costruction

8/3/2019 costruction

1/28

Construction costsin Denmark- a comparison with other countries

Danish Agency for Trade and IndustryDecember 2000


2/28

2

SummaryThe comparison of construction costs by ordinary and modifiedprices per square metre has the fundamental weakness that the item wecompare, a private single family house in two storeys, is not very well defined.Thus, there is a significant element of randomness in the comparison of

construction costs between countries.

In order to reduce this arbitrariness, we develop a new indicator ofconstruction costs as follows: We select a typical Danish single family house.We ask an experienced surveyor to break down the house in well-definedwork items. Obtaining prices for these work items from price books in a largenumber of countries, including Denmark and Sweden, we can now estimatethe construction costs of an identical house in all these countries underreview.

We argue that this new index is the most reliable indicator for the comparison

of construction costs between countries and conclude that Danishconstruction costs are among the highest in Europe, both using ordinaryexchange rates and using PPP conversion rates.

In an appendix we present alternative results from four other comparativestudies of construction costs in European countries. Most of the resultsare difficult to evaluate due to lack of documentation. However, in thosecases where the methods are comparable, the results are not incompatiblewith the results in this report.

Construction costs in Denmark and in other countriesWe compare construction costs in Denmark with those in seventeen otherprimarily European countries. The construction costs are the costs that theclient has to pay to build a house, except the purchase of land, finance andvalue-added tax. The construction costs are nearly equivalent to thecontractors invoice prices and fees for professional services.

First, we calculate the price per square metre of a private single-family housein one and a half or two storeys in each of the countries included in thesurvey, using Danish kroner as a reference currency. The construction costsin Denmark are the second highest, with fifty per cent above the average price

per square metre for the Netherlands, Sweden, Finland and Germany (in thefollowing referred to as the NSFG countries). If we compensate for differencesin purchasing power using the Purchasing Power Parity (PPP) conversionfactor, Denmark ranks sixth, but still at a 20 per cent higher cost level than inthe NSFG countries. However, comparability is highly problematic.

According to our analyses a number of factors, primarily living standards, butalso inflation and climate have a statistically significant influence on the priceper square metre. If we correct for differences in living standards, Denmarktakes sixth place, but it is still twenty-five per cent more costly than the NSFGcountries. Other factors also have the effect of changing the price per square

metre. For example, we estimate that the price per square metre in Denmarkis about DKK300 higher (5 per cent) than they would have been, because our


3/28

3

average climate is colder than the climate in the countries used forcomparison. But none other factor has enough impact to change the ranksignificantly. In all other circumstances, Denmark stays second, with a priceper square metre thirty to fifty per cent above the NSFG countries aftercurrency conversion.

Also, we have developed a price index for a typically Danish single familyhouse. The costs of its construction would amount to about DKK1.2 million. Ifconverted into Danish kroner as a reference currency, Denmark remains themost expensive country in Europe and the second most expensive country ofthe seventeen countries included in the survey. Only Japan is more costly. If aPPP conversion factor allowing for differences in purchasing power is usedinstead, Denmark turns into the third most expensive country in Europe andthe fourth most expensive of all countries. In this case the construction costsare larger only in Belgium and Japan. Relative to the NSFG countries, theconstruction costs in Denmark are 20-30 per cent higher.

The calculation of a price index for identical housesseems to suggest that theconstruction costs in Denmark are somewhat higher than in most othercountries commonly used for comparison. The same is true whether we makecorrections for purchasing power or not. The price index is a comparativemethod that most extensive makes allowance for the problems otherwiseexisting in comparative cross-country price studies. The estimated costscomprise exactly the same types and volumes of work items. Thus, weeliminate a major part of the criticism against comparative price studies.However, some weaknesses remain that we need to point out. Even thoughthe materials are identical, quality differences may exist in different countries.And the quality of the workmanship may be different.

In an appendix we examine four previous analyses of construction costs inEuropean countries. The four analyses were undertaken by the DanishBuilding Development Council (1989), the German Ministry of Housing andConstruction (1993), the Nordic Council of Ministers (1991-93) and theEuropean Committee of Construction Economists (1992). The figures inparenthesis indicate the year when the construction costs were surveyed.These analyses are often hard to compare for lack of documentation or fordifferences in methodology. The results from comparable analyses essentially

support the conclusions in this report.

The analyses rely on three methods for their comparisons of constructioncosts: (i) systematic surveying of work items; (ii) systematic expert opinions;and (iii) ad hoc expert opinions. The first method is used by this report(Section C.3 in the full report), by the German Ministry of Housing andConstruction (partly) and by the European Committee of ConstructionEconomists. The conclusions of these analyses are fairly compatible, even ifthe comparative basis is limited. The second method is used by the NordicCouncil of Ministers and by Copenhagen Economics. The conclusions are toa certain extent still compatible, but the comparison also reveals that

systematic expert opinions may vary a great deal if conducted by differentgroups of experts at different points in time. The third method is used by the


4/28

4

Danish Building Development Council and by the German Ministry of Housingand Construction (partly). It seems to be hard to compare such estimates witheach other and with the results of other analyses.

C. Clients construction costs in Denmark and in other countries

The analysis in this report differs from previous analyses in two respects.First, we consider the clients construction costs and not the contractorscosts. The clients construction costs are costs that are relevant for theultimate buyer of the output of construction, i.e. houses, and typicallycorrespond to the contractors costs plus the contractors companyoverheads, profit and fees for professional services. We still exclude thepurchase of land, finance and value-added tax. Secondly, we compareconstruction costs across countries. We will thus try to answer the followingquestion: Does a Danish client pay more or less for building a house thanclients in foreign countries?

It is not an easy task to compare costs between countries. Usefulcomparisons of prices presuppose a comparison of the same product orservice. If a house costs DKK1,000,000 in Denmark and DKK800,000 inPortugal, it is not possible to simply conclude that is it more expensive to builda house in Denmark than in Portugal. This is only possible if the two housesare identical. But differences in climate, practices, soil conditions, wealth andregulation of the construction sector often make houses very different.

First, we consider the ordinary prices per square metre, i.e. the price in thelocal currency in 1999, of building one square metre of a certain type of housesuch as a one-storey, single-family house. A comparison of prices per squaremetre between countries therefore allows you to get some idea whether thecosts of building a single-family house vary from country to country or not. Weshall see that such a comparison is highly problematic, because the single-family houses used for comparison may be functional identical, but in realitythey are very different.

We further calculate the corrected prices per square metre based on amethod developed by Wigren (1998). Corrected prices per square metreprices are prices that have been corrected for factors determining thedifferences in functionally identical houses between countries. We calculate

the corrected prices per square metre based on a statistical analysis of thecorrelation between prices per square metre and variables that in our opinionexplain why functionally identical houses are in reality different. For example,countries with cold winters will tend to have higher construction costs as aconsequence of more insulation and more powerful heating systems. Astatistical analysis will enable us to calculate how much higher theconstruction costs are in Denmark because of its colder winters. This allowsus to calculate corrected prices per square metre for all countries on theassumption that these countries all have the same temperature in winter. Inprinciple, the impact from differences in temperature between countries isthus eliminated in calculating the price per square metre.


5/28

5

However, both ordinary and corrected prices per square metre share thecommon problem that the product we compare, a private single-family houseof one and a half or two storeys, is not well defined. In every country there isin practice a wide differential for the price per square metre for this type ofhouse, and we are not sure where to place the price per square metre for

each individual country within this differential. The results are thereforesubject to considerable uncertainty.

Instead we develop our own methodology for comparison of the clientsconstruction costs. We design a price index for identical houses. We estimatethe costs by building the same Danish single-family house with exactly thesame content of materials in several countries. This methodology haspreviously been used by construction economists affiliated to the CEEC,Comit Europen des Economists de la Construction, (the EuropeanCommittee of Construction Economists). They have compared theconstruction costs of office buildings (for instance, CAT at Roskilde

University), hospitals and schools in 1989 and 1996. The results derived fromthese analyses do not allow direct comparison with our analyses becausetheir surveys are not immediately consistent enough for our purpose.

This is how we do it: we select a typically Danish single-family house. Anexperienced construction economist is asked to survey the house and preparea detailed list of the types of work and the work items involved in building thehouse. The next step is to obtain unit rates for work items from the countrieswe wish to compare, for calculation of the clients construction costs of exactlythe same house with exactly the same content of materials in these countries.

The established costs are eliminated of any differences in quality arising as aconsequence of variance in materials and quantities of materials used indifferent countries. For example, the Portuguese client must build a houseusing 300mm of insulating material according to Danish standards. Themethodology also makes allowance for differences between countries interms of labour productivity and wages, because the clients costs aremeasured on the basis of work items that constitute a measure of output. Inour opinion, therefore, the price index for identical houses is the most reliablemethod for comparison of construction costs across countries.

No comparison of prices is perfect. We need to state that there are twoweaknesses that the index design (still) does not eliminate. First, the Danishhouse uses materials commonly used for construction in Denmark and theyare not necessarily the materials that would be used abroad. In that case thelocal markets for these materials are probably less developed than inDenmark. The market could be smaller, with no opportunity for economies ofscale or less efficient competition. In both these cases we expect that theexternal prices for Danish materials will be higher than in a normallydeveloped market. Thus, there will be a tendency to overestimate the costsabroad relative to Denmark. Differences in the choice of materials could, forinstance, be due to differences in access to natural resources. In Scandinavia

wood is an inexpensive and easily accessible construction material whereas


6/28

6

tiles provide an inexpensive and easily accessible construction material inplain-filled Central European countries.

Secondly, we may have eliminated the external differences in quality. Thismeans differences in quality due to the choice of materials. However, there

may still exist internaldifferences in quality. This means differences in qualitydue to the same materials being of different qualities in the respectivecountries. If the quality of materials and in workmanship is higher in Denmarkthan in other countries, the Danish costs will tend to be overestimatedcompared with costs in foreign countries.

1. Prices per square metre in Denmark and in other countriesMost countries publish surveys informing a client of the average price ofbuilding one square metre of a certain building type. For instance, a Danishclient pays nearly DKK9,000 per square metre, exclusive of value-added tax,for a single-family house of a reasonable quality in Denmark. In some cases

such prices per square metre are used in comparisons of construction costsbetween countries after conversion of local prices into a common currency.

Figure 8 and Table 3 provide a survey of typical prices per square metre inthe first quarter of 1999 for a private client wishing to build a one-and-a-half ortwo-storey single-family house in the capital of one of fourteen selected(primarily) European countries. In most cases the price per square metre wasobtained from Spons European Construction Costs Handbook 2000 andstated for all countries in their local currencies by local constructioneconomists according to identical guidelines. The price per square metre isconverted into Danish kroner using the average exchange rate for theappropriate currency in the first quarter of 1999.


7/28

7

Figure 8: Prices per square metre for a single-family house in sixteencountries, 1999. Converted into Danish kroner by means of the average rateof exchange in the first quarter of 1999

The Figure shows that a Danish client pays more to build a single-familyhouse than clients in all other countries, except Austria and Switzerland wherethe price per square metre is nearly the same as in Denmark. On average, aDanish client must pay nearly fifty per cent more than a client from fourcountries very similar to us, the Netherlands, Sweden, Germany and Finland(in the following we will refer to these four countries as the NSGF countries).There are wide variations between countries. A single-family house of thesame size is four times as costly in the most expensive country (Austria) thanin the least expensive country (Portugal).

The conversion of prices per square metre in different countries into Danishkroner using the rate of exchange is a problem as such. First of all, theexchange rate makes no allowance for the possibly higher real purchasingpower of a currency than indicated by the exchange rate1. The Portugueseescudo, for instance, has a larger purchasing power, because many servicesare less expensive in Portugal than in other countries, even in the samecurrency. The difference arises because the exchange rate is very muchdetermined by the physical trade between countries whereas services areseldom traded. Therefore, the exchange rate underestimates the real

1

Besides, the exchange rates between some countries very often fluctuate so much so (andmuch more than prices ) that the time of comparison can determine whether one country ismore or less costly than the other.

0 2000 4000 6000 8000 10000 12000

Aust r ia

Swi tzer land

Denmark

Sw eden

Ireland

France

Italy

Germany

Belg ium

US A

Nether lands

Finland

Uni ted K ingdom

Spain

Poland

Por tugal

Danish kroner per square metre


8/28

8

purchasing power in Portugal, and for this reason the Portuguese price persquare metre of about DKK3,000 in reality underestimates the cost of buildinga house in Portugal.

Instead it is possible to convert prices per square metre by means of PPP

factors (PPP = Purchasing Power Parity). The PPP factors convert values indifferent currencies into a common currency, eliminating any differences inpurchasing power at the same time. At the beginning of 1999, for instance,the price of PTE100 was about DKK27. As the PPP conversion factorbetween Portugal and Denmark is 185 at the same time, this means that thePTE100 in reality will buy goods and services in Portugal that would be worth27 x 185/100, or DKK50, in Denmark. If the PPP conversion factor is appliedto the Portuguese price per square metre, you thus get a higher PPPcorrected price per square metre of about DKK5,500.

Table 3: Prices per square metre in Danish kroner converted by means of

exchange rates and PPP conversion factors, 1999

Exchange rate PPP factorAustria 11,902 Austria 14,282Switzerland 8,603 Ireland 9,655Denmark 8,600 Sweden 9,511Sweden 8,416 Italy 8,617Ireland 7,602 Denmark 8,600France 7,002 Switzerland 8,258Italy 6,336 France 8,122

Germany 5,665 Poland 7,606Belgium 5,520 USA 7,224USA 5,235 Belgium 7,010Netherlands 4,854 Germany 6,515Finland 4,691 Netherlands 6,165United Kingdom 4,183 Spain 6,075Spain 4,050 Portugal 5,476Poland 3,030 Finland 5,348Portugal 2,960 United Kingdom 5,103

Source: Spons European Construction Costs Handbook 2000, Mngda AB and own

estimates

Figure 9 and Table 3 show the same survey of prices per square metre as inFigure 8. Only the prices per square metre are converted into Danish kronerby means of PPP factors. Denmark is still an expensive country, butconsidering the real purchasing power, housing construction is apparentlymore expensive in Ireland, Sweden and Italy than in Denmark. Denmark isnow fifth among these countries. Moreover, the differential between the mostexpensive and least expensive countries has considerably narrowed. So asingle-family house of the same size is now only three times as expensive inthe most expensive country (Austria) as in the least expensive country (United

Kingdom).


9/28

9

Figure 9: Price per square metre of a single-family house in sixteen countries1999. Converted into Danish kroner by means of PPP conversion factors

It is important to keep in mind that the conversion of currencies by means ofPPP conversion factors is not necessarily a more correct way than conversionby means of the exchange rates. The PPP conversion assumes, in fact, thatthe basket of goods you purchase, in this case one square metre of a single-family house, has the same composition of goods (traded across borders) andservices (non-traded items) as the GDP. The reason is that the PPPconversion factor is calculated on the basis of composition of goods in theGDP. Therefore, you should consider calculations based on exchange ratesand PPP factors as calculations that will complement, rather than replaceeach other.

However, there is a reason why comparisons of prices per square metrebetween countries at best can be misleading and at worst can be downrighterratic. This is true whether the conversion into a common currency is basedon ordinary exchange rates or PPP conversion factors.

The prices per square metre reproduced in Figures 8 and 9 and in Table 3 arefor functionally identicalhouses, i.e. houses that fulfil the same function in therespective countries. In this case it is a private home of one and a half or twostoreys for a single family. But functionally identical houses may showimmense variety in design between countries. In one country winter

temperatures may drop below zero, and all houses are carefully insulated andprovided with a powerful heating system. In another country the power supply

0 2000 4000 6000 80 00 10000 12000 14000 16000

A us t r i a

Ireland

S w e d e n

Italy

Denm ark

S w i t ze r l and

F rance

P o land

U S A

Belg ium

G e r m a n y

Nether lands

S pa in

P or tuga l

F in land

Un i ted K ingdom

Da n ish k r one r pe r squa r e m e t r e


10/28

10

installations are subject to specific safety regulations. And in a third country allsingle-family houses traditionally have at least two bathrooms.

These differences imply that even if houses are functionally identical, thecomparison in reality consider houses of a widely different content of

materials and widely differences in quality. Figures 8 and 9 thus do not vouchfor a conclusion that Danish construction costs are higher than in many othercountries. The price per square metre may be high in Denmark, becauseDanish houses have a higher quality than in most other countries. The qualitymay be superior if the house is built from better materials and the housecontains more functions and installations.

In the next two sections we will apply methods that will allow for the possibilitythat functionally identical houses are not physically identical and are thereforeonly comparable with difficulty. First, applying statistical methodology, wecorrect the prices per square metre for some of the factors that may lead to

higher construction costs, see Section 2. In the next step we develop a newprice index for identical houses, cf. Section 3.

2. Corrected prices per square metre in Denmark and in other countriesThe purpose of this section is to correct the prices per square metre for thefactors allowing functionally identical houses to contain different materials andthus leading to variations in costs. We expect that the corrected prices persquare metre will present a more fair view of Danish construction costsrelative to the construction costs in other countries.

The climate is an example of a factor which have impact on the variety in thedesigns of functionally identical houses. For instance, we expect that theconstruction costs of houses in countries with cold winters will prove to behigher, due to the increase in insulation and the more powerful heatingsystems. We thus want to correct the price per square metre price forinstance for the part of the construction costs that is owed to the cold wintersin Denmark.

The correction takes place by regression of the prices per square metre ofseveral variables that are considered ex anteto be closely correlated with thecausal factors of variety in functionally identical houses. For instance, we

expect that the average minimum temperature in January will be indicative ofa cold winter. For each of these variables we estimate a coefficient in theregression indicating the change, statistically, in the price per square metreprice with changes in the variable. In a specific case, the average minimumtemperature in January may be given the coefficient 1.2. This means that foreach time the minimum temperature in January increases by 1C theconstruction costs will fall by 1.2 per cent. The result is (fortunately) asexpected. With rising temperatures, the costs will fall. And now we are able tocalculate a corrected price per square metre for each country in thehypothetical situation of the minimum temperature being the same in allcountries. The resulting price per square metre is thus eliminated of

differences in winter temperatures.


11/28

11

MethodologyThis methodology was originally developed by and described in Wigren(1998). He carried out the analysis using data from a previous edition ofSpons European Construction Costs Handbook. In principle, we carry out thesame analysis, only we use the most recent data available. We go through the

following regression:

where ln y is the logarithm to the uncorrected prices per square metre foreach country and for four different house types2, x and z are explanatory

variables included in a logarithmic or linear form, are coefficients and is aterm of error. As explanatory variable we use as a basis the same variables

that were used in Wigren (1998).

The explanatory variables, except for a series of dummies, are specified inTable 43. The Table states the effect that we expect the variable in question tohave on construction costs. In some cases we are unable to determine thetotal effect in advance, because there are opposite forces at work. We includesixteen countries in the regression: Denmark, Sweden, Finland, Belgium, theNetherlands, France, the United Kingdom, Ireland, Germany, Austria,Switzerland, Spain, Italy, Portugal, Japan and the United States.

2

We use prices per square metre for four different building types: a mass market one-storeydetached house, a one and a half storey single-family house, an appartment building (withlifts) and an appartment building (no lifts). All prices per square metre are from Spons

European Construction Costs Handbook 2000.3We refer to Byggeomkostningerne i Danmark Erhvervsfremme Styrelsen 2000, for the

precise definition of each variable.

+++= zxy210

lnln


12/28

12

Table 4 Explanatory variables in the correction regression and their expectedeffect on construction costs

Variable increases construction

costs, because

reduces construction

costs, because

Housing patternDegree of urbanisation a higher concentration

of city dwellersincreases the localdemand for buildingprojects

a higher concentrationmakes it possible toachieve economies ofscale

Capital city dwellers a higher concentrationof city dwellersincreases the localdemand for buildingprojects

a higher concentrationmakes it possible toachieve economies ofscale

Economic developmentEconomic growth increased economic

growth generates anincreased demand

increased economicgrowth may be due totechnologicaldevelopment, whichincreases constructionefficiency

Inflation inflation increases the(current) prices ofmaterials and labour

Standard of living a higher standard ofliving increases thedemand for quality ofthe home

The construction market

Construction level ofactivity

increased buildingactivity createsbottlenecks, whichdrives up costs

Size of the constructionmarket

a large market may bedue to high prices as a

result of inefficiency

a large market may bedue to a high level of

activity as a result ofefficiency andeconomies of scale

Climate

Temperature high temperaturesreduce the need forinsulation and heatingsystems


13/28

13

Regression resultsWe then carry out the regression and obtain results as reproduced in Table 5.The regression has reasonable statistical properties and most variables aresignificant if we use a standard significance limit of ten per cent. If a variableis significant, it means that there is statistical evidence to suggest that the

variable in question is different from zero. In turn, this means that there is astatistical correlation between the variable and the construction costs. Mostvariables have the expected signs, however except for the activity in theconstruction market, where increased activity in the market apparentlyreduces costs. These results are further discussed in Appendix 2.

Table 5: Survey of estimation results

Variable Expected sign of

coefficient

Estimated coefficient

(10% significance limit)

Housing pattern

Degree of urbanisation Plus/minus -0.59 (not significant)

Capital city dwellers Plus/minus -0.01 (significant)

Economic development

Economic growth Plus/minus -0.83 (almost significant)

Inflation Plus 1.48 (highly significant)

Standard of living Plus 0.92 (highly significant)

Construction market

Construction level of

activity

Plus -0.43 (significant)

Size of construction

market

Plus/minus 0.89 (significant)

Climate

Temperature Minus -0.02 (highly significant)

Adjusted R2=0.71; F value=14.37 (0.00); number of observations=57

Corrected prices per square metreWe can now use the estimation results to consider which variables have thelargest impact on Danish construction costs. A variable has a major impact onDanish construction costs if (i) the estimated coefficient is large and significantand if (ii) the value of the variable for Denmark is widely different from theaverage value for all countries. Based on this we now calculate for eachsignificant variable the hypothetical price per square metre payable by a

Danish client if the variable in question had a value corresponding to theaverage of the countries included in the survey, see Table 6. The table also


14/28

14

shows how much the price per square metre would hypothetically fall orincrease in each case. If corrected for individual variables, this mostly impliesthat the Danish price per square metre will fall.

Table 6: Corrected price per square metre in Denmark if the value of a

significant variable is set to equal the country average, 1999

Variable Corrected price perprice per square metre

Difference to actualprice per square metre

Market size 8789 139Economic growth 8610 -40Capital city dwellers 8592 -58

Climate 8359 -291Inflation 8356 -294Standard of living 6859 -1791Source: Own estimates

The standard of living is by far the most important variable. If Denmark hadhad a standard of living equivalent to the average of the sixteen countries inour survey, the clients costs would be nearly DKK1,800, or twenty per centlower per square metre, which makes a total of about DKK6,900 per squaremetre. The result can be interpreted so that one of the reasons for Danishclients paying a high price per square metre is that they demand a higherquality as they have a higher standard of living than clients have in most othercountries.

A high rate of inflation signifies all other things being equal that it is a highprice per square metre. This is hardly surprising. We measure the price persquare metre in current prices, and inflation is exactly a measure of theincrease in current prices. As Denmark in the period up to 1999 experienced ahigher rate of inflation than the average of the sixteen countries, this meansthat the price per square metre in Denmark gets lower if inflation is reduced tothe same level as in other countries. In such case the price per square metrewill be about DKK300 lower. This corresponds to about five per cent.

The Danish winter also means that Denmark has higher construction coststhan most other countries. If they were just as warm as the average in the

other countries, the price per square metre would fall by about DKK300 or fiveper cent. For a house of 150 square metres this would lead to savings ofabout DKK45,000 in 1999.

The price per square metre is then corrected for differences in the standardsof living. We calculate the hypothetical costs for each country if the standardof living was exactly the average for all countries, see Table 7. The correctionimplies that the price per square metre will increase for countries such asPortugal, Spain, the United Kingdom, Italy and Ireland. Conversely, the pricesper square metre will drop for countries such as Japan, Denmark, Switzerlandand Germany.


15/28

15

Table 7: Price per square metre for a one-and-a-half to two storey single-family house, corrected for differences in the standard of living, 1999

Country Actual price Price correction Corrected priceAustria 11902 -557 11345

Ireland 7602 1043 8645Italy 6336 2089 8425Sweden 8416 -191 8225France 7002 202 7202Denmark 8600 -1791 6809

Spain 4050 2054 6104Portugal 2960 2822 5782United Kingdom 4183 1548 5731Switzerland 8603 -2929 5674Belgium 5520 -105 5415

Germany 5665 -400 5265USA 5235 -312 4923Netherlands 4854 -144 4710Finland 4691 -185 4506Source: Spons European Construction Costs Handbook 2000 and own estimates

Our calculations show that if we correct the prices per square metre fordifferences in the standards of living, the Danish construction costs wouldmove from second in the top range to rank sixth in the upper half of the groupof countries with average construction costs. The price per square metre pricewould still be higher than in the NSGF countries, but now it is only twenty per

cent higher against, previously, fifty per cent.

The result therefore suggests that part of the reason for the higherconstructions in Denmark is due to the affluence of this society where a clientdemands a higher quality than in other countries.

We can undertake similar calculations for each of the other variables. Butnone other variable has enough impact to change the ranks of countriesaccording to price per square metre. For this reason we have left out thespecific results in this context. All relevant tables can be verified in Appendix2, sub-appendix 1.

However, there is one problem in comparing prices per square metre that hasnot been solved by estimating corrected prices per square metre. The pricesper square metre that we compare are for building a typical one-and-a-half totwo-storey single-family house. The problem is that this typical single-familyhouse is not very well defined. If you asked several architects or constructioneconomists to estimate a price per square metre, you would be certain toreceive different quotes. This means that there are in fact a price differentialbetween typical prices per square metre of a single-family house, and we donot know where in this differential the prices per square metre were taken inthe individual countries. In one country it may be a single-family house ofmedium quality with an average price per square metre. In another country itmay be a house of high quality with a relatively high price per square metre.


16/28

16

This introduces an element of randomness in the comparison of both squaremetre prices and corrected prices per square metre. And, what is worse, wedo not know the direction or the magnitude of the uncertainty.

Therefore, in the next section, we will develop a new price index for identical

houses, with a much better definition and taking the above mentionedproblem much more into account.

3. Comparable price index for Denmark and other countriesWe intend to design a price index for housing construction that provides amore fair view of the construction costs in various countries. We design theindex so as to measure the costs of building precisely the same Danishsingle-family house in the countries in question. In each country there will thusbe precisely the same content of materials in the house we build and price.Thus, we avoid many of the problems (but not all) of comparing constructioncosts for functionallyidentical houses.

The price index is developed in four steps. First, after consulting an architect,we select a typical Danish single-family house. Secondly, we arrange with anexperienced construction economist to survey the house and to prepare acomplete list of components. We focus on components constituting well-defined work items that are priced in national schedules of unit rates. Thirdly,we collect list prices of these items from the schedules of unit rates in theselect countries for comparison. Fourthly, we submit the Danish single-familyhouse to approximate estimating of costs for each country in their nationalcurrencies and convert these costs into a common currency for comparisonbetween the countries.

The index is designed so as to measure the clients costs. The index thusindicates the costs that the client has to pay to the contractor for building thehouse in question, except the purchase of land, finance and value-added tax.

The index calculations are based on the type and volume of the work items forthe house in question. Table 8 shows examples of some of the 63 work itemsinvolved in building the house.

The price of a work item includes all necessary materials delivered to the site,

the necessary labour for mounting and handing over the works aftercompletion and the contractors company overheads and profit. The price ofeach work item is published in the national schedules of unit rates of labourand costs.


17/28

17

Table 8: Examples of work items included in the Danish single-family house

Description UnitHard core filling in making up levels, 150mm capillary breakinghard brick or crushed or broken stone

m3

Lathing with roof battens 38x56mm mFacing bricks type BS red or yellow, gauged mortar flushpointed as work proceeds

m2

Single-glazed casement window, size 650x900mm inhardwood (Meranti) with 38x100mm frame and 75x125mm sill,with single-glazed window pane, U=1.5

unit

Low pressure polypropylene, polythene or UPVC pipes for coldwater supply. Fixed to lightweight concrete walls at 1,00mcentres.15mm diameter, complete with fittings

m

Source: Spons European Construction Costs Handbook 2000

The houseWe develop the index based on a typically Danish single-family house. Afterconsulting with an architect, we chose a one-and-a-half storey single-familyhouse of about 150m2 with a half basement and an outhouse supplied by amedium size Danish prefabricated housing contractor in the Copenhagenarea. The design is shown in Figure 10, however, it should be borne in mindthat the house actually surveyed is purpose designed and is therefore nottruly identical with the depicted house.

Figure 10: The typical Danish single-family house


18/28

18

Accommodation includes a master bedroom and three childrens bedrooms.The position of one of the childrens bedroom makes it suitable as proxy foran office or a hobby room. The two childrens bedrooms are placed towardsone end of the house, sharing a separate bathroom and a toilet. Two bays ateither end of the front provide extensions of the crosswise kitchen/family room

provided with a rich light entrance. A carport complete with outhouse isattached. Finally, the house contains a large bathroom and a cloakroom.

Lightweight concrete panels veneered with brown facing bricks are used forconstruction. Lightweight concrete panels are also used for all internal walls.A w- truss is used at the top of the roof, which is covered by standardconcrete roofing tiles. Insulation complies with Danish standards andrequirements. The carport and outhouse are wooden structures with one-on-two board cladding. Although normally delivered as part of the outfit of aDanish prefabricated housing unit, white goods and kitchen are excluded. Theplan, elevation and section drawings are contained in Appendix 4A to the full

report.

The particular house was subsequently surveyed by an experiencedconstruction economist, who prepared a detailed list of the type and numberof work items. In a few cases we made adjustments to materials comparedwith the original plans to be certain to find comparable prices in as manycountries as possible. A complete list of the work items and a description ofthe individual items are reproduced in Appendix 4B (to the full report).

The pricesWe have collected prices of the individual work items in nineteen (primarilyEuropean) countries: Denmark, Sweden, Austria, Belgium, Finland, France,Germany, Ireland, Italy, Japan, the Netherlands, Poland, Portugal, Slovakia,Spain, Switzerland, Turkey, the United Kingdom and the United States. Acomplete survey of the prices of individual work items in the nineteencountries is reproduced in Appendix 4C to the full report.

All prices, except the prices from Denmark and Sweden, were taken fromSpons European Construction Costs Handbook 2000. This book is publishedby E & FN Spoon (see www.efnspon.com), a respectable British publisherspecialising in national and international price data for the construction sector

(see also www.pricebooks.co.uk). Professional investors use it for costcomparisons of international projects. Unit rates are collected in all countriesaccording to a common methodology developed with the assistance of theCEEC, Comit Europen des Economistes de Construction, (the EuropeanCommittee of Construction Economists). The CEEC holds experience inapplying the same methodology in connection with country-to-countrycomparisons of the construction costs of schools, hospitals and officebuildings4 .

4

See for example the CEEC, Economie de la Construction en Europe Comparaison desMthodes dEstimation Cots, Ecole Polytechnique Fdrale de Lausanne 1998 and B. Drake(ed.), Construction Economics in the Single European Market, E&FN Spon 1995.


19/28

19

The Danish and Swedish cost data were obtained applying the samemethodology as in Spons handbook. Most Danish prices were supplied byV&S Byggedata, a Danish publisher of local prices (see www.vs-byggedata.dk). The Swedish prices were supplied by Mngda AB, a Swedishpublisher of local prices (see www.mangda.se).

The prices were collected as if the house was to be built in the capital city ofeach appropriate country in the spring of 1999. They reflect the contractorscharge invoiced to the client for the particular work item and are based on thecurrent schedule of unit rates, with the addition of the standard cost payable ineach particular country to cover the contractors company overheads, profitand fees for the professional services of architects and engineers. The pricethus includes all materials according to the particular country standard andlabour wages (including taxes, health insurance and other indirect payrollcosts) normally attached to the performance of the appropriate work item inthe particular country.

The prices collected are list price rates. This means that they do not includewage drift or specific company or cyclical discounts. In addition, there may bevariations in the additional standard costs to the contractor for reasons of localpractices or cyclical conditions.

It was impossible to find comparable costs for all work items included in thehouse of our choice. It was possible to find comparable costs for about 63different work items. However, these work items cover a significant part oftotal construction costs of this particular house. In our view the constructioncosts of the selected work items account for eighty-five per cent of the clientstotal costs in Denmark. Non-included work items were, first of all, kitchen outfitand bathroom and utility room equipment as well as installation of a heatingsystem.

There are gaps in data because the cost data of a particular work item in acountry was sometimes missing. In these cases we put a price on such workitems, by assuming that they represented the same proportion of total costsas in Denmark. In most of the cases by far the corrections affected less thanten per cent of the total construction costs, see Table 13 in Appendix 4C tothe full report.

The price indexWe are now able to determine a price index for an identical house by addingup the clients construction costs of the Danish single-family house in each ofthe countries in the survey. The price index indicates the approximateestimating costs (not the actual price), which a contractor will invoice to theclient for the construction of the Danish single-family house, if it were to bebuilt in the particular country. We convert the prices from national currenciesinto Danish kroner by means of the ordinary rate of exchange as well as aPPP conversion factor. But it should be pointed out that in this case the PPPconversion is not as relevant, because we compare products that are in

principle identical for all the countries under review.


20/28

20

Our calculations show that a client has to pay about DKK1.2 million towardsconstruction costs for the single-family house in Denmark. Among theeighteen countries used for comparison Denmark is the most expensivecountry in Europe and the second most expensive country of all countries inthe survey if we convert into a common currency at the ordinary rate of

exchange, see Figure 11 and Table 10. Using PPP conversion factorsinstead, Denmark becomes the third most expensive country in Europe andthe fourth most expensive of all countries in the survey, see Figure 12 andTable 10.

Figure 11: Clients construction costs of the Danish single-family house in 18countries in Danish currency converted at the ordinary exchange rates, 1999

The PPP factor conversion does not upset ranks anyway significantly,because Denmark, Belgium and Japan show much higher costs than all othercountries by ordinary conversion. However, the conversion carries someimportance if we compare the Danish clients construction costs with the levelof the NSGF countries. In the first instance the clients costs are 44 per centhigher in Denmark than in the NSGF countries. In the second instance theclients construction costs are 23 per cent higher.

0 200.000 400.000 600.000 800.000 1.000.000 1.200.000 1.400.000

Japan

Denmark

Belgium

Austria

Germany

Netherlands

France

Ireland

Switzerland

USA

Sweden

United Kingdom

Italy

Finland

Spain

Poland

PortugalTurkey

Danish kroner per square metre


21/28

21

The calculation of a price index for identical housessuggests that constructioncosts are somewhat higher in Denmark as compared with most othercountries normally used for comparison. This is true whether or not we correctfor purchasing power.

The price index is a method of comparison that extensively allow for problemsthat may otherwise exist in price comparisons between countries. Theapproximate estimating costs comprise exactly the same types and quantitiesof materials. This removes most of the criticism against comparisons ofprices.

Figure 12: Clients construction costs of the Danish single-family house in 18countries in Danish kroner using PPP conversion factors, 1999

The result of the analysis is relatively robust to any systematic errors incomputing Danish construction costs. No price comparison is perfect,however. There are two weaknesses that have proved impossible toovercome in developing this index and that require specific mentioning. Firstof all, construction of the Danish house employs materials normally used inDenmark and these materials may not be the appropriate choice abroad. Inthis event, the local market for these materials will probably not be as welldeveloped as in Denmark. The market may be smaller, with no opportunity foreconomies of scale or competition may be less efficient. In both respects the

prices of Danish materials in foreign countries will be higher than in an

0 200.000 400.000 600.000 800.000 1.000.000 1.200.000 1.400.000 1.600.000

Japan

Belgium

Poland

Denmark

Netherlands

USA

Austria

Ireland

Germany

France

Italy

United K ingdom

Sweden

Spain

Portugal

Finland

Switzerland

Turkey

Dan ish kroner per square metre


22/28

22

ordinarily developed market. Thus, there will be a tendency to overestimatingforeign costs compared with the costs in Denmark.

Table 9: Clients construction costs of a Danish single-family house in 18countries converted into Danish kroner by means of exchange rates and PPP

factors, 1999

Country Exchange rate Country PPP factorJapan 1.331.890 Japan 1.371.846Denmark 1.145.531 Belgium 1.367.036Belgium 1.076.406 Poland 1.146.886Austria 903.444 Denmark 1.145.531Germany 877.781 Netherlands 1.111.173Netherlands 874.939 USA 1.099.635France 868.720 Austria 1.084.133

Ireland 838.763 Ireland 1.065.229Switzerland 808.749 Germany 1.009.448USA 796.837 France 1.007.715Sweden 740.826 Italy 948.010United Kingdom 722.321 United Kingdom 881.232Italy 697.066 Sweden 837.134Finland 689.745 Spain 832.058Spain 554.706 Portugal 809.861Poland 456.927 Finland 786.309Portugal 437.763 Switzerland 776.399Turkey 224.265 Turkey 479.928

Source: Spons European Construction Costs Handbook 2000and own estimates

Secondly, we may have eliminated the externaldifferences in quality. Theseare differences in quality due to a different choice of materials. However, theremay still exist internaldifferences in quality. These are differences in qualitydue to fact that the same materials are of different qualities in differentcountries. If the qualities of materials and workmanship are higher in Denmarkthan in other countries, the Danish costs will tend to be overestimatedcompared with those in other countries.


23/28

23

Appendix 1:Four analyses of construction costs in European countriesCopenhagen Economics have reviewed four previous studies of constructioncosts in a number of European countries and compared their results withthose presented in this report. We reproduce the review results in this

appendix. The four analyses were undertaken by the Danish BuildingDevelopment Council (1989), the German Ministry of Housing andConstruction (1993), the Nordic Council of Ministers (1991-93) and theEuropean Committee of Construction Economists (1992). The figures inparenthesis indicate the year when the construction costs were surveyed.These analyses are often difficult to compare for lack of documentation or fordifferences in methodology. The results from comparable analyses essentiallysupport the conclusion in this report.

The analyses rely on three methods for their comparisons of constructioncosts: i) systematic surveying of work items; ii) systematic expert opinions;

and iii) ad hoc expert opinions. The first method is used by this report, by theGerman Ministry of Housing and Construction (partly) and by the EuropeanCommittee of Construction Economists. The conclusions of these analysesare fairly compatible, even if the comparative basis is limited. The secondmethod is used by the Nordic Council of Ministers. The conclusions are to acertain extent still compatible, but the comparison also reveals that systematicexpert opinions may vary a great deal if made by different groups of experts atdifferent points in time. The third method is used by the Danish BuildingDevelopment Council and by the German Ministry of Housing andConstruction (partly). It seems to be hard to compare such estimates witheach other and with the results of other analyses.

In the following we present each analysis individually.

Analysis 1: The Danish Building Development Council, 1998The Danish Building Development Council prepared a note on productivity inconstruction in 1998. It contains a comparative study of the construction costsin Denmark, the United Kingdom and Germany. The method applied was anad hoc expert opinion. The construction costs were measured as prices persquare metre in an unspecified building in 1989, with a breakdown of pricesinto seven main components. The note fails to specify the exact country area

for collection of data or whether prices include value-added tax or not. Noinformation is offered as to how the figures were generated, for example byexpert opinion or by specific surveying of the individual work items. Theconstruction costs were converted into a common currency (Danish kroner) bymeans of both ordinary and purchasing power corrected exchange rates.

The analysis shows that Danish construction costs per square metre in 1989was about thirty per cent higher than the corresponding German costs andfive per cent higher than the corresponding costs in the United Kingdom byordinary exchange rate conversion. Instead, if purchasing power correctedexchange rates are used, the Danish construction costs would be twelve per

cent higher than the German ones, but twenty-two per cent lower than the UKcosts.


24/28

24

The note concludes that an in-depth study of the prices of the individualbuilding services shows, however, that the cost level is largely the same in theindividual countries in comparable areas . The note does not disclose thelogic of arriving at this conclusion based on the above figures.

All analyses in this report confirm that the Danish construction costs forsingle-family houses are higher than those in Germany whether converted byordinary or purchasing power corrected exchange rates, see Tables 3, 7 and9. The same analyses also conclude that Danish construction costs are higherthan in the UK whether converted by ordinary or purchasing power correctedexchange rates. However, it should be pointed out that it is difficult tocompare the results of these two reports. The data are ten years apart, and itis far from certain that the prices are for comparable constructions or in otherways are comparable.

Analysis 2: Kommission zur Kostensenkung und Verringerung vonvorschriften im Wohnungsbau, Germany, 1994The German Ministry of Housing and Construction (at the federal level) set upa commission in the early 1990s to study the possibilities of lowering theGerman construction costs. In 1994, the commission issued a report that alsocompared construction costs in Germany with similar costs in Denmark,Norway and the Netherlands.

Germany-NetherlandsThe commission carried out a detailed survey of construction costs byerecting the same Dutch house in both the Netherlands and in Germany(Meurer, 1994). The method applied is a (i) systematic surveying of workitems and in principle similar to the method applied in this report, section C.3in the full report.

The Dutch house was a two-storey terrace house with an floorage of about125 square metres built as the central house of a group of sixty houses inthe autumn of 1993 in the Netherlands and in the spring of 1994 in Nordrhein-Westphalen in Germany. The prices originated from a detailed surveying offorty work items and comprised the costs of materials and labour, thecontractors company overheads and profit including value-added tax. The

house in the Netherlands was built according to Dutch customs andstandards, and the house in Germany was built according to Dutch customsand German standards. The prices of the individual work items were obtainedfrom Dutch suppliers, price-lists and from a regular tender from a Dutchcontractor to build the houses in question in Germany. The total costs wereconverted into a common currency using normal exchange rates.

The computations showed that the Dutch construction costs were aboutDKK3,2505 per square metre exclusive of 18.5 per cent Dutch value-addedtax whereas the German construction costs were about DKK4,040 per square

5 All prices are converted from Deutschemark into Danish kroner at the ordinary averageexchange rate for the year 1993.


25/28

25

metre exclusive of 15 per cent German value-added tax. The Germanconstruction costs were thus about twenty-four per cent higher than the Dutchcosts. The German house was considered to have a higher quality inparticular areas, which could explain about three percentage points of thedifference and also the higher German standards necessitated additional

costs of five to ten percentage points.

The report subsequently argued that the Dutch construction methods might beforty to fifty per cent more efficient than the German method and consideredthat the same house built according to German methods would have showedconsiderable higher costs in the interval from DKK5,600 to DKK6,800exclusive of value-added tax. The report does not explain how to arrive atthese figures.

For comparative purposes, all the analyses of this report, except one, confirmthat the German construction costs are higher than or similar to the Dutch

construction costs.

Germany-Denmark-NorwayThe comparison of the construction costs in Germany, Denmark and Norwayrelies on expert opinion, and computations were not nearly as thorough aswith the Netherlands (Aring and Tornow, 1994). The applied method was an(iii) ad hoc expert opinion. The commission stated that a typical price persquare metre of single-family houses in Denmark was about DKK5,900 in1993, whereas in Norway it varied between DKK3,900 and DKK6,700 and inGermany between DKK7,100 and DKK11,4006. The prices per square metrewere pure construction costs and did not include costs in connection with theacquisition of land. It does not specify which construction costs wereotherwise included in the individual prices. Neither does it specify whether theprices were inclusive or exclusive of value-added tax.

The report quotes several examples to illustrate the difficulty in comparingconstruction costs across countries. For example, the square area statedagainst the price per square metre can be different. Sweden uses an overallgross measure where the area includes both internal and external walls.Denmark and Norway use a gross measure in which the area includes theinternal walls but not the external walls. Germany uses a net measure where

neither the external nor the internal walls are included. However, the reportdoes not specify whether the authors have attempted to correct for thesedifferences or not.

Our analyses in the present report are unable to confirm that the Danishconstruction costs are lower than in Germany. All results suggest that theDanish construction costs exceed the German ones. However, it should beemphasised that it may be difficult to assess to which extent the results of thetwo analyses are comparable.

6The Norwegian differential is mainly due to variations in quality, whereas the German

differential is mainly due to regional variations. No reason is given for not indicating a Danishdifferential.


26/28

26

Analysis 3: The Nordic Council of Ministers, Construction costs in theNordic Countries and Western Europe, 1997The Nordic ministers for housing and construction in the Nordic Council ofMinisters have ordered an analysis of the construction costs in the Nordiccountries compared with other countries (Engebeck and Wigren, 1997). In the

analysis the method applied is a (ii) systematic expert opinion and is largelyidentical with the method of analysis applied in this report, see Section C.2 inthe full report. However, the data are from a previous period since theconstruction costs were collected in 1991. The construction costs are the(gross) price which a client must pay in the particular country to build onesquare metre of a multi-family house in the normal standard of the particularcountry (i.e. functionally identical houses), excluding the purchase of land andfinance. The prices are estimated by local experts in national currencies andare collected from twenty primarily European countries. The prices areconverted into a common currency using the ordinary exchange rates in forcein 1991. The report also computes costs in a common currency, using the

1993 exchange rates. The aim is to study the sensitivity to fluctuations in theexchange rate. The data source is Spons European Construction CostsHandbook (1992).

The prices per square metre have then been corrected for the factorscontributing to functionally identical houses containing different materials andthus showing different costs. It is the same methodology as described inAppendix 3 to the full report, but in this case the correction is based on asomewhat different group of explanatory variables and on a slightly largergroup of countries. The results of the two analyses do not allow immediatecomparison, but a simple conversion is able to constitute a comparable basis.Table 1 contains a comparable survey of prices per square metre andcorrected prices per square metre from the two analyses complete withranking of the countries.

A comparison of the actual ranking of the countries shows some coincidencein country position. Denmark is in the top range in both analyses, andcountries with double-digit rank appear largely the same in the two analyses.However, there are some marked exceptions. Finland was clearly the mostexpensive country in 1991, but plummeted to twelfth place in 1999. Austria isclearly the most expensive country in 1999, and takes first place in 1999.

Austria was by far the most expensive country in 1999 compared with beingonly fifth in 1991. Part of the explanation for these significant differences,especially in the case of Finland, may however be attributable to considerablefluctuations in the exchange rates taking place in the early 1990s. Instead, byconverting the prices into a common exchange rate at the 1993 average, theFinnish construction costs are up to twenty-five per cent lower7.

There can be at least four explanations for these deviations. First, thecountries could be in different phases of the trade cycle when the surveys

7 Alternatively, PPP conversion factors could be used as they are more stable vis--visfluctuations in exchange rates.


27/28

27

were made. In 1991 the Finnish economy had not yet collapsed after thedebacle in Eastern Europe. Secondly, the expert opinions could be based ondifferent conditions in the two years. There is thus no precise definition as tohow the prices per square metre should be made up, and the expert opinionsmay be subject to some degree of randomness. Thirdly, the 1991 figures are

for a multi-family house with several flats, whereas the 1999 figures are for asingle-family house. There is no rejecting that there could be differences inranks due to the building type. Fourthly, the data on which the results arebased are almost a decade apart.

Table 10: Actual and corrected prices per square metre for a number ofcountries and their ranking, 1991 and 1999

Danish kroner Ranking

Actual Corrected Actual Corrected

1999 1991 1999 1991 1999 1991 1999 1991Austria 11902 6963 11345 5770 1 5 1 5

Ireland 7602 4731 8645 5892 5 11 2 4Italy 6336 5923 8425 5462 7 8 3 6Sweden 8416 6561 8225 4920 4 7 4 10France 7002 4382 7202 3893 6 12 5 14Denmark 8600 9651 6809 7107 3 2 6 3Spain 4050 3827 6104 4756 14 13 7 13Portugal 2960 3546 5782 7749 15 14 8 1U.K. 4183 5164 5731 4980 13 10 9 9

Switzerland 8603 7950 5674 4832 2 3 10 12Belgium 5530 5756 5415 5018 9 9 11 8Germany 5665 7039 5265 5298 8 4 12 7USA 5235 3417 4923 2852 10 15 13 15Finland 4691 9917 4506 7240 12 1 15 2Netherlands 4854 4710 11 14Norway 6644 4876 6 11

Analysis 4:The European Committee of Construction Economists(CEEC), 1992

The European Committee of Construction Economists (CEEC) has alsoconducted comparative analyses of construction costs in Europe (theEuropean Committee of Construction Economists, 1992). The applied methodis a (i) systematic surveying of work items and somewhat similar to themethod applied in Section C.3 in the full report, but the computations are foranother building type and are not carried out at the same detailed level. Thefictitious buildings for costing included a school and an office buildingconstructed in 1992. Either building was split into 66 major work items andeight consulting services.

The school is a basic state school for 500 pupils for construction in a majorprovincial town in the appropriate country. It is a two-storey building with a


28/28

basement and a gross floorage of 3,440 square metres. The project wasprepared by the French delegation to the CEEC. The school was priced infour countries: Germany, Denmark, Spain and the United Kingdom8 .

The price per square metre in Danish kroner was converted by means of the

ordinary rate of exchange exclusive of value-added tax, producing anestimated DKK8,350 in Germany, DKK7,500 in Denmark, DKK4,300 in theUnited Kingdom and DKK2,870 in Spain. Corrected by purchasing powerthese German, UK and Spanish prices would increase compared with theDanish prices, but not so much so that the United Kingdom and Spain wouldhave larger purchasing power corrected costs than Denmark. The Danishconstruction costs are comparatively high, but the comparison only includesvery few countries.

The office building is a private six-storey building for rental, with a totalfloorage of nearly 10,000 square metres and an underground parking space

of 800 square metres. The office building was aimed for construction in thecapital city of the appropriate country in 1992. This project was also preparedby the French delegation to the CEEC. The building was priced in fivecountries: Germany, Denmark, Spain, Ireland and the Netherlands9 .

The price per square metre in Danish kroner was converted by means of anordinary rate of exchange exclusive of value-added tax, producing anestimated DKK7,800 in Denmark, DKK6,050 in Germany, DKK5,100 in bothIreland and the Netherlands and DKK2,300 in Spain. Corrected by purchasingpower, all other prices would increase compared with the Danish prices, butnot to so much so that other countries would have larger purchasing powercorrected costs than Denmark. The Danish construction costs are high, butthe comparison only includes very few countries.

8

In principle, prices also exist from Finland, but they are considered of poor quality. The UKconstruction costs are adjusted upwards by twenty per cent to compensate for the lack ofprices of consulting services.9

In principle, prices also exist from Finland, but they are considered of poor quality. The Irish

construction costs are adjusted upwards by twenty per cent to compensate for the lack ofprices of consulting services.

Documents

costruction