Introduction

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This report contains measures of price change for four major categories:

1. elements of construction costs
2. outputs of construction industries
3. capital expenditures
4. consulting engineering

Elements of construction costs include price indexes for the industries that produce most of the construction materials in Canada and unionized building trades workers.

Measures of price change for the outputs of construction industries cover houses (table 5), apartment construction (table 6) and selected non-residential buildings (table 7).

Price changes for capital expenditures are classified, as in the System of National Accounts, into construction and machinery and equipment. When combined with overhead costs, they become plant price indexes. Measures applying to total capitalized cost for certain categories of investment are shown in table 9 for electric utilities.

Consulting Engineering Services Price Indexes (table 10) are published for ten fields of specialization as well as for regional, domestic and foreign markets.

Uses

These measures are useful in analysing price change in construction and fixed capital formation, for contract escalation and for estimates of reproduction cost, either for recosting budgets or for revaluing fixed assets. Data quality, concepts and methodology describing the concepts and practices used in price index preparation are included.

Index formula

Price indexes in this publication have been calculated using either a fixed weight formula or the Chain-Laspeyres index formula of the following general type. (See Appendix I and II)

Fixed weight

Figure 1: Fixed weight

The fixed-weight Laspeyres price index I in time t and relative to time base period 0 is given by the summation over all components, that is, i equal to 1 to n, of the relative importance of the i-th component (Wi), times the price relative of the i-th component in time t relative to time base period 0.

The relative importance of the i-th component, Wi, is given by the following; at the numerator: Total Expenditure (P0 times Qk) in Period k on the i-th component expressed in base period 0 prices; and the denominator: the summation over all components, i equal to 1 to n, of the Total Expenditure (P0 times Qk) in Period k on the i-th component expressed in base period 0 prices.

The summation over all components, i equal to 1 to n, of the relative importance of the i-th component (Wi) is equal to 1.

Chain-Laspeyres Index

Figure 2: Chain-Laspeyres Index

The Chain-Laspeyres price index I in time t is given by multiplication of the following products;

1. at the numerator: summation over all components, that is, i equal to 1 to n, of the price index I of the i-th component in time t (which may also be calculated in a similar manner to It) times the relative importance W of the i-th component in time (t minus 1); and at the denominator: summation over all components, that is, i equal to 1 to n, of the price index I of the i-th component in time (t minus 1) times the relative importance W of the i-th component in time (t minus 1);
2. at the numerator: summation over all components, i equal to 1 to n, of the price index I of the i-th component in time (t minus 1) times the relative importance W of the i-th component in time (t minus 2); and at the denominator: summation over all the components, that is i equal to 1 to n, of the price index I of the i-th component in time (t minus 2) times the relative importance W of the i-th component in time (t minus 2);
3. Price index products analogous to (1) and (2) are formed for more distant periods.

The Chain Laspeyres price index I at time t thus can be simplified to the multiplication of the following two products;

1. At the numerator; summation over all components, i equal to 1 to n, of the price index I of the i-th component in time (t) times the relative importance W of the i-th component in time (t minus 1); and at the denominator: summation over all components, i equal to 1 to n, of the price index I of the i-th component in time (t minus 1) times the relative importance W of the i-th component in time (t minus 1);
2. Price Index I at time (t minus 1).

Figure 3: The summation over all components

Note in the above that the Chain-Laspeyres index formula is used to reflect the changing relative importance of index component. The above example showing a single level of index aggregation can be extended to two or more levels.

Availability of indexes

Unless otherwise stated, statistics contained in this publication are available from the time reference period to the present. Most figures printed here are also accessible on CANSIM, Statistics Canada's machine readable data base and retrieval system. Availability of data on CANSIM is announced in the Statistics Canada Daily (on the Internet). Monthly and quarterly data are released 5-6 weeks and 6-8 weeks following the end of the reference period, respectively. In the interim, index numbers may be obtained from the regional offices, directly from the Producer Prices Division, or from CANSIM. CANSIM Matrix and data bank access code numbers are provided in each table of this publication.

Indexes available through cost recovery

Construction Building Materials Price Index, Residential and Non-Residential and Construction Machinery and Equipment Price Index (Imported) are available on a cost recovery basis.

For certain terminated series where continuity could not be assured, a proxy series has been created as a possible alternative, e.g. Chemical and Mineral Process Plant Price Index.

Revisions

Price indexes are aggregations of representative price movements combined as weighted averages. Revisions to published weights are usually restricted to major renovations of statistical series. Such changes are described in technical notes available with the first release of a new or revised series of indexes. Exceptions to this practice are stated in the Data quality, concepts and methodology section.

Revisions to prices are, on the other hand, a regular part of index production. The symbol "r" only appears when revisions have been made outside the limits normally applying for the table in question.

See individual survey revision policies in Data quality, concepts and methodology section.