METAC Workshop
March 14-17, 2016
Beirut, Lebanon
National Accounts Compilation Issues
Session 5.1: Construction, Price and Volume
measures
Content
• Construction output, specific features
• Data available
– Price indices
– Volume data
– Administrative data
• Methods
– Complete construction
– Other elements of construction output
Construction output
• … covers a wide range of products:
– one-dwelling and multi-dwelling buildings,
– industrial and commercial buildings,
– highways, railways, and other major civil
engineering projects.
• Types of construction work:
– new construction,
– major improvement of existing structures and
– regular repair and maintenance.
Construction output
• Other features of the construction activity
require attention in measuring output at both
current and constant prices:
– projects may span two or more accounting
periods;
– project can be considered unique and should
therefore be decomposed wherever possible into
standard activities that can be priced between
periods
Data available
• Input, Output, and Seller's price indices used for
deflation of specific type of construction output;
• The Purchasing Power Parities (PPPs) program for
construction:
– … collection of detailed data which can be used as a
helpful comparative source for pricing a 'standard'
output;
• Quantitative information on building materials
used;
• Labor input;
• Administrative data on government projects.
Methods
• Deflation
– Input price indices
– Output price indices
– Seller's price indices
Methods
• Deflation, using input price indices
• Possible methods for estimating output price
indices:
– "actual prices" method takes data from real projects
undertaken during the period, or adjusts tender price
indices to match the relevant time period
• … resource intensive, but can be used for all types of
construction, if suitably weighted, if some generic designs
are used repeatedly, and if a sufficiently large sample of
projects is taken; not appropriate for unique projects;
– "model pricing" method, which constructs a
theoretical "model project" (such as a one-family
dwelling) using tender price data from standard price
books or statistical surveys;
Methods
• Possible methods for estimating output price
indices:
– "hedonic" method, which attempts to define the
quality of a structure in terms of its characteristics
and regress them against price
• … employed only in suitable areas of construction.
• Volume methods, if there is no options for
detailed deflation
– measuring cubic meters of construction, or
– the number of building permits issued
Methods
• Civil Engineering
– decomposition of the project into a set of more
measurable components;
– collect detailed prices as part of the administrative
control of public building contracts
• Repair/Maintenance
– collect data on hourly rates or quotes for 'model' jobs
from contractors, and then to use these as indicators
of price;
– for small repair and maintenance work undertaken by
private households: CPI indices for materials
commonly used in these activities can be employed
Methods
• Own account construction
– deflated by an appropriate index, the closest
market-based index available
• related to residential dwellings or a subset of that
References
• 2008 SNA, Chapter 15
• Construction Price Indices, OECD-Eurostat
• Handbook on price and volume measures in
national accounts, Eurostat
Thank you