Welcome to the BER / MFA Building Costs Information Service

Comprising the Haylett Index & the BER Building Cost Index 2017 TO 2021

This invitation to subscribe to our Building Costs Information Service is aimed at all professional quantity surveyors, building contractors, property developers, financial analysts, property researchers, project managers, engineers, property valuers, legal practitioners and insurance professionals.

* CPAP: Contract Price Adjustment Provisions (Haylett Index)

1. The Problem

Your client needs an accurate estimate of future costs, which are always uncertain. As a professional consultant you are required to provide it. If your estimates are too low, both you and your client might eventually experience considerable financial loss. If your estimates are too high, then the client could possibly decide not to continue with the project. The building project could be priced out of the market and your firm could then lose a commission. A reliable assessment of future cost escalation can contribute a great deal to the reduction of uncertainties surrounding the evaluation of building contracts extending over periods of more than one year.

2. The Solution

You can get reliable information about building costs by making use of our specialist knowledge. We have studied fluctuations of building cost indicators in depth for many years. Our long experience in business cycle analysis and economic forecasting applied to building is available to subscribers. Our main service consists of five-year forecasts of the course of the Haylett Index (Work Groups 180 & 181) and the BER Building Cost Index.

The Haylett Index represents the input costs of building contractors. The BER Building Cost Index reflects the tender prices of building contractors. The difference between these two key building indicators arises because the Haylett Index does not include the profit margins of building contractors. By contrast, the BER Building Cost Index is based on an analysis of accepted tender prices of building projects. Therefore, it includes the profit margins of building contractors and reflects market conditions in the South African building industry.

• How do we make these forecasts? These forecasts are compiled on a quarterly basis and subsequently interpolated to yield monthly index values. The annual percentage changes are also provided in our tables.
• Previous research has indicated that building costs fluctuate in a fairly predictable pattern in line with the business cycle in the overall economy. Therefore, to forecast the future course of these two key building cost indicators, the probable course of the business cycle must first be established. The interaction between the business cycle and fluctuations in these building cost indicators forms the basis of our forecasts.

3. How can this report help you?

This report can help you:

• To calculate the anticipated tender price of a building in future months (pre-tender escalation) by using our monthly forecast of the BER Building Cost Index, 2017 to 2021. The rates of the 22 representative items, on which the index is based, are also provided in our Reports.
• To calculate the anticipated Haylett escalation on projects (post-tender escalation) by using our monthly forecasts of the CPAP indices (Work Groups 180 & 181), 2017 to 2021;
• To determine the pre-estimated cost of a building with a reasonable degree of accuracy by combining these two aspects, together with the anticipated cash flow on the project.

In addition, our Report presents a graph of the expected periods of “over- and under-compensation” often experienced by contractors. This information can place your firm in a better position to advise interested parties about economic conditions expected during the course of the contract, as well as possible labour and materials bottlenecks that may arise.

4. Updates

All reliable forecasts should be updated on a regular basis. Ours are revised quarterly as soon as new data comes out, with the necessary adjustments made to the historical data. Subscribers receive an overview of general economic trends, as well as trends in the building industry, together with the monthly forecasts of these two key building cost indicators. These indices are provided on a national basis in tabular form. Subscribers receive a PDF copy of our Report. Our quarterly Reports appear in March, June, September and December.

5. The Annual Fee for this Forecasting Service

The annual fee in 2017 for the BER / MFA Building Costs Information Service is R4 190.35 + R586.65 VAT = R4 777.00 (VAT reclaim number 4960259994).

We sincerely believe that we are able to provide you with a useful and scientifically-based consultancy service.

We look forward to receiving your subscription and will be happy to help you if you need further assistance.

Yours sincerely,

Johan Snyman

Dr G J J Snyman
Director: Medium-Term Forecasting Associates