Construction cost indexing

Construction cost indexing is a method used to track changes in the prices of building materials, labor, and other expenses over time. It provides a standardized way to estimate how much construction projects will cost at different points in time, allowing owners, contractors, and lenders to plan budgets accurately. By comparing current costs to a base period, the index helps manage financial risks and adjust project estimates as market conditions fluctuate. In essence, it's a tool that reflects the overall trend of construction costs, ensuring more accurate and timely financial planning.