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Changes in the availability of source data for the CEPIant Cost Index periodically necessitate updates to how the index is calculated
The Chemical Engineering Plant Cost Index (CEPCI) is a widely used tool for comparing plant construction costs in the chemical process industries (CPI) between different time periods since 1963. Over its history, the underlying details of the index have been revised and adjusted several times. For a discussion of these changes, readers are directed to Chem. Eng., January 2002, pp. 6269. This article aims to explain the most recent change that has been made to the CEPCI.
The CEPCI
The CE Plant Cost Index is actually a composite that consists of four subíndices: Equipment; Construction Labor; Buildings; and Engineering and Supervision (see Table 1). The Equipment subindex s itself a composite of seven other indices, each focusing on a particular category of process equipment. The component indexes are compiled, and weighting factors are applied to make up the Equipment subindex. The three other subindexes are compiled independently from appropriate inputs. Information on these four indexes has been reported running back to 1947.
After weighting and normalizing the values, the four sub-indexes are combined to constitute the CEPCI. For each year in the past, an annual value for the CEPCI is calculated based on the arithmetic mean of 12 monthly values for a given year. CEPCI data from previous years can be found and downloaded at www. chemengonline.com/pci.
BLS data
As many users of the index know, the CEPCI uses specifically selected producer price index (PPI) data and other data from the U.S. Bureau of Labor Statistics (BLS; Washington, D.C.; www.bls.gov), which is a part of the U.S. Department of Labor. Relevant PPI information reported by the BLS is collected by Chemical Engineering editors and used to calculate the monthly changes to the CEPCI. BLS says it is the "principal Federal agency responsible for measuring labor market activity, working conditions, and price changes in the economy." It collects and analyzes many types of economic information to assist decision-making in the public and private sectors.
A portion of the input data for the CEPCI is derived from the BLS's PPI data. As the BLS defines them, producer price...