Construction cost index for residential buildings

Definition of the main terms

The CCI measures the changes in the prices of input factors to the construction process of residential buildings. CCI ignores gains in productivity and changes in profit margins

Labour cost  =  direct labour costs an indirect labour costs per hour. Direct labour costs include wages and salaries, remuneration and other cash payments. Indirect labour costs include salaries in kind, costs for health and safety, social contributions, training costs and taxes on labour

A Laspeyres price index is a price index where the weights remain fixed. A chained Laspeyres price index is an index linked by Laspeyres indices with different sets of weights.

Definition of the main variables

Price: Actual sales prices to the construction industry. Price on the 15 ^th of each month exclusive VAT.

Not relevant

Name: Construction cost index for residential buildings
Topic: Prices and price indices

Division for Housing, Property, Spatial and Agricultural Statistics

National level only.

Monthly.

Prices on the 15 ^th of each month.

The statistics are reported to Eurostat.

Quarterly price observations for goods and services are stored on UNIX.

The indices are published since 1978.

The CCI is used to regulate the cost of construction works. At Statistics Norway the CCI is used as deflator in the National Accounts. The subscribers are developers, contractors, builders, technical installation firms, manufacturers of prefabricated houses etc.

No external users have access to the statistics and analyses before they are published and accessible simultaneously for all users on ssb.no at 8 am. Prior to this, a minimum of three months' advance notice is given in the Statistics Release Calendar

Principles for equal treatment of users in releasing statistics and analyses

Some data are collected from the Consumer Price Index, Wage Statistics, Cost Index for Road Goods Transport and NTNU's Cost Index for Machinery.

The construction cost index for residential buildings is an important input to the National Accounts.

Data from the survey are used in the calculation of the Construction Cost Index for Civil Engineering works, the Consumer Price Index and the Price Index for Wholesale Trade.

Statistics Act Sections 2-2 and 2-3.

Construction cost index for residential buildings is regulated through EC 1165/98.

Construction cost indices measures the price developments of material, labour, transport, plant and other types of input factors in the production of residential buildings, i.e. costs incurred by the contractor/producer carrying out the construction work. It is two different types of information to be collected about the input factors, the percentage of each component (weights) and the prices. The weights are compiled every tenth year through cost studies of representative buildings. The prices are measured monthly.

The material prices are collected by means of questionnaires, which are sent to the suppliers to the construction industry (mainly wholesale companies).

The labour costs are based on Statistics Norway's quarterly Labour cost index, based on full cencus data from a-meldingen.

Machinery costs indices calculated by NTNU

Transport costs indices compiled by Statistics Norway.

A sample of 420 suppliers to the construction industry (mainly wholesale companies) provides about 3 800 price observations every month.

The material prices are collected by means of questionnaires, which are sent to the outlets on the 12 ^th of each month, and returned to Statistics Norway 10 days later.

Reporting and recordkeeping burden

An outlet uses an average of 17.5 minutes every month to fill out the questionnaires, which means that the sample of outlets use a total of 1 050 hours or 131 days of work each year.

The prices are put through tests, which identify observations with large price changes from the previous month. Prices are also checked when sorted by item and when items are aggregated into groups. Sub-indices and item-indices are checked against time-series that are published earlier and comparisons with other statistics.

Not relevant

The construction cost indices are calculated as Laspeyres indices. A new weight basis was adopted in January 2000. The weights are based on calculations and accounting data from 7 apartment building projects and 4 detached house projects. Projects which in size and standard were close to the average from Statistics Norway's surveys of detached houses and multi-dwelling units completed in 1997 and 1998. The weight basis was prepared in accordance with the Norwegian Standard for specification of costs in building project NS 3453.

The overall building cost index for houses comprises the two indices for detached houses and apartment buildings. The weights that are used are square metre utility floor space for dwellings under construction multiplied with the average price in kroner per square metre utility floor space.

The index goes back to 1978. Aspelin - Stormbull AS calculated construction cost indices for residential buildings from 1932 to 1978.

The outlets might, for the sake of convenience, copy the previous month's prices instead of the correct prices when filling out the questionnaires. The most obvious cases of this kind are revealed in a manual check carried out when receiving the questionnaires. When a product or service is no longer sold the outlets are instructed to find a replacement and mark it in the questionnaire. If they fail to do so, the difference in price between the old product and the replacement will incorrectly be registered as a price change of the old product.

Skewness: The sample of goods and services is updated every tenth year. In addition products are replaced if an outlet no longer deliver this particular product.

Non-response: Each month about 1 per cent off all questionnaires are missing. Missing prices are imputed. The imputations are based on the average changes in prices from the previous month of the same product.

Sampling errors are not calculated.

Non-sampling errors

For some goods prices measurements are based on price lists, and changes in discounts given to building contractors are not taken into account.

Price effects due to changes in relative prices.
The price ratio between different goods and services has been changed over time.

Unsatisfactory handling of quality changes.
Statistics Norway has not initiated separate calculations of the impact of these measuring errors in the building cost indices.

All incoming questionnaires are screened for errors and irregularities. Price changes larger than +/- 15 per cent are always checked, if neccessary with the outlet.