Apartment Building Construction Price Index (ABCPI)

Detailed information for second quarter 2017

Status:

Active

Frequency:

Quarterly

Record number:

2330

The Apartment Building Construction Price Index (ABCPI) is a quarterly series measuring changes in contractors' selling prices of a representative apartment building.

Data release - August 8, 2017

Description

The ABCPI measures the changes in what clients would pay contractors to build a representative apartment building. The index relates to both general and trade contractors' work and excludes the cost of land, land assembly, design, development and real estate fees.

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

Reference period: The time period for which the ABCPI equals 100; currently this is the year 2002.

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
  • Prices and price indexes
  • Residential construction

Data sources and methodology

Target population

The target population for the ABCPI encompasses all work-in-place cost components included in the contractors' selling prices for apartment buildings constructed 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.

The observed population is limited to the work-in-place cost components included in a representative high-rise apartment building construction project. Where possible, the project is chosen from actual completed apartment building projects for which the construction costs and selling price are known. Alternatively, a representative 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 building that might be constructed in any of the CMAs covered by the index. Buildings with a contemporary design are preferred. Since the building must be comparable to bidders across the country, those with an unusual shape, size, or materials are avoided. A new representative apartment building construction project is selected every 10 to 15 years with the assistance of construction cost consultants.

In addition, the observed population is limited to apartment building construction in 11 census metropolitan areas (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 apartment building construction to support collection of quarterly pricing information over time and covered most provinces.

Instrument design

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

This electronic questionnaire collects information on changes in the costs for work-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.

Developed and tested in the early 1980s, a paper questionnaire is also used to collect information on the prices for products used in the mechanical and electrical trade groups. The specifications of the selected products are printed on the questionnaire and repriced each period. When products need to be replaced, respondents are asked to choose products that are as similar as possible to the replaced product. Since respondents typically provide prices for both the current and previous periods for the new product, no adjustments for quality change are required.

Sampling

This is a sample survey with a longitudinal design.

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

Data sources

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-in-place components and market information are collected quarterly from survey respondents using an electronic questionnaire (Construction Contractors Survey). A mail-out/mail-back paper questionnaire is used to collect prices for selected mechanical and electrical products. Price information is collected for the 15th day of the middle month of each quarter or the nearest business day prior to the 15th. All data are collected within the reference quarter.

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.

The paper questionnaire is mailed out by Producer Prices Division once each quarter and collects prices for sampled items from a sub-set of existing respondents. Follow-up for non-response or failed edits is done by telephone.

Prices for certain materials, labour rates, rental of equipment, municipal charges and sales taxes are obtained from a variety of secondary sources. These sources include construction industry publications and in-house databases.

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 ABCPI is calculated based on bid prices in the real market for sampled work-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.

The prices include costs for materials, labour, equipment, provincial taxes, and contractors' current overhead and profit and market conditions. Value added taxes such as the federal Goods and Services Tax, the Quebec Sales Tax and harmonised sales tax are excluded.

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 ABCPI encompasses both elemental and aggregate indexes. The elemental indexes are calculated using a fixed weighted Laspeyres formula to combine prices for work-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 seven-city aggregate.

Indexes for the CMAs of St. John's, Moncton, Winnipeg and Saskatoon are not currently published.

Weights
Weights are assigned to each sampled work-in-place cost component. Separate weights are compiled for each CMA based on the detailed 2005 costs for each component in the representative apartment building project. The weight assigned to each sampled cost component reflects the share in the 2005 total project cost that was attributable to the sampled component and the other components that it represents.

Price-adjusted three-year moving averages of the annual building permit values issued for apartment building construction are used to weight the CMA-level indexes.

The weights assigned to each work-in-place cost component are derived from the detailed costs originally provided by cost consultants when the apartment building project was introduced in 2005.

The weights used to aggregate the CMA-level indexes are based on annual estimates of the value of building permits for new apartment building construction calculated by Statistics Canada's Investment, Science and Technology Division.

The CMA level weights used in calculating the 2016 ABCPI are based on a three-year moving average of building permit values for reference years 2013, 2014 and 2015.

The ABCPI 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 (2002=100) in the overlap period to the old index series (1997=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.

Quality evaluation

Prior to publication, the ABCPI 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 a price index and data are released as such, so that it is not possible to identify the suppliers of raw prices.

Revisions and seasonal adjustment

The ABCPI 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 (CMA) are obtained from a detailed breakdown of the work-in-place cost components of a representative apartment 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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