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A Hundred Years of ENR Cost Indexes

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Whenever anything or anyone turns 100, it's a big deal. With a base year of 1913, ENR's cost indexes have joined that category after a century of measuring construction cost fluctuations and reflecting the industry's most important trends. The use of the cost indexes has grown almost as dramatically as the indexes themselves.They captured, for example, the explosion in union wages that caused costs to jump in the 1970s, and they tracked the record hike in steel prices and its effects on overall construction costs in 2004.

Over the years, ENR has labored to ensure the indexes are accurate, objective, transparent and flexible so that they can serve as a benchmark to assess the health of the construction industry's most important sectors. This includes deep-dive analysis that interprets the numbers and tells readers the stories behind them.

These days, they help many municipal officials make the most informed decisions they can about their costs of engineering, construction and maintenance work.

John Pedersen, district engineer with the Mammoth Community Water District in California, says, "The MCWD uses the ENR Construction Cost Index to adjust our connection fees annually for inflation in construction of capital projects. The fees are used to pay for water and sewer facilities needed for system expansion to accommodate new users."

Mike Clark, senior project manager in Oklahoma City's Public Works Dept., says, "Over the last three years, I have used the Construction Cost Index as an inflation-type index for approximately 30 procurement contracts."

Says Leonard J. Goodwin, public- works director for Springfield, Ore., "We use the ENR CCI as an inflation adjustment factor for our system development charges [impact fees]. Our methodology allows us to administratively increase fees by the change in the CCI. I think a fair number of jurisdictions in Oregon do the same."

Federal agencies also find the indexes valuable. "The indexes are an expertise multiplier. Regularly publishing the data from multiple locations not only shows industry and cost trends but also allows comparison of my personal and professional knowledge of the local cost data with the indexes," says Rick Russell, cost engineering team lead, U.S. Army Corps of Engineers, Portland, Ore. "The CCI and [Building Cost Index] provide expertise to make judgments for costs among a wide variety of materials and projects. Although the indexes are not an exact match to the projects in my job, they help by providing vetted background information on the cost components."

"The ENR indexes are an excellent resource. I have used them to accurately escalate contract pricing for the future where the Corps Index is not really applicable. The Corps cost index system is more long term. This is not as current and accurate as using the ENR for short-term trends and projections," says Jerry Welch, chief of the Cost & Relocations Team, U.S. Army Engineer District, Memphis.

"ENR indexes are very helpful as they represent actual market conditions based on labor and materials. I have used ENR indexes on various civil and MILCON projects as these indexes catch up to price fluctuations on actual materials rather swiftly. During the past decade, steel, cement, lumber and copper prices saw unusual swings, and ENR's [Materials Cost Index] was my first choice to develop escalation factors for projects that required use of these materials," says Mukesh Kumar, chief cost engineer with the U.S. Army Engineer District, New York. n

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