a guide to construction cost sources - what can they tell us about competitiveness (1)

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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



A Guide to Cost Sources


As the industrial, commercial and institutional (ICI)marketplace becomes increasingly global, the competition tohost new facilities also becomes more intense. Decisions byowners on where to build are often based upon a conceptualestimate, with construction costs being part of that estimate.Other factors include (but are not limited to) projected returnson investment, location-specific tax relief, energy availability,and operating costs.

It is important to put construction costs in context. For a newindustrial 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.

Figure from Richardson Engineering Services

As can be seen, for a typical processing plant, building andsite 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 siteconstruction, and 12% in processing installation.

For determining the cost of construction in the preliminarystages of project development, several cost indexes arecommercially available. These differ in their intended use andtheir reliability. One index may depict the cost of constructionin a certain city or area as very competitive globally, whileanother may indicate that the same location is uncompetitive.This report discusses the assumptions behind constructioncost indexes available in the ICI industry and compares theresulting indication of cost competitiveness using Toronto asthe 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, anindex might take as its baseline 100 as the cost of building a20 storey office building in Toronto in 1992. Locations may be

defined as cities, telephone area codes, provinces/states, or countries, depending on the level of detail and the intendeduse of the index. The assumptions and methodology behindeach index is unique, therefore the values are not transferable.

Input, Output, and Hybr id Indexes

There are several facets of cost indexes that may affect their applicability. First, it is important to know the philosophy

100% ConstructionCost

20% Buildings

& Site

80% Process

S stem

55% FieldMaterial

45%Labour

75%EngineeringEquipment

10% FieldMaterial

15%Labour




behind the index. Generally, they are characterized as input,output, or hybrid indexes 1.

Input indexes are compiled from a shopping cart of commonmaterials, equipment, and trade labour hours. They represent

the inputs to the construction process and reflect the marketprices for these items. For example, an input index may bebased upon the cost of 100 m3 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. Localcosts for the items in the shopping cart are determined for every location covered by the index, and summed. They arethen normalized to the baseline to produce the index.

Input indexes do not contain any assumptions or adjustmentsrelated 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 quantitiesare constant in every location. This means that some aspectsof 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 simplestto produce and contain the least error. Local hard costs arecollected from collective agreements and materialdistributors/retailers. Importantly, these indexes are not biasedby assumptions or estimates of local conditions. This index

may be useful for construction companies that move their owncrews between projects and only need to know the differencesin 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 PriceIndex 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 havedifferent parameters, the costs must be adjusted to account for the different project characteristics. Although these indexesmore closely represent real costs, it is extremely difficult to

collect this information and to adjustment the costs in areasonable way to reflect the effects of the different projectparameters. For example, the cost of constructing a high risebuilding will be affected by the footprint size and shape, thebuilding height, the interior finishes, the presence of underground parking, and ground conditions.

The second procedure is to estimate the cost of constructing aspecific building. The various characteristics of the building areoutlined and estimates are solicited from practitioners in eachlocation. While this method produces indexes that reflect

location conditions including labour skill, availability, andproductivity, it requires significant cost estimating resources.Extreme care must be taken to ensure that the assumptionsmade in the specifications are acceptable across all locations.This method introduces uncertainty and possibly biasesbecause the estimated costs are dependent upon thepractitioners. When tenders are submitted for a project, everybid that is submitted has a different price. The index costdeveloped by the estimator may affect the perceivedcompetitiveness of that location by the users of that index.

Hybrid indexes exploit the ease of input index developmentand the reliability of output indexes. Instead of providingindexes based on the total cost of a project, hybrid indexesfocus on the installed costs of smaller building elements, suchas foundation walls, insulation or roof membranes. Buildingelements are usually organized using MasterFormat. Often,labour cost, material cost, and total cost including overheadsare provided.




It is important to understand the basis of these indexes. If costs are provided for each location, then they may containproductivity differences. If the cost is ascertained for a singlelocation and then applied across locations using a locationindex, the assumptions behind the location index must also be

considered. Often assumptions are based on labour hourlycosts and material costs, with a standard productivity rate andoverhead rate applied, making them more similar to an inputindex than an output index.

Comp i lat ion Method

A second facet of the cost index relates to how the costinformation collected over several projects or locations iscompiled into a single index. Several schemes have beendeveloped including using simple averages, medians, modes,inverse averages, and product roots. Each method results in adifferent index value even if the same data are used. In mostcases, the mean (the mathematical average) or the mode (themost likely value) is used based on a sample of 3 costestimates. 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, somesubjective judgement must be used to ensure the results arereasonable. Occasionally, a confidence level is used as thevalue. Assuming a normal distribution was fit to these data andan 85% confidence value was desired, this would result in acost of $1.72. It is obvious that the method significantly affectsthe resulting reported cost, and they are all correct based ontheir interpretation.

Method CostMean $1.43Most Likely $1.3085% Confidence $1.72

Validation

Finally, the reliability of the data is always in question. Themethod used to collect the cost data is very important toensure the data are representative of the political andeconomic conditions. Data collection may be done by phonewith associated firms (engineers, quantity surveyors, and/or contractors) providing information, by survey of publishedlabour, material, and equipment costs, or by review of completed project files. Where associated firms are providingthe information, it is important that they all understand theassumptions that must remain constant for all locations, and tonot allow personal or local biases affect the reliability of theprocess.




Research Objective

The primary objective of this research was to:

• Develop a reference guide that presents the keycharacteristics of each construction cost source separatelyand allows convenient comparisons of results.

This was achieved by collecting the cost sources, interviewinganalysis and publishers, documenting results and preparingthe guide. Additional analysis was performed showing how theindexes compared over time, and by location.

How to Use this Guide

This Guide is organized in the following manner. Section 2contains a summary of the cost sources and a comparison of the costs over time and location. Section 3 contains detailedinformation for each cost source outlining the assumptions,strengths and weaknesses of each source. In addition, astandardized format specific to each index was preparedoutlining their characteristics related to labour, material andequipment indexes, assemblies and structures indexes, and

location indexes.

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




Summary of Cost Sources

Cost Type

CostSource

Labour (Input)

Materials(Input)

Equip’t(Input)

Assemblies/Structures(Output)

LocationIndexes

TimeSeries

Boeckh ü Input ü

Dodge ü ü ü InputENR ü ü ü InputHanscomb ü ü Input & OutputHelyar ü Output ü

KPMG ü OutputRichardson ü ü OutputRSMeans ü ü ü ü Input ü

Saylor ü ü ü Input üStatisticsCanada

ü ü ü ü ü




Comparison of Time Series

Statistics Canada and Helyar Indices (1981=100)

Toronto: Commercial

100

125

150

175

200

1981 1983 1985 1987 1989 1991 1993 1995 1997

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

90

100

110

120

130

140

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Saylor: Sub-Contractors Saylor: Materials & Labour

Statistics Canada

Figure 2: Statistics Canada vs. Saylor

Some of the indexes can be expressed as time series that areapproximately comparable to the time series published byStatistics Canada. No inference should be made from thesecomparisons that one index is more reliable than another. Thereliability of an index is determined by its suitability to the useto which it is applied and by the validity of the assumptionswith respect to that use. In all cases, the comparisons arerates of change from a base year.

Statistics Canada / Helyar ( Figure 1 )Figure 1 compares changes from 1981 in the cost of constructing a commercial-use building, as measured byStatistics Canada and Helyar & Associates. From 1981 to1989, the Helyar Index and the Statistics Canada Index closelytrack one another. The indexes differ on whether constructioncosts peaked in 1989 or 1990. In the 1990,s the indexesdiverge significantly. Statistics Canada reports a moderatedecline in construction costs – approximately 6% from 1990 to1992. Helyar & Associates, however, report a much sharper decline in costs – approximately 22% from 1989 to 1992.Thereafter, both indexes track a comparable 1½% annual rateof inflation form 1992 to 1999. While there are strong similarities in the trends reported by the two indexes, it issignificant that they differ on both the turning point of theconstruction cycle and the extent of cost reductions during the period of contraction from 1991 to 1993.

Statistics Canada / Saylor (Figure 2)The Statistics Canada and the Saylor indexes exhibitapproximately similar patterns. During the contraction of 1990-1992, Statistics Canada reports a reduction in constructioncosts. This is consistent with the Helyar index and also withexpectations. The Saylor indexes, however, show virtually nodecline in costs during the recession.




Statistics Canada and Boechk Indices (1990=100)

Statistics Canada: Toronto Non-ResidentialBoechk: Unweighted All-Components Average for Ontario

90

100

110

120

130

140

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

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

90

100

110

120

130

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Means Index Statistics Canada

Figure 4: Statiscis Canada vs. RSMeans

Over the decade, Statistics Canada estimates constructioncost increases of 10% compared to 25% and 27% in theSaylor indexes. The Saylor indexes consistently estimateinflation at significantly higher rates that Statistics Canada.

Statistics Canada / Boechk (Figure 3) As in the Saylor comparison, the Boechk Index divergessharply from the cost pattern reported by Statistics Canada for the recession years (1991-1993). During this period, StatisticsCanada reported a cost reduction for Toronto Non-Residentialconstruction of approximately 5%. Boechk, however reports acost increase of 15%. This degree of cost increase is uniqueamong the indexes for the period in question and is alsocounter-intuitive. For the period 1993 to 1999, the Boechk andStatistics Canada indexes closely track one another. Boechkreports cost inflation of approximately 17% compared to 14.5%

for Statistics Canada. In 2000, Statistics Canada identified asharp increase in costs – 6.5%. This is consistent with industryexperience. Boechk, however, reports inflation in 2000 of only1.6%. The indexes appear to track one another during periodof moderate expansion, but to diverge during the downturnand at acceleration points in the construction cycle.

Statistics Canada / R.S. Means (Figure 4) As with the Boechk index, the Means index reports costincreases during the contraction years 1991-1992. Thiscontrasts with Statistics Canada and Helyar. For the period

1993-1999, the R.S. Means index and the Statistics Canada 7-City Average track one another closely. Means reports costinflation of 15.6% during this period, while Statistics Canadaestimates the 6-year inflation at 13.7%.




Comparison of Location SeriesLocation indexes are an important source of information tocompare regional construction costs. Table 1 shows locationindexes from eight publications for 12 cities, 4 of which are inCanada. Figure 5 shows the same information in graphicalformat. These cities were chosen to provide a reasonablegeographic sampling as well as to represent major industrialcentres. 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 thelocation indexes for each city from the publications. Theaverage for each publication is shown under the index list. Thebottom row of the table shows whether the location indexcould be considered an input index or an output index (asdefined in the introduction). To facilitate trend analysis, thelowest index value for each location is marked with a singleunderline, and the highest value marked with a doubleunderline.

The values vary widely. Only two of the indexes are from

Canadian firms, namely Helyar and Hanscomb. Thesepublications do not provide indexes for US cities. Boeckh isbased out of Germany, but has offices in Canada and US thatgather information for their publication. KPMG is internationaland, like Boeckh, has offices in both Canada and US. Theother indexes are published by US firms. Only Richardson isspecific to industrial process plant construction while theothers 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 citywas not available, so an available index for another city wasused. 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, theUS cities are represented by their index for the state. Similar substitutions were made for the KPMG data. San Diego wasused for Los Angeles, Columbus for Cincinnati, Dallas-Fort

Worth for Houston, Saginaw for Detroit, and Newark for NewYork. These substitutions were deemed reasonable at thetime.

Of the eight location indexes compared, only three, KPMG,Helyar and Hanscomb, are output indexes. RSMeans explicitlystates that productivity is not considered in their locationindexes. Saylor, Dodge, and Richardson each mention once intheir literature that productivity is considered but do notindicate 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 calculationsof union installed costs and open shop installed costs, andassume that the same crew configuration is used in eachlocation. It is therefore unlikely that they differentiateproductivity rates in their location indexes. Dodge statedduring their interview that constant productivity rates wereused.

Because all the publications provide indexes for the chosenCanadian cities, this discussion will first look at them. Then,




the US cities will be included, which will require omitting Helyar and Hanscomb from the discussion.

Compar ing Canadian Cit ies Only

All of the input indexes show Toronto as the most expensiveCanadian city. Only one output index, Hanscomb, shows thesame trend although the difference between them cannot beconsidered significant. All three output indexes indicate thatToronto and Montreal are approximately the same. BothKPMG and Helyar indicate Vancouver and Calgary are moreexpensive than Toronto, although KPMG is much higher. Infact, KPMG has the highest index for each Canadian city.

Figure 5: Location Cost Indexes

Comp ar ing Al l Ci t ies

This discussion does not include Hanscomb and Helyar asthey do not provide indexes for the US cities, leaving KPMGas the only output index in the comparison.

KPMG, an output index, publishes the highest value for 7 of the cities and is the highest index on average. Richardson, aninput 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 towhat degree productivity may differ.

Although there an exchange rate of Can$1.48= US$1.00 hasbeen applied, two US cities have indexes significantly lower (approximately 15%) than Toronto. These are Atlanta andHouston from Dodge and Richardson publications. RSMeans,however, published indexes for these two cities approximately15% higher than Toronto. There does not appear to be anyconsistency in the indexes across publications, even thosethat are of the input type.

To understand the sensitivity of the US location factors to theexchange rate used, the rate was varied until the averageindex for each of the US cities was equal to 100. This occurredwhen $1.00 US = Can $:

Houston $1.41 Atlanta $1.38

Cincinnati $1.26Chicago $1.14

Los Angeles $1.11Detroit $1.08

Boston $1.06New York $0.92

Conc lus ion

Using location indexes appears to be a gamble, and the resultwill vary significantly depending on the index used. There is noobvious consistency between the publications, even those of the same type. This is very concerning as major decisions maybe based upon this information.

75

100

125

150

175

200

T o r o n t o

M o n t r e a l

C a l g a r y

V a n c o u v e r

H o u s t o n

A t l a n t a

C i n c i n n a t i

C h i c a g o

L o s A n g e l e s

D e t r o i t

B o s t o n

N e w

Y o r k

Richardson Dodge Boeckh Saylor

RS Means KPMG Hanscomb Helyar




Table 1: Normalized Location Indexes

City Richardson Dodge Boeckh Saylor RS Means KPMG Hanscomb Helyar Average

Toronto 100 100 100 100 100 100 100 100 100

Montreal 96 91 89 89 92 100 98 98 94.1Calgary 97 81 82 87 87 140 96 106 97.0

Vancouver 99 94 92 94 96 124 95 106 100.0

Houston 83 86 107 132 118 104 105.0 Atlanta 85 88 100 123 117 128 106.9

Cincinnati 96 101 115 132 122 140 117.6Chicago 102 119 149 132 146 129.5

Los Angeles 110 115 141 148 144 140 133.2Detroit 97 120 134 135 139 200 137.4Boston 103 123 144 135 154 176 139.3

New York 132 155 180 153 176 172 161.4Average 100.1 106.1 119.4 121.7 124.3 138.5 97.2 102.5

Type of Index Input Input Input Input Input Output Output OutputSingle Underline: lowest index value per cityDouble Underline: highest index value per city




Boeckh Commercial, Institutional, Light Industrial Building Cost Guide

General Inform ation

Publ isher: Boeckh, A Division of Thomso n Canada Limited

100 Sheppard Ave. EastSuite 460, Toronto, ON M2N 6N5

Tel: (800) 661-3619Fax: N/AWebsite: http://www.boeckh.com

Years in circulat ion: 66 years

Type of index: This guide provides unit costs for various building types with adjustments for building parameters andcharacteristics. Location multipliers for construction costs at various locations are provided to transfer unitcosts to other locations.

Intended use by: This publication provides insurance adjusters with estimates of the cost of replacing a building. It does notattempt to measure the market value of the building. The information may be used by owners for preliminaryconstruction cost comparisons, but is not detailed enough to be of use to contractors. Of interest are thelocation multipliers that compare costs in different locations.

Canadian City

Coverage:

940 locations, 53 of which are Canadian cities:

BC: Kamloops, Prince George, Vancouver, Victoria AB: Calgary, Edmonton, LethbridgeSK: Prince Albert, Regina, SaskatoonMB: Brandon, WinnipegON: 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 RivieresNB: Bathurst, Fredericton, Moncton, Saint JohnNS: Bridgewater, Halifax, Sydney, Truro, Yarmouth






PE: CharlottetownNF: Corner Brook, St. John’s

Other Publ icat ions: • 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

Descr ipt ion: The Boeckh Cost Guide consists to two major sections: the baseline square foot building costs, and thelocation multipliers. The baseline for costs is Milwaukee WI in 1995. It was chosen because of its historicallystable economy and its typical profile of national economic characteristics.

Baseline Square Foot Building CostsBoeckh uses an inductive cost estimating method in which they collect elemental costs and combine them instages to eventually represent a whole building.

Boeckh provides square foot building costs in Milwaukee, WI for 120 different building models falling into 10model types

• Lodging•

Offices• Mercantile• Restaurant/Recreation• Professional Services• Public Building• Services• Industrial• Processes• Basements/Miscellaneous






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 applyto reconstruction projects

• Fast track construction: it is assumed that standard design-construct practices are used. Boeckhrecommends adding 10-15% for fast track projects

• Demolition, site work (clearing, paving, landscaping)

Location MultipliersOnce the base cost of the building is determined, it may be adjusted to a specific location and year using thelocation multipliers. Boeckh provides location multipliers for over 880 locations, categorized by US state and






zip codes and Canadian provinces and cities. For each location, nine multipliers are provided:

Frame, Masonry, JointedMasonry

Pre-Engineered Metal, Non-Combustible

Steel, Protected Steel, MasonryNon-Combustible, Modified Fire

Resistive

Reinforced ConcreteFrame, Fire Resistive

Building Items andSite 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 PublicBuildings.

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 thelocation and property type) plus fringe benefits are gathered from the locations. Wages include the basewage (journeyman) including vacation and holidays. Fringe benefits include health and welfare, pensionfunds, 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 contractorsby writing or telephone interviews.

Material prices are collected from local suppliers. The costs of these items include local taxes, freightcharges, and contractor discounts. National-supply centres distribute certain materials, and their cost isassumed constant.

For each building model, elemental costs as a percentage of the total baseline cost in Milwaukee arecalculated. The Boeckh example shows these proportions for the costs of a tree house:• 40% Carpenter labour • 25% 2x4 lumber






• 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, andnormalized to the Milwaukee 1995 cost to calculate the location multiplier.

Of the over 880 location multipliers provided, only 201 are calculated independently. The remainder aremodified from a similar, neighbouring zip code using a predetermined “hook-up” factor which relates theneighbouring locations to the central location by a factor, say, 0.96 or 1.03. Periodically, the hook-up factorsare reviewed for accuracy.

The base building is assumed to be in a cold climate and a seismic zone 0. Additional factors are provided toaccount for special site conditions that are important in the subject location but not captured in thelabour/material-based location multipliers.

Multipliers for Canadian locations represent Canadian dollars.

Assumpt ions: 1. An allowance is included in the base costs for normal general contractor and subcontractor overheadand 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.






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 buildingcode 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 reflectedas 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



Locat ion Indexes

Boeckh Commerical, Institutional, Light Industrial

Location Factor Published

GeneralComments Time-location multipliers are published for each state and province over 10 years. Eight buildingstructure types are detailed plys an overall building and site improvement multiplier. The multipliers takeinto account labour rates, material prices and other applicable costs such as taxes and insurance.Boeckh states that they apply a productivity adjustment.

Soft Costs Included

Design Modif ied to Local Condit ion s

Same Weighting Of Index Comp onents Over Locations

Ontario Construction Secretariat: A Guide to Cost Sources




Elements, Ass embl ies, and Bui ld ing s

Elemental Installation s

Assemb ly Instal lat ions

Comp lete Structures

Individual Location Costs

Costs Specif ic To One Location

National Average Costs

Union Wage Rates

Open Shop Wage Rates

Wage Rate Source

Numb er Of Trades Tracked 0 Supplementary Benefi ts

Constant Produ ctivi ty Rates

Same Crew Com posi t ion

Supervisory Factor

Markup Factor Number Of Sources 1

Data Collection Method

Update Frequency annual

Notes




Labour Cos t Indexes


Labour Costs Tracked

Costs for Individual Locations


Costs are National Av erages

Union Wage Rates


Wage Rate Source

Numb er Of Trades Tracked 0


Supplementary Benefi ts Included

Constant Produc tivi ty Rates

Supervisory Factor Included

Markup Factor

Number Of Sources 0


Update Frequency

Notes




Mater ia ls and Equipm ent


Materials Tracked




Numb er Of Materials Tracked 0

Same Materials Across L ocation

Number Of Sources 0

Data Collection Metho d

Update Frequency

Notes

Equipm ent Tracked




Number Of Equ ipment Tracked 0

Same Equipment Across Lo cat ions

Number Of Sources 0


Update Frequency

Notes





Dodge Unit Cost Guide


Publ isher: Marshal l & Swift

911 Wilshire Blvd.Los Angeles, CA 90017-3409

Tel:Fax:Website:

(213) 683-9000(213) 683-9010http://www.marshallswift.com

Years in circulat ion: • 12 years by Marshall & Swift (1988-present)• 16 years by McGraw-Hill (1972-1988)• Dodge cost indexes have been created since 1932

Type of index: 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

Intended use by: These indexes are intended to assist contractors in developing bids and drop prices.

Canadian City

Coverage:

Over 1000 locations of which 86 are Canadian:

BC: Cranbrook, Kamloops, Kelowna, Nanaimo, Nelson, Penticton, Port Alberni, Prince George, PrinceRupert, Trail, Vancouver, Victoria

AB: Calgary, Edmonton, Lethbridge, Medicine Hat, Red Deer SK: Moose Jaw, North Battleford, Prince Albert, Regina, SaskatoonMB: Brandon, Thompson, WinnipegON: Barrie, Belleville, Brampton, Brantford, Brockville, Cambridge, Guelph, Hamilton, Kingston,

Kitchener, Lancaster, Lindsay, London, Niagara Falls, North Bay, Orillia, Oshawa, Ottawa, OwenSound, Peterborough, Sarnia, Sault St. Marie, St. Catharines, Sudbury, Thunder Bay, Timmins,Toronto, Trenton, Waterloo, Windsor






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. JohnNS: Cape Breton, Dartmouth, Halifax, New Glasgow, Sydney, TruroPE: CharlottetownNF: Corner Brook, Gander, St. JohnsNT: YellowknifeYT: Whitehorse

Other Publ icat ions: • Repair and Remodel Cost Guide• Residential Cost Handbook• Commercial Cost Handbook• Electrical Cost Guide

Descr ipt ion: 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 aredetermined by contacting building product manufacturers, dealers, supply houses, distributors, andcontractors.

All the costs found in the Dodge Unit Cost Guide are U.S. national averages. The local multipliers are usedto 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 torepresent 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 overallmultiplier, which represents a weighted average of materials and labour. The weights of the overall localmultiplier are the same for all the locations and over time.






Marshall & Swift monitors the areas specified in the publication for the required costs and rates on aquarterly 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).

Assumpt ions: 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 nationalaverages. 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 desiredexchange 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 alllocations; they vary by trade and CSI divisions.






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 thelocation 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.



Locat ion Indexes



GeneralComments The Local Multipliers are calculated for each of the 16 CSI Masterformat divisions plus an overallmultiplier.

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 LocalMultipliers are organized by province and city.

Soft Costs Included














Union Wage Rates


Wage Rate Source Collective agreements

Number Of Trades Tracked Supp lementary Benefi ts



Supervisory Factor


Data Collection Method Phone interviews and data collection

Update Frequency semi annually

Notes Elemental costs provided for over 20,000 line items. They are based on labour and materials only (equipment costsnot included). Overhead and profits are provided. Markups do not reflect local competitiveness across locations butvary by CSI Masterformat divisions and by trade. Elemental costs are based on single components. Their sum for anentire 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 thelocations.

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.










Union Wage Rates








Markup Factor

Number Of Sources


Update Frequency

Notes Dodge does not specifically provide a labour index, but tracks labour costs in their crew component of the elementaland assembly costs.






Materials Tracked




Numb er Of Materials Tracked


Number Of Sources


Update Frequency

Notes Dodge does not specifically provide a materials index, but tracks material costs in the elemental and assembly costs.

Equipm ent Tracked






Number Of Sources 3

Data Collection Method hone surve

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 15different 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 individuallocations.





Engineering News Record Building Cost Index and Construction Cost Index


Publ isher: Engineering News-Record

McGraw-Hill Co.,Two Penn Plaza,New York, New York 10121-2298

Tel: (212)-904-3418Website: http://www.enr.com

Years in circulat ion: • Both indexes base-dated to 1913• Construction Cost Index commenced in 1920’s

• Building Cost Index commenced in 1930’s

Type of index: Composite of four input costs: labour (skilled/unskilled), cement, lumber and steel.

Intended use by: Contractors and developers - to estimate approximate changes in constructions over time in locations, not tocompare across locations.

Canadian City

Coverage:

Toronto and Montreal

Other Publ icat ions: The ENR ’s cost indexes are proprietary. The ENR ’s 20-city average (US only) is published weekly. City-specific data (including Toronto and Montreal) are published in the Dec. 1st issue.




Engineer ing News Record Building Cost Index and Construction Cost Index


Descr ipt ion: 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., unskilledlabour). 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 68.38 hours of skilledlabour. Skilled labour is the average wage paid to three trades – bricklayers, carpenters andstructural ironworkers. The 20-city average is used.

Both indexes are based-dated to 1913. 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 non-statutory benefits. Statutory payments are not included.

As noted, prices for lumber and cement a local. The steel price is a national average. The national averageis not weighted.

Because the technical specifications of the indexes have not changed, the current relative weight of thecomponents is a function of changes in prices and wages since 1913. 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






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-plus-materials component of construction ranges from 30% in civil projects to 40% in ICI projects and 60% inrepair projects.

Changes in the timing of the index components affect the month-to-month variations. Steel prices and wagerates 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 bylumber prices, except in those months when wages or the prices of steel and cement change. There mayalso be lags in the incorporation into the index of changes. Consequently a moving average is more reliableas 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 areintended to show changes in costs over time at a location or over time for the 20-city average. ENR is moreconfident 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 inflationadjustments. It is also common for the ENR index to be used to estimate the current cost of replicating astructure built in the past.

Canadian data are estimated in C$ and are not converted. Consequently any attempt to derive a comparisonbetween Toronto and Montreal and the 20-city US average would be invalid, as the exchange rate factor would not be taken into account.






Assumpt ions: 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 skilledlabour. (Note that this excludes the mechanical trades).

Strengths: 1. There are comparatively few components in the index. This makes maintenance comparativelyinexpensive. 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).



Locat ion Indexes



GeneralComments Location indexes are based solely on input values. The index is based on cost of 1,128 tonnes of bulkportland cement, 1,088 board-ft of lumber, 25 cwt of structural steel and either 200 hours of commonlabour (CCI) or 68.38 hours of the average of three skilled trades (BCI)

Soft Costs Included














Union Wage Rates


Wage Rate Source




Supervisory Factor



Update Frequency

Notes










Union Wage Rates


Wage Rate Source Collective Agreement






Markup Factor

Number Of Sources 1

Data Collection Method Same source consistently

Update Frequency US: Monthl ; Canada: Annual

Notes






Materials Tracked






Number Of Sources

Data Collection Metho d Survey

Update Frequency Weekly

Notes Each week, different material categories are published. For example, various types of pipe one week, then all wood itemsthe next.

Equipm ent Tracked






Number Of Sources 0


Update Frequency

Notes





Hanscomb’s Yardsticks for Costing


Publ isher: Produced b y Hanscom b Lim ited, and pu blished by R.S. Means Co., Inc.

40 Holly Street, Suite 900Toronto ON, M4S 3C3

Tel: (416) 487-3811Fax: (416) 487-5043Website: http://www.hanscomb.com


Type of index: This publication provides installed-in-place costs for 8 Canadian cities for comparing construction costsbetween these locations.

Intended use by: Intended to be used as a costing tool by estimators for design work in the early stages of a project. It is notdesigned as a bidding tool.

Canadian City

Coverage:

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

Other Publ icat ions: N/A






Descr ipt ion: The publication has four main sections:

1. Current market prices.The Current market prices section contains prices organized according to the CSI MasterFormat

Divisions. Prices in this section include all materials, labour to install, transportation, equipment costs, andsite overheads and profit for work done by subcontractors. Provincial taxes (PST) are included in Ottawa,Toronto, Winnipeg and Vancouver’s rates. Goods and Services Tax (GST), Harmonized Sales Tax (HST)and Quebec Sales Tax (QST) are not included.

2. Composite unit rates.

This section contains composite rates classified according to the Canadian Institute of QuantitySurveyors (CIQS) breakdown. The costs are built up from the current market prices. This section is to beused in preparing preliminary estimates or for comparative purposes.

3. Gross building costs.The gross building costs section contains a general guide to overall cost of 35 building types. Average

costs are shown for each building element with its proportion to the total cost. High and low prices are alsopresented per square foot or square meter.

4. Labour rates.The labour rates section contains rates from 23 different trades. The rate for each trade includes the

base rate, vacation & statutory holidays, health & welfare and pension, industry and union funds. All therates listed in this section are union rates.

All sections present prices and rates for the 8 Canadian cities listed above, except for the gross buildingcosts section, which shows the prices as national averages. The data required to produce this publication isdivided by a number of persons in each of the 8 cities. Each person will make telephone interviews withindustry contacts and contractors to get reasonable estimates of installed prices. Market experience and

judgement is then used to determine the most appropriate prices. The prices collected are put-in-placeprices. Hanscomb takes particular care with the Toronto cost estimates, because it represents almost half of






their market. They also use Toronto as a benchmark to assess cost estimates obtained from other cities.

Hanscomb used to produce a cost index (Cost Trends). This exercise was abandoned approximately fiveyears ago. Hanscomb cited three reasons:

1. The index was costly to maintain especially, in obtaining the correct and accurate prices, andcalculating the weighting of the components of the index.

2. There is a liability associated with the incorrect usage or application by the industry.3. Hanscomb believes that Statistics Canada does the same job in tracking changes in the construction

industry costs. Statistics Canada also has the advantage of being a published source, whichenhances its creditability when, relied on for litigation purposes.

Assumpt ions: 1. All contractors are unionized contractors.

Strengths: 1. This publication provides unit rates and costs for the different locations without the need to use a locationfactor or multiplier thus eliminating any inaccuracy involved in using such factor.

2. The costs and rates in this publication reflect the following factors if compared between the differentlocations:• Building code requirements• Local market conditions• Differential labour productivity• Supervision and management costs

Weaknesses: 1. All costs are unionized cost. No reflection for the non-unionized costs.

2. Not all the trades are covered in the labour rates section.






3. Not all the labour rates are available in the labour rates section. About 20% of the labour rates are notavailable.

4. In case of the gross building costs:• Prices are national and must be adjusted to local conditions• Costs for site work are not included because of the wide variation regardless of gross floor area

5. The costs and rates in this publication does not reflect the following factors if compared between thedifferent locations:• Climate and weather conditions• Access and transportation

• Soil conditions• Market competitiveness condition and local discounting practices• Engineering and architectural costs• Insurance and bond costs• Land surveys• Permit fees



Locat ion Indexes

Hanscomb's Yardsticks for Costing


GeneralComments All costs presented for the 8 Canadian cities. Installed and complete costs provided.

Soft Costs Included














Union Wage Rates


Wage Rate Source contractors




Supervisory Factor

Markup Factor Number Of Sources 3Data Collection Method phone interviews


Notes Metric and Imperial Current Market Prices:Includes:-material, labour, overhead, profit and PST-does not include GST, QST, or HST

Metric and Imperial Composite Unit Rates:

-represent average rates for average conditions-are built up from the current market prices

Gross Building Costs-35 building types listed-per square metre and per square feet costs-national average costs and must be translated to individual locations-low, average, and high prices given-low and high represent 25%ile and 75%ile respectively-site work costs not included










Union Wage Rates


Wage Rate Source collective agreements






Markup Factor

Number Of Sources 1

Data Collection Method data collection


Notes Total wage rate given for 24 trades in 8 cities. Rates include (all cities except Montreal):-base rate-vacation and statutory holidays-health, welfare, pension-industry, union funds

Montreal includes:-base rate-vacation, sttautory holidays

-finge benefits-CCQ, AECQ, other funds






Materials Tracked






Number Of Sources 0


Update Frequency

Notes

Equipm ent Tracked






Number Of Sources 0


Update Frequency

Notes





Hanscomb-Means International Construction Cost Index (Parity Index)


Publ isher: Hanscomb

1175 Peachtree St, NESuite 1650,

Atlanta, Georgia 30309-9998

Tel: (404) 881-0533Fax: (404) 881-1341Website: http://www.hanscombusa.com

Years in circulat ion: Approximately 10 years

Type of index: Survey of in-place construction cost ranges to a prime contractor for industrial projects, showing approximatechanges in costs over time and approximate differences in costs across locations. The baseline is Chicago,IL. Exchange rates are applied at the market rate current at the time of publishing.

Intended use by: Early stage planners of industrial projects who are working within +/- 25% estimation ranges.

Canadian City

Coverage:

29 locations of which only one is Canadian: Toronto

Other Publ icat ions: The Parity Index is published in the Hanscomb·Means Report, which is available in PDF format from thecompany’s website.

Descr ipt ion: The Parity Index compares costs to a prime contractor for in-place construction of a standard industrialbuilding across 29 cities in all regions of the world. The standard industrial building is a single storey, owner-built and owner-occupied manufacturing facility with a large office component.

The standard industrial building comprises approximately 26 component specifications covering all major trades.






Technical specifications are held constant across locations and over time. The following table summarizesthe technical specifications:

Cost Model ParametersSingle-Storey Manufacturing Facility, Owner-Built, Owner-Occupied

Statistics: Office Manufacturing Total

Gross Floor Area 4,400 m2 4,400 m2 4,400 m2

Floor – Roof Height 4.90 m 8.55 m n/a

Volume 26,560 m2 81,225 m2 102,785 m2

Perimeter n/a n/a 555

Exterior Wall Area 750 m2 2,425 m2 3,175 m2

Specifications: Office Manufacturing

Foundations Spread footing Spread footing

Structure Girders Girders

Bay Size 6 m x 6 m 12 m x 18 m

Roof Adhered single-ply EPDM Adhered single-ply EPDM

Exterior Wall Metal siding Metal siding

Fenestration Aluminum w/ insulated glass None

Finishes Standard Minimal

Mechanical Heated, vented & AC Heated, vented

Electrical Recessed fluorescent light fixtures Metal halide high bay light fixtures; copper bus duct

Because the parity index estimates in-place costs for each of the 26 components, the index does notseparate trade contractors’ costs for labour, machinery, materials, overhead or profit. An estimate isfactored into the index for a general contractor’s mark-up over costs. Using in-place costs implicitly takesaccount of differences in productivity across locations and over time as well as differences in market






conditions.

Costs for components are estimated as a range. Typically the mid-point of the range is selected, unless thelocal pricing source assigns a greater probability to one end of the distribution. Allowances for tradecontractors’ overhead costs and profits are included in the in-place cost estimates. The index is marketfocused. Consequently, the index makes no distinction between union and non-union trade contractors.

In-place cost estimates exclude:• Development costs• Recoverables (GST, VAT)

• Engineering and architectural fees• Site work costs (roads, parking, landscaping, and utilities)• The impact of specifically local factors (e.g., building codes, piling requirements, seismic

requirements)• Local differences in preferred materials• Regulatory requirements (or lack thereof)

The index is revised quarterly. Location surveys are undertaken semi-annually. Typically, the index relies ononly one source per city. All costs are expressed relative to Chicago costs, which are the base for the index.

The Hanscomb-Means International Construction Cost Index is published in two formats. The first is in local

currency. This removes the influence of exchange rates and allows a user to employ whatever exchange ispreferred. This is the parity index. The second format uses the most recent month-end exchange rate,which is applied to the parity index. This is the international construction cost index in which all costs arebased on US$ at most recent exchange rates.

Hanscomb does not regard a 3% difference across locations as significant. A difference of 5% would reflectcost differences that are real, but may not be significant or enduring. However, a cost difference of 10% or more is judged to be significant.






Hanscomb considers the index more reliable as a comparison of costs at a specific location over time thanacross locations. In part, this arises from differences in local factors that affect construction costs, but whichare excluded from the parity index (e.g ., piling, seismic requirements or finish standards).

Assumpt ions: 1. It is assumed that the standard industrial building, per the specifications in the 26 components, isconstructed without modification in all locations.

2. It is assumed that the standard industrial building is constructed on the outskirts of an urban area.Transportation factors that might affect costs in another type of location are excluded, therefore, byassumption.

Strengths: 1. The Hanscomb-Means International Construction Cost Index is a purchasing power parity index.Consequently the index isolates the impact of exchange rates from the effect of local inflation (or deflation) factors.

2. The Hanscomb-Means International Construction Cost Index is the only international cost comparisonthat isolates narrowly defined construction costs. Other international comparisons incorporate landcosts, site costs and other costs. Typically other international indice also present their estimates as asquare-metre (or square-foot) costs that are derived from comparisons of dissimilar buildings. Bycontrast, the Hanscomb-Means International Construction Cost Index uses an unchanging, standard

building as the basis for its estimates.






Weaknesses: 1. The Hanscomb-Means International Construction Cost Index does not take into account specifically localfactors that can have a significant impact on final construction costs. These factors include:

• Foundation requirements for piling

• Seismic requirements for modification to structural design

• Specific local building code requirements pertaining to use of materials and design requirements

• Site work requirements

• Regulatory requirements, especially environmental requirements

• Local differences in preferred materials

2. As an output index that tracks the cost of in place construction, the Hanscomb-Means International Construction Cost Index does not isolate the relative roles of changes in the prices of materials, the costof labour, charges for equipment use or changes in contractors’ overheads and profit margins.

3. The Hanscomb-Means International Construction Cost Index maintains fixed specifications for thestandard building over time. Consequently the index does not reflect changes in building design thatoccur over time.



Locat ion Indexes

Hanscomb-Means International Construction Cost Index


GeneralComments It measures to some extent differences in market and bidding conditions. Relative productivity iscaptured

Soft Costs Included














Union Wage Rates


Wage Rate Source




Supervisory Factor

Markup Factor Number Of Sources 0Data Collection Method Personal interviews

Update Frequency semi-annually

Notes The index makes no distinction between union and non-union labour.

Markup is included for subcontractors only.










Union Wage Rates


Wage Rate Source





Supervisory Factor Included Markup Factor

Number Of Sources 0


Update Frequency

Notes






Materials Tracked






Number Of Sources 0


Update Frequency

Notes

Equipm ent Tracked






Number Of Sources 0


Update Frequency

Notes





Helyar Construction Cost Guide


Publ isher: Helyar & Associates212 King St WestToronto, ONM5H 1K5

Tel: 416-204-1100Fax: 416-204-1200Website: www.helyar.com

Years in circulat ion: Over 20 years

Type of index: The Construction Cost Guide publishes an annual range estimate of in-place construction costs, expressedas cost per sq. ft., for 34 building types across 8 Canadian cities. Index trends in Toronto are published for:

• Commercial building costs• Institutional costs• Industrial, apartment, and housing building costs• Consumer price index

Index of Canadian Centres given for 44 locations

Intended use by: Early stage project planners, conceptual estimates

Canadian City

Coverage:

• BC: Vancouver • AB: Calgary, Edmonton• ON: Ottawa / Hull, Toronto• QC: Montreal• NS: Halifax

Other Publ icat ions: N/A






Descr ipt ion: The Helyar Construction Cost Guide estimates the in place cost of constructing 34 building types in Toronto,Montreal, Vancouver, Edmonton, Calgary, Ottawa/Hull and Halifax. Construction costs are expressed ascost per sq. ft. Cost estimates are developed by Helyar and Assoc., based on their current experience asproject managers and cost estimators.

The guiding formula may be summarized as follows:

Output Cost = Labour Cost + Materials Cost + Allowance for Contractors’ Overheads + Opportunity Cost

where variables are defined and estimated as follows:

1. Labour Cost:• Quantity estimated by Helyar for building type• Wage cost derived from Statistics Canada and/or current collective agreements

2. Materials Cost:• Quantity estimated by Helyar for building type• Prices derived from Statistics Canada and/or current information from managing projects

3. Contractors’ Overheads• Based on current information from managing projects

4. Opportunity Cost:• Based on current information from managing projects• In tight labour market conditions, will reflect over-rate charges for labour

The most unstable component of output cost is opportunity cost. In depressed market conditions, the need tocover overheads drives opportunity cost close to zero. By contrast, in a buoyant market, capacity utilizationapproaches 100%. In these conditions, the inelasticity of supply allows significant increases in mark-up.Consequently, the output price of construction is more unstable than the price of labour and materials.






TheHelyar

Construction Cost Guide

excludes land costs, financing costs, legal costs, architectural andengineering costs and permit costs. Site costs are estimated separately.

The following table lists the building types tracked by the Helyar Construction Cost Guide:Office Buildings (70% above grade / 30% below grade):

o under 5 storieso 5-10 stories

o 10-20 storieso 20-30 storieso over 30 stories

Stores:o strip plazao enclosed mallo anchor / department store

o supermarketo discount store

Schools:o elementaryo high school

o technical / vocational school

Nursing Homes

Hospitalso chronic care / long-term careo acute treatment / acute care

Hotels:o budgeto 4-star, full-serviceo luxury

Parking Garages:

o free standing (above grade)o underground

Residential Condominiums / Apartments:o basic qualityo medium qualityo high quality

Townhouses:o row (medium quality)

o stack (medium quality)o walk-up timber frame (medium quality)o walk-up timber frame (high quality)

Houses:o speculative (basic quality)o speculative (medium quality)

o speculative (high quality)

Light Engineering Factories and Warehouses:o 10-20 k sq. fto 20-50 k sq. ft.o 50-150 sq. ft.






Component specifications for building types (e.g., partitions, fenestration, mechanical requirements) arebased on project management experience. Completed estimates are compared to current and recentprojects managed by the firm. All estimates are strongly judgment based.

Cost estimates are expressed as a range that is approximately +/- 10% from the mean. Costs reflect, tosome degree, local factors that entail design-related costs.

Helyar does not distinguish between union and non-union labour in its estimate of costs.

An Index of Canadian Centres provides estimated relative cost differences (Toronto = 100) for 44 different

locations. This is a judgement based composite of construction costs based on approximately 200 projectsthat the company typically will have under current or recent management.

Assumpt ions: 1. It is assumed that the same structure is constructed without modification in all locations.

2. Transportation factors that might affect costs beyond the norm are excluded, e.g., the higher costs thatare typically associated with construction in a city core as opposed to the outskirts of an urban centre.

Strengths: 1. The Helyar Construction Cost Guide takes account of opportunity cost and is strongly sensitive to thecompanies’ perception of local conditions as they bear on opportunity cost.

2. The Helyar Construction Cost Guide covers a wide range of structures that are broadly representative of the construction market. As such, the Guide is useful to early stage planners estimating budgetrequirements and assessing the relative costs of build to specification vs. lease.

3. The Helyar Construction Cost Guide compares costs of constructing a total structure in place, i.e.,inclusive of “opportunity costs”.






Weaknesses: 1. The Helyar Construction Cost Guide is strongly judgement based. The Guide can be taken as indicativeof general trends but should not be used for precise comparisons across locations. In particular, therange which is typically +/-10% from the mean should discourage strong reliance on the Guide as acomparison of construction costs across locations.

2. The Index of Canadian Centres does not reflect differences in the composition of construction activityacross sectors and building types. The index should not be relied upon for anything more than anapproximate gauging of relative construction costs. For most construction projects, there are a significantnumber of project-specific or contractor-specific factors that affect final cost. Often, these will outweighthe location differences suggested by the Index.

3. The specifications for building types are adjusted over time, as appropriate to current constructionpractices. Consequently, for some buildings, comparisons over time are comparisons of structures thathave themselves changed.



Locat ion Indexes



GeneralComments Unit costs (per sq. ft.) for the various building types are given for each city. These costs are in the formof ranges.

Index provided for additional cities: 25 in Ontario, 4 in Quebec, 3 in Maritimes, 4 in Prairies, 5 in BC, and3 in Territories.

Soft Costs Included














Union Wage Rates


Wage Rate Source




Supervisory Factor

Markup Factor Number Of Sources

Data Collection Method Collective Agreement, Statistics Canada


Notes Data derived from Helyar projects and Statistics Canada. Components are not published. Cost ranges give user information of variance due to project characteristics.










Union Wage Rates


Wage Rate Source

Numb er Of Trades Tracked





Markup Factor

Number Of Sources 0


Update Frequency

Notes






Materials Tracked




Numb er Of Materials Tracked


Number Of Sources


Update Frequency

Notes

Equipm ent Tracked






Number Of Sources 0


Update Frequency

Notes





KPMG, INTERNATIONAL COST COMPARISON ANALYSIS: The Compet i t ive Al ternat ive


Publ isher: KPMG

777 Dunsmuir StVancouver, B.C.,V7Y 1K3

Tel:Fax:Website:

(604)-691-3410(604)-691-3340http://www.kpmg.ca

Years in circulat ion: Since 1994

Type of index: Survey of in-place costs (including land and construction) and operating costs (including labour, electricity,financing costs and taxes) for nine industries (electronics, food processing, medical devices, metalfabrication, pharmaceuticals, plastics, telecommunications equipment, packaged software, and advancedsoftware). Costs provided for at least three cities in each of the G-7 and other major economies.

Intended use by: Early stage planners of industrial projects with an international scope in terms of location. Policy plannerswishing to assess the impact of tax policy and labour costs on overall competitiveness.

Canadian City

Coverage:

64 cities, 25 of which are CanadianBC: Kamloops, Kelowna, Vancouver

AB: Calgary, EdmontonSK: Regina, SaskatoonMB: Brandon, WinnipegON: Hamilton, Kingston, Kitchener, London, Mississauga, Ottawa, Sarnia, Toronto, Windsor QC: Montreal, Quebec, SherbrookeNB: MonctonNS: HalifaxPE: CharlottetownNF: St. John’s






Other Publ icat ions: Published in an International Edition and a G-7 edition. A detailed Results Book is also published.

Descr ipt ion: The KPMG international cost comparison estimates the cost of constructing and operating nine differenttypes of manufacturing operations in 64 cities. City coverage includes 25 Canadian cities, 21 American citiesand 15 European cities and 3 Japanese cities.

Construction costs are the costs to the owner-operator. Construction costs include both land costs andcompleted building costs. Implicitly these costs include the general contractor’s mark-up. The costs of equipment are standard across locations. Land and building specifications are common across locations.

Operating costs are divided into divided into location-sensitive costs and costs which are not locationsensitive. Location-sensitive operating costs include:• Labour • Utilities (both power and telecomm)• Transportation (based on an analysis of likely shipping patterns)• Interest (based on standard debt/equity ratios by industry)• depreciation2

• Taxes (including incentives that are firmly embedded in law and are not subject to negotiation or discretion)

Operating costs are not sensitive to location are raw material inputs.

Labour costs reflect direct wages and salaries, prevailing employee benefit costs, payroll taxes and other statutory contributions. Labour requirements are estimated for each industry in terms of 36 generic jobdescriptions. This allows for variation across industries in the nature of labour requirements. Labour requirements in each industry are assumed standard across locations.

Operating costs are estimated over a 10-year horizon and reflect a scale-up of operations. Using common

2 Although depreciation costs are expressed as a standard percentage of fixed capital, depreciation costs are considered location-sensitivebecause their actual amount is a function, in part, of the cost of initial construction, which is location sensitive.






revenue estimates for each location, the study estimates both before tax and after-tax return on investedcapital. For each industry, it is assumed that an operation will have at least 90 employees and annualrevenues greater than US$ 10 million.

The eight industries covered by the cost comparison vary in their capital intensiveness, labour intensivenessand the nature of the labour they require. The eight industries are:

• Electronics• Medical devices• Pharmaceuticals• Packaged software• Advanced software•

Food processing• Metal fabrication• Plastics• Telecommunications equipment

The building characteristics for a manufacturing industry are:• Build-to-suit• 10% finished office space• All mechanical systems (HVAC) installed throughout• 50,000 – 100,000 sq. ft., depending on industry• 26-30 ft clear span ceiling height, depending on industry• Loading-level dock• Standard 500 lb./sq. ft. floor loading

For a service industry, it is assumed that space is leased. Building characteristics are:• Class A• Suburban location

Building costs are expressed as finished cost per square foot to the owner-occupier. Building costs include






all “soft costs” such as construction financing, design and development charges. Land is priced at cost per acre to buy a lot of 5-10 acres. Site must be suitable to manufacturing, located in a light-to-medium industrialpark in a suburban area, fully serviced with good highway access. Colliers International gathers building andland costs for KPMG.

Construction costs are estimated without reference to union or non-union construction based on prevailingmarket conditions.

Cost are expressed in US dollars using current exchange rate. A separate analysis is done to illustrate theappreciation in the exchange that would be required to eliminate competitive advantage.

Cities are ranked in terms of their initial investment costs for land and building and their annual operatingcosts. Ranking is expressed as an index in which the base (100) is the average of the eight US cities. Cityrankings are shown for each industry and also for the 8-industry average. A separately published ResultsBook provides details on rate of return on invested capital by location showing detailed balance sheet andincome statements.

Both operating and initial investment specifications can change over time. Consequently the index should beused as a current cost comparison rather than for an analysis over time.

Key current findings are:1. 40-45% of total costs are location sensitive,2. Canadian cities enjoy a significant competitive advantage in all industries,3. Canada’s competitive advantage would be eliminated by an appreciation of the exchange rate of

approximately 18% from C$1.00 = US$0.67.4. Construction costs are lowest in Canada.






Assumpt ions : 1. Location specific factors in construction (e.g ., piling and seismic requirements) are not explicitly identifiedin the specifications, but may be incorporated into cost estimates.

2. Interest costs are based on local market conditions. Some companies will source capital internally in amarket other than where they locate a facility.

3. Operating cost components are standardized based on industry averages.

4. Transportation costs are standardized based on assumed shipping patterns for raw materials and endproduct.

5. Explicit productivity assumptions are factored into operating costs. For construction, productivity isimplicit.

Strengths : 1. The KPMG international cost comparison takes into account all major factors affecting a locationdecision.

2. By separating and detailing both initial investment costs (land and building) and operating costs, theKPMG international cost comparison allows an analysis of how sensitive the comparisons are to changesin either components of operating costs or initial investment costs.

3. The KPMG international cost comparison allows analysis of comparative advantage by industry type.

4. The KPMG international cost comparison identifies the impact of land costs.

Weaknesses : 1. Important industries (from an Ontario perspective) are not reflected in the KPMG international costcomparison. These include chemical processing and aeronautics. Auto assembly is also typically on ascale of operation that exceeds the specifications of the KPMG model.






2. The KPMG international cost comparison does not allow an analysis of the impact of union vs. non-labour on construction costs.

3. The KPMG international cost comparison does not allow a separation of construction costs from softcosts.

KPMG International COST COMPARISON ANALYSIS: The Competitive Alternative



Locat ion Indexes

KPMG, International COST COMPARISON ANALYSIS: The Competitive Alternative


GeneralComments Along with the location index, they rank each location according to cost.

Soft Costs Included




KPMG I t ti l COST COMPARISON ANALYSIS Th C titi Alt ti











Union Wage Rates


Wage Rate Source




Supervisory Factor


Data Collection Method Colliers-McKay Offices

Update Frequency Annual

Notes The KPMG Index compares costs to build and operate specific types of structures. All costs are included.Construction cost is cost to owner-operator, inclusive of all mark-ups.


KPMG I t ti l COST COMPARISON ANALYSIS Th C titi Alt ti









Union Wage Rates


Wage Rate Source






Markup Factor

Number Of Sources


Update Frequency

Notes


KPMG International COST COMPARISON ANALYSIS: The Competitive Alternative





Materials Tracked






Number Of Sources 0


Update Frequency

Notes

Equipm ent Tracked






Number Of Sources 0


Update Frequency

Notes





The Richardson Construction Cost Trend Reporter


Publ isher: Richardson Engineering Services, Inc.

1742 S. Fraser DrivePO Box 9103Mesa, AZ 85214-9103 USA

Tel:Fax:Website:

(480) 497-2062(480) 497-5529http://www.resi.net


Type of index: The Richardson Construction Trend Reporter is primarily a labour cost resource. The Richardson Labor CostIndex covers 16 trades for each location. The Richardson Composite Crew index has 16 crews for eachlocation. The Construction Cost Index is a compilation of 17 industry indexes including Bureau of theCensus, ENR, Turner Construction, over time, and 63 material prices from one location. The baseline is afictional average location called Richardson, USA. Canadian values are in Canadian dollars.

Intended use by: These indexes are for estimators and contractors.

Canadian City

Coverage:

120 locations, 7 of which are Canadian:

BC: Vancouver AB: Calgary, EdmontonMB: WinnipegON: Toronto, Windsor QC: Montreal

Other Publ icat ions: • Process Plant Construction Cost Estimating Standards• General Construction Cost Estimating Standards• International Cost Factors Location Manual






Descr ipt ion: The Richardson Construction Cost Trend Reporter consists of 3 sections:

1. Richardson Labour Cost Index:• 120 U.S. cities and 7 Canadian cities• 16 trades• Union and open shop (Davis-Bacon) hourly labour rates• Union fringe benefits include all the benefits such as health and welfare, pensions, vacations• Davis-Bacon fringe benefits• Richardson labour index for each of the Union wage rates and the Davis-Bacon rates normalized

2. Richardson Composite Crew Rates:• 120 U.S. cities and 7 Canadian cities• 18 composite crews• Union and open shop (Davis-Bacon) hourly manhour rates plus RES index• Crew consists of 10 journey level tradespeople (no apprentices):

• 1 foreperson• 7 journeypersons• 2 labourers• 1 equipment (depending on the trade)

• Hourly rate reflects a mix of trades and their contribution to one hour • Adjustment to hourly rate should be made if crew composition or skill level changes

3. Construction Cost Trends: (trends over time)• Construction Cost Indexes normalized so that 1992=100• Combines several publicly available indexes including ENR, Boeckh, Bureau of Reclamation, Turner

Construction Company, and Bureau of Census

• Indexes of Producer Prices of Materials Used in Construction for 63 materials and material groupingsover time

• Interest rates






• Contract Construction Employment provides number of employees on payrolls by type of contractor • New US Nonresidential Construction Put in Place gives annual construction values by building type

The Davis-Bacon wage rates and fringe benefits are determined by the United States Department of Labour (for the U.S. cities only) to be the prevailing rate for a particular craft or labour classification in a given area.The Davis-Bacon rates constitute the minimum wages and fringe benefits payable on federal and federallyassisted buildings construction projects.

For the Canadian cities, the rates are in local currency so there are no exchange rates applied.

The target level of confidence for all the Richardson values is 85% (i.e. that the user can be 85% confidentthat the actual cost will be the published value or less). In other words, Richardson does not use averages(50% confidence) to provide a level of confidence in the published data.

It is important to note that this publication is for the comparison of labour rates only. Differences inproductivity and installed costs are not reflected. There is no mention how the differences in labour ratescorrelate to productivity, safety, or labour stability in that region.

Assumpt ions: 1. There is sufficient local labour availability that a crew of average quality can be dispatched.

2. The Richardson standard crews consist only of skilled labour (no apprentices).

3. The management is sufficiently skilled in planning to avoid shortages of materials and equipment.

4. The Richardson crew composition is the same for all the locations.






Strengths: 1. The data in this report provides a mean of comparing individual labour and crew wage rates and therelated fringe benefits for a large number of cities.

2. Cost index trends from other publications are compiled here. The indexes are presumed to reflect anaverage US location, but would vary from source to source. The compilation does provide a goodoverview of index ranges.

Weaknesses: 1. This report compares union and open shop labour and crew costs for various cities. It is important toremember that only labour costs are reflected and not productivity or installed prices.

2. The same crew composition is assumed for all the locations. Estimators must make allowances for the impact on productivity of diverging from the standard crews, e.g., including apprentices, usinglabour of less quality owing to tight labour market conditions, absenteeism and over-manning andvarying the size or composition of the crew.

3. The differential productivity between the locations is not reflected in the RES index.

4. The management system is assumed to be sufficiently skilled, but the costs of a managementsystem are not reflected in the total wage rates.




Locat ion Indexes



GeneralComments Richardson Labour Cost Index: labour wage rates for both union and Davis-Bacon labour organized bycity and trade.

Richardson Composite Crew Index: wage rates for both union and Davis-Bacon labour orbanized by cityand trade crews.

Soft Costs Included















Union Wage Rates


Wage Rate Source

Number Of Trades Tracked Supp lementary Benefi ts



Supervisory Factor


Data Collection Method Data collection from industry index publications

Update Frequency annually

Notes These are not Output cost indexes of other index publishers are compiled and normalized using 1992 = 100. Assumptions are dependent on the index source.











Union Wage Rates


Wage Rate Source Collective agreements, Davis-Bacon wa






Markup Factor

Number Of Sources 1

Data Collection Method Data collection

Update Frequency annuall

Notes The wage rates are provided for individual labour and composite crews. They consist of:For union wage rates-local union no.-basic hourly rate-H & W Pens.-Fringes-Total hourly rate-Index

-Union wage rate expiry dateFor Davis-Bacon wage rates-Basic hourly rate-Fringes-Total hourly rate-Index

Canadian locations are union rates only.

Worker's compensation is not included in the wage rate because it is highly dependent on experience and can varywidely.







It is assumed that the crews are efficient and can complete the required work with an efficient production rate. It isassumed that all the composite crew members consist of journey trades (no apprentices).

Adjustments should be made to account for any changes in the crews from the standard crews.

Standard crew consists of 1 foreman, 7 journey trades, 2 labourers, and 1 operator. Standard crew is the same in everylocation.







Materials Tracked






Number Of Sources 1

Data Collection Metho d Data collection

Update Frequency monthly

Notes Indices of Producer Prices of Materials Used in Construction: data for 63 materials or material groups from the USDepartment of Labor, Bureau of Labour. Indexes normalized with 1982-100.

Equipm ent Tracked






Number Of Sources 0


Update Frequency

Notes





Richardson International Cost Factors Location Manual


Publ isher: Richardson Engineering Services, Inc.

1742 S. Fraser DrivePO Box 9103Mesa, AZ 85214-9103 USA

Tel: (480) 497-2062Fax: (480) 497-5529Website: http://www.resi.net


Type of index: The Richardson International Cost Factors Location Manual provides indexes that compare the costchanges over international locations with an average, fictional location called Richardson, USA as a baseindex.

Intended use by: Richardson’s Construction Locations Factors are formulas used to adjust U.S. based estimates for processplant industry construction to each country. They attempt to meet the needs of owners, contractors, andconsultants by providing economic, political, and regulatory information about each location as well as costs.

Canadian City

Coverage:

21 locations of which 5 are Canadian:BC: Vancouver

AB: CalgaryMB: WinnipegON: Toronto, Windsor QC: Montreal

Other Publ icat ions: • Process Plant Construction Cost Estimating Standards• General Construction Cost Estimating Standards• The Richardson Construction Cost Trend Reporter






Descr ipt ion: This manual contains cost multipliers for major cities in 21 countries: Argentina, Australia, Brazil, Canada,China, France, Germany, India, Indonesia, Ireland, Japan, Kuwait, Singapore, South Africa, Spain, U.A.E.,Mexico, Poland, Saudi Arabia, United Kingdom, Venezuela. The base for comparison between locations isRichardson USA, a fictitious town having average US characteristics and costs.

A fixed process plant design consisting of both a building and of a plant structure is used for the analysis.The total cost of the plant is based on the weighted sum of the cost of materials (local and imported), plantequipment (local and imported), and the local labour rates. A Labour Productivity Factor is determined for each city, and is incorporated in the final location factor to account for differences in productivity. Overheadsand markups are incorporated.

General FactorsBLDNG = % Building Cost of Total Process Project PCEE = % Process Engineered Equipment CostBLABOUR = % Building Labour Cost PCFM = % Process Field Material CostBLDNGFM = % Building Field Material Cost EEL = % Engineered Equipment LocalPROC SYS = % Process Plant Cost of Total Process Project EEI = % Engineered Equipment ImportedPLABOUR = % Process Labour Cost FML = % Field Material Local

FMI = % Field Material ImportedIndex Formulas

LI = Labour IndexIMI = Import Material IndexLIM = Local Material Index

LI = 1.00 x Local Rates / Base Rates x Labour Productivity Factor IMI = 1.00 + Duty + Freight + VAT + Other LIM = Local Prices / Base Prices

Location Factor FormulasLLF = Labour Location Factor EELF= Engineering Equipment Location Factor FMLF = Field Material Location Factor LF = Location Factor LLF = BLDNG x %BLABOUR + (PROC SYS x % PLABOUR) x LIEELF= (PROC SYS x %PCFM x %FMI x IMI) + (%PROC SYS x PCEE x EEL% x LIM)FMLF = (%PROC SYS x %PCFM x % %FMI x IMI) + (%PROC SYS x %PCFM x FML% x LMI) +






(%BLDNG x %BLDNGFM x %FMI x IMI) + (%BLDNG x %BLDNGFM x %FML% x LMI)LF = LLF + EELF + FMLF

Richardson tries to provide a target level of confidence for all the Richardson publications of 85%.

The costs and rates are collected from owners (from the owner perspective) unlike other sources that collectthe data from suppliers and contractors. All costs are converted to US dollars, with the exchange rate usedfor the conversion listed at the bottom of the appropriate page.

Below are some samples of the Richardson International Cost Factors.

City, CountryLabour Productivity

Factor Location Factor Sidney, Australia 1.6 1.24Guangzhuo, China 3.0 1.01Bombay, India 3.0 1.00Mexico City, Mexico 1.7 1.00Rio de Janeiro, Brazil 1.9 1.10Calgary, Canada 1.2 1.00Toronto, Canada 1.2 1.03

Additional information for each country is provided including:• General Information• People and ethnic divisions• History• Government and political conditions• Foreign business – legal organization of businesses, foreign ownership, patents• Taxation• Regulatory agencies• Trade regulations• Environmental issues• Employment – unemployment rates, major unions, labour relations, worker rights






• Economy – currency exchange• Crew Rates

Unfortunately, this information appears to be at least 6 years outdated. This could cause significantmisinterpretations if someone is viewing the information for the first time.

Assumpt ions: 1. A fixed percentage (10%) is added to the delivered prices to account for the general contractor markup.The estimators must vary this percentage according to the local conditions.

2. Open shop conditions are assumed.

3. The Labour Productivity Factor reflects typical labour saving construction tools and equipment used inthe host country.

Strengths 1. The Richardson International Cost Factors Location Manual provides means of comparing constructioncosts among international locations.

2. Relative productivity between locations is reflected through the Labour Productivity Factors.

3. Some design requirements (e.g., piling, seismic requirements, …etc) are taken into account in the

location factors.

4. The following factors are included in the Location factors:• Availability of skilled labour • Climatic conditions• Shipping costs for unavailable materials from various ports in the U.S.• Environmental issues• Import duties






Weaknesses 1. Although Richardson provides significant information about each country, it tends to be outdated. For example, the economic and political information on Canada appears to be at least 6 years old.

2. It is very risky to represent all the market conditions for a specific country by one factor. It could be better to apply a range.

3. An exchange rate is used in the calculations of the location factors, so the estimator must make anyappropriate adjustments.

4. Local purchase requirements might affect the cost of materials.

5. Cost differences might arise from local regulations within the same country.

6. The markup percentage is assumed constant for all locations.

7. There is no differentiation between Union and Non-union labour in this index. All the costs are based onopen shop conditions.




Locat ion Indexes


GeneralComments differences in codes, requirements, conditions, and productivity are captured. Also differences in thedesigns are taken into consideration.Captures differences in code requirements, weather and limatic conditions, local requirement.

Soft Costs Included














Union Wage Rates


Wage Rate Source




Supervisory Factor


Data Collection Method survey

Update Frequency annually

Notes It is assumed that all the composite crew members consist of skilled labour (no apprentices). It is also assumed thatthere are sufficient local skilled labour and efficient management system to do the job.

For subs, a 10% mark-up is added. The estimator must adjust this percentage in the light of the local conditions.










Union Wage Rates


Wage Rate Source






Markup Factor

Number Of Sources 0


Update Frequency

Notes






Materials Tracked






Number Of Sources 0


Update Frequency

Notes

Equipm ent Tracked






Number Of Sources 0


Update Frequency

Notes





RSMeans Building Construction Cost Data


Publ isher: R.S. Means Com pany, Inc. A Construction Market Data Group CompanyConstruction Plaza, 63 Smiths LaneKingston, MA 0264-0800

Tel:Fax:Website:

(800) 448-8182(781) 585-8868www.rsmeans.com


Type of index: The Means Building Construction Cost Data provides local multipliers that represent relative constructionfactors for material costs, installation costs as well as the weighted average for total in-place costs for eachCSI MasterFormat Division. These multipliers can be used for comparing costs between cities as well asacross time for the same city. Installation and Materials indexes are published.

Intended use by: This publication is intended to assist estimators and contractors to estimate their jobs in the early planningstages of a project.

Canadian City

Coverage:

930 locations of which 62 are Canadian:BC: Kamloops, Prince George, Vancouver, Victoria

AB: Calgary, Edmonton, Fort McMurray, Lethbridge, Lloydminster, Medicine Hat, Red Deer SK: Moose Jaw, Prince Albert, Regina, SaskatoonMB: Brandon, Protage la Prairie, WinnipegON: Barrie, Brantford, Cornwall, Hamilton, Kingston, Kitchener, London, North Bay, Oshawa, Ottawa,

Owen Sound, Peterborough, Sarnia, St. Catharines, Sudbury, Thunder Bay, Toronto, Windsor QC: Cap-de-la-Madeleine, Charlesbourg, Chicoutimi, Gatineau, Laval, Montreal, Quebec, Sherbrooke,

Trois RivieresNB: Bathurst, Dalhousie, Fredericton, Moncton, Newcastle, Saint JohnNS: Dartmouth, Halifax, New Glasgow, Sydney, Yarmouth






PE: Charlottetown, Summerside

NF: Corner Brook, St. John'sYT: WhitehorseNT: Yellowknife

Other Publ icat ions: • Assemblies Cost Data• Building Construction Cost Data• Concrete & Masonry Cost Data• Construction Cost Indexes• Contractor's Pricing Guide: Framing & Rough

Carpentry, and Residential Detailed Costs, andResidential Square Foot Costs

• Electrical Change Order Cost Data• Environmental Remediation Cost Data

• Heavy Construction Cost Data• Interior Cost Data• Labor Rates for the Construction Industry• Mechanical Cost Data• Open Shop Building Construction Cost Data• Plumbing Cost Data• Repair & Remodeling Cost Data• Site Work & Landscape Cost Data• Square Foot Cost Data

Descr ipt ion: The Means Building Construction Cost Data contains average construction cost indexes for 305 U.S. andCanadian cities. The cities listed represent geographical areas with the densest population centers. All costsfound in this publication represent U.S. national averages and are given in U.S. dollars. The nationalaverage is the average construction costs for the 30 major cities in U.S. (Also known as the 30 City

Average). Means city cost indexes are used to adjust the national average costs to a particular location. Thecity cost indexes for Canada can be used to adjust the U.S. national averages to local costs in Canadiandollars.

The Means Building Construction Cost Data is updated on annual basis, while the city cost indexes areupdated and published on a quarterly basis.

The city cost indexes use the national average costs as basis for comparison between locations. The MeansConstruction Cost Indexes publication also contains historical city cost indexes which use January 1, 1993as a base line for comparing costs across time.

The city cost indexes can be used for the following applications:• Compare costs from city to city






• Compare a specific city’s construction costs with the national average• Update and adjust construction cost data based on a national average

The city cost indexes are updated quarterly. Thus, this will be particularly useful in updating a “bottom line”estimate that has been “on the shelf” for a couple of quarters.

The Historical city indexes can be used for the following applications:• Estimating and comparing costs in the same city for different years• Estimating and comparing costs in different cities for the same year • Estimating and comparing costs

To create the city cost indexes, R.S. Means researched the building types most often constructed in the

United States and Canada. Nine different types of buildings were combined to create a composite model.These nine building types were chosen to form a composite model, because there is no one type buildingthat can completely represent the building construction industry. The following structures were chosen tomake up the composite model:

• Factory, 1 story• Office, 2-4 story• Store, retail• Town hall, 2-3 story• High school, 2-3 story• Hospital, 4-8 story• Garage, parking• Apartment, 1-3 story• Hotel/Motel, 2-3 story

The exact material, labour and equipment quantities are based on detailed analysis of these nine buildingtypes, then each quantity is weighted in proportion to expected usage. The material prices, hourly labour rates and equipment rental rates are combined to form this composite building that represents as closely aspossible the actual usage of materials, labour and equipment used in the North American buildingconstruction industry.






There are approximately three sources for the cost data in each city. An average of the sources is used torepresent each location index. The range of error believed in the estimates of the city cost indexes is ± 5%.

The components of the index for the composite model consists of:• Specific quantities of 66 commonly used construction materials.• Specific labour hours for 21 building construction trades• Specific days of equipment rentals for 6 types of construction equipment (normally used to install the 66

material items by the 21 building trades).

The cost data in this publication is represented in two ways: Bare cost and Total cost including O&P

(Overhead and Profit). For each item of the CSI MasterFormat divisions, the following costs are represented.

Material bare costsMaterial costs are collected by contacting manufacturers, dealers, distributors, and contractors in each city.Material costs don’t include sales taxes.

Labour bare costsLabour wage rates are determined from labour union agreements where available. When labour union wagerates are not available in a certain city, the associated general contractors are contacted and an average for

the wage rates is considered. Labour rates reflect productivity based on actual normal conditions. Thesefigures include time spent during a normal workday on tasks other than actual installation, such as materialreceiving and handling, mobilization at site, site movement, and cleanup. The labour costs represent the in-place costs for installing the required materials.

Equipment bare costsEquipment costs are collected from contractors, suppliers, dealers, manufacturers, and distributors.Equipment costs include rental and operating costs under normal use. The operating costs include parts and






labour for routine servicing such as repair and replacement of pumps, filters, …etc. Normal operating

expendables such as fuel, lubricants, tires, …etc are included. Extraordinary operating expendables withhighly variable wear patterns such as diamond bits and blades are excluded.

Total cost

The total cost is the sum of the Bare costs of material, labour and equipment.Total cost = Material bare cost + Labour bare cost + Equipment bare costs

Total cost including O&PTotal cost including O&P = (Material bare cost x 10%)+ (Labour bare cost x 10%)

+ (Equipment bare costs x 10%)

General conditions, when applicable, should also be added to the Total cost including O&P. The costs for the general conditions are listed in division 1. General conditions for the subcontractors may range from 0%to 10% of the Total cost including O&P. For the general contractors, costs for the general conditions mayrange from 5% to 15% of the Total cost including O&P, with a figure of 10% as the most typical allowance.

For the Canadian cities, the prices are collected in the local currency (No exchange rate is applied).

Assumpt ions: 1. The labour productivity rates assumed are considered as the standard or typical productivity rates. Theserates are constant for all the cities.

2. Productivity rates are developed over an extended period so as not to be influenced by abnormalvariations and reflects a typical average.

3. Overhead and profit for the subcontractor is assumed to be 10% of the total labour, material, andequipment bare costs.






Strengths: 1. Covers a large number of Canadian cities (57 cities)

2. There is an option of applying an index from a category specific to a certain component, or using overallindex and apply it to the whole project.

3. No exchange rate is applied for the Canadian cities, which gives the flexibility to apply a desiredexchange rate when comparing projects between the U.S. and Canada.

Weaknesses: 1. Productivity is assumed to be constant for all locations. Therefore, no differential productivity is reflectedin the city cost indexes.

2. The city cost indexes does 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

• Competitive conditions• Automation• Restrictive union practices• Managerial efficiency

• Access and transportation• Soil conditions

3. The following costs are not reflected in the city cost indexes:• Engineering and architectural costs• Land and related costs• Land surveys• Permit fees• Taxes






• Safety costs

• Managerial and supervision costs

4. Overhead and profit is assumed constant for all locations, which does not reflect the local market for each city. Additional adjustments will be required to reflect local market conditions.

L t i I d




Locat ion Indexes


GeneralComments RSMeans clearly states that productivity is not measured between locations.

Soft Costs Included














Union Wage Rates






Supervisory Factor


Data Collection Method Mailed surveys

Update Frequency quarterly

Notes Average productivity rates, same in all locations. Union wage rates are used from as many locations as possible,because it is easier to collect. If open shop is more dominant, Davis-Bacon rates are used or open-shop contractorsare contacted to determined the going rates. There are almost 15,000 sources (data suppliers). They try to maintainat least 3 suppliers per location per cost item. Judgement is required to deal with the outlier data instead of justtaking the average.

Installation costs include labour wage rates and equipment rental costs. Markups are national averages and vary bytrade.










Union Wage Rates








Markup Factor

Number Of Sources 3

Data Collection Method Mailed surveys

Update Frequency uarterl

Notes Union wage rates are used from as many locations as possible, because it is easier to collect. If open shop is moredominant, Davis-Bacon rates are used or open-shop contractors are contacted to determined the rates.

There are almost 15,000 sources (data suppliers). They try to maintain at least 3 suppliers per location per cost item.Judgement is required to deal with the outlier data instead of just taking the average.

Installation costs include labour wage rates and equipment rental costs.

For open-shop contractors, the average of the wages collected is used excluding outliers.

Markups are national averages and vary by trade.


M t i l d E i t





Materials Tracked






Number Of Sources 3

Data Collection Metho d Mailed surveys

Update Frequency quarterly

Notes Expert judgement is used to remove outlier data instead of just taking the average.

Equipm ent Tracked






Number Of Sources 0


Update Frequency

Notes





Saylor Current Construction Costs


Publ isher: Saylor Publications, Inc .9420 Topanga Canyon Blvd.Suite 203Chatsworth, CA 91311

Tel:

Fax:Website:

(818) 718-5966(800) 642-3352(818) 718-8024www.saylor.com


Type of index: The Saylor Current Construction Costs provides costs for Union and Open Shop trades, 23 materials, 21subcontractor specialties, and a Major Cities Cost Relationship Index for 125 cities. Costs are based on SanFrancisco, CA.

Intended use by: These indexes are for estimators working for contractors and consulting engineers.

Canadian City

Coverage:

120 locations of which 5 are Canadian:BC: Vancouver

AB: Calgary

MB: WinnipegON: TorontoQC: Montreal

Other Publ icat ions: Residential Construction CostsRemodeling/Repair Construction CostsCommercial Square Foot Building CostsResidential Square Foot Building Costs






Descr ipt ion: The Current Construction Costs publication contains six main sections:1. Wage Rate Recap

• Includes wage rates for 31 trades• Union and open shop• Includes benefits, supervision, overhead and profit

2. Material/Labour and Subcontractor Time Indexes• Started in 1967 (Index = 100)• 4 construction types (concrete, steel, wood frame, and combination) information for 5 previous

years3. Material Time Indexes

• Unit costs for 23 construction materials• Assumes minimum quantity

4. Major Cities Cost Relationship Index• 125 U.S. and Canadian cities• Uses San Francisco, California as the base city• Indexes are computed from the analysis of both wage rates only (no material or equipment costs

are included in the analysis or computation of indexes)5. Construction Costs

• Organized according to 16 CSI MasterFormat divisions• Costs of the elemental items are broken down by material cost and labour (union and open shop)

installation cost•

Material cost includes equipment, equipment rental, material and factory fabrication, plus profitand overhead• Installation is defined as field installation and erection with applied subcontractor’s overhead,

profit, payroll taxes and insurance6. Assembly Costs

• Arranged by 11 CSI MasterFormat divisions• Each assembly derived from construction cost section• Complete building cost determined by adding the applicable assemblies






Material prices and rates are gathered from suppliers’ catalogues.

Markup percentages vary by trade and differ between Union and Open shop where markup percentages for the Open shop trades are higher than those of the Union trades.

The supervisory labour costs vary by trade and differ between Union and Open Shop. For the Open shop,the supervisory costs are slightly higher as a percent of the labour cost.

For the Canadian Cities Relationship Indexes, costs are quoted in local currency (No exchange rates areapplied).

Assumpt ions: 1. The same crew composition and productivity is assumed for the Union and Open shop. Only the wagerates differ.

2. Crew composition and productivity are assumed constant over all locations.

Strengths: 1. This publication differentiates between the Union and the Open shop, and provides separate installation

costs.

2. No exchange rates are applied for the Canadian locations, which gives the flexibility to apply anappropriate exchange rate when comparing projects between the U.S. and Canada.

3. The Major Cities Cost Relationship Index reflect the following factors:• Managerial and supervision costs.

Weaknesses: 1. The location indexes are derived from labour only i.e. they assume material costs are constant across all

locations. Although the publication mentions that productivity is considered, it was stated during theinterview that productivity is not considered.






2. The Major Cities Cost Relationship Index does 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

3. The same crew composition is assumed for both Union and Open Shop crews. This does not reflect all of the differences between them.

Locat ion Indexes




Locat ion Indexes


GeneralComments Major Cities Cost Relationship Index:No account is taken for the productivity differences between locations. Only direct labour wage rates(hourly rates) are collected from the different locations and used to calculate the index.

There is an attempt to maintain at least two sources for each location. The most probable value is usedinstead of the average if there are outliers.

Commercial Square Foot Building Costs:Square foot costs are provided for 65 building types with 5 exterior finishes over each of 4 earthquakezones. These costs include GC overhead and profit, and architectural fees. This section is an excerpt of the Commercial Square Foot Building Costs publication.

Soft Costs Included





Elements Ass embl ies and Bui ld ing s










Union Wage Rates


Wage Rate Source Collective agreements, Labour brokers




Supervisory Factor


Data Collection Method Personal interviews


Notes Elemental and Assembly costs are detailed and categorized by CSI Masterformat. Costs are provided for:-elemental or assembly measurement unit-material cost-union installation cost-total union cost (material + installation)-open shop installation cost-total open shop cost (material + installation)

Installation costs between union and open shop are proportional to differences in wage rates and not to productivitydifferences.

Markup is added to the unit rates as a percentage which is determined from finished projects. Markup percentagesfor open-shop contractors are higher than those for union contractors.

Commercial Square Foot Building Costs:Square foot building costs for 65 building types, each with 5 exterior finish/frame type combinations. Costs arepresented for 4 earthquate zones, as shown on included map of US. These costs are used to evaluate cost trade-offs for different designs and materials.











Union Wage Rates


Wage Rate Source Collective agreements, Labour brokers






Markup Factor

Number Of Sources 2

Data Collection Method Phone calls and data collection


Notes Union Wage Rate Recap and Open Shop Wage Rate Recap consist of:-base wage-total fringe (union only)-payroll taxes-supervision-workers comp.-overhead & profit-total

All information is based on San Francisco

Supervisory Factor: A percentage is assumed for the supervisory costs (0.96-1.72 %). Supervisory costs are ingeneral higher for open shop labour when calculated as a percent of the base wage, but is generally lower in hourlycosts.







Materials Tracked

Individual Location Costs Costs Specif ic To One Location




Number Of Sources 2

Data Collection Metho d Phone interviews


Notes Material costs are based on San Francisco prices and are tracked over time.

Equipm ent Tracked




Number Of Equ ipment Tracked


Number Of Sources 0


Update Frequency

Notes





Statistics Canada Construction Price Statistics (Cat. No. 62-007-XPB)


Publ isher: Statistics Canad a - Prices Divisio n 13-D2, Jean Talon BuildingOttawa K1A 0T6

Tel: 613-951-3390Website: www.statcan.ca

Years in circulat ion: Current ICI buildings index since 1981. There are predecessor indexes.

Type of index: See below

Intended use by: These indexes should be used only to compare changes in costs across regions and types of construction,not differences in absolute costs. They were developed for:1. Price deflators for estimating the real value of construction output for the National Accounts2. Industry use

Canadian City Index Type of Pricing Pricing Frequency Coverage

Coverage: Construction Inputs:

• Materials (various)• Wages

• Financial• Machinery

• Selling Prices• Union Rates

• BoC Rate• Selling Prices

• Monthly• Monthly

• Monthly• Quarterly

• National• 22 Cities

• National• National

Construction Outputs:Residential:

• New Housing• Apartment

• Model• Model

• Monthly• Quarterly

• 20 Cities• 7 Cities

Non-Residential

• Office

• Warehouse• Shopping Centre

• School

• Model

• Model• Model

• Model

• Quarterly

• Quarterly• Quarterly

• Quarterly

• 7 Cities (Halifax, Montreal, Ottawa, Toronto, Calgary,

• 7 Cities Edmonton, Vancouver)• 7 Cities

• 7 Cities






• Factory • Model • Quarterly • 7 Cities

Trades• Fabricated Structural Steel• Pre-cast Concrete

• Model• Model

• Quarterly• Semi-Annual

• 3 regions• 3 regions

Engineering:

• Highways• Utilities

o Electrico Telecom

• Purchase Prices

• Modified Input• Purchase Prices

• Annual

• Annual• Annual

• 9 provinces (excl PE)

• National• National

Other Publ icat ions: Various. See Statistics Canada catalogue.

Descr ipt ion: Statistics Canada publishes three types of construction price indexes.

Input Prices: monitor changes in the cost of labour, machinery and building materials. Labour costs areunion rates, both straight wage and inclusive of benefits. The selected rate is typically the ICI rate for eachtrade.

• Model Prices for Construction Outputs: estimate the cost of various model structures by pricingthe in-place contractor’s price for various components. This procedure is used for estimating changes in construction costs in apartment buildings and ICI buildings.

• Bid Price for Construction Outputs: estimate the cost for certain types of engineered construction

based on unit bid prices. This procedure is used for certain types of engineeringconstruction (e.g., highways).

Input Prices:Input prices are based on regular surveys of suppliers. Wage costs are prevailing union wages (direct wagesand benefits). Wage costs do not include statutory contributions to EI, WCB, CPP, EHT, etc.






Model Prices for ICI Buildings:

Statistics Canada estimates costs for six model buildings:

Apartment Building• 7 stories with penthouse used for mechanical systems – 53 units – 4,900 m 2

• 2-level basement parking• brick face / aluminum siding and stucco

Office Building• 10 stories - 16,500 m2

• basement parking

• brick veneer and glazed aluminum curtain wall

Warehouse• 1 storey, concrete slab-on-grade - 3,809 m2

Shopping Centre• L-shaped suburban mall• concrete slab-on-grade - 1,895 m2

Light Factory• 1 storey – 7,910 m2

Secondary School• 3 stories – 20,000 m2

• basement parking• brick veneer and glazed aluminum curtain wall

Approximately 200 components are priced for each model. These components represent approximately 60%of total costs. Component prices are in-place costs, inclusive of contractors’ overhead and profit margin.

S C C S (C )






Components are divided into four major trade divisions – architectural, structural, mechanical and electrical –plus the general contractor’s overhead and profit.

Excluded from component costs are:• Capitalized services – legal, engineering and architectural• Financing cost• GST• Land costs• Landscaping

The same structure is used across locations. Local differences in codes (if applicable) or seismic

requirements are not taken into account.

Multiple prices are elicited from quantity surveyors, consultants and contractors. For the model apartmentbuilding, for example, in Toronto, 45 different sources are used. For mechanical and electrical trades, themain sources of price information are suppliers of construction materials and equipment to these trades.Overhead, productivity and profit information is derived through discussions with trade associations andunions. Many sources are applicable to more than one type of structure. For ICI structures, in Toronto,approximately 110 sources are surveyed

Models are revised every 10-15 years. If codes change, the specifications will be revised for the relevantcomponents. The office, light factor and school are based on 1991 specifications. The warehouse and

shopping centre are based on 1981 specifications.

The union/non-union composition of the survey panel depends on the amount of construction generallyperformed by each type of contractor.

The indexes cannot be used to compare absolute cost levels across locations. The indexes can be used tocompare changes in costs across locations and across building types.

St ti ti C d C t ti P i St ti ti (C t N 62 007 XPB)






Bid Prices – EngineeringBid prices are drawn from actual bids registered with provincial and municipal governments and with utilities.Bid prices are typically expressed in terms of price per standard unit of output.

Assumpt ions: 1. Changes in construction technology proceed slowly and do not jeopardize a model-based index thatis updated every 10-15 years.

2. The composition of ICI construction does not change sufficiently to make the models selectedunrepresentative.

Strengths: 1. The model ICI building cost estimates are published quarterly.

2. The length of time of the survey and the consistency of the methodology allow time series analysisand a comparison of the different behaviour of input and output prices over the course of theeconomic cycle.

Weaknesses: 1. For each of the segments of the ICI sector, comparatively few model structures are employed. In theinstitutional segment of ICI, the representative structure is a secondary school. This underestimates

the impact of changes in mechanical construction costs in structures, such as hospitals, that aresignificantly more mechanical-intensive.

2. The indexes should only be used to compare changes in construction costs across cities. Theindexes cannot be used to compare absolute construction costs.

3. The ICI indexes may over-estimate on-site construction costs by not taking sufficient account of thetrend to use pre-fabricated components that require only installation labour.

St ti ti C d C t ti P i St ti ti (C t N 62 007 XPB)






4. The indexes do not reflect the diversity in architectural specification (especially in regard to buildingenvelope)

Locat ion Indexes





GeneralComments

Soft Costs Included














Union Wage Rates


Wage Rate Source Collective Agreement or Survey




Supervisory Factor


Data Collection Method Interviews

Update Frequency Monthly

Notes










Union Wage Rates


Wage Rate Source Collective Agreement






Markup Factor

Number Of Sources 100

Data Collection Method Interview

Update Frequency Quarterl

Notes Labour costs are tracked for all trades.Number of sources varies by location. In Toronto over 100 sources.






Materials Tracked






Number Of Sources 0


Update Frequency

Notes

Equipm ent Tracked






Number Of Sources 0


Update Frequency

Notes

a guide to construction cost sources - what can they tell us about competitiveness (1)

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