### APPENDIX 6A. DETAILED DATA FOR EQUIPMENT PRICE MARKUPS

TABLE OF CONTENTS

6A.1 INTRODUCTION ........................................................................................................... 6A-1 6A.2 DETAILED WHOLESALER COST DATA .................................................................. 6A-1 6A.3 DETAILED MECHANICAL CONTRACTOR DATA.................................................. 6A-2 6A.4 DETAILED GENERAL CONTRACTOR COST DATA............................................... 6A-3 6A.5 ESTIMATION OF WHOLESALER AND CONTRACTOR MARK-UP STANDARD DEVIATIO NS .............................................................................................................. 6A-4

LIST OF TABLES

Table 6A.2.1 Disaggregated Costs and Expe nses for Wholesalers ..................................... 6A-1 Table 6A.3.1 Mechanical Contractor Expenses and Markups Used To Scale the Incremental Markups ..................................................................................... 6A-3 Table 6A.4.1 General Contractor Expe nses and Markups................................................... 6A-4 Table 6A.5.1 Wholesaler Incremental Mar kup Standard Deviation.................................... 6A-5 Table 6A.5.2 Mechanical Contractor Baseline Mark-ups by State, 2002 ........................... 6A-5 Table 6A.5.3 Residential General Cont ractor Baseline Mark-ups by State, 2002 .............. 6A-7 Table 6A.5.4 Commercial General Contr actor Baseline Mark-ups by State, 2002............. 6A-8

6A-i

### APPENDIX 6A. DETAILED DATA FOR EQUIPMENT PRICE MARKUPS

6A.1 INTRODUCTION

This appendix provides furthe r details on information pres ented in Chapter 6, markups for equipment price determination.

6A.2 DETAILED WHOLESALER COST DATA

Based on data provided in the 2008 Profit Report (2007 Data) of the Heating Airconditioning & Refrigeration Distributors Intern ational (HARDI), Table 6.4.1 of Chapter 6, section 6.4, Estimation of Wholesale Mark-ups shows wholesaler revenues and costs in aggregated form. Table 6A.2.1 below provides the complete breakdown of costs and expenses as provided in the 2008 Profit Report (2007 Data) . The column labeled “Scaling” in Table 6A.2.1 indicates which expenses the U.S. Department of Energy (DOE) assumed to scale with only the baseline markup and which it scaled with bot h the baseline and incremental markups. As described in Chapter 6, section 6.4, only those expe nses that scale with baseline and incremental costs are marked-up when there is an incremental change in equipment costs.

Table 6A.2.1 Disaggregated Costs and Expenses for Wholesalers

Item Percent of Revenue % Scaling
Cost of Goods Sold 73.0 Gross Margin 27.0 Payroll Expenses 15.6 Baseline
Executive Salaries & Bonuses 1.9 Branch Manager Salaries and Commissions 1.3
Sales Executive Salaries & Commissions 0.5
Outside Sales Salaries & Commissions 2.3 Inside/Counter Sales/Wages 2.6 Purchasing Salaries/Wages 0.4 Credit Salaries/Wages 0.2 IT Salaries/Wages 0.2 Warehouse Salaries/Wages 1.7 Delivery Salaries/Wages 0.7 All Other Salaries/Wages & Bonuses 1.2 Payroll Taxes 1.1 Group Insurance 1.1
Benefit Plans 0.4 Occupancy Expenses 3.1 Baseline Utilities: Heat, Light, Power, Water 0.4 Telephone 0.3 Building Repairs & Maintenance 0.2 Rent or Ownership in Real Estate 2.2



### 6A-1

### Table 6A.2.1 (contd)

Item Percent of Revenue % Scaling Other Operating Expenses 5.2 Baseline & Incremental Advertising & Promotion 0.5 Insurance (business liability & casualty) 0.2 Depreciation 0.4 Vehicle Expenses 1.1 Personal Property Taxes/Licenses 0.1
Bad Debt Losses 0.3 All Other Operating Expenses 2.6 Total Operating Expenses 23.9 Operating Profit 3.1 Baseline & Incremental
Other Income 0.5 Interest Expense 0.9 Other Non-operating Expenses 0.0
Profit Before Taxes 2.7 Source: Heating, Air-conditioning & Refrigeration Distributors International. 2008. 2008 Profit Report (2007 Data). Note: The wholesaler costs and expenses are percentage values as opposed to the per-dollar of sales revenue values shown in Tab le 6.4.1.



### 6A.3 DETAILED MECHANICAL CONTRACTOR DATA

Based on data in the 2005 edition of Fina ncial Analysis for the HVACR Contracting Industry, published by the Air Conditioning Contr actors of America (ACCA), Tables 6.6.1, 6.6.2, and 6.6.3 of Chapter 6, section 6.6, Estimation of Mechanical Contractor Markups provide mechanical contractor revenues and costs in a ggregated form by ‘Cost of Goods Sold’ and ‘Gross Margin.’ The Financial Analysis report did not provide a more disaggregate tabulation of these costs and expenses. As in section 6A.2, th e gross margin category was assumed to scale only with the baseline markup.

The more disaggregated breakdown of costs used to scale the incremental markup are shown in Table 6A.3.1 by both dollar value a nd percentage terms from the 2002 Census of Business. As the ACCA data were used to calc ulate the baseline markup, only the categories in the ‘Scaling’ column that scaled with both th e baseline and incremental markups are marked.

6A-2

### Table 6A.3.1 Mechanical Contractor Expens es and Markups Used To Scale the Incremental Markups

Item Dollar Value $ Percentage % Scaling Total Cost of Equipment Sales 77,482,735 66.01

Cost of materials, components, and supplies 37,813,136 32.21 Payroll, construction workers 25,619,932 21.83
Cost of construction work subcontracted out to others 12,462,622 10.62 Cost of selected power, fuels, and lubricants 1,587,045 1.35 Gross Margin 39,898,412 33.99 Payroll Expenses 19,648,990 16.74 Fringe benefits, all employees 9,326,660 7.95 Payroll, other employees 10,322,330 8.79 Occupancy Expenses Rental cost for machinery, equipment, and buildings + Purchased communication services 2,926,539 2.49

Other Operating Expenses 2,969,716 2.53 Baseline & Incremental Depreciation charges during year 1,666,352 1.42 Cost of repairs to buildings and other structures + Cost of repairs to machinery and equipment 1,303,364 1.11

Net Profit Before Income Taxes 14,353,167 12.23 Baseline & Incremental Source: U.S. Census Bureau. 2002. Plumbing, Heating, and Air-Conditioning Contractors: 2002. Report EC02-231-238220, Table 4. D etailed Statistics for Establishments: 2002. Note: Mechanical contractor costs and expenses are first presented as total dollar values and than converted to percentage values. This is in contrast to the per dollar of sales revenue values shown in Table 6.5.4.



### 6A.4 DETAILED GENERAL CONTRACTOR COST DATA

Based on U.S. Department of Census data, Table 6.5.1 of Chapter 6, section 6.5, General Contractor Expenses and Markups shows general contractor revenu es and costs in aggregated form. Table 6A.4.1 below shows the complete breakdown of costs and expenses provided by the U.S. Department of Census. The column labeled “Scaling” in Table 6A.4.1 indicates which expenses DOE assumed to scale with only the baseline markup and which scaled with both the baseline and incremental markups. As described in Chapter 6, section 6.6, only those expenses that scale with baseline and incremental costs are marked-up when there is an incremental change in equipment costs.

The fact that the mech anical contractor relative standard deviation is 3.7 percent of the baseline markup implies that the standard deviation for the replacement and new markets, relative to their respective baselin e markups, is also 3.7 percent.

DOE also assumed that wholesaler, genera l contractor, and mechanical contractor incremental markups have the same relative standa rd deviation as wholesaler, general contractor, and mechanical contractor baseline markups. It us ed this assumption to calculate the standard deviation of wholesaler, general contractor, a nd mechanical contractor incremental markups.

6A-3

### Table 6A.4.1 General Contract or Expenses and Markups

Item Dollar Value $ Percentage % Scaling Total Cost of Equipment Sales 187,494,802 77.54 Baseline

Cost of materials, components, and supplies 36,592,170 15.13 Payroll, construction workers 16,516,884 6.83 Cost of construction work subcontracted out to others 132,835,992 54.94 Cost of selected power, fuels, and lubricants 1,549,756 0.64 Gross Margin 54,310,758 22.46 Payroll Expenses 19,517,206 8.07 Baseline Fringe benefits, all employees 6,823,998 2.82 Payroll, other employees 12,693,208 5.25 Occupancy Expenses Rental cost for machinery, equipment, and buildings + Purchased communication services 3,737,333 1.55 Baseline

Other Operating Expenses 2,747,096 1.14 Baseline & Incremental Depreciation charges during year 1,318,065 0.55 Cost of repairs to buildings and other structures + Cost of repairs to machinery and equipment 1,429,031 0.59

Net Profit Before Income Taxes 28,309,123 11.71 Baseline & Incremental
Source: U.S. U.S. Census Bureau. 2002. Commercial and Ins titutional Building Construction: 2002. Report EC02-231-236220, Table 4. Detailed Statistics for Establishments: 2002. Note: General contractor costs and expenses are first presented as total dollar values and than converted to percentage values. This is in contrast to the per dollar of sales revenue values shown in Table 6.6.1.



### 6A.5 ESTIMATION OF WHOLESALER AND CONTRACTOR MARK-UP STANDARD DEVIATIONS

DOE used U.S. Census survey data to estimate CAC/CHP equipment wholesaler, general contractor, and mechanical contr actor markup distributions. In the case of wholesalers, survey data were available only in summary form at th e national level (Table 6A .5.1). In the case of mechanical and general contractors, the survey data include state-level heating, ventilating, and air-conditioning (HVAC) total value of work, numbe r of firms, cost of goods sold, cost of subcontract work, cost of materials, and construction payroll as shown in Table 6A.5.2, Table 6A.5.3, and Table 6A.5.4.

DOE estimated the size of the baseline mar kup distribution from national statistics and the standard deviation of across-state markups. DOE defined the relative standard deviation as the standard deviation as a percent of the baseline markup. The wholesale markup standard deviation is 5.7 percent, derived from the av erage markup and publishe d relative markup of 7.7 percent, as shown in Table 6A.5.1. The mechani cal contractor markup st andard deviation is 5.6 percent and the relative markup is 3.7 percen t, derived from the average of state-level markups and their standard deviation in Table 6A.5.2. The residential general contractor markup standard deviation is 9.3 percent and the relative standard deviati on is 6.8 percent, derived from the average of state-level markups and their st andard deviation in Table 6A.5.3. The commercial general contractor markup standard deviation is 9.5 percent and th e relative standard deviation is 7.5 percent, derived from the average of state- level markups and their standard deviation in Table 6A.5.4.

6A-4

### Table 6A.5.1 Wholesaler Incremental Markup Standard Deviation Number of Firms Sales ($000) Cost of Goods Sold ($000) Gross Margin ($000) 5180 17,715,524 Cv for 4237 = 1.6% 12,789,493 4,627,533 Cv for 4237 = 7.7% Since Cv = σ / μ , σ = Cv / μ = 0.077 / 1.362 = 0.057 Where: Cv = Coefficient of variation

σ = Standard deviation
μ = mean value Sources: U.S. Census Bureau. 2005. Sector 42: Wholesale Trade: Subject Series - Misc Subjects: Gross Margin and its Components for Merchant Wholesalers for the United States: 2002 @ http://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-_skip=0 &

- ds_name=EC0242SXSB06&-_lang=en U.S. Census Bureau. 2005. Annual Report for Wholesale Trade: 2002-2003. Report BW(MSBO)/04-A. http://www.census.gov/svsd/www/msbo2003.pdf U.S. Bureau of Census. 2005. Table 4. Estimated Coefficients of Variation of Annual Sales, End-of-Year Inventories, Purchases, Gross Margins, and Gross Margin/Sales Ratios for Merchant Wholesalers, excluding Manufacturers' Sales Branches and Offices (MSBOs) @ http://www.census.gov/svsd/www/atstable4.txt Notes: The data are at the national level. NAICS 4237 applies to Hrdwr, plumb & heat equip & supp merchant wholesalers and 42373 applies to Warm air heating & AC equip me rchant wholesalers. Cv = coefficient of variation.


### Table 6A.5.2 Mechanical Contractor Baseline Mark-ups by State, 2002

State Number of Firms Value of Construction ($000) Cost of Subcontract Work ($000) Cost of Materials ($000) Construction Payroll

($000) Baseline Markup Relative Markup Alabama 1,425 1,490,919 151,240 547,075 308,967 1.480 0.981 Alaska 229 384,009 68,230 110,136 73,456 1.525 1.010 Arizona 1,510 1,958,430 141,885 776,733 420,945 1.462 0.969 Arkansas 1,045 799,157 65,491 305,198 154,099 1.523 1.009 California 7,272 12,346,970 1,172,183 4,018,408 2,701,227 1.565 1.037 Colorado 2,015 2,354,183 235, 012 821,432 547,419 1.468 0.973 Connecticut 1,321 1,580,361 156,607 505,340 320,528 1.609 1.066 Delaware 306 460,330 42,001 150,096 112,360 1.512 1.002 District of Columbia 22 117,971 D 29,263 21,379 1.490 0.987

Florida 5,069 6,255,428 616,097 2,270,555 1,263,030 1.507 0.999 Georgia 2,534 3,436,673 380,819 1,226,368 653,972 1.520 1.007 Hawaii 280 358,921 36,053 129,870 65,305 1.552 1.029 Idaho 594 546,349 47,466 211,341 133,160 1.394 0.924 Illinois 3,848 6,112,025 605,868 1,770,254 1,504,166 1.575 1.044 Indiana 1,867 2,964,787 418,904 869,816 753,388 1.452 0.962 Iowa 1,066 1,189,684 133,934 428,842 265,529 1.436 0.952 Kansas 966 1,225,986 155,011 431,331 264,876 1.440 0.954 Kentucky 1,219 1,357,063 121,960 469,639 307,205 1.510 1.000 Louisiana 1,469 1,439,726 174,283 497,169 291,819 1.495 0.990 Maine 458 393,322 36,149 138,587 76,034 1.568 1.039 Maryland 2,024 3,902,613 583,237 1,251,986 797,428 1.482 0.982 Massachusetts 2,520 3,531,662 503, 155 1,038,151 713,798 1.566 1.038 Michigan 3,051 4,334,221 492,957 1,338,229 957,980 1.554 1.030 Minnesota 1,635 2,860,054 280,556 958,849 599,935 1.555 1.030 Mississippi 655 754,652 70,985 283,993 132,824 1.547 1.025



### 6A-5

### Table 6A.5.2 (contd)

State Number of Firms Value of Construction ($000) Cost of Subcontract Work ($000) Cost of Materials ($000) Construction Payroll

($000) Baseline Markup Relative Markup Missouri 1,816 2,538,706 276,621 849,770 581,090 1.487 0.985 Montana 432 356,269 44,987 135,009 68,332 1.435 0.951 Nebraska 683 819,918 90,582 321,124 177,052 1.393 0.923 Nevada 498 1,093,329 78,259 350,851 236,089 1.644 1.089 New Hampshire 531 535,046 52,209 179,259 123,215 1.509 1.000 New Jersey 3,551 4,210,275 466, 668 1,230,617 949,465 1.591 1.054 New Mexico 599 543,713 51,116 191,757 104,423 1.566 1.037 New York 5,750 7,561,952 949,038 2,335,220 1,595,864 1.550 1.027 North Carolina 2,978 3,231,394 339,388 1,127,518 684,958 1.502 0.995 North Dakota 272 291,850 34,971 105,405 66,002 1.414 0.937 Ohio 3,514 4,611,590 502,061 1,470,907 1,037,116 1.532 1.015 Oklahoma 1,158 906,621 77,207 341,921 185,111 1.500 0.994 Oregon 1,031 1,440,390 132,523 506,559 332,135 1.483 0.983 Pennsylvania 3,653 5,929,629 639,074 1,766,004 1,193,465 1.648 1.092 Rhode Island 397 490,872 60,217 171,994 99,426 1.480 0.981 South Carolina 1,472 1,395,359 111,394 518,386 327,238 1.458 0.966 South Dakota 337 333,758 22,754 141,297 58,708 1.498 0.993 Tennessee 1,370 2,292,875 201,748 846,426 459,475 1.521 1.008 Texas 5,653 8,061,607 807,501 2,889,320 1,746,739 1.481 0.981 Utah 892 1,010,317 113,775 353,958 202,682 1.507 0.999 Vermont 282 208,056 19,987 77,251 43,158 1.482 0.982 Virginia 2,547 3,036,417 254,085 1,074,309 700,273 1.497 0.992 Washington 1,602 2,344,257 222, 282 773,211 543,668 1.523 1.009 West Virginia 416 296,407 19,109 99,089 71,401 1.563 1.036 Wisconsin 1,839 2,578,014 193,399 941,806 617,852 1.471 0.974 Wyoming 262 166,318 D 59,507 35,307 1.451 0.962 Average Baseline Markup Standard Deviation Relative Standard Deviation 1.509 1.000 0.056 0.037 Sources: U.S. Bureau of the Census. American Factfinder. 2002 Economic Census. Sector 23: Construction: Geographic Area Series: General Statistics for Establishments by State: 2002. Accessed on March 25, 2009 at http://factfinder.census.gov/servlet/IBQTable?_bm=y&

- fds_name=EC0200A1&-_industry=23822&-NAICS2002sector=8699097&-ib_type=NAICS2002&-_lang=en&-geo_id=&

- NAICS2002=23822&-ds_name=EC0223A1&-NAICS2002subsector=8701562 and Bureau of the Census. American Factfinder. 2002 Economic Census. Sector 23: Construction: Industry Series: General Statistics f or Establishments by State: 2002. Accessed March 25, 2009 at http://factfinder.census.gov/servlet/IBQTable?_bm=y&-fds_name=EC0200A1 &

- _industry=238220&-NAICS2002sector=8699097&-ib_type=NAICS2002&-_lang=en&-geo_id=&-NAICS2002=238220&

- ds_name=EC0223I03&-NAICS2002subsector=8701562 Notes: The Census Bureau withheld data for some states. Markups may vary across states for several reasons, including differences in firm size.



### 6A-6

### Table 6A.5.3 Residential General Contract or Baseline Mark-ups by State, 2002

State Number of Firms, Residential Value of Residential Construction ($000) Cost of Subcontract Work ($000) Cost of Materials ($000) Construction Payroll

($000) Baseline Markup Relative Markup Alabama 2,156 2,352,156 879,887 913,466 121,743 1.228 0.896 Alaska 593 555,693 180,602 182,651 45,102 1.361 0.993 Arizona 2,927 8,944,590 4,077,531 1,520,550 340,851 1.506 1.099 Arkansas 1,102 965,784 330,411 399,722 64,603 1.215 0.887 California 17,492 35,599,566 14,223,394 6,517,163 2,185,454 1.553 1.133 Colorado 4,294 8,969,090 3,654,221 2,207,474 368,475 1.440 1.051 Connecticut 2,033 2,376,761 836,239 795,422 175,075 1.315 0.960 Delaware 668 954,727 324,103 258,374 55,222 1.497 1.093 District of Columbia 134 D D D 24,484 1.479 1.080

Florida 8,816 25,237,559 9,614,388 6,421,377 904,292 1.490 1.087 Georgia 4,811 9,930,327 3,671,913 3,454,040 374,997 1.324 0.966 Hawaii 566 1,450,660 686,288 267,088 102,698 1.374 1.003 Idaho 1,348 219,332 573,558 537,916 73,854 1.399 1.021 Illinois 7,651 11,426,833 4,762 ,202 2,800,886 681,895 1.386 1.011 Indiana 3,831 5,017,140 1,806,047 1,840,614 267,379 1.282 0.936 Iowa 2,059 1,233,036 417,991 440,248 99,750 1.287 0.939 Kansas 1,844 1,844,443 699,013 615,232 106,010 1.299 0.948 Kentucky 1,809 2,785,820 1,025,346 964,139 117,856 1.322 0.965 Louisiana 1,547 1,316,948 475,260 428,061 92,753 1.322 0.965 Maine 1,344 833,920 278,251 269,031 81,018 1.327 0.969 Maryland 3,998 6,532,241 2,343,107 1,725,383 423,633 1.454 1.061 Massachusetts 3,529 4,338,533 1, 630,030 1,230,025 313,075 1.367 0.998 Michigan 7,134 7,210,856 2,488,963 2,332,357 501,934 1.355 0.989 Minnesota 4,190 6,581,446 2,664,325 1,815,880 315,586 1.372 1.002 Mississippi 892 D D D 39,835 1.251 0.913 Missouri 3,880 4,060,799 1,414,323 1,244,589 298,295 1.373 1.002 Montana 1,217 857,782 323,303 283,334 69,987 1.268 0.925 Nebraska 1,228 1,233,763 523,773 337,636 76,779 1.315 0.960 Nevada 1,050 4,671,330 1,890,254 689,856 204,723 1.677 1.224 New Hampshire 978 1,014,569 347,603 285,545 82,571 1.418 1.035 New Jersey 5,833 7,773,252 2,556,482 2,284,090 502,713 1.455 1.062 New Mexico 1,495 1,410,525 524,152 389,342 85,732 1.412 1.030 New York 10,007 9,608,316 3,878,184 2,639,624 761,915 1.320 0.963 North Carolina 6,576 9,462,181 3,339,029 3,114,139 443,960 1.372 1.001 North Dakota 406 248,629 82,158 88,810 22,954 1.282 0.936 Ohio 6,183 7,955,878 3,054,947 2,348,619 440,867 1.361 0.993 Oklahoma 1,502 1,454,942 451,357 593,842 77,547 1.296 0.946 Oregon 3,484 2,981,961 1,116,078 854,412 178,699 1.387 1.013 Pennsylvania 6,828 8,045,755 2,744,933 2,665,008 509,054 1.359 0.992 Rhode Island 805 643,949 235,284 245,728 46,251 1.221 0.891 South Carolina 2,615 3,490,308 1,222,905 1,263,978 178,744 1.309 0.956 South Dakota 750 497,463 D 200,146 33,480 1.295 0.945 Tennessee 2,219 3,173,248 985,320 1,039,114 252,650 1.394 1.017 Texas 6,735 21,459,933 7,977,898 6,337,942 791,977 1.420 1.037



### 6A-7

### Table 6A.5.3 (contd)

State Number of Firms, Residential Value of Residential Construction ($000) Cost of Subcontract Work ($000) Cost of Materials ($000 ) Construction Payroll

($000) Baseline Markup Relative Markup Utah 1,768 2,251,069 898,273 677,157 114,364 1.332 0.972 Vermont 888 599,311 184,049 166,305 52,650 1.487 1.085 Virginia 5,424 9,467,694 2,996,475 2,786,061 509,630 1.505 1.098 Washington 7,005 6,513,741 2,204,286 1,814,321 426,371 1.465 1.069 West Virginia 1,473 563,776 146,451 188,680 59,677 1.428 1.042 Wisconsin 4,003 4,087,572 1,513,293 1,396,311 312,214 1.269 0.926 Wyoming 532 371,662 133,759 113,250 49,138 1.255 0.916 Average Baseline Markup 1.370 1.000 Standard Deviation 0.093 Relative Standard Deviation 0.068 Sources: U.S. Bureau of the Census, American Factfinder. 2002 Economic Census. Sector 23: Construction: Geographic Area Series: General Statistics for Establishments by State: 2002. accessed 3-25-2009 at http://factfinder.census.gov/servlet/IBQTable?_bm=y&

- fds_name=EC0200A1&-_industry=23611&-NAICS2002sector=8699097&-ib_type=NAICS2002&-_lang=en&-geo_id=&

- NAICS2002=23611&-ds_name=EC0223A1&-NAICS2002subsector=8701533 and U.S. Bureau of the Census. American Factfinder. 2002 Economic Census. Sector 23: Construction: Industry Series: General Statist ics for Establishments by State: 2002. Accessed March 25, 2009 at http://factfinder.census.gov/servlet/IBQTable?_bm=y&-fds_name=EC0200A1 &

- _industry=236115&-_industry=236116&-_industry=236117&-_industry=236118&-_industry=236220&-NAICS2002sector=8699097&

- ib_type=NAICS2002&-_lang=en&-geo_id=&-NAICS2002=236115|236116|236117|236118|236220&-ds_name=EC0223I03&

- NAICS2002subsector=8701533 Notes: The Census Bureau withheld data for some states. Markups may vary across states for several reasons, including differences in firm size



### Table 6A.5.4 Commercial General Contract or Baseline Mark-ups by State, 2002

State Number of Firms, Commercial Value of Commercial Construction ($000) Cost of Subcontract Work ($000) Cost of Materials ($000) Construction Payroll

($000) Baseline Markup Relative Markup
Alabama 633 4,087,391 2,224,073 648,488 257,100 1.306 1.026
Alaska 179 1,013,830 513,186 232,958 102,651 1.194 0.938
Arizona 647 4,793,249 2,824,778 554,056 238,438 1.325 1.041
Arkansas 339 1,764,890 891,847 361,034 121,985 1.284 1.008
California 4,179 27,905,058 16,477,915 3,569,406 1,859,722 1.274 1.000
Colorado 929 6,466,717 3,835,598 1,022,903 351,770 1.241 0.975
Connecticut 365 2,958,160 1,697,294 440,540 248,136 1.240 0.974
Delaware 122 633,739 325,254 98,580 85,416 1.244 0.977 District of Columbia 47 641,796 425,080 32,556 38,424 1.294 1.016

Florida 1,900 11,708,047 6,593,086 1,727,883 556,589 1.319 1.036 Georgia 1,335 10,267,854 5,885,254 1,879,470 551,798 1.235 0.969
Hawaii 169 1,483,121 739,526 250,037 134,938 1.319 1.036
Idaho 290 909,164 516,919 142,880 67,147 1.251 0.982
Illinois 1,493 10,232,559 5,296 ,152 1,432,918 772,060 1.364 1.071
Indiana 665 4,732,683 2,541,628 755,937 363,268 1.293 1.015
Iowa 512 2,124,574 1,142,078 490,254 188,518 1.167 0.916
Kansas 341 1,947,757 1,026,208 410,497 135,895 1.239 0.973 Kentucky 527 2,199,782 1,182,207 383,228 184,386 1.257 0.987



### 6A-8

### Table 6A.5.4 (contd)

State Number of Firms, Commercial Value of Commercial Construction ($000) Cost of Subcontract Work ($000) Cost of Materials ($000) Construction Payroll

($000) Baseline Markup Relative Markup
Louisiana 513 2,909,041 1,410,150 703,189 247,488 1.232 0.968
Maine 185 584,457 330,848 91,490 39,088 1.267 0.995 Maryland 872 6,675,194 3,829,059 766,415 422,357 1.330 1.045
Massachusetts 786 8,075,207 5,233,003 1,114,320 430,337 1.191 0.936 Michigan 1,237 6,501,437 3,372,219 1,009,192 436,199 1.350 1.060
Minnesota 748 6,161,105 3,771,957 1,030,060 428,143 1.178 0.925 Mississippi 297 2,017,236 925,348 438,336 216,914 1.276 1.002
Missouri 834 7,193,405 4,625,554 1,062,202 519,994 1.159 0.910
Montana 139 456,228 216,656 100,544 46,776 1.253 0.984
Nebraska 285 1,361,395 737,300 257,308 106,558 1.236 0.971
Nevada 350 2,488,460 1,352,898 500,324 185,380 1.221 0.959 New Hampshire 153 1,123,795 709,159 168,953 75,195 1.179 0.926 New Jersey 1,191 7,134,900 3,823,338 959,859 549,231 1.338 1.051
New Mexico 265 1,111,735 585,306 189,063 100,363 1.271 0.998
New York 2,147 16,092,933 7,732,253 2,214,809 1,103,423 1.456 1.144
North Carolina 1,053 6,123,409 3,212,008 1,143,321 387,044 1.291 1.014
North Dakota 164 346,507 151,554 94,777 39,360 1.213 0.952
Ohio 1,354 6,956,588 3,743,681 1,226,315 600,282 1.249 0.981
Oklahoma 440 2,242,093 1,261,310 438,198 124,791 1.229 0.965 Oregon 614 2,998,924 1,762,863 577,844 338,286 1.119 0.879 Pennsylvania 1,419 10,114,293 5, 579,230 1,612,363 697,391 1.282 1.007
Rhode Island 138 1,205,052 534,577 80,447 62,293 1.779 1.397
South Carolina 525 2,298,379 1,049,437 521,385 197,114 1.300 1.021
South Dakota 117 540,082 258,352 140,454 51,216 1.200 0.942
Tennessee 763 5,003,780 2,657,587 745,164 325,486 1.342 1.054
Texas 2,890 17,578,086 8,870,626 2,817,907 961,374 1.390 1.091
Utah 432 2,742,884 1,428,086 589,679 162,060 1.258 0.988
Vermont 100 376,473 199,521 56,407 41,172 1.267 0.995 Virginia 851 6,287,509 3,781,530 928,059 402,428 1.230 0.966 Washington 929 5,086,570 2,947,223 836,605 449,325 1.202 0.944 West Virginia 200 419,620 155,537 110,001 58,024 1.297 1.018
Wisconsin 595 4,867,473 2,460,336 1,030,059 479,144 1.226 0.963 Wyoming 133 291,926 129,865 69,637 26,669 1.291 1.014 Average Baseline Markup
Standard Deviation
Relative Standard Deviation 1.273 1.000
0.095
0.075 Sources: U.S. Bureau of the Census, American Factfinder. 2002 Economic Census. Sector 23: Construction: Geographic Area Series: General Statistics for Establishments by State: 2002. accessed 3-25-2009 at http://factfinder.census.gov/servlet/IBQTable?_bm=y&

- fds_name=EC0200A1&-_industry=23611&-NAICS2002sector=8699097&-ib_type=NAICS2002&-_lang=en&-geo_id=&

- NAICS2002=23611&-ds_name=EC0223A1&-NAICS2002subsector=8701533 Notes: The Census Bureau withheld data for some states. Markups may vary across states for several reasons, including differences in firm size



### 6A-9

### DOE assumed that new construction and repl acement market mechanical contractor markups have the same relative standard deviation as that de veloped from the baseline markups for all contractors. The fact that the mechanical contractor relative standard deviation is 3.7 percent of the baseline markup implies that the standard devi ation for the replacement and new markets, relative to their respectiv e baseline markups, is also 3.7 percent.

DOE also assumed that wholesaler, genera l contractor, and mechanical contractor incremental markups have the same relative standa rd deviation as wholesaler, general contractor, and mechanical contractor baseline markups. It us ed this assumption to calculate the standard deviation of wholesaler, general contractor, a nd mechanical contractor incremental markups.

The relative standard deviations for mechanical and general contractors are not used directly to estimate markups as for wholesal e trade. The markups in construction vary systematically relative to their mean by stat e, so the state relative markups are applied individually to average markups by cl ass of construction in each state.

6A-10