Ashuri, B; Shahandashti, S M and Lu, J (2012) Empirical tests for identifying leading indicators of ENR construction cost index. Construction Management and Economics, 30(11), pp. 917-927. ISSN 1466433X
Abstract
Engineering News-Record (ENR) publishes its Construction Cost Index (CCI) monthly. CCI is the weighted average price of construction activities in 20 United States (US) cities. CCI has widely been used for cost estimation, bid preparation and investment planning. Cost estimators and investment planners are not only interested in the current CCI, but also are interested in forecasting changes in CCI trends. However, CCI is subject to significant variations that are difficult to predict. An important step towards forecasting CCI trends is to identify its leading indicators. The research objective is to identify the leading indicators of CCI using empirical tests. The results of Granger causality tests show that consumer price index, crude oil price, producer price index, GDP, employment levels in construction, number of building permits, number of housing starts and money supply are the leading indicators of CCI. The results of Johansen's cointegration tests show that money supply and crude oil price are the leading indicators with long-term relationships with CCI. These findings contribute to the body of knowledge in CCI forecasting. CCI can be predicted more accurately using its leading indicators. Cost estimators and capital project planners can benefit from better forecasting through reduction in uncertainty about future construction costs.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | cointegration; cost estimation; enr construction cost index; granger causality; leading indicator |
| Index terms: | capital project, planner, cost estimator, crude oil, forecasting, construction cost, employment, construction activity, variation, construction cost index, body of knowledge, bid preparation, housing, Granger causality test, United States, cost estimating, cointegration |
| Subjects: | management, factor and component analysis, contractual condition, Geography, profession, construction type, cost indicators, environmental resource management, bidding, knowledge management, construction operations, strategic project management, financial and cost management, prediction and forecasting, economic analysis |
| Topics: | Site Management, Contract Administration, Human Resources, Design Practice, Sustainability, Construction Technology, Procurement, Roles and Professions, Information Management, Geographical Context, Project Management, Research Practice, Cost Management |
| Descriptive scope: | 3 PCA |
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