What are the methods of construction cost living index with an example for each?

The construction cost living index (CCLI) measures the percentage change in the cost of construction materials, labor, and equipment. It is used to adjust construction costs for inflation. There are several different methods for calculating the CCLI, each with its own advantages and disadvantages.

1. Materials index

The materials index measures the change in the cost of construction materials. This index is based on a survey of construction material prices, such as lumber, cement, and steel. The materials index is calculated by taking the average of the price changes for all of the materials in the survey.

For example, if the price of lumber increases by 5%, the price of cement increases by 3%, and the price of steel increases by 2%, then the materials index would be 3.3%. This means that the cost of construction materials has increased by an average of 3.3%.

2. Labor index

The labor index measures the change in the cost of construction labor. This index is based on a survey of construction worker wages. The labor index is calculated by taking the average of the wage changes for all of the workers in the survey.

For example, if the wages of carpenters increase by 4%, the wages of plumbers increase by 3%, and the wages of electricians increase by 2%, then the labor index would be 3%. This means that the cost of construction labor has increased by an average of 3%.

3. Equipment index

The equipment index measures the change in the cost of construction equipment. This index is based on a survey of construction equipment prices, such as cranes, bulldozers, and trucks. The equipment index is calculated by taking the average of the price changes for all of the equipment in the survey.

For example, if the price of cranes increases by 6%, the price of bulldozers increases by 5%, and the price of trucks increases by 4%, then the equipment index would be 5%. This means that the cost of construction equipment has increased by an average of 5%.

4. Composite index

The composite index is a combination of the materials index, the labor index, and the equipment index. The composite index is calculated by taking the average of the three indexes.

For example, if the materials index is 3.3%, the labor index is 3%, and the equipment index is 5%, then the composite index would be 3.8%. This means that the cost of construction has increased by an average of 3.8%.

The composite index is the most commonly used CCLI. It provides a comprehensive measure of the change in the cost of construction.