Critical Analysis of Current Practices of Highway Construction Cost Index (HCCI) Calculation and Utilization

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Conference Proceeding

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A proper understanding of the local construction market is essential for making appropriate project budgeting and planning decisions. State highway agencies typically use highway construction cost indexes (HCCIs) to understand the current market conditions. In the U.S. highway construction industry, the Federal Highway Administration (FHWA) pioneered the concept of a HCCI as an indicator of the national construction market. State Departments of Transportation (DOT) also started developing their state level HCCIs to better represent their state level construction markets. But, some state DOTs noted the lack of guidance to develop and update their HCCIs. This paper summarizes literature review and nationwide questionnaire survey results to identify the current practices of calculating and using HCCIs. There are two methods to generate basket of construction items for HCCI calculation: a) categorized market basket and b) item level market basket. The Fisher index is the most popular indexing formula among the state DOTs and is also recommended by the FHWA and International Monetary Fund (IMF). Despite many potential users of HCCIs, the current use of HCCIs is very limited in state DOTs.


San Juan, Puerto Rico