Construction Survey Workshop

1. Construction Survey Workshop Asian Development Bank Manila, Philippines November 28-30, 2005 Yonas Biru,

2. Objectives • The objective is to get national average prices/cost for the basic expenditure headings of the construction sector • Residential buildings, Non-residential Construction and Civil Engineering Works. • What is required from countries are data that will permit estimates of parities for each of these basic headings. • The data required from each country are estimates of the cost of a number of Construction Components that have been identified as common in systems and projects across the region

3. Objective Our objective is to compare the cost of common structures Not to compare the cost of unique structures

4. General challenges • Construction Projects are much more complex to price • The characteristics of construction projects are highly variable • Difficult to obtain perfect matches across countries • Most statistical agencies do not have the expertise required to carryout construction surveys

5. Specific challenges • What data to collect? • Who collects the required data? • Where and when to collect the data? • How many observations?

6. What data are collected? • Each Construction Component to be priced has been described in the form of an SPD/PS • A typical construction component contains 3 subcomponents • Building materials • Equipment • Labor- skilled and unskilled

7. Who collects the data? • Building engineers, architects, quantity surveyors or other experts have to be involved • Most statistical agencies do not have the necessary expertise • Some countries may be able get the help of specialists from public works departments • Other government agencies responsible for building regulations may also be useful • In other countries the work has to be contracted out to construction firms or freelance engineers

8. When and where data are collected • In principle the prices should be national annual average • This means data collection should be across regions and should cover all year (quarterly), but this would be excessively costly • In practice some simplifications are necessary for construction sector • Prices should only be collected in 3 to 5 cities that would give a close approximation to national average • In smaller countries this may not be a major issue. In large countries the scope of coverage should be extended to cover major cities and regions. • Price collection in mid-year is recommended.

9. How many observations? • For building materials and for equipment multiple pricing is recommended (Min. 15 observations) • Ideally, prices should be collected from at least four or five sources (public work departments, contractors, other construction experts, etc) again with the objective of providing an approximation of national average • This may not be a major issue in relatively small countries with low price variations. In large countries the scope of coverage should be extended to cover major cities and regions • For skilled and unskilled labor the number of observations required depends on the data sources used

10. What is in the cost estimate? • For the completed components the price is the total of the cost, at contractor prices of the materials, labor and equipment • The price reported for completed components does not include any profit margin or any fees for architects, quantity surveyors and other construction specialists • The purchaser prices of the materials and hire of equipment includes only non-deductible product taxes • Value added taxes are often fully deductible for goods and services that are considered to be investments and so will usually be excluded from the purchaser price.

11. What is in the cost estimate? • For skilled and unskilled labor, total compensation of employees is to be reported and not just cash wages and salaries • For equipment, building materials, and for off-the-shelf components the contractor prices are to be reported