CONSTRUCTION COSTS INDEX FOR RESIDENTIAL BUILDINGS, SLOVENIA

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1 CONSTRUCTION COSTS INDEX FOR RESIDENTIAL BUILDINGS, SLOVENIA METHODOLOGICAL EXPLANATIONS PURPOSE OF THE STATISTICAL SURVEY LEGAL BASIS FOR THE SURVEY OBSERVATION UNITS COVERAGE SOURCES AND METHODS OF DATA COLLECTION DEFINITIONS EXPLANATIONS PUBLISHING REVISION OF THE DATA OTHER METHODOLOGICAL MATERIALS PREPARED BY LAST UPDATED PURPOSE OF THE STATISTICAL SURVEY The construction costs index for new residential buildings is intended for reviewing or monitoring costs incurred by a construction company in the execution of the construction process of building new residential buildings. In accordance with the EU methodology, the development trends of construction costs for new residential buildings can be measured in different ways, and always should be included in the observation of two most important natural types of costs that occur in the construction process, i.e. the costs of material and labour. The total construction costs index for new residential buildings is composed of two components, i.e. of two indices, namely the construction material costs index and the labour cost index (measured in labour cost per hour worked), resulting from the construction of new residential buildings. Both indices have been developed for other indicators in the relevant statistical areas in the Statistical Office of the Republic of Slovenia (SURS), namely the construction material costs index in the price statistics (i.e. output price statistics on the domestic market), and the labour cost index in the labour statistics. So from two already existing indicators, which were for the purpose of calculating the

2 construction costs index slightly adjusted, we set up the third only by using so-called»secondary data sources«without further burdening of reporting units. The main users of construction costs indices for residential buildings are construction companies, which refer to the movement of construction costs in calculations when entering a construction contract. We also send the data to Eurostat, where they are made available to other international users in a database. As mentioned, the EU regulations do not provide only one method strictly for calculating the construction costs index, but allow different options for assessment of these indicators, depending on the circumstances in each country. One of these options, which we used at SURS, is also the described method. The chart below is taken from the methodological directive prepared by the Statistical Office of the European Union Eurostat and adapted to our method of calculating these indicators. Chart 1: Construction costs by type of costs and the site where they originate I. Contractor II. Client III. Final owner Materials, Together with the Energy or Fuell Labour Construction costs = Factor prices Output Prices = Producer prices Plant and equipment Productivity VAT Site Client costs Transport Profit margin Other Architects costs Other costs Profit margin Selling price = Costs to final client

3 Note: In calculating the construction costs index for residential buildings those costs are covered which in the above chart are highlighted or shaded. Construction costs index (total) for residential buildings is calculated as a weighted average of the labour cost index and the construction material costs index. Weights for the calculation of the total construction costs index were obtained from the annual accounts of companies registered within section F Construction according to the 2008 Standard Classification of Activities and are reflected in the form of shares of the value of labour costs and material costs from final accounts. CSTI = w 1 *CSTM + w 2 *CSTL CSTI construction costs index (total) CSTM construction material costs index CSTL construction labour cost index w 1, w 2 weights LEGAL BASIS FOR THE SURVEY The survey is conducted in accordance with the National Statistics Act (OJ RS, No. 45/95 and No. 9/01), the Annual Programme of Statistical Surveys and Council Regulation (EC) No. 1165/98 (OJ L 162) concerning short-term statistics. OBSERVATION UNITS The observation units for the calculation of the construction material costs index are all those classes within the output price indices of the domestic market that include products related to construction. The construction material costs index on the domestic market covers 43 different product groups according to types of activities in sections B Mining and quarrying and C Manufacturing. Table 1: List of materials included in the construction material costs index Prodcom list_2013 Description Ornamental and building stone, limestone, gypsum, chalk and slate Gravel, sand, clays and kaolin Wood, sawn and planed Veneer sheets and wood-based panels

4 Prodcom list_2013 Description Other builders' carpentry and joinery Refined petroleum products Plastics in primary forms Paints, varnishes and similar coatings, printing ink and mastics Glues Other chemical products n.e.c Other rubber products Plastic plates, sheets, tubes and profiles Builders' ware of plastic Other plastic products Shaped and processed flat glass Glass fibres Ceramic tiles and flags Bricks, tiles and construction products, in baked clay Ceramic insulators and insulating fittings Cement Lime and plaster Concrete products for construction purposes Ready-mixed concrete Mortars Fibre cement Other articles of concrete, plaster and cement Cut, shaped and finished stone Other non-metallic mineral products n.e.c Basic iron and steel and ferro-alloys Cold drawn bars Cold drawn wire Aluminium

5 Prodcom list_2013 Description Lead, zinc and tin Metal structures and parts of structures Doors and windows of metal Central heating radiators and boilers Other tanks, reservoirs and containers of metal Machining services Locks and hinges Wire products, chain and springs Other fabricated metal products n.e.c Measuring, testing and navigating equipment Electricity distribution and control apparatus Different calculations for the construction material costs index All other important information relating to various calculations in the construction material costs index, as for example: the calculation of the individual price index and aggregate index at the higher levels, the concept of price, the price base period, the weighting system and other information, is available in the methodological explanations: Output price statistics on the domestic market on the website: The labour cost index reflects quarterly moving of costs for the hour worked. Observation units are legal persons of the public and private sectors or their units registered for performing activity in the Republic of Slovenia. For calculating construction costs indices the data on labour cost indices for section F construction are used (divisions 41, 42 and 43 of the 2008 Standard Classification of Activities). The labour cost index is based exclusively on existing, i.e. already collected, statistical and administrative sources. The results are calculated on the basis of the chain Laspeyres index and on the base year 2008; for the purpose of calculating the construction costs index they are calculated on the base year 2010.

6 In calculating the labour cost index of all components of labour costs the following costs are taken into account: - employee's allowances, - employers' social security contributions, - payroll taxes (eliminated on 1 January 2009), - and subsides. The following costs are not taken into account: - vocational training costs and other labour costs (recruitment costs and clothing). More detailed definitions of the labour cost index are published in the methodological explanations: The labour cost index and labour costs on the website COVERAGE The survey on the construction material costs index covers different construction enterprises which are engaged in the production of building materials and report their monthly prices for building materials that fall into one of the 43 groups of products covered by the construction material costs index. The statistical survey Labour Cost Index covers persons in paid employment who signed employment contracts (employed for fixed or unspecified period of time, irrespective of whether they work full time or part time, are taken into consideration). SOURCES AND METHODS OF DATA COLLECTION The source for the calculation of the construction material costs index is data on producer prices for selected groups of building materials collected from selected respondents by using individual questionnaires. For calculating the labour cost index, according to EU regulations various sources can be used. In Slovenia only existing sources are used for calculating the labour costs index: data on payments of general government revenues on certain accounts source: Public Payments Administration of the Republic of Slovenia as well as the Monthly Report on Earnings by Legal Persons, the Labour Force Survey and the Labour Costs Survey source: the Statistical Office.

7 DEFINITIONS The total construction costs index for residential buildings is composed of two components, i.e. of two indices, namely the construction material costs index and the labour cost index, resulting from the construction of new residential buildings. Construction material costs index on the domestic market covers 43 different product groups by activity classes in sections B Mining and quarrying and C Manufacturing and thus all those classes of business within the output price index on the domestic market, which contain products related to the construction or construction of dwellings. The labour cost index reflects quarterly moving of costs for the hour worked. EXPLANATIONS / PUBLISHING Survey results are published quarterly in accordance with international requirements within 75 days after the end of the quarter in the First Release and in the SI-STAT database. At the same time they are also transmitted to Eurostat. REVISION OF THE DATA The published results are final. We anticipate that from time to time we will carry out regular revisions planned in advance only with the possible revision of data sources or in the event new data sources start to be used. Explanations about the revision of the results are available on the Statistical Office s website: OTHER METHODOLOGICAL MATERIALS / PREPARED BY: Ajda Demšar

8 LAST UPDATED :

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