An Analysis of Some Construction Price Index Methodologies - ARCHIVED

Price indexes are an essential tool for the analysis of real output in the construction industry and for relative performance and productivity measures. They provide a succinct picture of the past and a useful framework for forecasting future developments. Government requires such price indexes as part of the information used in the development of its policies including support programs to provincial governments. These indexes are also used in construction contracts to adjust for cost fluctuations and inflation. It is however, a difficult task to obtain satisfactory indexes reflecting 'pure' price changes for construction. The units built are nonstandard and heterogeneous with large variations in quality, size, design and construction techniques. Consequently, there are many different types of indexes developed from information recorded in the construction industry.

This paper summarizes the various ways in which construction price indexes can be compiled, and examines and compares the performance of some of the indexes currently produced at Statistics Canada. It is hoped that the comparisons would permit an assessment of the various types of construction indexes examined for specific applications.