Building Construction Price Index (BCPI)

Detailed information for first quarter 2018

Status:

Active

Frequency:

Quarterly

Record number:

2317

The Building Construction Price Indexes (BCPI) are quarterly series that measure change over time in the prices that contractors charge to construct a range of new commercial, institutional, industrial and residential buildings.

Data release - May 23, 2018

Description

The BCPI measures change over time in contractors' prices to construct a range of new commercial, institutional, industrial and residential buildings. These buildings include 6 non-residential structures: an office building; a warehouse; a shopping centre; a factory; a school; and a bus depot with maintenance and repair facilities. In addition, indexes are produced for 5 residential structures including a bungalow, a two storey house, a townhouse, a high rise apartment building (five storeys or more) and a low rise apartment building (less than five storeys).

The contractor's price reflects the value of all materials, labour, equipment, overhead and profit to construct a new building. It excludes value added taxes and any costs for land, land assembly, building design, land development and real estate fees.

The BCPI is of use to government agencies undertaking economic analyses and other users that are interested in evaluating the impact of price changes on capital expenditures. Statistics Canada, for example, uses the BCPI in preparing estimates of the construction industry's contribution to national expenditure, real output and capital stock. Other uses include the revaluation of expenditure, output and new order figures for construction work; making adjustments to project costs for escalation; as well as forecasting financial requirements for proposed projects and real rates of return on investment.

Reference period: The time period for which the BCPI equals 100; currently this is the year 2017.

Collection period: Collection occurs over the second and third months of each quarter, i.e. February and March, May and June, August and September, November and December.

Subjects

  • Construction
  • Construction price indexes
  • Non-residential building construction
  • Prices and price indexes
  • Residential construction

Data sources and methodology

Target population

The target population for the BCPI encompasses all work put in place cost components included in contractors' prices to construct new residential and non-residential buildings in Canada. These cost components cover construction activities associated with the architectural, structural, mechanical and electrical trade groups, as well as general contractors' overhead and profit.

Each building construction price index is based on a representative building project. As a result, the observed population of work put in place cost components is limited to those included in the residential or non-residential building construction project selected. Where possible, the project is chosen from an actual completed residential or non-residential building project for which the construction costs and selling price are known. Alternatively, a representative residential or non-residential building project is identified and its selling price is estimated by cost consultants. The project chosen must represent the median for its class with respect to price, size, design and construction techniques employed. In addition, the project must be for a residential or non-residential building that might be constructed in any of the census metropolitan areas (CMAs) covered by the index. Buildings with a contemporary design are preferred. Since the building must be typical for construction projects undertaken across the country, those with an unusual shape, size, or materials are avoided. New representative residential and non-residential building construction projects are selected every 10 to 15 years with the assistance of construction cost consultants.

In addition, the observed population is limited to residential and non-residential building construction in 11 CMAs including St. John's, Moncton, Halifax, Montréal, Ottawa-Gatineau (Ontario part), Toronto, Winnipeg, Saskatoon, Calgary, Edmonton and Vancouver. Based on the value of issued building permits, these CMAs were assessed to have enough ongoing new residential and non-residential building construction to support collection of quarterly pricing information over time. They also cover most provinces.

Instrument design

Price information for this survey is collected using an electronic questionnaire (Construction Contractors Survey). The electronic questionnaire was designed, tested and refined in consultation with the Questionnaire Design Resource Centre and with residential and non-residential general contractors operating in the Vancouver, Toronto, Ottawa-Gatineau and Montréal CMAs.

This electronic questionnaire collects information on changes in the costs for work put in place components (construction activities) included in residential and non-residential building projects, the reasons for changes and construction market conditions. With reference to a project built or bid-on in the previous quarter, respondents are asked to report how much the estimated costs for each component would have changed if they repeated the build or bid in the current quarter. The details of the project are not reported and the respondent can choose different projects each quarter so long as they are representative of the work they typically do.

Sampling

This is a sample survey with a longitudinal design.

The BCPI has a multi-stage sample design. A combination of cut-off and judgement based sampling is used to select representative work put in place cost components from residential and non-residential building projects, as well as the general contractors that will be contacted for price information.

Frame
There are two unique frames used in selecting the BCPI sample. The first is a listing of the work put in place cost components included in the total selling price for an actual or representative residential or non-residential building project. This frame is fixed for the life of the representative project which is only replaced once every 10 to 15 years, depending on how rapidly construction design, materials and methods are changing. It provides a description (including technical specifications) of each work put in place cost component, the number of units of installed material or labour in the component and its total installed cost. Examples of the technical specifications include: Supply and install glazed ceramic tile 150 x 150 x 3mm thick or adhesive application to waterproof gypsum board walls in penthouse shower area and as bathtub and shower surround in suites.

The second frame is a list of general contractors that meet two conditions: they have been issued building permits to construct residential and/or non-residential buildings as reported in Statistics Canada's Building Permits Survey for a given reference year and they can be matched to active units on the Statistics Canada's Business Register. This frame is stratified by CMA and includes details such as the name and address of the builder, as well as the number and value of building permits for the residential and the non-residential buildings that the contractors have reported for a given reference year.

Sampling unit
There are unique sampling units associated with each stage in the BCPI sample selection. These include work put in place cost components and contractors.

Stratification method
Before sample selection, the frame of contractors is stratified by CMA. The work put in place cost components in the representative residential and non-residential building projects are divided into 5 groups including the architectural, structural, mechanical, and electrical trade groups, as well as a category for general contractors' overhead and profit.

Sampling and sub-sampling
Since there may be a large number of work put in place cost components in a building project, for practical reasons, a sample is selected from each trade group, as well as from the general contractor's overhead and profit category. The sample is selected based on judgement and targets coverage of components that together account for about 80% of the total project cost. In addition to their importance in the total project cost, components have a higher likelihood of selection if they meet the following criteria: they are standard to all residential and non-residential buildings across geography and across time; they are included in some of the projects used to compile other building indexes; or they account for the largest volumes of material inputs.

To collect information on changes in the cost components, a judgement sample of well-established general contractors is selected for each CMA. In general, these contractors are selected from among those reporting building permits for residential and/or non-residential building construction projects to Statistics Canada's Building Permits Survey. They are usually members of local construction associations who are knowledgeable and capable in their pricing. The contractors must be actively bidding and winning a share of the residential and/or non-residential building construction jobs. Their reported price movements are considered to be representative of market conditions in their CMA.

Over time, builders enter and exit the construction market. To ensure that the BCPI continues to measure change in contractors' selling prices for residential and non-residential buildings, the sample of contractors must be monitored and refreshed. For this reason, Statistics Canada subject matter staff continuously review the BCPI contractor sample to determine when sampled units need to be added or removed.

Data sources

Data collection for this reference period: 2018-02-15 to 2018-03-21

Responding to this survey is mandatory.

Data are collected directly from survey respondents and derived from other Statistics Canada surveys.

Price changes for sampled work put in place components and market information are collected quarterly from survey respondents using an electronic questionnaire (Construction Contractors Survey). Administrative data sources are used to collect prices for selected mechanical and electrical products. Prices for certain materials, labour rates, rental of equipment and municipal charges are obtained from a variety of secondary sources. These sources include construction industry publications and in-house databases. Price information is collected for the 15th day of the middle month of each quarter or the nearest business day prior to the 15th.

Initial data collection from new respondents is completed by Producer Prices staff. This collection takes the form of telephone interviews with data captured using the electronic questionnaire. During this collection, interviewers confirm that respondents are in-scope, verify their contact information, as well as confirm the type of construction (residential or non-residential) and CMA for which they will be reporting.

Electronic data collection for subsequent reference quarters is handled by Statistics Canada's Halifax regional office. Respondents are emailed a secure access code and asked to complete the electronic questionnaire. Non-response follow-up is handled by email and telephone. Failed edit follow-up is done by telephone.

View the Questionnaire(s) and reporting guide(s) .

Error detection

Error detection is an integral part of both collection and data processing activities. During collection, edits are applied to data records to identify missing data, as well as capture and reporting errors. Respondents are asked to validate their data when these collection edits fail.

During data processing, subject matter specialists review the collected data to identify and resolve errors, inconsistencies and outliers. In addition, they confront the price information with other available data sources to identify and resolve invalid and inconsistent data.

Estimation

The BCPI is calculated based on bid prices in the real market for sampled work put in place cost components with a fixed specification and quantity. The prices constitute a "competitive" price that would have a reasonable chance of being the low price in an actual bid and therefore are not typical "list" prices. They reflect material, labour and equipment costs, as well as contractors' overhead and profit. They exclude value added taxes and any costs for land, land assembly, building design, land development and real estate fees.

The current price for each sampled cost component is estimated by adjusting the previous quarter's price for quarterly changes in the per unit value of its material, labour rate and less frequently, overhead and profit components. Information on price changes is collected from respondents or derived from administrative data or other Statistics Canada survey sources for this purpose.

The BCPI encompasses both elemental and aggregate indexes. The elemental indexes are calculated using a fixed weighted Laspeyres formula to combine prices for work put in place cost components within trade groups and across trades groups to the CMA.

The aggregate indexes are calculated using the Chain-Laspeyres formula to combine weighted CMA indexes to the eleven-city aggregate.

Weights
Weights are assigned to each sampled work put in place cost component which are derived from the detailed costs originally provided by cost consultants for the year when the building projects were chosen. Separate weights are compiled for each CMA based on the detailed costs for each component in the representative building projects. The weight assigned to each sampled cost component reflects the share in the total project cost that was attributable to the sampled component and the other components that it represents.

The CMA level weights used in calculating the 2017 BCPI are based on a price adjusted three-year moving average of building permit values issued for residential and non-residential building construction for reference years 2014, 2015 and 2016. The annual estimates of the value of building permits are calculated by Statistics Canada's Investment, Science and Technology Division.

The BCPI weights are updated annually and are introduced for the first quarter of each reference year when the second quarter indexes are released.

Linking of indices
With the introduction of a new basket, historical estimates are linked to the new basket by maintaining the same historical period-to-period changes. This is done by calculating a link factor for each index series as the ratio of the new index series (2017=100) in the overlap period to the old index series (2002=100). This link factor is then applied to the old index series to bring it up or down to the level of the new index series. The historical continuity of the building construction price indexes are maintained wherever possible by linking the new building construction price indexes with comparable historical indexes when they exist.

Quality evaluation

Prior to publication, the BCPI is analyzed for comparability with historical trends, as well as for coherence with results from related economic indicators, known current events and information from other external price index sources.

Disclosure control

Statistics Canada is prohibited by law from releasing any information it collects which could identify any person, business, or organization, unless consent has been given by the respondent or as permitted by the Statistics Act. Various confidentiality rules are applied to all data that are released or published to prevent the publication or disclosure of any information deemed confidential. If necessary, data are suppressed to prevent direct or residual disclosure of identifiable data.

Collected data are converted to price indexes and data are released as such, so that it is not possible to identify the suppliers of raw prices.

Revisions and seasonal adjustment

The BCPI series are subject to a one quarter revision period after publication of a given quarter's data. The indexes are not seasonally adjusted.

Data accuracy

The statistical accuracy of these indexes depends on quality of the price and weight information used in their compilation. All of these data sources are subject to their own errors. Data on prices and price changes are obtained from a sample survey, other Statistics Canada series and administrative sources. The weights used to compile the indexes for each census metropolitan area are obtained from a detailed breakdown of the work put in place cost components of a representative residential or non-residential building project at a point in time. The quality of this weight data depends on its timeliness, where in general, the longer a project is used, the less it reflects the current mix of construction inputs and technologies. The weights assigned to the CMAs are based on the building permits data gathered by the Investment, Science and Technology Division of Statistics Canada.

Indexes for all levels of aggregation are considered to be statistically reliable.

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