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FAQs from the 2022 Construction Cost Changes Webinar, Part 1

Every January, members of our expert data team present updates to the RSMeans dataset to construction industry professionals via our Construction Cost Changes Webinar. And each year, amid the discussion of material cost changes and market analysis, we receive hundreds of written questions from attendees.

While we do our best to answer as many of these questions as possible in the live discussion, there are inevitably too many submissions to address during the live presentation. So, we’ve gathered some of the most frequently asked questions for the live session and asked our presenters  – Bob Mewis, Gordian’s Principal Engineer, and Sam Giffin, our Director of Data Operations – to answer them here.

Here are seven FAQs from the 2022 Construction Cost Changes Webinar:

1. What geographical areas are included in RSMeans data?

The RSMeans dataset covers nearly 1,000 local markets across the United States, Canada, Puerto Rico and the U.S. Virgin Islands. While the base line item data for material, labor and equipment costs is presented at a national average cost, all line items in RSMeans data can be indexed to those local markets.

2. How does RSMeans data track cost changes throughout the calendar year, and how can I account for those changes in my estimates?

The City Cost Index (CCI) is the RSMeans data tool used to track cost changes throughout the calendar year. The CCI is updated quarterly, and every product from RSMeans data includes the CCI.

3. What is the CCI, and how do I apply it to cost data?

The City Cost Index is a quarterly data product designed to answer the question, “How much higher/lower are costs in my city relative to the national average?,” and it can be used to index RSMeans data estimates to better reflect localized pricing. Each quarter, the RSMeans data research team collects localized prices from cities across the United States and Canada, which are then compared to the national average and the current year’s annual release data to create the CCI.

With cost books, you can manually apply the CCI to your estimates to account for cost variations referring to the table included in the cost book or by downloading the most recent CCI quarterly update from rsmeans.com. If you are using RSMeans Data Online, the most up-to-date CCI calculation is automatically applied to line items in your estimate once you select your location in the program.

Click here to watch the full 2022 Construction Cost Changes webinar and hear how the prices of specific materials have risen or fallen over the past year, plus gain insight into how the the construction industry market might shift in 2022.

4. What are the differences between the CCI, location factors and the historical cost index?

The City Cost Index shows a factor for Material, Installation and Total with rows representing multiple CSI divisions. Additionally, the CCI shows a Material Total, Installation Total and a Total Weighted Average. Location Factors, on the other hand, are a simplified version of the CCI and are represented by the Total Weighted Average.

The Historical Cost Index (HCI) is a better measure of the changes in construction costs over an extended period of time. Whereas the CCI is based on a comparison of the national average for the given data year, the HCI is based upon a comparison to the national average in 1993. The HCI indexes how much higher costs are currently when compared to the 1993 national average.

5. How are RSMeans data labor rates calculated, and what influences year-over-year changes?

The RSMeans dataset’s wage rates represent national average Union scale wages in the United States and are determined using an average of 30 data points from 30 major U.S. cities. Union rates are set via collective bargaining agreements, which our data team members research but take no part in, allowing us to present unbiased data.

Our dataset has line items in Division 1 that can be used to adjust for unique labor conditions, which may change year-to-year. In the last year, changes in labor rates may have been affected by ongoing skilled labor shortages, an uptick in voluntary unemployment and regional or corporate vaccine mandates.


6. How is the COVID-19 pandemic continuing to affect the construction industry? Is there a COVID modifier in this year’s RSMeans data?

The pandemic has impacted virtually every aspect of construction – as well as every aspect of our normal lives. Nearly every material cost, equipment price and labor rate change in the 2022 RSMeans dataset can be attributed at least in part to the persisting effects of COVID-19 on the world. Two more recent pandemic-related challenges attributing to the increased cost of construction work are rising fuel prices and the labor conditions mentioned above.

We are still including Infectious Disease Precautions (sometimes referred to as the COVID-19 Modifier) in all 2022 RSMeans data products. This section of data can help you adjust your estimates to account for worksite practices that limit the spread of infectious diseases. You can read more about what Infectious Disease Precautions are and how you can use them here.

7. How do natural disasters tend to impact the markets for construction materials, equipment and labor? Is there anything I should do to account for that in my estimates?

Recovery efforts for natural or man-made disasters tend to follow a cycle. Typically, post-disaster, there is a rush to button up, make safe, clean up or perform emergency repairs. Then, there is usually a lull in construction repairs while architects, engineers, municipalities and developers prioritize projects to determine what needs to be done and when. The industry uses this lull to replenish, restock and prepare for forthcoming rounds of construction. Finally, construction picks up again as rebuilding efforts continue, anywhere from six months to two years after the disaster.

Our research shows that while some prices do go up, construction costs tend not to rise as significantly as you may think in the wake of disasters. Quarterly updates to the RSMeans data City Cost Index will show changes in material, wage and equipment costs in those areas affected by a disaster. So applying the most up-to-date CCI calculation to your estimates for such areas will help you account for those changes.

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About Gordian

Gordian is the leading provider of Building Intelligence™ Solutions, delivering unrivaled insights, robust technology and expert services to fuel customers’ success through all phases of the building lifecycle. Gordian created Job Order Contracting (JOC) and the industry-standard RSMeans Data. We empower organizations to optimize capital investments, improve project performance and minimize long-term operating expenses.