The Benchmark for
Construction Escalation
Hedging.
CEH Standard defines the methodology, data inputs, and calculation framework for pricing construction cost escalation risk. Used by developers, lenders, and capital markets participants nationwide.
Overview
Why a Standard
Was Needed
Construction cost escalation is one of the largest unhedged risks in real estate development. Material costs, labor rates, supply chain shocks, and regional inflation create unpredictable exposure from groundbreaking through TCO.
Until CEH Standard, there was no agreed-upon methodology for quantifying, pricing, or hedging this risk. Lenders and developers were using inconsistent assumptions — often leading to blown budgets and disputes at draw.
CEH Standard provides the shared language that capital markets needed: a transparent, auditable, and regularly updated benchmark for construction escalation risk.
Methodology
How the Standard Works
A four-factor model built on public and proprietary data sources, updated monthly.
Materials Price Index
Tracks 200+ construction materials via BLS PPI data, supplier invoices, and commodity futures. Weighted by asset class and regional procurement patterns.
Labor Rate Escalation
Union and non-union wage data aggregated from 48 metro areas. Adjusted for prevailing wage requirements, trade-specific supply constraints, and overtime premiums.
Supply Chain Risk Factor
Quantifies lead time volatility, import dependency, and substitution risk for critical path materials. Updated weekly via supplier network data.
Regional Inflation Overlay
CPI and PPI regional variants applied at MSA level. Captures local permit activity, contractor capacity, and competitive bidding conditions.
Use Cases
Who Uses CEH Standard
Developers
Lock in escalation assumptions at project underwriting. Avoid budget disputes with lenders by referencing the Standard as a neutral benchmark.
Construction Lenders
Require borrowers to reference CEH Standard in loan docs. Establish clear escalation reserves and trigger conditions tied to the index.
Capital Markets
Price construction risk into CMBS, CLO, and preferred equity structures. CEH-referenced instruments allow apples-to-apples risk comparison.
Access
Request Access
CEH Standard is available to qualified developers, lenders, and institutional capital participants. Contact us to discuss licensing and data access.