Construction and Civil Engineering Work

The African Statistical Journal, Volume 4, May 2007 ��

Summary:Pricing in the construction sector is resource intensive compared to many other sectors. In most of the countries participating in the ICP, prices collection for the program has been largely disconnected with the regular price collection processes aiming at producing inter-temporal price indices. Inter-temporal price indices for the construction sector are often calculated using a basket of construction material and labor prices. This approach doesn’t permit to take into account the inter-temporal fluctuations of productivity nor to address correctly the prob-lem linked to the trade-off between labor and equipment tradeoff. This article presents the Basket of Construction Components (BOCC) approach that was developed with a view to eradicate both these problems. The BOCC approach provides a much simpler and better defined price comparison tool that can help to drastically reduce the resources and the expertise required for price data col-lection. Due to its simplicity, it is plausible that the basket can be adapted to be used in national inter-temporal price comparisons.

Key words: Price indices, basket of construction components approach, ICP

Résumé :La collecte des prix dans le secteur de la construction requiert des moyens im-portants comparativement à plusieurs autres secteurs. Dans la plupart des pays participant au PCI, la collecte des prix a été en grande partie déconnectée du processus de collecte régulier des prix nécessaires au calcul des indices des prix temporels. Les indices temporels des prix pour le secteur de la construction sont souvent calculés en utilisant des prix correspondant à un panier de maté-riaux de construction et de travail. Cette approche ne permet pas de prendre en compte les fluctuations de productivité dans le temps, ni de traiter correctement le problème lié à la distinction entre le travail et les équipements. Cet article présente l’approche du panier de composantes de construction (BOCC) qui a été développé afin de répondre à ces deux problèmes. L’approche BOCC fournit un outil de comparaison des prix beaucoup plus simple et mieux défini qui peut aider à réduire de façon significative les ressources et l’expertise exigées pour la

Construction and Civil Engineering Work: Designing a Time-Space Index

Michel Mouyelo-Katoula2 and Adalbert Nshimyumuremyi�

1Theviewsexpressedinthispaperarethoseoftheauthorsanddonotnecessarilyrepre-sentthoseoftheAfricanDevelopmentBank.

2Manager,StatisticalCapacityBuildingDivision,AfDB,Tunis,TunisiaManager3ICPPrincipalStatistician,StatisticalCapacityBuildingDivision,AfDB,Tunis,Tunisia.

Le Journal statistique africain, numéro 4, mai 2007��

Michel Mouyelo-Katoula and Adalbert Nshimyumuremyi


collecte des prix. Sa simplicité permet d’adapter le panier à des comparaisons temporelles des prix au niveau national

Mots clé s: Indices des prix, approche du panier de composants de construc-tion, PCI

1. Introduction

TheInternationalComparisonProgram(ICP)isaglobalstatisticalinitia-tiveaimedatproducingestimatesofpricelevels,expenditurevalues,andpurchasingpowerparities(PPPs)thatallowforcross-countrycomparisonsofpricelevels,andeconomicaggregatesinrealterms.TheAfricacompo-nentoftheprogramismanagedandcoordinatedbytheAfricanDevelop-mentBank(AfDB)andiscommonlyreferredtoasICP-Africa.

Tasks involved in the ICP-Africa include: (i) compiling GDP aggre-gatesincompliancewiththe1993SystemofNationalAccounts(SNA);(ii)disaggregatingGDPintodetailedcategoriesforwhichexpenditureandpricedatacanbeobtained;(iii)conductingnation-widepricesurveysforsamplesofitemsrepresentingallmaincomponentsofGDP;(iv)comput-ingpriceratiosforidentical/comparableitemsacrosscountries/space,thusgeneratingelementaryPPPs;and(v)aggregatingelementaryPPPsforallGDPcomponents.

AsanimportantGDPcomponent,GrossFixedCapitalFormation(GFCF)isdivided intoMachineryandEquipment,andConstructionandCivilEngineeringforwhichspecificdatacollectionexercisesarebeingconduct-edbycountriesparticipatingintheICP-Africa.

Pricingintheconstructionsectorisresourceintensivecomparedtomanyothersectors.Thepricingofthecomponentsinvolvedinaconstructionproject requires expertise that isnotnormallyavailablewithinNationalStatisticsOffices(NSO).Theexpertisethatisrequiredincludesafamili-aritywith theusualmeansandmethodsof the sectoraswell asexperi-encewithrecentevolutionoftheconstructioncosts.Thiskindofexpertisemust be mobilized by the NSOs (typically on a consulting basis) fromconstruction,engineering,orarchitecturalcompaniesorGovernmentde-partments.

Giventhatthelevelofeffortrequired,andtherelatedcostofthateffort,isdirectlylinkedtothenumberandthecomplexityoftheconstruction

The African Statistical Journal, Volume 4, May 2007 �7

Construction and Civil Engineering: designing a time-space index

components to be priced, there is a need to focus on a relatively shortlist of components.These selected componentsmight be representativeandcomparablewithregardstomeansandmethods,andcanbebroadlyillustrativeofthemajorcapital-intensivesystemsintheconstructedfacili-ties.Inthisregard,theBasketofConstructionComponents(BOCC)ap-proachwasdevelopedwithaviewofreachingthisobjective.

InSeptember2004,theTechnicalAdvisoryGroup(TAG)fortheInter-nationalComparisonProgram(ICP)recommendedtheuseoftheBasketofConstructionComponents (BOCC)approach forprice comparisonsin theconstruction sector.This recommendationwasbasedondetailedstudiesthatwereconductedundertheaegisoftheAfDBandWorldBankbetween2002and2004.

TheBOCCapproachwasformalizedinaseriesofthreereportsthatwereproducedandsubmittedtotheAfDBandtheWorldBank.(WalshandSawhney, 2002, 2004, 2005).The first report entitled “An Implemen-tation Framework for the Basket of Construction Components Ap-proach” provides the theoretical and conceptual underpinnings for theBOCCmethod.Thesecondreportentitled“Process for Implementation of the Basket of Construction Components Approach” highlights andexplainsthehierarchicalstructureoftheBOCCapproach.KeydefinitionsoftheBOCCconceptsarealsoprovidedinthisreport.Thethirdreportentitled“Identification of Construction Systems and Components for the BOCC Approach”providesalistofConstructioncomponentsintheformofStandardProductDescriptions(SPD).ThereportservesasabasicguidelineforthecompleteimplementationoftheBOCCapproachatthenationallevel.

Thisarticlesynthesizesthecontentsofthesethreereports,firstasaguide-line for the ICPnational coordinators and second as a tool for furtherimprovingnationalpricedatacollection intheconstructionsector.TheAfDBiscurrentlypreparingatechnicalcomplementtothisworkinor-dertoaddressthequestionoftheinter-temporalcomparisonsundertheBOCCapproach.

2. The complexity of comparisons in the construction sector

The complex and variable nature of the construction sector makes it adifficultsectortointegrateintostandardizedeconometricsystemsandinmanywayscanbetermedasa“comparisonresistant”sector.Theconstruc-tionindustryconsistsofafragmentedarrayofcontractors,subcontractors,




andsuppliers.Theconstructionindustrysupplychainisextremelycom-plexastherearenoformalizedindustrystructuresthatrepresentallofitsstakeholders.Itsprimaryoutputisaseriesofprojects,eachresultinginauniquelyconstructedfacility.Theindustryistypifiedbytemporary,con-tract-drivenrelationshipsbetweentheparticipantsofagivenproject,andthisconditionmakessatisfactorycharacterizationandcollectionofnation-alstatisticsverydifficulttoachieve.Thelifecycleandtimelineofconstruc-tionprojectsfurthercomplicatescollectionofpricesandtheirrelationshiptoexpendituresinnationalaccounts.Itiscommontofindconstructionprojectswithdurationrangingfromafewmonthstoseveralyears.Fur-thermore,theindustrydoesnotreally“exist”withinagivennationasallprojectsatsomepointintheirsupplychainsformaterials,equipment,orlabor,reachoutintotheinterconnectedglobalindustry.

Constructionproductsarehighlycustomizedtotheneedsandwishesoftheconstructionconsumer.Infact,thereisno“productionline”forcon-structedfacilities;eachandeveryprojectisspecifictotheeventualowner,atthefoundationlevelataminimum.Thenetresultofthiscustomizationfromtheperspectiveofinternationalcomparisonisthatitbecomesverydifficulttocompareoneprojecttoanother.Theexternalinfluencesthatareatworkontheconstructedproductarecorrespondinglyunique,andexistprimarilyattheprojectlevel(seefigurebelow).Economicactivityintheconstructionsectorconsistsoftheconversionofmaterials,labor,andequipmentintotheuniqueconstructedfacility.Variationsintheseinputsand inthecommonmeansandmethodsusedtoorchestrateand installthem,existbetweenregionsoftheworld,betweennations,andeveninter-nallywithinnations.

Thefigurebelowdepictstheconversionofinputstoaconstructedfacilityoutput,andtheinfluencingfactorsattheprojectandindustrylevels.

ConstructionSector

InputsConstruction MaterialsConstruction LaborConstructionEquipment

OutputUnique

ConstructedFacility

Project-Specific Indirect FactorsVariations in Construction MaterialsVariations in Construction LaborProductivityVariations in Construction EquipmentUsageVariations in Construction Means andMethodsChanges in Weather ConditionsVariations in Soil ConditionsOther Environmental Conditions

Industry-Specific Indirect FactorsStandards of QualityAnticipated UseContracting PracticesSafety PoliciesStakeholders



Because these factorsnever combine inquite the sameway twice, eachconstructedfacilityisunique.Thecostofaconstructionprojectisdirectlyinfluencedbytheselectionofmeansandmethodsofputtingmaterialsinplace,thematerialsthemselves,andthelaborandequipmentratesinuseatthattimeandplace.However,thereareanumberofindirectinfluencesthataffectthesechoices.Anumberoftheseindirectfactorsarerepresentedinthefigureabove,termed“indirect”herebecausetheymodifytheselec-tionofmaterials,equipment,labor,ormethods,butdonotappearonthebillsofquantitiesthemselves.Becauseconstructionoutputsareinherentlydifficulttocompare,thisstudywasconceivedandconductedtofurtherdevelopconceptsforthenecessarypricecomparisonsintheconstructionsector.

3. The different methods used for price comparisons in the con-struction sector

Spatialcomparisonofconstructionsectorpricingcanbeperformedusinganumberofapproaches.Inabroadsensetheseapproachescanfallunderoneofthefollowingthreecategories:

1. Pricing a basket of standard (hypothetical) construction projects :ThisapproachhasbeenusedforthepastroundsofICPcomparisons.Thecruxofthisapproachistoaskcountriestopriceusingtheunitpriceapproachanumberofstandardconstructionprojects.Theinstrumentusedinthepricingeffort iscalledthebillofquantities (BOQ).BOQsforstandardresidential,non-residentialandcivilengineeringprojectsareusedforpricecollection.

2. Pricing a basket of construction inputs—material, labor, and equipment : Thisapproachisprimarilyusedfortemporalconstructionindicesdevelopedbycountriesorregions.Suchusemakesthemethodappealing,atleastatfirstblush,asitcarriesthesuggestionthattemporalcomparisons already available might be fit within the framework ofspatialcomparisonandaugmenttheutilityofbothtypesofcomparison.Thisapproachrequiresonlythatonemonitorsthepricesforgoodsand/orservicesincludedinthebasket,andcomparethemtopricesatsomeothertime(or,inthecaseofPPP,atsomeotherplace).

3. Pricing a basket of construction components : This approachresembles the basket of construction inputs approach in that itrevolves around the concept of pricing a fixed set of items. As thename suggests the basket that is used for price comparison consists

Le Journal statistique africain, numéro 4, mai 200720



of construction components. Construction components are tangibleunitsofaconstructionprojectthatconsumeinputssuchasmaterial,labor,andequipment.Inhierarchicaltermsconstructioncomponentslie somewhere between the construction inputs and constructionprojects.

Traditionallypricecalculationsfortheconstructionsector intheframe-workoftheICParerealizedbygeneratingestimatedcostsfor20standardconstructionprojects,forwhichbillsofquantities(BOQ)andspecifica-tionshavebeendeveloped.Accordingtotheproceduresthatwereestab-lished by Eurostat in the early stage of the ICP, each bill of quantitiesrequirespriceestimationfor10to20chapters,eachconsistingof100to1000individualconstructionitems.The1993ICProundwasconductedusingthisparticularmethodandsignificantconcernsaroseregardingtheresources needed to collect these price data. Subsequently the standardprojectmethod (SPM)wasmodified.A“reducedbillofquantities”ap-proachwasset-up,inwhichmanyoftheindividualitemswereeliminated.However, a substantial number of prices still remained to be gathered.Thereistodayastrongconcernthatthelevelofeffortsandofresourcesrequiredforthisprocessmayhamperthedevelopment,andeventhecon-tinuedundertaking,ofpricecomparisonsintheconstructionsector.

SomepartnersoftheICPprogramhavealsocasttheirdoubtsontheac-curacyofthedatacollectedandonthecredibilityofthepriceestimationprocessintheconstructionsector.

Inadditionthepriceestimationattheconstructionprojectlevelhasmanypitfalls.Manyauthorshavepointedoutthattherecanbeaverywiderangeinprojectcostestimates,andthattheseestimatescancompareverypoorlytotheactualcostoftheconstructionprojects.Theprimarypredictorofestimateaccuracyis theeffortexpendedtoproducetheestimate,whichraisesobviousconcernsabouttheICPgiventhedisparateresourcesamongNSO’s.

Giventhatthelevelofeffortrequired,andtherelatedcostofthateffort,isdirectlylinkedtothenumberandthecomplexityofthecomponentstobepriced,thereisaneedtofocusonarelativelyshortlistofcomponents.These selected components might be representative and comparable inregardstomeansandmethods,andwhichcanbebroadlyillustrativeofthemajorcapital-intensivesystemsintheconstructedfacilities.TheBOCCapproachisaimedatreachingthisobjective.

The African Statistical Journal, Volume 4, May 2007 2�


4. The BBOC approach in 2005 ICP round

Theconstructionsectorcanbedividedinto3categoriesofworksreferredto as “basic headings”. These are: residential buildings, non-residentialbuildings,andcivilengineeringworks.CodesattachedtoeachcategoryrelatetotheICP-Africaclassification.

502Construction

502.1 ResidentialBuildings

502.2 Non-ResidentialBuildings

502.3 Civil EngineeringWorks

One-family and multi-familydwellings, detached, semi-detached and terracedhouses

All non-residential farmbuildings; all industrialbuildings; office buildings;buildings for health,educational, cultural andreligious purposes

Roads, streets, andhighways; railroads; harbors;airports; canals andwaterways; pipelines for gas,water and sewer systems;telephone and telegraphssystems; electricitytransmission infrastructure;oil wells, gas wells, mineshafts, dams, dikes etc.

TheBOCCapproachbuildsonthreemainconcepts:project,systemandcomponent.

Aprojectistheentiretyofaconstructionenterprise,resultinginarelative-lywelldefinedfacilityforessentiallyasinglepurpose.Examplesincludetheconstructionofabuilding,theconstructionofacampusofbuildingsmore-or-lesssimultaneously,ortheconstructionofasectionofroadwayincludinginterchanges,bridges,anddrainageappurtenances.

Asystemisasetofrelatedcomponentswithinaprojectthatsatisfyagivenfunction.Forexample,thestructuralsystemwithinabuildingisintendedtodenotethatsetofcomponentsthatservethepurposeofsupportingthebuilding,andwouldincludefoundations,columns,beams,girders,head-ers,andsoon.Itwouldnotincludetheheatingandventilationequipmentornon-structuralexteriorcladding.Systemsaredefinedasshowninthefollowingtables:




ConstructionSystemsfortheResidentialSub-sector

System Name System Explanation

Site-work Constructioncomponentsrelatedtositepreparationofaresidentialconstructionproject

Substructure Structuralcomponentsandrelatedworkitemsbelowthegroundsurfacethatarepartofaresidentialcon-structionproject.Thesecomponentsareload-bearingandtransferalltheloadsfromthesuperstructuretothegroundbelow

Superstructure Structuralcomponentsandrelatedworkitemsabovethegroundsurfacethatarepartofaresidentialcon-structionproject.Thesecomponentsareload-bearingandprovideresistancetoliveanddeadloadonthebuilding

ExteriorShell/BuildingEnve-lope

Constructioncomponentsthatformtheexteriorshellofaresidentialconstructionproject.Theyarenon-load-bearingmembersthatrestuponthesuper-structureofthebuilding

InteriorPartitions Allinteriorwallsandopeninginthebuilding

InteriorandExteriorFinishes Allconstructioncomponentsinplaceforthepurposeofsatisfyingacosmeticfunction,includingforexam-plepaintorplaster.

MechanicalandPlumbing Allconstructioncomponentsrelatedtoprovidingclimatecontrolorwaterservicessuchasheatingandcoolingsystems,hotandcoldwatersystems,firefightingsystemsetc.

Electrical Allconstructioncomponentsrelatedtodistributionofalternatingcurrentanddirectcurrentincludingelectricalfixturesforaresidentialconstructionproject



ConstructionSystemsfortheNon-ResidentialSub-sector


Site-work Constructioncomponentsrelatedtositepreparationofanon-residentialconstructionproject

Substructure Structuralcomponentsandrelatedworkitemsbelowthegroundsurfacethatarepartofanon-residentialconstructionproject.Thesecomponentsareload-bearingandtransferalltheloadsfromthesuperstruc-turetothegroundbelow

Superstructure Structuralcomponentsandrelatedworkitemsabovethegroundsurfacethatarepartofanon-residentialconstructionproject.Thesecomponentsareload-bearingandprovideresistanceofalltypesofliveanddeadloadonthebuilding

ExteriorShell/BuildingEnve-lope

Constructioncomponentsthatformtheexteriorshellofaresidentialconstructionproject.Theyarenon-load-bearingmembersthatrestuponthesuper-structureofthebuilding

InteriorPartitions Allinteriorwallsandopeninginthebuilding

InteriorandExteriorFinishes Allconstructioncomponentsinplaceforthepurposeofsatisfyingacosmeticfunction,includingforexam-plepaintorplaster

MechanicalandPlumbing Allconstructioncomponentsrelatedtoprovidingclimatecontrolorwaterservicessuchasheatingandcoolingsystems,hotandcoldwatersystems,firefightingsystemsetc.

Electrical Allconstructioncomponentsrelatedtodistributionofalternatingcurrentanddirectcurrentincludingelectricalfixturesforanon-residentialconstructionproject

ConstructionSystemsfortheCivilEngineeringWorksSub-sector


Site-work Constructioncomponentsrelatedtositeprepa-rationofacivilengineeringprojectincludingearthwork,earthmoving,andsurfacetreatmentssuchsidewalksandpavements

Substructure Structuralcomponentsandrelatedworkitemsbelowthegroundsurfacethatarepartofacivilengineeringproject.Thesecomponentsareload-bearingandtransferalltheloadsfromthesuperstructuretothegroundbelow





Superstructure Structuralcomponentsandrelatedworkitemsabovethegroundsurfacethatarepartofacivilengineeringproject.Thesecomponentsareload-bearingandprovideresistancetoliveanddeadloads

MechanicalEquipment Equipmentinstalledoncivilengineeringprojectssuchaspumps,turbines,boilers,airhandlingequipment,coolingtowers,vesselsetc.includingallconnectingpipesandvalves.Mechanicalin-cludesutilitysystems(steam,compressedair,andrefrigeration),processsystems(rotatingpumps,compressors,agitators,filters,etc.)specialvesseldesign(tanks,pressurevessels),etc.

ElectricalEquipment Equipmentinstalledoncivilengineeringprojectsforpowerdistributionsystems,substations,powerdistributionpanels,motorcontrolcenters,lighting,communications,etc.

UndergroundUtility Anyundergroundline,systemorfacilityusedforproducing,storing,conveying,transmitting,ordis-tributingcommunicationortelecommunication,electricity,gas,petroleumandpetroleumprod-ucts,coalslurry,hazardousliquids,waterunderpressure,steam,orsanitarysewage.Theseincludewires,ducts,fiberopticcable,conduits,pipes,sew-ers,andcablesandtheirconnectedappurtenancesinstalledbeneaththesurfaceoftheground

Acomponentisacombinationofmaterialsintheirfinalintendedloca-tionwhichcanbeclearlyidentifiedtoasimplepurposewithintheproject;thebuildingblocksofasystem.Forexample,acolumnisacomponent.Acomponentwillingeneralconsistofsomematerialsmanipulatedinsomeway,transportedtoafinallocationattheprojectsite,andconnectedtoothercomponentswithlaborandequipmentasappropriatetomeansandmethodsemployedinagivencountry.

Therelationshipbetweenprojects,systems,andcomponentsisillustratedinthefigurebelow.Inthisfigureahypotheticalprojectisshownconsistingof three systems.Each system is furtherbrokendown into its constitu-entcomponents;witheachcomponentmadeupofmaterial, laborandequipment.Inessence,thistaxonomysupportsahierarchicaldecomposi-tionoftheprojectintosmaller“chunks”.Thecostcontributionofeachcomponenttothetotalsystemandprojectcostscanthenbedeveloped,usingstandardconstructioncostestimatingandaccountingprinciples,by



rollingupalongthebranchesofthetree.Costsforanygivencomponentcanbedevelopedfromtheunitcostsofmaterials(includinganynecessaryconsumables)andtheexpectedquantityofmaterialstocreatethatcom-ponent,laborratesandlaborfactors,andequipmentratesandfactors.Ex-pertsspecializedintheestimationofconstructioncostsaregenerallyveryskilledandexperiencedinmakingthesecalculations.Asimilarbreakdowncouldbeconductedforanyofthesystemsinaproject,ofcourse.

Project

System-1 System-2 System-3

Component-3Component-1

Component-7Component-6Component-5Component-4

Component-9Component-8 Component-10

Material Labor Equipment

Breakdown not shown due to space limitation

Component-2

The fundamental conceptual basis of the BOCC is to measure relativepricesattheleveloftheconstructioncomponent.Aconstructioncompo-nentisaproductionunitthatcanbefullydefinedasaportionofacom-pleteconstructionproject.Theconstructioncomponentthusfallsbetweenaconstructionproject(e.g.,acompletestructure)andaconstructionworkitem(e.g.apieceofreinforcingsteel).Theconstructioncomponentcanbethoughtofasanaggregationofseveralconstructionworkitems,includ-ingthematerialactuallyputinplace,thelaborandequipmentrequiredto accomplish that task, and any consumables that might be required(e.g.formwork,blades,orwastelumber).Becausethelabor,equipment,andconsumablesaredirectlyincludedintheprice,theconstructioncom-ponentalsoinherentlyaccommodatesdifferencesinproductivity,thela-borequipment tradeoff, anddifferences inmeansandmethodsof con-struction.

Pricingoftheconstructioncomponentsisintendedtoincludethepriceofthegooditself,anyconsumablesrequiredintheconstructionprocess,andthecostofthelabororequipmentrequiredtoinstallit.Thepricecouldbefurtheradjustedtoincludeappropriatemarkups(taxes,fees,profit,etc.).

Le Journal statistique africain, numéro 4, mai 20072�



Theadvisabilityofandmethodsforinclusionofmarkupsdependtosomeextentonthemethodsusedinthenationalaccounts.

Toensurethatallcountriespricethesameconstructioncomponents,34specific formshavebeenprovidedwhichneedtobecompletedbyeachcountry.EachformrelatestotheStructuredProductDescription(SPD)ofaparticularcomponent.

Eachformisidentifiedbythecodeandnameofthecomponent(Example:5.02.00.0.01AggregateBase). It contains3 sections - (a)Source Infor-mation,(b)Quantityanddetails,(c)Pricinginformationwhichmustbecompletedcarefully.Anyadditionalcommentshasalsotobeprovided.All34formshavetobecompleted.Theseformsarecompletedatthecountrylevel.

5. Expenditure weights in the BOCC approach

Somecomponentscanbeappropriatetomorethanoneconstructionba-sic heading (sub-sector).The Civil EngineeringWorks sub-sector posesspecificproblemsasitincludesawidearrayofpossibleprojects.Thissub-sectorequallyincorporatesasmalldrainageenhancementproject,withavalueequivalenttoafewthousanddollars,andanenormousdamorair-portwithavalueofseveralbillioneuros.Findingcommonbuildingblocksforbothoftheseprojectsisnoteasy.Ofcourse,thisproblemwouldariseforanysystemofmeasurement,butforthissectorsomecommonelementsmaystillbe identifiable.Earthworkisnearlyalwaysapartofcivilengi-neeringworks,asisconcreteplacement.Additionalcivilengineeringre-latedcomponentssuchassitepreparation,haulage,massconcrete,asphaltconcrete,andutility/drainageworksrepresentsystemsofcivilengineeringworksthatarealmostincludedineveryprojects.

System of weights

TheBOCCapproachusesthreetypesofweights:

W1,fortheaggregationattheleveloftheconstructionsub-sectors,i.e.fortheresidential,non-residentialandcivilengineeringbaskets,

W2,fortheaggregationatthelevelofthesystems,

W3,atthelevelofthecomponentsfortheinclusionoflaborproductivityandofthelabor/equipmenttradeoff.

The African Statistical Journal, Volume 4, May 2007 27


Thesethreelevelsofaggregationareshowninthetablebelow.

Material Labor Equipment

Breakdown not shown due to space limitation

System-1System-2

Residential BOCC

System-3

Basket

Civil BOCCNon-Residential BOCC

Construction

W1

W2

W3

Component-1 Component-2 Component-3 Component-4 Component-5 Component-6 Component-7 Component-8 Component-9 Component-10

TheweightsW3aredesignedwithin theBOCCapproachandarenotrequiredtobeidentifiedexplicitly.

Procedure for Calculating W2

Nationalexpertshavetoreviewthelistingofthesystemsfortheresiden-tial,non-residential,andcivilengineeringsub-sectors.Theyreviewpricinginformationonongoingprojectsforthethreesub-sectorsandtabulatethepercentagecontributionsofthesystems.

TheprocedureforcalculatingW2involvesthefollowingsteps:

Step 1:SelectionofBillsofQuantities.

Theexpertsretrievesamplesofbillsofquantities(BoQ)relatedtocon-structionprojectsthatweredesignedin2005aswellasthosedesignedin2006.TheseBoQsarerequestedfromarchitects,contractorsorfromtheMinistryofwork.

Thesamplesmustrelatetothefollowingprojects:




Forresidentialbuildings

o Single-familyresidences o Bungalows o Apartmentbuildingsandthelike,

Fornon-residentialbuildings

o Farmbuildings o Officebuildings o Buildingsforheathpurpose(e.g.hospitalward) o Buildingsforeducationalpurpose(e.g.aprimaryschool) o Buildings for cultural or religious purpose (e.g. a church or a

mosque)

Forcivilengineeringworks

o Metalledroads o Farmtrack o Lateritetrack o Bridge o Waterandsewersystems o Telecommunicationstructures

Itisrecommendedthatatleast2categoriesofprojectsbeselectedundereachsub-sector.Forinstance,underresidentialbuilding,single-familyres-idencesandapartmentbuildingscouldbeselected.Undercivilengineer-ingworks,metalledroads,lateritetracksandbridgescouldbeincludedinthesamples.CategoriesincludedintheselectionofBoQsmustreflecttheconstructionmarketinthecountry(oratleastinthecapitalcityandsomeothermajortowns),intermsoftherepresentativityofrelevantconstruc-tionprojects.

Foreachcategory,thereisaneedtouseasmanyprojectBoQsaspossible.Forexample,forsingle-familyresidences,3(ormore)typesofvillasofdif-ferentsizesandcostscanbeselected.

Thereisnoneedtogeneratenewdataforthisprocess;rather,thedatacol-lectionrequiredconsistsofthecollectionofcostdataforpastprojects.

Step 2:MappingBoQintoconstructionsystems



EveryiteminthepricedBOQneedstobeclassifiedasbelongingtooneofthesystems.EachlineitemintheBOQmustbemappedtoaparticu-larsystem.ItisnotnecessarytohaveanextremelydetailedBOQforthispurpose.A“roll-up”BOQthatlistsonlytheprincipaldivisionsandafewmajorcategorieswithineachdivisionissufficientandsomewhateasiertoworkwithforthisstage.WithsuchaBOQ,themappingofthelineitemstotheappropriatesystemscanbeaccomplishedinafewminutes.

SupposethatwehaveaBOQ.WemustarrangetheBOQintheformofa tablewhere thefirst columnwill showthe itemdescriptions, the sec-ondcolumnwillindicatetheunits,thethirdrelatestoquantitiesandthefourthtouniteratesorunitcostsorunitprices.Thefifthcolumncontainstheitemcosts.

Item Description Unit Quantity Unit Rate Item Cost3.1Buildingconcrete150kgcement 5cmthick m3 4 100 4003.2 foundations reinforced concrete for strip and independent foot ings350kgcement m3 19 140 26603.3Roughformworkforitem3.2 m2 97 12 1164

3.4Reinforced concrete for anchor ageslintelsparapetandupright m3 41 140 57403.5Roughformworkforitem3.4 m2 574 12 6888

3.6Reinforcedconcrete250kgsfor slab10cmthick m2 260 12 3120

Wehavetomapeachofthe6BOQitemsintoconstructionsystems.Wewilladdasixthcolumntothetable,toindicatethesystemwhichapar-ticularitembelongsto.Forinstance,thefirstitembelongstosubstructureswhereastheotheritemsbelongtosuperstructures.

Thetablebelowillustratestheresultofthemappingprocess.

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Item Description Unit Quantity Unit Rate

Item Cost

System Identification

3.1Building concrete 150 kg cement5cmthick

m3 4 100 400 Substructure

3.2foundations reinforced con crete for strip and independ entfootings350kgcement

m3 19 140 2660 Superstructure

3.3 Rough formwork for item3.2


3.4 Reinforced concrete for an chorages lintels parapet and upright


3.5 Rough formwork for item3.4


3.6Reinforcedconcrete250kgs forslab10cmthick


Step 3:AggregationofBOQcostsbysystems

Atthisstage,costsshowninthefifthcolumnmustbeaggregatedbysys-tem,sothatthetotalcostforeachsystemcontainedintheprojectcanbeestimated.Forexample,thetotalcostforsubstructuresisequalto400intheexampleaboveasonlyoneBOQitembelongstosubstructures.Thetotalcostforsuperstructuresisequalto19572(i.e.2660+1164+5740+6888+3120).

Intheexampleabove,theprojectcostbysystemisasfollows:

Systems Total costSubstructure 400

Superstructure 19572

Thisprocessisrepeatedforallsystemsineachofthethreebaskets.

6. Conclusion

InformationonconstructionandcivilengineeringhasaparticularinteresttoAfrica,particularlyinviewofitscriticallinktoinfrastructuredevelop-ment,akeyareaofemphasisintheNewPartnershipforAfrica’sDevelop-ment (NEPAD).PPPsandprice level indicators ingeneral, and relateddataonconstructioncostsandexpenditureinparticular,provideextremely



usefulinformationaboutthemacroeconomicenvironmentwithinwhichinvestmentistakingplace.

HoweverinmostofthecountriesparticipatingintheICP,pricescollec-tionfortheprogramhavebeenlargelydisconnectedwiththeregularpricecollectionprocessesaimingatproducinginter-temporalpriceindices.In-ter-temporalpriceindicesfortheconstructionsectorareoftencalculatedusingabasketof constructionmaterial and laborprices.This approachdoesn’tpermittotakeintoaccounttheinter-temporalfluctuationsofpro-ductivitynordoesitaddresscorrectlytheproblemlinkedtothetrade-offbetweenlaborandequipment.Thereisthereforeaneedforamethodthatcouldpossiblyeradicateboththeseproblems.

TheBOCCapproachprovidesamuchsimplerandbetterdefinedpricecomparisontoolthatcanhelptodrasticallyreducetheresourcesandtheexpertiserequiredforpricedatacollection.Duetoitssimplicity,itisplau-siblethatthebasketcanbeadaptedtobeusedinnationalinter-temporalpricecomparisons.ThesetwofeaturestogetherwillalsofurtherthegoalofmakingtheICPmoresustainable.

Becauseitislessresourceintensivetoprice,theproposedbasketcaneasilybeusedtogeneratemultipleobservations.ByusingtheBOCCapproach,theNSOscancollectpricesfortheconstructionsectoratalargernumberoflocationswithintheircountryincludingbothurbanandrurallocations,andatseveraltimesoverthecourseofayear.

DuetothedesignfeaturesofBOCCitcanalsopotentiallyimpactthena-tionalaccountingproceduresusedfortheconstructionsectorinacountry.Theaccountingproceduresusedbynational accounts in ICPcountriesfor the construction sector show large variations. Probably most coun-triesbasetheirestimatesonbuildingpermits,publicworksbudgets,andsome ad hoc valuation of non-permit buildings and private non-build-ingprojects.ItislikelythattheBOCCapproachcouldimproveexistingvaluationmethodsandtherebyimprovetheaccountingproceduresfortheconstructionsectorwithinthenationalaccounts.

TheBOCCapproachcanprovidesomeguidanceincomparingothercom-parisonresistantsectors,suchastherentalhousingsector.Thecomparisonintherentalhousingsectorisoftencomplicatedduetotheimportanceofgovernmentprograms(suchassubsidies)andlimitedavailabilityofrentalhousinginsomeareas.Onesuggestedimprovementistousethe“quan-tity”approachinwhichthevolumeofhousingisderivedbymultiplying




thequantityindicatorandthequalityindicator.TheBOCCapproachforresidential sectorhasenoughflexibility tobeappliedforvariousstudiesrelatedtohousing.

References

Dubner,M.,andMcKenzie,R.(2002)“Construction Industry Purchasing Power Parities Obtaining Comparable Prices.”ConferenceontheInterna-tionalComparisonProgramme.AustralianBureauofStatistics.Washing-ton,D.C.

Heston,A. (1999) “ESCAP Comparisons of Real Gross Domestic Product and Purchasing Power Parities, 1993”UnitedNations,Bangkok,1999.

OECD(2001)“Source and Methods: Construction Price Indices”.

Stapel, S. (2002) “The EuroStat Construction Price Survey: History, Cur-rent Methodology and New Ways for the Future”,WorldBankReport,June2002.

UnitedNations(1992)Handbook of International Comparison Program.

Walsh,K.D.andSawhney,A.(2002)“International Comparison of Cost for the Construction Sector: Toward a Conceptual Model for Purchasing Power Parity”,WorldBankReport,June2002.

Walsh,K.D.andSawhney,A.(2004),An Implementation Framework for the Basket of Construction Components Approach, African DevelopmentBankandWorldBankConsultantsReport,June2004.

Walsh, K.D. and Sawhney, A. (2004), Process for Implementation of the Basket of Construction Components Approach,AfricanDevelopmentBankandWorldBankConsultantsReport.

Walsh,K.D.andSawhney,A.(2005),Identification of Construction Systems and Components for the BOCC Approach,AfricanDevelopmentBankandWorldBankConsultantsReport,February2005.



Ward,M. (2003)“Pricing Construction Projects Using Prototype Models,”paperpresentedtothe1stRegionalMeetingontheInternationalCom-parison Program in Western Asia, 24-27 June 2003, Beirut, Lebanon,available at www.escwa.org.lb/icp/activities/regional/24-27june/papers.htm(lastaccessed8July2004).

WorldBank(2006),ICP 2003-2006 Handbook.

Construction and Civil Engineering Work

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