United States Department of Transportation
i
Michigan Transportation Construction Price Index [Final Report I]
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2021-06-01
[PDF-3.45 MB]
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Alternative Title:Report on Development of Michigan Highway Construction Cost Index [Project Title From Cover]
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Edition:Final Report I, 1/1/2020 - 6/1/2020
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Abstract:A highway construction cost index (HCCI) measures the price changes over time in the highway construction industry. It allows Departments of Transportation (DOTs) to monitor highway construction market conditions so that they can more accurately project long-term funding needs. Michigan has not yet established a methodology for HCCI calculation or calculated historical index values. Hence, the primary goal of this research is to develop a state-level HCCI and historical trend index values for Michigan based on available bid data and establish a framework for their maintenance and use. A three-step methodology for Michigan highway construction cost index (MHCCI) calculation is proposed that encompasses (1) data cleaning, where inconsistent bid items, primarily caused by changes in specification books, are cleaned; (2) bid item sampling, which helps to ensure the reliability of the HCCI as an indicator of changing construction market conditions by statistically selecting the bid items suitable for calculation purposes; and (3) HCCI calculation, where the chained Fisher index formula is applied. Accordingly, the MHCCI at the state level, as well as indices for specific regions and item categories as defined by MDOT, are calculated. (These MHCCI and sub-MHCCIs provide further insights into Michigan's construction market conditions. For example, spikes in quarterly MHCCI correspond to higher costs for hot mix asphalt (HMA) pavement, earthwork, bases, and drainage features.) Moreover, the MHCCI is projected for the next five years, and a general discussion of the impacts of labor trends and economic factors such as unemployment on highway construction costs is provided. Finally, recommendations are provided to local units of government for their consideration as they endeavor to index and measure their highway construction costs.
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