Validation of the Construction and Civil Engineering …siteresources.worldbank.org/ICPINT/Resources/270056-1255977007108/...ADJUSTMENT FOR PRODUCTIVITY ... typical mark-ups and professional

International Comparison Program

6th Regional Coordinators Meeting April 23-25, 2012

Paris

Validation of the Construction

and Civil Engineering Survey

Global Office

Table of Contents

1. INTRODUCTION ............................................................................................................................................. 3

2. OVERVIEW OF APPROACH FOR CONSTRUCTION AND CIVIL ENGINEERING PPPS ........................................... 3

2.1. ESTABLISHMENT OF SUB-HEADINGS ...................................................................................................................... 4 2.2. SUB-HEADING PPPS .......................................................................................................................................... 5

2.2.1. Construction Expenditure and Resource Mixes ................................................................................... 6 2.2.2. Establishment of Sub-Heading weights ............................................................................................... 7 2.2.3. Aggregation of PPPs ............................................................................................................................ 8

2.3. ADJUSTMENT FOR PRODUCTIVITY ......................................................................................................................... 8

3. VALIDATION OF CONSTRUCTION AND CIVIL ENGINEERING SURVEY .............................................................. 8

3.1. INTRA-COUNTRY VALIDATION .............................................................................................................................. 9 3.1.1. Prices ................................................................................................................................................... 9 3.1.2. Equivalent materials .......................................................................................................................... 10 3.1.3. Unit of Measurement and Dimensions .............................................................................................. 10 3.1.4. Importance ........................................................................................................................................ 11 3.1.5. Other information .............................................................................................................................. 11 3.1.6. Completeness of questionnaire ......................................................................................................... 13

3.2. INTER-COUNTRY VALIDATION ............................................................................................................................ 13 3.2.1. Initial Data Validation ....................................................................................................................... 13 3.2.2. Validation of price data using Validation Tables ............................................................................... 13 3.2.3. Importance ........................................................................................................................................ 14 3.2.4. Resource Mixes .................................................................................................................................. 14 3.2.5. Construction PPPs .............................................................................................................................. 16 3.2.6. Approximate Project Prices ............................................................................................................... 16

3.3. GLOBAL VALIDATION ....................................................................................................................................... 17

ANNEX 1: MATERIAL INPUTS ............................................................................................................................... 18

ANNEX 2: COMPLETE LIST OF HEADINGS AND ITEMS FOR PPP COMPUTATION ................................................... 19

ANNEX 3: LIST OF HEADINGS AND ITEMS FOR VALIDATION ................................................................................. 24

ANNEX 4: CLASSIFICATION OF COUNTRIES INTO INCOME GROUPS ..................................................................... 26

ANNEX 5: LIST OF PROJECT PRICE HEADINGS AND ITEMS FOR VALIDATION ........................................................ 29

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Validation of the Construction and Civil Engineering Survey1

1. Introduction

The 2011 ICP Construction and Civil Engineering survey is based on input approach, where countries price 50 basic and common resources for construction work which are selected to correspond with the main inputs to national construction output. In addition, respondents to a national survey provide information on importance, resource mixes, typical mark-ups and professional fees, and approximated project prices. These data are used to calculate and validate the Construction and Civil Engineering PPPs.

This chapter of the ICP Operational Guide provides an overview of the steps required to calculate PPPs for the Construction and Civil Engineering component of the GDP. In addition, covered is the process for validating input data and subsequent PPPs. The chapter is divided into 5 sections, starting with the introduction. Second section describes method for calculating the PPPs and the following three sections cover the validation steps at Country, Regional and Global levels.

2. Overview of approach for Construction and Civil Engineering PPPs

Construction is one of the two categories under Gross Fixed Capital Formation Aggregate. The Category is further broken down into three Groups, Classes and Basic Headings (BHs) as shown in Table 1 below. The objective of the Construction and Civil Engineering survey is to estimate PPPs for the three BHs and to further aggregate these up to the Construction Category.

Table 1: Construction headings

Level ICP Code Heading

Aggregate 150000 GROSS FIXED CAPITAL FORMATION

Category 150200 CONSTRUCTION

Group 150210 RESIDENTIAL BUILDINGS

Class 150211 Residential buildings

BH 150211.1 Residential buildings

Group 150220 NON-RESIDENTIAL BUILDINGS

Class 150221 Non-residential buildings

BH 150221.1 Non-residential buildings

Group 150230 CIVIL ENGINEERING WORKS

Class 150231 Civil engineering works

BH 150231.1 Civil engineering works

1 This chapter is prepared by Marko Rissanen with input from with input from Michel Mouyelo-Katoula and Nada

Hamadeh, based on the material prepared by Jim Meikle.

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In order to reach this objective, four separate and consecutive steps are to be taken. First step is formation of Sub-Headings, followed by calculation of Sub-Heading PPPs. Next, PPPs are aggregated up to the level of Category. Finally, the Category level PPPs are adjusted for productivity differentials. Each step is described below in detail.

2.1. Establishment of Sub-Headings

The 50 basic and common construction resources are grouped into three Sub-Headings as follows:

Materials Sub-Heading: 38 material inputs;

Equipment Sub-Heading: 5 types of equipment hire services;

Labor Sub-Heading: 7 categories of construction labor.

These Sub-Headings are allocated under the three Construction BHs (Residential and Non-residential buildings and Civil engineering work), so that each BH has three Sub-Headings, totaling to nine Sub-Headings.

Inputs included in the Equipment and Labor Sub-Headings are identical for all BHs, but the number and set of material inputs included in the Materials Sub-Heading may differ depending on the BH. This is because items, such as concrete and steel reinforcement, can be relevant for all construction projects, and thus for all BHs, while other items, sheet roofing and sanitary ware, for example, may be used only in residential and non-residential projects. Annex 1 gives indicative list of relevant materials for each BH.

National experts are required to indicate if a material is commonly used or, in other words, whether the material in question is relevant, for each type of construction project. This is done by deeming materials either important or not-important for each BH. It is suggested that indicative list given in Annex 1 is used as a starting point. Table 2 below summarizes the headings and number of items included in each Sub-Heading and BH. The actual number of items under Material Sub-Heading may vary between the BHs, as explained above.

Table 2: Sub-Headings and associated number of items

Level ICP Code Heading # Items

BH 150211.1 Residential buildings 50

Sub-Heading Materials 38

Sub-Heading Equipment 5

Sub-Heading Labor 7

BH 150221.1 Non-residential buildings 50



Sub-Heading Labor 7

5

BH 150231.1 Civil engineering works 50



Sub-Heading Labor 7

2.2. Sub-Heading PPPs

Having the Sub-Headings established for all countries and each BH, the next step is calculation of the PPPs. For practical computation reasons, Sub-Headings are treated as “Basic Headings” in the subsequent process for calculating the PPPs, whereas actual BHs are treated as aggregate level as shown in Table 3 below.

Table 3: Sub-Headings as “Basic Headings”

Actual Levels Considered as ICP Code Aggregate or BH

Aggregate Aggregate level 150000 GROSS FIXED CAPITAL FORMATION

Category Aggregate level 150200 CONSTRUCTION

Group Aggregate level 150210 RESIDENTIAL BUILDINGS

Class Aggregate level 150211 Residential buildings

BH Aggregate level 150211.1 Residential buildings

Sub-Heading Basic Heading 150211.11 Materials

Sub-Heading Basic Heading 150211.12 Equipment

Sub-Heading Basic Heading 150211.13 Labor

Group Aggregate level 150220 NON-RESIDENTIAL BUILDINGS

Class Aggregate level 150221 Non-residential buildings

BH Aggregate level 150221.1 Non-residential buildings




Group Aggregate level 150230 CIVIL ENGINEERING WORKS

Class Aggregate level 150231 Civil engineering works

BH Aggregate level 150231.1 Civil engineering works




The method for calculating Sub-Heading PPPs is unweigted CPD. This method is selected instead of CPRD or weighted CPD, as all items included in the calculation of PPPs are deemed important, as explained

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above in section 2.1 Establishment of Sub-Headings2. As all items are important, different calculation methods yield the same results.

The next step is the aggregation of the Sub-heading PPPs to the actual BH level. As construction BHs are identical to their parent classes and groups, one single aggregation step will fill all these identical aggregation levels. In this process both National Account Expenditures and Resource mixes are used, as explained below.

2.2.1. Construction Expenditure and Resource Mixes

National Accounts Construction Expenditure data is reported for the Construction headings listed in Table 1 above.

Resource Mixes are cost of materials, equipment and labor expressed as a percentage share of the total expenditure value of a BH. The shares in different clusters of countries are dependents to the skills and technology available in the countries and other factors, and average values can vary from country to country, within countries, and across types of work3.

Primarily, information on Resource Mixes will be collected during the price survey. However, in cases where national construction experts are not able to provide this information or if there is considerable doubt on the reliability of this information, default values estimated based on gross national income (GNI) per capita and relative construction labor costs can be used. Indicative values are presented below in section 3.2.3. Resource Mixes.

2 Classifying an item as important in the Construction and Civil Engineering survey means that the material in

question is commonly used in residential, non-residential or civil engineering construction projects within a country. Respectively if an item is classified as not-important, it means that the material in question is not used commonly in construction projects within the country. As such, it is less likely to represent the construction material costs for the country realistically.

3 In most countries and in most types of work, with possible exception of civil engineering work, Material inputs

represent the greatest proportion of construction value, typically as high as 50 – 75%. Building work labor represents the next greatest share, approximately 20 – 40%, whereas Equipment has the smallest proportion with 5 – 20% share. In civil engineering work, the relative significance of labor and equipment can be reversed, and materials and products may not be the most significant component.

2.2.2. Establishment of Sub-Heading weights

Aggregation of the Sub-Heading PPPs to the actual BH level requires Sub-Heading Expenditure. These are formed by breaking down the BH level Expenditure over each Sub-Heading using Resource Mixes as weights. As an example in Table 4 below, Nominal Expenditure for Construction Category is 70, which is further broken down into Groups and Classes, as shown in the Table. Column “RM Shares” gives Resource Mix shares for each Sub-Heading. The last column gives the Nominal Expenditures to be applied, when the Sub-Headings are aggregated up to the BH level.

Table 4: Establishment of BH weights

Actual Levels Considered as Code Aggregate or BH Nominal Expenditure

(LCU) RM

Shares RM weighted Nominal

Expenditure (LCU)

Aggregate Aggregate level 150000 GROSS FIXED CAPITAL FORMATION 120

Category Aggregate level 150200 CONSTRUCTION 70

Group Aggregate level 150210 RESIDENTIAL BUILDINGS 18

Class Aggregate level 150211 Residential buildings 18

BH Aggregate level 150211.1 Residential buildings

Sub-Heading Basic Heading 150211.11 Materials 70% 12.6

Sub-Heading Basic Heading 150211.12 Equipment 5% 0.9

Sub-Heading Basic Heading 150211.13 Labor 25% 4.5

Group Aggregate level 150220 NON-RESIDENTIAL BUILDINGS 12

Class Aggregate level 150221 Non-residential buildings 12

BH Aggregate level 150221.1 Non-residential buildings

Sub-Heading Basic Heading 150221.11 Materials 67.5% 8.1

Sub-Heading Basic Heading 150221.12 Equipment 7.5% 0.9

Sub-Heading Basic Heading 150221.13 Labor 25% 3.0

Group Aggregate level 150230 CIVIL ENGINEERING WORKS 40

Class Aggregate level 150231 Civil engineering works 40

BH Aggregate level 150231.1 Civil engineering works

Sub-Heading Basic Heading 150231.11 Materials 50% 20.0

Sub-Heading Basic Heading 150231.12 Equipment 27.5% 11.0

Sub-Heading Basic Heading 150231.13 Labor 22.5% 9.0

2.2.3. Aggregation of PPPs

After the Sub-Headings weights are established, the Sub-Heading PPPs can be aggregated to BH, Class, Group and finally up to the level of Construction Category, using the selected aggregating method4.

2.3. Adjustment for productivity

The final step in the calculation process is adjustment of the Category level PPPs for productivity differentials. The main reason for productivity differentials across countries is on how efficiently the material, labor and capital inputs are used in the transformation into output quantity. If this efficiency is lower, the output price will be higher, as more input quantities are needed to arrive at the same output quantity. Respectively if this efficiency is higher, the output price will be lower as less input quantities are needed to get the same output quantity.

Adjustment for productivity can be done by applying factors based on specific capital and productivity levels of a country. Applying this method would means that capital stocks are be estimated based on investment flows by asset type for each country, and that total factor productivity level would be derived from labor and capital income shares, using a production function framework5.

3. Validation of Construction and Civil Engineering Survey

Overall validation process for the Construction and Civil Engineering Survey follows the general ICP validation process. This means that the validation work is carried out on three stages as follows:

1. Intra-country validation at country level;

2. Inter-country validation at regional level;

3. Global validation at global level.

However, due to distinct methodology applied for the survey, a number of steps are specific to the Construction and Civil Engineering Survey. This section focuses on these specificities. General description of the ICP validation process can be found in the Validation of Household Consumption Survey and Validation Tables chapters of the ICP Operational Guide.

4 The selected method can be Elteto, Koves, Szulc (EKS), Geary-Khamis (GK) or Iklé.

5 The work on the productivity adjustment in the 2011 ICP round is ongoing.

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3.1. Intra-country Validation

During the intra-country validation process, National Coordinators (NCs) together with national construction experts verify completeness and correctness of the information collected during the survey. The sections below cover the checks needed to be done for prices, equivalent materials, unit of measurements and quantities, importance, and for other reported information.

3.1.1. Prices

Regarding the prices to be reported, NCs must confirm with national construction experts that the prices:

- Are the prices paid by established contractors to their suppliers;

- Are reflecting the buying power of contractors undertaking significant amounts of work6;

- Include all non-recoverable taxes;

- Exclude all recoverable taxes, such as the Value Added Tax (VAT);

- Are representing national average prices7;

- Are the prices for typical construction projects within a country8;

- Are representing annual averages;

Further, prices should be provided for products that are commonly available and commonly used in the country; they should not be provided for products that:

6 The size of projects can influence the cost of resources, particularly materials and equipment – large quantities

and long periods of hire, for example, can reduce unit costs and vice versa. Prices should be provided for medium-sized projects, that is, projects which are not unusually small or unusually large.

7 Construction prices can vary across countries as a result of local resource and distribution costs, geographic,

seismic or climatic conditions, local market conditions, etc, particularly in large countries and where these variations could be significant. National construction experts should consider the extent of geographical variations when pricing items and making a judgment on what represents the national average.

8 Construction prices can vary depending on detailed site conditions, for example, constrained city centre sites,

greenfield sites adjacent to urban areas and remote sites that are difficult to access; when pricing items, respondents of the price survey questionnaire should assume reasonable site contexts with good access.

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- Involve “special” items i.e., items that are either not generally available or is only available at a premium price in the country.

3.1.2. Equivalent materials

Materials included in the construction survey have been selected on the basis of their common use across countries. However, listed materials may not be always available or used in all countries and in these cases, equivalent materials are selected and priced.

When equivalent materials are to be priced, NCs need to verify the following with the national construction experts:

- Alternative material is indeed equivalent to the original material9;

- Substitution is clearly indicated in the price survey questionnaire, and sufficient information on the material is provided.

3.1.3. Unit of Measurement and Dimensions

Each material, equipment and labor item defines a preferred unit and respective quantity in which the prices are to be reported. It is crucial to check that the reported prices respond to the requested unit.

In addition the prices can be reported in alternative units, i.e. either in based on metric or imperial systems. If this is done, NCs need to check that the following points are taken into account:

- Alternative unit is clearly indicated and all relevant information is given;

- Alternative unit can be converted to the preferred unit. For example, if cubic meters are asked, prices can be reported in cubic feet, however, price shall not be reported in running meters, which cannot be converted to cubic meters.

Errors and problems in units are the most common reason for incomparable prices across the countries. Thus, utmost attention should be paid to this point during the intra-country validation.

9 For example, where countries do not have clay and use alternative materials for bricks, prices for the alternative

bricks should be provided and the alternative description noted. However where countries do not use bricks at all but only use concrete blocks, prices for concrete blocks should not be provided since they cannot be treated as equivalent to bricks. In this case the brick item should not be priced. Another example is that in some countries copper pipe is not used; instead used are steel and plastic pipes. In this case steel pipe can be treated as equivalent to copper pipe and respective prices should be provided and the alternative description noted. Plastic pipes are not considered equivalent to copper or steel pipes.

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3.1.4. Importance

National experts indicate whether a material is commonly used in the construction projects within the country or not. This is done by indicating importance of items separately for each BH.

Regarding the classification of items as important and unimportant, NCs should verify that the following points are taken into account:

- If a material is available and commonly used in all three BHs, it should be priced and classified as important by inserting “1” in each BH’s importance column;

- If a material is available and commonly used in only some BHs, it should be priced, and classified as: important (1) for those BHs for which the material is important; and unimportant (0) for those BHs for which the material is unimportant;

- If a material is available but not important for any of the BHs, a price should be provided, but classified as unimportant material (0) for all BHs;

- If a material is not available and not used, it should not be priced and classified as unimportant (0) material for all BHs.

Finally, NCs should check that importance is indicated for each item.

3.1.5. Other information

Percentages for Resource Mixes, mark-ups and professional fees should be provided for each Construction BHs separately. Table 5 below gives an example of questionnaire used to collect this information. Regarding these reported figures, NCs need to ensure that:

- Provided information is complete for each element (yellow cells in Table 5);

- Percentages add up to total figures (underlined figures in Table 5).

NOTE: The current price survey questionnaire asks respondents to indicate the importance of an item with an asterisk (*). However for the sake of further data processing, numbers should be used instead to classify an item as important or unimportant:

- “1”: Material is important for a given BH (Residential, Non-Residential or Civil work)

- “0”: Material is unimportant for a given BH (Residential, Non-Residential or Civil work)

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Table 5: Example of a completed questionnaire

The mix of construction resources

Residential buildings

Non-residential buildings

Civil engineering works

1 Construction materials and products 30.0% 30.0% 20.0%

2 Construction equipment 7.5% 10.0% 30.0%

3 Construction site labor 62.5% 60.0% 50.0%

Total project value 100% 100% 100%

Contractors’ mark-ups

Cost headings




1 Total mark-up of which: 25.0% 30.0% 25.0%

2 General site costs and temporary works 18.0% 21.0% 18.0%

3 Head office overheads 2.0% 4.0% 2.0%

4 Profit 5.0% 5.0% 5.0%

5 Other contractors costs (please specify) N/A N/A N/A

Professional fees

Cost headings




1 Overall percentage addition for professional services

12.0% 13.0% 11.0%

Reporting approximate project prices is voluntary, but when these prices are given, NCs should confirm the following points with the national experts that the prices:

- Represent annual average prices; mid-year prices can be treated as such;

- Refer to a midpoint in a range of prices. This means that in case a country has a range of mid-year prices for a given project, the middle price should be selected and reported10;

- Are those charged by construction contractors and paid by purchasers. For example, purchasers can be housing developers or public authorities;

10 In practice it may be useful to provide several prices per location and then take the midpoint (or average) per

location which would then be used to determine the national midpoint or national average.

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- Exclude external works11; and

- Exclude the value of land.

3.1.6. Completeness of questionnaire

Prior to submission of the questionnaire, it has to be checked that all required information is provided. It is extremely critical to check the completeness of prices and related quantities.

3.2. Inter-country Validation

During the inter-country validation, RCs together with NCs, check the completeness and correctness of the data submission and conduct validation of price and metadata across countries.

3.2.1. Initial Data Validation

Upon verification of the submitted data, RCs should conduct the following checks:

- Completeness of questionnaires;

- Comparability of unit of measurement in which the prices are provided;

- Initial comparability of equivalent materials.

If any of the above mentioned points require further review, it should be checked with the NCs right after the submission and prior to entering the next validation phases.

3.2.2. Validation of price data using Validation Tables

After initially reviewing the submitted data, the next step is to validate the data using Validation Tables, i.e. either Quaranta or Diknanov Tables.

For practical price validation purposes these tables can calculate by treating the Sub-Headings for Materials, Equipment and Labor as Basic Headings and further by including all items under these Basic Headings as follows:

11 External works are construction works often included in contracts, but outside the external walls of the building

concerned. They may include boundary walls, footpaths, landscaping, car parking and utilities outside the building. They are excluded because they are site dependant and extremely variable in scope.

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- Materials BH: 38 material inputs;

- Equipment BH: 5 types of equipment hire rates;

- Labor BH: 7 categories of construction labor.

This means that all 38 material inputs are included in the Materials Sub-Heading, without distinction of BH specific selection of items, which were presented in Table 2 above. The reason behind is that while each submitted average price has to be validated, there is no need to replicate each average price for each BH, since they are identical. Further, it makes sense to compare relative prices across countries for all materials together, rather than clustering them according to actual construction project usage for each BH.

Annex 3 gives a list of Sub-Headings and items together with the respective coding that can be used for price validation purposes.

After the calculation of the Validation Tables, analysis is to be conducted following the steps introduced in the chapter Validation of Household Consumption Survey of the ICP Operational Guide.

3.2.3. Importance

It is important to validate the provided information by checking:

- Plausibility of the classification within a country;

- That the rationale for classifying item as important is comparable across the countries;

- That sufficient number of items is classified as important.

RCs should review doubtful cases regarding the classification with NCs, as differences in the interpretation of the approach can lead into biased results when the PPPs are being calculated.

3.2.4. Resource Mixes

As noted earlier, an initial set of resource percentages has been estimated centrally by the Global Office. These figures are presented in Table 6 below.

The clustering of countries is based on:

- Gross national income (GNI): Higher, Middle and Lower

- Relative construction labor costs: Higher, Middle and Lower

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Gross national income (GNI) per capita is used as a proxy for estimating resource mix differentials, as it can be suggested that the main factors influencing resource mixes across countries, particularly for building work, are the relative wealth of the countries and, within countries, the relative wage levels of construction workers. The shaded areas indicate less plausible combinations of national wealth and cost of construction labor. Annex 4 gives clustering of countries based on GNI per capita and construction labor costs. Countries will be further clustered based on the relative labor costs, based on the data derived from the Construction and Civil Engineering price survey.

Table 6: Initial estimated Resource Mixes

Relative cost of construction labor

Gross national income (GNI)

Higher Middle Lower

Residential building

Higher

Labor 30%

Equipment 7.5%

Materials 62.5%

Middle

Labor 25% Labor 25%

Equipment 5% Equipment 5%

Materials 70% Materials 70%

Lower

Labor 20% Labor 20% Labor 20%

Equipment 2.5% Equipment 5% Equipment 7.5%

Materials 77.5% Materials 75% Materials 72.5%

Non-residential building

Higher

Labor 30%

Equipment 10%

Materials 60%

Middle

Labor 25% Labor 25%

Equipment 7.5% Equipment 7.5%

Materials 67.5% Materials 67.5%

Lower

Labor 22.5% Labor 20% Labor 17.5%

Equipment 5% Equipment 7.5% Equipment 10%

Materials 72.5% Materials 72.5% Materials 72.5%

Civil engineering

Higher

Labor 20%

Equipment 30%

Materials 50%

Middle

Labor 22.5% Labor 22.5%

Equipment 27.5% Equipment 27.5%

Materials 50% Materials 50%

Lower

Labor 25% Labor 20% Labor 15%

Equipment 25% Equipment 30% Equipment 35%

Materials 50% Materials 50% Materials 50%

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Generally, labor percentages tend to increase and material percentages decrease, as national wealth and the cost of construction labor increase. Where construction labor is relatively cheap, contractors prefer to use labor rather than equipments. Civil engineering is most variable area across countries and over time, particularly in small and developing countries. Normally, there are more options in richer than in poorer, countries. Australia, for example, tends to use relatively expensive and highly skilled local labor, while Singapore uses relatively cheap, and unskilled migrant labor (Australia and Singapore are both wealthy countries with similar income levels). As such, Australia would be located in higher labor costs row, whereas Singapore would belong to lower row of higher GNI column.

The estimated initial Resource Mix shares, presented in Table 6 below, can be used in two ways during the validation process:

- As a check on the data provided by national experts;

- As an estimation where data has not been provided.

When submitted values are substantially different from the default values, it should be confirmed that this is due to plausible reasons and not a result of an error or misinterpretation of the approach.

However, it is important to note that provided estimates are based on initial data; only after resource mix data is gather across the countries, final figures can be produced. As such, the estimated values are as well a subject of validation.

3.2.5. Construction PPPs

Once the input data has been validated, it is possible to calculate and validate Construction PPPs, following the steps 1 to 3 explained above in section 2. Overview of steps to calculate Construction and Civil Engineering PPPs12. Validation of the PPPs should follow the process described in the chapter 10 Validation of Basic Heading and Aggregated PPPs of the ICP Operational Guide.

3.2.6. Approximate Project Prices

Approximate project prices provide an additional tool for checking the plausibility of the input price based PPPs. The project prices reflect real-world construction projects within countries as they include all related costs. They can thus be used to estimate the total costs of construction projects.

Project prices are asked for:

- Four residential building projects

12 Step 4, adjustment for productivity differentials, will be carried out centrally by the Global Office for both

Regional and Global results.

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- Four non-residential building projects

- Three civil engineering projects

PPPs can be calculated as treating the above listing titles as Basic Headings, and further the projects as items. As such, the PPPs can be calculated and aggregated up to the level of Construction Category, using NA Expenditures as weights and selected aggregating method.

Annex 5 gives a list of these Basic Headings and items together with the respective coding that can be used for validation purposes.

The approximate project price based PPPs can be compared against the input price based PPPs. Should the comparison show substantial differences between the two sets of PPPs, there may be need for further verification of input prices.

3.3. Global Validation

During the Global Validation the GO, together with the RCs and NCs work together to ensure that:

1. Prices are validated consistently across the regions;

2. Price data is comparable across all the countries;

3. Resulting Global PPPs are plausible.

In addition, adjustment for productivity differentials will be carried out centrally by the Global Office for both Regional and Global Results.

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Annex 1: Material inputs

Material or product

Use in

Residential building

Non-residential building


1 Aggregate for concrete X X X

2 Sand for concrete and mortar X X X

3 Softwood for carpentry X X X

4 Softwood for joinery X X

5 Exterior plywood X X X

6 Interior plywood X X

7 Chipboard sheet X X

8 Petrol/ gasoline X X X

9 Diesel fuel X X X

10 Oil paint X X

11 Emulsion paint X X

12 Ordinary Portland cement X X X

13 Ready-mix concrete X X X

14 Precast concrete slabs X X

15 Common bricks X X X

16 Facing bricks X X

17 Hollow concrete blocks X X X

18 Solid concrete blocks X X X

19 Clay roof tiles X

20 Concrete roof tiles X

21 Float/ sheet glass X X

22 Double glazing units X X

23 Ceramic wall tiles X X

24 Plasterboard X X

25 White wash hand basin X X

26 High yield steel reinforcement X X X

27 Mild steel reinforcement X X X

28 Structural steel sections X X X

29 Sheet metal roofing X X

30 Metal storage tank X X

31 Cast iron drain pipe X X X

32 Copper pipe X X

33 Electric pump X X

34 Electric fan X

35 Air-conditioning equipment X X

36 Stand-by generator X

37 Solar collector X X X

38 Electricity X X X

Totals 34 36 19

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Annex 2: Complete list of headings and items for PPP computation

Level ICP Code Heading

GDP 1000000 GROSS DOMESTIC PRODUCT





BH 1502111 Residential buildings

Sub-Heading 15021111 Materials

Item 1502111101 Aggregate for concrete

Item 1502111102 Sand for concrete and mortar

Item 1502111103 Softwood for carpentry

Item 1502111104 Softwood for joinery

Item 1502111105 Exterior plywood

Item 1502111106 Interior plywood

Item 1502111107 Chipboard sheet

Item 1502111108 Petrol/ gasoline

Item 1502111109 Diesel fuel

Item 1502111110 Oil paint

Item 1502111111 Emulsion paint

Item 1502111112 Ordinary Portland cement

Item 1502111113 Ready-mix concrete

Item 1502111114 Precast concrete slabs

Item 1502111115 Common bricks

Item 1502111116 Facing bricks

Item 1502111117 Hollow concrete blocks

Item 1502111118 Solid concrete blocks

Item 1502111119 Clay roof tiles

Item 1502111120 Concrete roof tiles

Item 1502111121 Float/ sheet glass

Item 1502111122 Double glazing units

Item 1502111123 Ceramic wall tiles

Item 1502111124 Plasterboard

Item 1502111125 White wash hand basin

Item 1502111126 High yield steel reinforcement

Item 1502111127 Mild steel reinforcement

Item 1502111128 Structural steel sections

Item 1502111129 Sheet metal roofing

Item 1502111130 Metal storage tank

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Item 1502111131 Cast iron drain pipe

Item 1502111132 Copper pipe

Item 1502111133 Electric pump

Item 1502111134 Electric fan

Item 1502111135 Air-conditioning equipment

Item 1502111136 Stand-by generator

Item 1502111137 Solar collector

Item 1502111138 Electricity

Sub-Heading 15021112 Equipment

Item 1502111201 Wheeled loader and excavator

Item 1502111202 Tracked tractor

Item 1502111203 Skid steer loader

Item 1502111204 Tandem vibrating roller

Item 1502111205 Compact track loader

Sub-Heading 15021113 Labour

Item 1502111301 General (unskilled) labourers [1]

Item 1502111302 Bricklayer [2]

Item 1502111303 Plumber [2]

Item 1502111304 Carpenter [2]

Item 1502111305 Structural steel worker [2]

Item 1502111306 Electrician [2]

Item 1502111307 Machine (equipment) operator [2]



BH 1502211 Non-residential buildings
















21









































22

BH 1502311 Civil engineering works








































23















24

Annex 3: List of headings and items for validation

Level Validation Code Heading











Item 110 Oil paint


























25











Sub-Heading 3 Labor

Item 301 General (unskilled) laborers [1]







26

Annex 4: Classification of countries into income groups

215 economies are divided into income groups according to 2010 gross national income (GNI) per capita and calculated using the World Bank Atlas method. The groups are:

- Low income, $1,005 or less;

- Middle income, $1,006 - $12,275; and

- High income, $12,276 or more.

Further details are given on the World Bank website at:

http://data.worldbank.org/about/country-classifications

Low-income economies ($1,005 or less) 35

Afghanistan Gambia, The Myanmar

Bangladesh Guinea Nepal

Benin Guinea-Bisau Niger

Burkina Faso Haiti Rwanda

Burundi Kenya Sierra Leone

Cambodia Korea, Dem Rep. Somalia

Central African Republic Kyrgyz Republic Tajikistan

Chad Liberia Tanzania

Comoros Madagascar Togo

Congo, Dem. Rep Malawi Uganda

Eritrea Mali Zimbabwe

Ethiopia Mozambique

http://data.worldbank.org/about/country-classifications

27

Middle-income economies ($1,006 to to $12,275) 110

Albania Guyana Paraguay

Algeria Honduras Peru

American Samoa India Philippines

Angola Indonesia Romania

Antigua and Barbuda Iran, Islamic Rep. Russian Federation

Argentina Iraq Samoa

Armenia Jamaica São Tomé and Principe

Azerbaijan Jordan Senegal

Belarus Kazakhstan Serbia

Belize Kiribati Seychelles

Bhutan Kosovo Solomon Islands

Bolivia Lao PDR South Africa

Bosnia and Herzegovina Latvia Sri Lanka

Botswana Lebanon St. Kitts and Nevis

Brazil Lesotho St. Lucia

Bulgaria Libya St. Vincent and the Grenadines

Cameroon Lithuania Sudan

Cape Verde Macedonia, FYR Suriname

Chile Malaysia Swaziland

China Maldives Syrian Arab Republic

Colombia Marshall Islands Thailand

Congo, Rep. Mauritania Timor-Leste

Costa Rica Mauritius Tonga

Côte d'Ivoire Mayotte Tunisia

Cuba Mexico Turkey

Djibouti Micronesia, Fed. Sts. Turkmenistan

Dominica Moldova Tuvalu

Dominican Republic Mongolia Ukraine

Ecuador Montenegro Uruguay

Egypt, Arab Rep. Morocco Uzbekistan

El Salvador Namibia Vanuatu

Fiji Nicaragua Venezuela, RB

Gabon Nigeria Vietnam

Georgia Pakistan West Bank and Gaza

Ghana Palau Yemen, Rep.

Grenada Panama Zambia

Guatemala Papua New Guinea

28

High-income economies ($12,276 or more) 70

Andorra Germany Norway

Aruba Gibraltar Oman

Australia Greece Poland

Austria Greenland Portugal

Bahamas, The Guam Puerto Rico

Bahrain Hong Kong SAR, China Qatar

Barbados Hungary San Marino

Belgium Iceland Saudi Arabia

Bermuda Ireland Singapore

Brunei Darussalam Isle of Man Sint Maarten

Canada Israel Slovak Republic

Cayman Islands Italy Slovenia

Channel Islands Japan Spain

Croatia Korea, Rep. St. Martin

Curaçao Kuwait Sweden

Cyprus Liechtenstein Switzerland

Czech Republic Luxembourg Trinidad and Tobago

Denmark Macao SAR, China Turks and Caicos Islands

Estonia Malta United Arab Emirates

Equatorial Guinea Monaco United Kingdom

Faeroe Islands Netherlands United States

Finland New Caledonia Virgin Islands (U.S.)

France New Zealand

French Polynesia Northern Mariana Islands

29

Annex 5: List of project price headings and items for validation


GDP 1000000 GROSS DOMESTIC PRODUCT





BH 1502111 Residential buildings

Item 150211101 Single storey average quality detached house

Item 150211102 Two storey attached house

Item 150211103 Low rise apartment

Item 150211104 High rise apartment



BH 1502211 Non-residential buildings

Item 150221101 High rise office/ administrative building

Item 150221102 Medium rise office/ administrative building

Item 150221103 Primary school one or two storey

Item 150221104 Factory/ warehouse building



BH 1502311 Civil engineering works


Item 150231201 Highway

Item 150231201 Concrete sewer pipes, 0.5m diameter, average 2 m depth

Item 150231201 Concrete sewer pipes, 1m diameter, average 3 m depth

Documents

Validation of the Construction and Civil Engineering …siteresources.worldbank.org/ICPINT/Resources/270056-1255977007108/...ADJUSTMENT FOR PRODUCTIVITY ... typical mark-ups and professional