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Using ENR Indexes
Readers of ENR direct a steady stream of questions about the magazine’s indexes and how to accurately apply them to various construction projects. To help clarify the nature and uses of the cost indexes, here are answers to the most frequently asked questions and suggestions on how to avoid costly mistakes.

What is the difference between ENR’s Construction Cost Index and its Building Cost Index?

The difference is in their labor component. The CCI uses 200 hours of common labor, multiplied by the 20-city average rate for wages and fringe benefits. The BCI uses 68.38 hours of skilled labor, multiplied by the 20-city wage- fringe average for three trades–bricklayers, carpenters and structural ironworkers. For their materials component, both indexes use 25 cwt of fabricated standard structural steel at the 20-city average price, 1.128 tons of bulk portland cement priced locally and 1,088 board ft of 2x4 lumber priced locally. The ENR indexes measure how much it costs to purchase this hypothetical package of goods compared to what it was in the base year.

What kinds of construction do the ENR indexes represent?

The two indexes apply to general construction costs. The CCI can be used where labor costs are a high proportion of total costs. The BCI is more applicable for structures.

Where does ENR get its data?

ENR has price reporters covering 20 U.S. cities who check prices locally. The prices are quoted from the same suppliers each month. ENR computes its latest indexes from these figures and local union wage rates.

Does ENR have cost indexes for cities outside the U.S.?

ENR publishes indexes for two Canadian cities, Montreal and Toronto, each month. ENR’s Fourth Quarterly Cost Report includes the most comprehensive listing of international costs.

Are material prices averaged?

No. ENR reporters collect "spot prices" from a single source for all of the materials tracked, including those in the index. The reporters survey the same suppliers each month for materials that affect the index. Actual prices within a city may vary depending on the competitiveness of the market and local discounting practices. This method allows for a quick indicator of price movement, which is its primary objective.

Do the city indexes have different weightings?

No. Each city uses the same weight for the labor and materials components as the U.S. average index.

Do the indexes measure cost differentials between cities?

No. This is one of the more common errors in the application of ENR’s indexes, which only measure the trend in an individual city and in the U.S. as a whole. Differentials between cities may reflect differences in labor productivity and building codes. Moreover, quoting bases for lumber and cement vary from one city to another. One city may report list prices while in another prices for the same material may include discounts.

Are indexes seasonally adjusted?

No. This is an important point for users of the indexes to keep in mind. Wages, the most important component, usually affect the indexes once or twice a year. Cement prices tend to be more active in the spring while fabricated structural steel pricing tends to have monthly adjustments. Lumber prices, more dependent on local pricing and production conditions, are the most volatile and can change appreciably from month to month. Declines in indexes are most often the result of falling lumber prices.

The study of an index movement for a period of less than 12 months can sometimes miss these important developments. Users of an index for individual cities should also watch the timing of wage settlements. Stalled labor negotiations may keep the old wage rate in effect longer than a 12-month period, giving the appearance of a low inflation rate.

Is it more accurate to use an index that is closest to my home city?

No. The 20-city average index is generally more appropriate. Because it has more elements, it has a smoother trend. Indexes for individual cities are more susceptible to price spikes.

Are annual averages weighted?

No. They are straight mathematical averages.

Are the indexes verifiable?

Yes. ENR’s national indexes are updated in the first week of each month on the Construction Economics pages of the magazine while indexes for individual cities appear in the second issue of the month. Prices for the indexes’ materials component are published in the preceding month on the Construction Economics pages.

Cement prices are in the first issue of the month, lumber prices in the third and steel in the fourth issue. Wage rates for all 20 cities are published in the second and third Quarterly Cost Reports. The reader can compute ENR’s indexes by multiplying the published prices and wages by the appropriate weights, shown in the tables below, and summing the results.

Does ENR forecast its indexes?

Yes. ENR projects its BCI and CCI for the next 12 months once a year in the Fourth Quarterly Cost Report. To reach its forecast, ENR incorporates the new wage rates called for in multiyear, collective-bargaining agreements and estimates for areas where new contract terms will be negotiated. ENR estimates the materials component by studying consumption forecasts and price trends.

Does ENR ever change the weighting of the index components?

No. The components are always multiplied by the same factors. However, a component’s share of an index’s total will shift with its relative escalation rate.

Has ENR ever changed the makeup of the index components?

Yes. Only once, in 1996. ENR was forced to switch from the mill price for structural steel to the 20-city average fabricated price for channel beams, I-beams and wide-flanges when ENR’s sources for mill prices left the structural market.

Does ENR revise the indexes?

Yes. On some occasions, ENR must revise the indexes. For example, ENR revised its March 2004 indexes shortly after their initial publication to reflect the huge surcharges being placed on structural steel. Revisions to national indexes are published below. Revisions to indexes for individual cities are published in the tables on the following pages.

Do ENR's cost indexes capture all the factors influencing construction costs?

No. ENR's two primary cost indexes, the Construction Cost Index and the Building Cost Index, each have only four components (inputs) -- cement, lumber, structural steel, and labor. They do not capture all the factors influencing project costs. They merely offer a snapshot of general cost trends.

Why doesn't ENR publish data on construction costs in Florida or Arizona?

When we first began collecting cost data in the 1930's Florida and Arizona were very lightly populated. We have decided not to revise our list of 20 cities, in order to preserve the continuity of our data sets.

Where can I obtain data on construction costs in Florida or Arizona, or other states that ENR does not collect cost data from?

There are three major firms that collect construction cost data -- R.S. Means, Marshall and Swift/Boeckh, and BNI Books -- all of which have data for most regions of the U.S., including Florida and Arizona.

What data does ENR publish on building material prices?

ENR has been collecting, compiling and publishing price data on 75 different building materials, in 20 major U.S. cities, plus Montreal and Toronto, on a monthly basis for over 50 years. We publish a table of cement and concrete and aggregate prices in our first weekly issue every month, pipe prices the second week, lumber, drywall and insulation prices the third week, and steel prices the fourth week.

How can I get any of this building material price data going back in time?

If you only need this data for a few specific months in the past, the best way to get it is to get those tables off our website. The monthly tables since February 2005 are posted on our website. To find them, go to our home page, and on the right-hand side of the screen, click on the link that says "magazine archive." Then scroll down to the weekly issue containing the table you need, and click on the link that says " This week ENR (date) online index.” That will bring you to the table of contents page for that issue. Then, under the Departments heading, click on the Construction Economics link.

But if you need cost data for more than a few previous months, or data prior to February 2005, then you need to order data sets. Here is how to do that:

We have not posted historical data sets of our various building material tables on our website, for two reasons. One reason is that the demand is not that frequent, and the other reason is that we do not have the manpower to format all that data. However, we do sell data sets.

Once you have identified which specific building materials you want data sets for, call ENR research director Scott Lewis, phone: 212-904-3507, and place your order. We charge $25 per product per year (for example, portland cement type one prices are $25 per year). We have data available from 1992 to the present.

Once you have ordered and paid, Brian will notify our economics editor, Tim Grogan, who will download the data from his computer, and mail it to you in tabular form. It is not available in Excel format, because it is stored in a database that runs on an ancient computer program that is not compatible with current programs.

What you will receive, in tabular form, are the prices for the particular item, in each of the 20 cities that we collect data from, for 12 months (240 data points in all per year), plus the 20-city average price each month, plus the prices in Montreal and Toronto.

This process of providing data sets takes several days, as Tim's primary responsibility for ENR is to supervise our economics coverage. He can only pull these data sets on days when he is not closing stories.

If you have any further questions, please call Scott Lewis, phone: 212-904-3507.

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