html5-img
1 / 16

National Highway Construction Cost Index

National Highway Construction Cost Index. Federal Highway Administration October, 2010 Ralph Erickson. National Highway Construction Cost Index (NHCCI). Replaces the FHWA Bid-Price Index Uses Fisher Index to produce a quarterly index at the National level

hakeem-garrett
Download Presentation

National Highway Construction Cost Index

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. National HighwayConstruction Cost Index Federal Highway Administration October, 2010 Ralph Erickson

  2. National Highway Construction Cost Index (NHCCI) • Replaces the FHWA Bid-Price Index • Uses Fisher Index to produce a quarterly index at the National level • Bid-Tabs data provided by Oman Systems, Inc. • Possible extensions • State level indexes • Component indexes

  3. Fisher Ideal Index • “Ideal” refers to the Fisher Index addressing changing ratios of inputs • Captures the effects of changes in the relative importance of different cost items in highway construction over time • Minimize substitution biases

  4. Index Data Requirements • Product requirements for isolating cost changes • Specific • Consistent over time • Continuity of time series for individual products (pay-items) • Sufficiently representative (and large) set of observations for statistical confidence

  5. Oman Systems, Inc. (OSI) Data • Captures State web-posted bids awarded on highway construction contracts • Partial data back to 1993 • Covers all contiguous States since 2007 • Composed of State-defined pay-items

  6. What State Bid-Items Measure • Cost of • Material • Installation (capital and labor) • Overhead • Profit • Not a measure of pure price changes • Such as the BLS Producer Price Index • PPI (for H&S) now discontinued

  7. OSI Data • With judicious editing, OSI data can meet the above data requirements for indexes: • Remove pay-item records: • Non-standard • Unit of measure (lump sum) issues • Suspect categories

  8. Non-standard • Same pay item number but have different pay item descriptions (or units of measure) between projects • Cannot be included due to the differing types of work from project to project

  9. Unit of measure issues • There are some pay items where the unit of measure makes it difficult to track price changes • Example: • Landscaping • Lump sum =1 • The prices bid on these items are not related to price trends

  10. Suspect categories • Categories of work such as start-up costs, incentives, etc. • Mobilization • Alternates/Bonuses/Time

  11. Further Data Edits • Eliminate records where pay-items: • Lack eight quarters of consistent data • Eliminate records where pay-items fail established variance tests • Rationale is to reduce data entry errors

  12. Edit Example • Eliminate records for pay-items : • Maximum observed price is more than 16 times the minimum price • Coefficient of variation is greater the 42 when evaluating the log of change in price times 100 • The “16” and “42” above vary by run

  13. Effect of the Edits • Overall effect of the edits (although large in number) still leaves a useful dataset for constructing the NHCCI • Remaining value is representative of all bid tabs expenditures with almost 40% of the original observations still available • The distribution of the expenditure categories which determine the weights in the NHCCI are largely unaffected by the edits

  14. Summary • The new FHWA cost index • Data characteristics • OSI data • Edits to the OSI data • Results

  15. NHCCI Results

  16. Resources • Ralph Erickson • 202-366-9235 • ralph.erickson@dot.gov http://www.fhwa.dot.gov/ohim/nhcci/

More Related