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Construction Inflation Rate (CIR)

The projected Construction Inflation Rate (CIR) used to estimate the future cost of remediation for components and their elements.

The CIR factors in materials, labour, demolition and ancillary costs inclusive of inspections, engineer costs, permits, third-party warranties etc.

The CIR includes contractor mobilisation and front end costs, overhead and profit, as well as detailed schedules of value inclusive of the review of drawings, details, specifications and material schedules. Contingencies, consulting, project management and general contractor fees are also included, if any.

Triangulation of Statistics Canada, Marshall and Swift, RS Means resources are used to establish the annual rate.

The average annual increase in construction costs over the last century has been 3.14 percent.

The CIR is not to be confused with consumer price inflation that reflects the cost of personal goods.

The CIR is determined on an annual basis to be of use in planning fiscal-year changes.

A CIR’s value is best seen as being valid until the next mandated depreciation report in three years’ time.

Best-practice reserve fund planning does not vary the rate over the scenario’s 30 year projection, as an inflation factor is an estimate that is statistically tentative to begin with.

 

 

About Author: Jean-François

With experience gained in construction, project management, field reviews, inspections, report writing and as strata president, J.-F. has cross-industry expertise guaranteeing that you will participate in a process geared to improving the corporation's finances and to setting the condo | strata board | council's planning to stand the test-of-time.