Construction Pricing Report -Trends Dashboard Whitepaper

Introduction

The rapid inflation of construction costs resulting from monetary policy impacts, tariff policy changes and supply chain disruptions of the 2020’s has prompted recurring questions from our clients regarding some of the pricing severity trends in the Claims Construction Cost Database. In response to those questions, Cotality has created a Pricing Report-Trends Dashboard to visualize those changes and allow clients to gain insights into various trends.

The Pricing Report- US and Canada Trends Dashboard was developed utilizing direct pricing data from the Claims Construction Cost Database and has been organized to display multiple views across material, labor, basket of goods, and common peril mix. The goal of this dashboard is to provide users with the ability to view trends at a Pricing Database (Region), State, or National level with various filter criteria for Categories, Components, or Trades. Monthly data is available within the Dashboard from January 2020 forward, with both Month-over-Month and Year-over-Year illustrations available for comparison.

Background-Claims Construction Database

Cotality Claims solutions utilize the Claims Construction Cost Database, which stores cost data for different resources and services relevant to the construction industry. To generate this data, Cotality’ s team of former contractors, estimators, custom builders, architects, engineers, adjusters, and appraisers conduct ground truth data collection and monitoring from more than 2,600 areas across the US and Canada.

The Cotality Construction Pricing Intelligence team regularly and independently research, collect, analyze, and curate thousands of construction material costs and industry trends to produce and maintain this comprehensive construction cost database. Among industry trends, Cotality relies on contractor surveys (both in the form of digital submissions and in-person interviews, as well as publicly and third-party privately sourced data.

Makeup of Basket of Goods and Scenarios

The phrase “Basket of Goods” is used to describe the collection of construction items selected to represent a cross-section of property claims items commonly selected within estimates by Cotality Claims users. Within the Pricing Report -Trends Dashboard, the Basket of Goods includes various construction Categories items: Cabinets & Countertops, Doors, Electrical, Fencing, Finish Carpentry, Floors, Framing, Insulation, Paint, Plumbing, Roofing, Siding, and Windows.

The associated Components (known within the Claims Construction Database as Action Items) within each respective Category were selected based on an analysis of frequently selected items and average quantities estimated across all Cotality claims experience. Actions can consist of labor costs only or labor and material costs. Typically, “Tear Out” and “Remove” Actions are inclusive of labor costs only. Estimate Scenarios have been created to group construction items related to Fire, Hail, Interior, and Water damage claims. For the respective Estimate (Peril) Scenarios, the Categories and Components filter within the Pricing Report – Trends Dashboard will update the included Items and associated Severity Cost within the Dashboard visualization. Both the Basket of Goods and Scenarios are the same composition for both the US and Canada versions.

Materials and Wage (Billing Rates) Item Actions within the Claims Construction Database are comprised of Materials, Labor and Equipment. This Pricing Report - Trends Dashboard can display Materials, Labor, or Severity (Materials and Labor) trends. Equipment is not displayed in this Dashboard, as not every Action Item contains Equipment Components, and it should be noted that Equipment Components generally represent <2% of total severity cost on most loss scenarios. Costs associated with taxes are also not displayed within this Dashboard, as those costs are added outside of the Claims Construction Cost Database, within the Estimate™ and/or Workspace™ products.

Material costs are included in most Actions apart from “Tear Out” and “Remove” Actions, which are labor costs only. Within this Pricing Report – Trends Dashboard, the Materials tab on the left-hand side of the Dashboard can be selected to only display changes in material costs. Accordingly, when the Materials tab is selected, “Tear Out” and “Remove” charges will reflect a $0 amount.

Similarly, billing rate (loaded labor rate) costs are included in almost all Actions. Within this Pricing Report – Trends Dashboard, the Wage tab on the left-hand side of the Dashboard can be selected to only display changes in billing rate costs. Accordingly, when the Wage tab is selected, only billing rates for the applicable trades within the Basket of Goods and/or Estimate Scenario will be displayed. Billing rates for various trades can be a single trade rate (Example: 1 Finish Carpenter), or a crew that is comprised of multiple trades (Example: 1 Tile setter & 1 Laborer).

For full details on the methodology utilized within the Claims Construction Cost Database, please see our Claims Methodology Whitepaper.

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If you have any questions or require assistance, please contact your Account Services Professional or insurancesolutions@cotality.com

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