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This method used for the compilation of construction price indices entails the selection of a representative sample of construction projects either taking place, or completed, in a given geographic area, over a specified period of time. The cost of each technical component (derived from blueprints, work specifications, etc.) of a given construction in the sample is priced as at the base reference date. This involves the use of a schedule of prices containing the price of each component of the construction at the base period date.

Examples of this method are the construction price indices for residential buildings compiled in France, and several output price indices compiled in the United Kingdom.

By aggregating the prices for all the components a theoretical average price of the entire construction is obtained as though it had been undertaken at the base reference date. The general weighting is obtained from statistics on current construction. A price index is then obtained by calculating the ratio of the current actual price of the sampled construction to the recalculated price at the base reference period (derived from the sum of its components compiled from the schedule of prices).

The role of the schedule of prices is to define a price structure, not the average level of each component. The composition of the schedule of prices may not necessarily reflect the average prices for the base period. Obtaining such an average would require a very large sample. However, the relative structure of the prices on the schedule reflects market conditions at the time period in question.

Source Publication:
Sources and Methods: Construction Price Indices, OECD, Eurostat + enr.construction.com.

Cross References:
Construction price indices
Subsequent breakdown methods (construction price indices)


Statistical Theme: Prices and purchasing power partities

Created on Friday, March 14, 2003

Last updated on Thursday, June 13, 2013