist contractors in developing bids and drop prices. Over 1000 locations of which 86 are Canadian: BC: Cranbrook, Kamloops, Kelowna, Nanaimo, Nelson, Penticton, Port Alberni, Prince George, Prince Rupert, Trail, Vancouver, Victoria AB: Calgary, Edmonton, Lethbridge, Medicine Hat, Red Deer SK: Moose Jaw, North Battleford, Prince Albert, Regina, Saskatoon MB: Brandon, Thompson, Winnipeg ON: Barrie, Belleville, Brampton, Brantford, Brockville, Cambridge, Guelph, Hamilton, Kingston, Kitchener, Lancaster, Lindsay, London, Niagara Falls, North Bay, Orillia, Oshawa, Ottawa, Owen Sound, Peterborough, Sarnia, Sault St. Marie, St. Catharines, Sudbury, Thunder Bay, Timmins, Toronto, Trenton, Waterloo, Windsor

23 Dodge Unit Cost Guide General Information Other Publications: Repair and Remodel Cost Guide Residential Cost Handbook Commercial Cost Handbook Electrical Cost Guide QC: Chicoutimi, Drummondville, Hull, Jonquiere, Laval, Montreal, Quebec City, Rimouski, Rouyn, Sept. Iles, Sherbrooke, Trios-Rivieres, Val d'or NB: Bathurst, Edmundston, Fredericton, Moncton, St. John NS: Cape Breton, Dartmouth, Halifax, New Glasgow, Sydney, Truro PE: Charlottetown NF: Corner Brook, Gander, St. Johns NT: Yellowknife YT: Whitehorse Description: The Dodge Unit Cost Guide contains construction costs organized by the CSI MasterFormat divisions. Hourly labour rates are gathered for the different trades in each city. Material and equipment costs are determined by contacting building product manufacturers, dealers, supply houses, distributors, and contractors. All the costs found in the Dodge Unit Cost Guide are U.S. national averages. The local multipliers are used to adjust the national average to the different locations. Material prices and wage rates are collected locally. Usually there are 3 sources for each location. A judgement is made on the information to exclude the outliers. An average is taken from the remaining data to represent each location. Markups (OH & P) are included and they vary by the CSI divisions and by trade. There are location multipliers for each division of the CSI Master-Format, and there is also an overall multiplier, which represents a weighted average of materials and labour. The weights of the overall local multiplier are the same for all the locations and over time.

24 Dodge Unit Cost Guide General Information Marshall & Swift monitors the areas specified in the publication for the required costs and rates on a quarterly basis. The guide is published annually. The local multipliers are provided quarterly. All taxes (PST and GST for the Canadian cities) are included. The range of error believed in the estimates of the location multipliers is ± (5 10)%. For the Canadian cities, the prices and rates are collected in local currency (No exchange rates are applied). Assumptions: 1. Crew compositions are assumed constant over all locations. These crews are believed by the Dodge estimators to be typical crew compositions. The crew compositions are found in the crew data section. 2. All the productivity rates estimated for the crews and used in the calculations are derived from national averages. These productivity rates are considered constant for all locations. 3. Labour wage rates are Union wage rates. Strengths: 1. Covers a large number of Canadian cities (86 cities). 2. There is an option of applying a location multiplier from a category specific to a certain component, or using the overall multiplier and apply it to an entire project. 3. No exchange rates are applied for the Canadian locations, which gives the flexibility to apply a desired exchange rate when comparing projects between the U.S. and Canada. 4. Estimated markups are added to the total costs. These are not a constant value or percentage for all locations; they vary by trade and CSI divisions.

25 Dodge Unit Cost Guide General Information Weaknesses: 1. Only Union wage rates are used. 2. Crew compositions are constant in all locations. 3. Productivity is assumed constant for all locations, therefore, no differential productivity is reflected in the location multipliers. 4. The location multipliers do not reflect the following factors: Unique local requirements Regional variations due to specific building codes Climate and weather conditions Seismic design requirements Design styles and conventions Market competitiveness condition, and local discounting practices Access and transportation (site conditions) 5. The following are not reflected in the costs: Engineering and architectural costs Land related costs Land surveys Permit fees and taxes Payroll costs such as social security and payroll insurance Managerial and supervision costs 6. Markups do not reflect local competitive conditions.

26 Dodge Unit Cost Guide Location Indexes Location Factor Published Soft Costs Included Design Modified to Local Conditions Same Weighting Of Index Components Over Locations GeneralComments The Local Multipliers are calculated for each of the 16 CSI Masterformat divisions plus an overall multiplier. Local Multipliers are based solely on prevailing wages and material costs within each of the regions. Multipliers are relatively detailed with several ZIP codes distinguished for each US state. Canadian Local Multipliers are organized by province and city. Ontario Construction Secretariat:

27 Dodge Unit Cost Guide Elements, Assemblies, and Buildings Elemental Installations Assembly Installations Complete Structures Individual Location Costs Costs Specific To One Location National Average Costs Number Of Trades Tracked Union Wage Rates Open Shop Wage Rates Wage Rate Source Collective agreements Number Of Sources 3 Data Collection Method Phone interviews and data collection Update Frequency semi annually Supplementary Benefits Constant Productivity Rates Same Crew Composition Supervisory Factor Markup Factor Notes Elemental costs provided for over 20,000 line items. They are based on labour and materials only (equipment costs not included). Overhead and profits are provided. Markups do not reflect local competitiveness across locations but vary by CSI Masterformat divisions and by trade. Elemental costs are based on single components. Their sum for an entire structure would likely exceed total costs because savings between elemental installations are not considered. Crew composition is based on the typical crew assumed by the Dodge estimators and is constant for all the locations. Costs are calculated as the average from 3 or more sources with outliers removed if necessary. The crew productivity rates are derived from the national averages, and are asumed the same for all the locations. Very few revisions on productivity from year to year. Ontario Construction Secretariat:

28 Dodge Unit Cost Guide Labour Cost Indexes Labour Costs Tracked Number Of Trades Tracked 20 Union Wage Rates Open Shop Wage Rates Wage Rate Source Number Of Sources Data Collection Method Update Frequency Notes Collective agreements Costs for Individual Locations Costs Specific To One Location Costs are National Averages Same Crew Composition Supplementary Benefits Included Constant Productivity Rates Supervisory Factor Included Markup Factor Dodge does not specifically provide a labour index, but tracks labour costs in their crew component of the elemental and assembly costs. Ontario Construction Secretariat:

29 Dodge Unit Cost Guide Materials and Equipment Materials Tracked Individual Location Costs Costs Specific To One Location National Average Costs Number Of Materials Tracked Same Materials Across Location Number Of Sources Data Collection Method Update Frequency Notes Dodge does not specifically provide a materials index, but tracks material costs in the elemental and assembly costs. Equipment Tracked Individual Location Costs Costs Specific To One Location National Average Costs Number Of Equipment Tracked 200 Same Equipment Across Locations Number Of Sources 3 Data Collection Method phone survey Update Frequency Notes Equipment rental rates are given on a daily, weekly, and monthly basis. For each type of equipment, several configurations are provided. For example, Air Compressor rates are lised for 15 different capacities for diesel-fueled, and 2 capacities for gas-fueled. It is expected that the Local Multipliers would be sufficient to convert these national average rental costs to individual locations. Ontario Construction Secretariat:

30 Engineering News Record Building Cost Index and Construction Cost Index General Information Publisher: Engineering News-Record McGraw-Hill Co., Two Penn Plaza, New York, New York Tel: (212) Website: Years in circulation: Both indexes base-dated to 1913 Construction Cost Index commenced in 1920 s Building Cost Index commenced in 1930 s Type of index: Intended use by: Canadian City Coverage: Other Publications: Composite of four input costs: labour (skilled/unskilled), cement, lumber and steel. Contractors and developers - to estimate approximate changes in constructions over time in locations, not to compare across locations. Toronto and Montreal The ENR s cost indexes are proprietary. The ENR s 20-city average (US only) is published weekly. Cityspecific data (including Toronto and Montreal) are published in the Dec. 1 st issue.

31 Engineering News Record Building Cost Index and Construction Cost Index General Information Description: The ENR publishes two indexes. Both indexes are based on a similar methodology. Construction Cost Index: The CCI is a composite index based on specified quantities as follows: cement - 1,128 tones of bulk portland cement priced locally lumber - 1,088 board-ft of 2 x 4 lumber priced locally steel - 25 cwt of fabricated structural steel at the 20-city average Labour for the Construction Cost Index is assumed to be 200 hours of common labour (i.e., unskilled labour). Labour is priced at the 20-city average. Building Cost Index: The BCI uses the same material inputs and costs but alters the labour input to hours of skilled labour. Skilled labour is the average wage paid to three trades bricklayers, carpenters and structural ironworkers. The 20-city average is used. Both indexes are based-dated to There have been no changes in the technical specifications (quantities and types of labour, quantities and types of materials). Wage costs in both indexes are the published union wage rate for the package, i.e., inclusive of nonstatutory benefits. Statutory payments are not included. As noted, prices for lumber and cement a local. The steel price is a national average. The national average is not weighted. Because the technical specifications of the indexes have not changed, the current relative weight of the components is a function of changes in prices and wages since Because labour costs, in the long run, tend to outstrip commodity prices, both indexes have a secular bias to be over weighted to the labour

32 Engineering News Record Building Cost Index and Construction Cost Index General Information component. The current weights are approximately at follows: CCI BCI Labour 78% 61% Cement 1% 27% Lumber 10% 7% Steel 11% 2% These weights are excessively skewed to the labour input. In general, the labour share of the labour-plusmaterials component of construction ranges from 30% in civil projects to 40% in ICI projects and 60% in repair projects. Changes in the timing of the index components affect the month-to-month variations. Steel prices and wage rates tend to change once per year. Cement prices change once or twice per year. By contrast, lumber prices can change monthly. Hence, the month-to-month variations in the indexes are largely determined by lumber prices, except in those months when wages or the prices of steel and cement change. There may also be lags in the incorporation into the index of changes. Consequently a moving average is more reliable as an indicator of underlying inflation trends than a point-over-point comparison. ENR does not recommend use of the indexes to derive cost comparisons across locations. The indexes are intended to show changes in costs over time at a location or over time for the 20-city average. ENR is more confident in the 20-city average than in individual city estimates. Typically only one source is used per location. ENR endeavors to use the same source over time. It is common for the ENR index to be referenced in construction contracts that provide for inflation adjustments. It is also common for the ENR index to be used to estimate the current cost of replicating a structure built in the past. Canadian data are estimated in C$ and are not converted. Consequently any attempt to derive a comparison between Toronto and Montreal and the 20-city US average would be invalid, as the exchange rate factor would not be taken into account.

33 Engineering News Record Building Cost Index and Construction Cost Index General Information Assumptions: 1. Steel, Portland cement and 2 x 4 lumber are representative building materials. 2. An unweighted average of bricklayers, carpenters and structural ironworkers is representative of skilled labour. (Note that this excludes the mechanical trades). Strengths: 1. There are comparatively few components in the index. This makes maintenance comparatively inexpensive. The methodology and the calculation of the index are published and are transparent. 2. There are no proprietary productivity assumptions. Weaknesses: 1. The index measures input costs for labour and materials. The index does not measure in-lace costs. The latter take into account contractors mark-ups. 2. The index does not take into account the impact of equipment costs. 3. The labour component is over weighted and incorporates a secular bias to be increasingly over weighted. 4. The three materials selected to proxy the materials component of construction do not reflect the costs of mechanical systems or changes in finish materials (e.g., the shift from plaster to drywall).

34 Engineering News Record Building Cost Index and Construction Cost Index Location Indexes Location Factor Published Soft Costs Included Design Modified to Local Conditions Same Weighting Of Index Components Over Locations GeneralComments Location indexes are based solely on input values. The index is based on cost of 1,128 tonnes of bulk portland cement, 1,088 board-ft of lumber, 25 cwt of structural steel and either 200 hours of common labour (CCI) or hours of the average of three skilled trades (BCI) Ontario Construction Secretariat:

35 Engineering News Record Building Cost Index and Construction Cost Index Elements, Assemblies, and Buildings Elemental Installations Assembly Installations Complete Structures Individual Location Costs Costs Specific To One Location National Average Costs Number Of Trades Tracked 0 Supplementary Benefits Union Wage Rates Open Shop Wage Rates Wage Rate Source Number Of Sources 0 Data Collection Method Update Frequency Constant Productivity Rates Same Crew Composition Supervisory Factor Markup Factor Notes Ontario Construction Secretariat:

36 Engineering News Record Building Cost Index and Construction Cost Index Labour Cost Indexes Labour Costs Tracked Number Of Trades Tracked 4 Union Wage Rates Open Shop Wage Rates Wage Rate Source Collective Agreement Number Of Sources 1 Data Collection Method Same source consistently Update Frequency US: Monthly; Canada: Annual Notes Costs for Individual Locations Costs Specific To One Location Costs are National Averages Same Crew Composition Supplementary Benefits Included Constant Productivity Rates Supervisory Factor Included Markup Factor Ontario Construction Secretariat:

37 Engineering News Record Building Cost Index and Construction Cost Index Materials and Equipment Materials Tracked Individual Location Costs Costs Specific To One Location National Average Costs Number Of Materials Tracked 200 Same Materials Across Location Number Of Sources Data Collection Method Survey Update Frequency Weekly Notes Each week, different material categories are published. For example, various types of pipe one week, then all wood items the next. Equipment Tracked Individual Location Costs Costs Specific To One Location National Average Costs Number Of Equipment Tracked 0 Same Equipment Across Locations Number Of Sources 0 Data Collection Method Update Frequency Notes Ontario Construction Secretariat:

38 Hanscomb s Yardsticks for Costing General Information Publisher: Produced by Hanscomb Limited, and published by R.S. Means Co., Inc. 40 Holly Street, Suite 900 Toronto ON, M4S 3C3 Tel: (416) Fax: (416) Website: Years in circulation: Type of index: Intended use by: Canadian City Coverage: Other Publications: 5 years This publication provides installed-in-place costs for 8 Canadian cities for comparing construction costs between these locations. Intended to be used as a costing tool by estimators for design work in the early stages of a project. It is not designed as a bidding tool. This is a Canadian publication with 8 locations covered: BC: Vancouver AB: Calgary MB: Winnipeg ON: Ottawa, Toronto QC: Montreal NS: Halifax NF: St. Johns N/A