Non-Residential Building Construction Price Indexes (NRBCPI)

Detailed information for fourth quarter 2003

Status:

Active

Frequency:

Quarterly

Record number:

2317

The Non-residential Building Construction Price Index (NRBCPI) is a quarterly series measuring the changes in contractors' selling prices of non-residential building construction (i.e. commercial, industrial and institutional).

Data release - February 12, 2004

Description

The Non-residential Building Construction Price Index (NRBCPI) is a quarterly series measuring the changes in contractors' selling prices of non-residential building construction (i.e. commercial, industrial and institutional). The indexes relate to both general and trade contractors' work and exclude the cost of land, land assembly, design, development and real estate fees.

The NRCBPI series are useful in many ways. They aid in the interpretation of current economic conditions and are of particular interest to government agencies undertaking economic analyses and users concerned about the impact of price changes on capital expenditures. As well, the series are employed by the Canadian System of National Accounts in arriving at estimates of real gross domestic product or output for the non-residential building construction sector through deflation. Other uses include, updating construction project costs through escalation, assessing company performance, restating the value of invested capital, forecasting financial requirements for proposed projects and calculating real rates of return on investment.

Reference period: The time period for which the NRBCPI equals 100; currently this is the year 1997.

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

Data sources and methodology

Target population

The population for the NRBCPI consists of non-residential building construction general and trade contractors that are primarily engaged in the construction of non-residential buildings in the census metropolitan areas (CMA) of Halifax, Montréal, Toronto, Calgary, Edmonton, Vancouver and the Ontario part of the Ottawa-Gatineau CMA.

Instrument design

Data are collected by telephone survey using a price report and also by mail-out questionnaire. Both the price report and questionnaire were developed in the early 1980's in collaboration with respondents and industry specialists.

Sampling

This is a sample survey with a longitudinal design.

Respondents in the NRBCPI survey are obtained from a judgmental selection in each CMA surveyed. The target population of the NRBCPI consists of those non-residential building construction general and trade contractors that are primarily engaged in the construction of non-residential buildings. They must be well established and actively bidding and winning a share of the jobs in one of the seven CMA's included in the survey. These are usually members of local associations, such as construction or trade associations, and are well established, knowledgeable and capable in their pricing. As these respondents are testing the market on virtually a daily basis, it is felt that the responses from the rest of the industry would show very similar price movement.

Data sources

Responding to this survey is mandatory.

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

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.

The prices for most of the sample items surveyed for the NRBCPI are collected quarterly, usually over a two month period. In an effort to minimise respondent burden, prices are collected less frequently in those cases where price changes occur normally at other intervals (e.g. every six months). The price information collected relates to the quarter in question. The goal is to obtain the average bid price for each sample item for the reference quarter. In order to do so and still remain timely, the NRBCPI is derived from bid prices for the 15th of the middle month of the quarter or the nearest prior business day for comparable transactions. Technical specifications of sample items of construction work-in-place selected from the building models are used in the collecting of the data (e.g. Supply and install carpet, 100% first quality, overtuft cut nylon pile equal to 907 g/m2). In addition to the technical specification, the unit of measurement and quantity of the sample item and the type of building where the item is to be placed (e.g. 810 m2 of carpet to be installed in office building located in a specific CMA) are defined.

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

Error detection

In the day-to-day collection and processing of the index, great emphasis is placed on the examination and evaluation of prices. Survey staff and quantity surveyors of Statistics Canada knowledgeable of the construction industry watch closely developments in the markets. They review the behaviour of the reported price changes, both to validate them directly and to ensure they are representative of non-residential building construction prices movement as a whole. Outliers and incorrect or suspicious prices are identified during the initial data processing and then follow-ups are carried out with the respondents to ensure the appropriate information has been obtained.

Imputation

Imputation is generally carried out for missing data. In any given pricing period there will be missing data due to the fact that respondents are late reporting. In this situation, an estimate will be made based on the other information or the last reported price would be carried forward in the short term while survey staff and quantity surveyors of Statistics Canada seek clarification from the respondent.

Estimation

Weights

Composite indexes are weighted averages of trade group and building level indexes. For the NRBCPI, sample item weights (quantities) are derived from a detailed cost analysis of each structure wherein quantities or values for each model are expressed in 1997 price levels. The office, light factory and school models sample quantity weights used are derived from the specifications of structures built in the early 1990's, while those for the warehouse and shopping centre models are derived from structures built in the early 1980's. Weights used at the CMA, building category and seven CMA composite levels are derived from the Building Permits Survey (Survey ID 2802).

Prices

The price information collected represents what the respondent would bid on a fixed specification and quantity in the real market, where the effective date of pricing is the 15th of the middle month of each quarter. Selling 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. Basically, the prices collected 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. Union and non-union contractors are surveyed in those areas where both are active in the non-residential building construction industry.

Prices for certain materials, labour rates, rental of equipment, municipal charges and sales taxes are obtained from a variety of secondary sources, particularly for the mechanical and electrical trades. These sources include suppliers and distributors, national price books and in-house database information systems such the Industrial Product Price Index (Survey ID 2318). Union wage rates used are derived from those published in the Union Wage Rate Indexes for Major Construction Trades (Survey ID 2307). Non-union labour rates are not surveyed.

Quality evaluation

Each city is visited every 2 years in order to establish and maintain a good rapport with our sources of information and to ensure obtaining reliable information. Staff conducting surveys are specially qualified and trained to elicit proper response from respondents.

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 NRCBPI series are subject to a one quarter revision period after dissemination of a given quarter's data.

Data accuracy

Confidence intervals are not calculated due to the nature of the survey. Trade total and aggregate level indices are felt to be statistical reliable.

The statistical accuracy of the NRBCP depends on price data and weight information. Price data are obtained from a subjective sample survey, while the weights come from actual cost breakdowns of constructing representative building models at a certain point in time. Both kinds of input data are subject therefore to their own errors. The quality of the weight data depends on the timeliness of the models considered. In general, the longer the models are kept, the less they reflect the current changes in input mix and construction technologies.

The accuracy of the price data is determined by the ability to maintain a representative sample and the level of respondent co-operation. In this regard, the sample for the NRBCPI is reviewed on a continual basis using all available market information in order to identify and select relevant companies (i.e. those winning bids or contracts and doing work). In addition, the response rate for those companies selected is approximately 95%.

Documentation

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