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Methodological explanation for the news release:


Construction cost indices for new residential buildings


Goals
The Construction cost indices for new residential buildings are intended for reviewing or monitoring the costs incurred by the construction companies during the execution of the process of building new residential buildings.
The indices are also used as an input for calculations in national accounts, as well as in constructional statistics.
Construction companies also use Construction cost indices when they refer to the movements of costs in drafting construction contracts.
 
Calculation
The Construction cost indices for new residential buildings is calculated as a weighted average of the Material cost index and the Labour cost index:
 
I(cc)t/o = I(mc)t/o*Wo1 + I(lc)t/o*Wo2
 
I(cc)t/o Construction cost index for new residential buildings
I(mc)t/o - Material cost index
I(lc)t/o   - Labour cost index
Wo1/2 - Weights
Wo1 + Wo2 = 1

The Material cost index is calculated on the basis of data on Industrial producer prices on the domestic market, for 92 products belonging to these classes:
08.11; 08.12; 08,99; 16.10; 16.23; 20.16; 20.30; 20.52; 20.59; 22.21; 23.12; 23.20; 23.32; 23.51; 23.52; 23.61; 23.62; 23.63; 23.64; 23.70; 23.99; 24.10; 24.20; 24.33; 24.34; 25.11; 25.12; 25.93; 27.32; 31.02.
 
The Material cost index is calculated by using by the Laspeyres formula: 


 
 
I(oc)t/o - Material cost index
Pti       - Price of the building material “i“ in the current period (t)
Poi       - Price of the building material “i“ in the base period (0)
Woi     - Weights
t          - Current period
0         - Base period
 
The Labour cost indexis calculated on the basis of the average gross wages paid per employee in the Construction section, Division 41 - Construction of buildings, from the National classification of activities (NKD Rev.2). The data on the average gross wages per employee are taken from labour statistics ("Monthly report on employees and wages").
 
 
I(lo)t/o - Labour cost index
Sti      - Average gross wage paid per employee in the current period (t)
Soi       - Average gross wage paid per employee in the base period (0)
t        - Current period  
0       - Base period
 
Weighting
The weights are the coefficients which show the participation of each individual cost (both for materials and for labour) in total costs in the base year.
 
 The procedure for calculation of the weights is complex and is carried out in several steps (all operations for calculating the weights are based on data from the base year, 2010).
 
Step 1:
The purchase values of the spent building materials from the "Annual report on spent building materials and energy" are distributed in accordance with the structure of the value of the turnover of construction works which have been carried out, according to the "Nomenclature of constructions and construction works" from the "Annual report on constructions on which works have been carried out" at the micro level (enterprise).
 
Step 2:
The values from "step 1" are distributed according to the structure of the value of the turnover of building materials on the domestic market, in accordance with the National nomenclature of industrial products, from the "Annual report on industry".
 
Step 3:
The values of the total paid gross wages from the "Monthly report on employees and wages" are distributed according to the structure of the values of the turnover of construction works carried out, in accordance with the "Nomenclature of constructions and construction works" from the "Annual report on constructions on which works have been carried out".
 
Step 4:
The values of the costs from the "Annual accounts of enterprises" are distributed according to the structure of the values of the turnover of construction works carried out, in accordance with the "Nomenclature of constructions and construction works" from the "Annual report on constructions on which works have been carried out".
 
Step 5:
The distributed values of each individual step are divided with the total value of all steps, which gives the weight coefficients.
 
Rebasing
The rebasing represents adjustment of the data (indices) calculated with the old base year, to the new base year.
The Construction costs indices for new residential buildings for the period 2001-2009, calculated with 2005 as a base year, are adjusted to the new base year, 2010.
The rebasing of the data series calculated with the old base year is performed with a special coefficient which serves as a rebasing factor (Chain factor).
 
This coefficient is calculated as a ratio between the average annual index for the year which is used as a new base year, calculated with the new base year, and the average annual index for the same year, calculated with the old base year.
 
Each individual quarterly index calculated with the old base year is multiplied with this rebasing factor and thus adjusted (rebased) to the new base year.
 
Classifications applied
The following classifications have been used in the calculations:
-          National classification of activities (Official gazette No. 147/2008) (NKD Rev.2);
          National nomenclature of industrial products (Official gazette No. 75/2009) (NNIP/2008);
-         Classification of types of constructions.
 
Harmonized with EU regulations
The methodology for calculating the construction cost indices is harmonized with the "Methodology of short-term business statistics" of Eurostat, for the following variables:
-          320 Construction costs;
-          321 Material costs;
-          322 Labour costs.



Last updated: 05.06.2013


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Preview27.05.2011
   

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