A new approach to Construction PPPs ICP Global Office 1st ICP Workshop for the 2011 round in Western Asia Region July 21-22, Beirut, Lebanon

Overall objectives Data model and approach Information sources A worked example Preliminary results Conclusions and next steps 2 Outlines

3 Overall objectives To provide a better operational mechanism for construction PPP computation To ensure consistency with National Accounts through the use of Supply and Use Tables

Construction PPPs compared 4 PPPs as calculated 2010 ICP construction PPPs, 2005 OECD construction PPPs, 2008 USA1.00 Australia New Zealand Singapore na South Africa na UK

5 Calculating weighted input price levels 1 SELECT PRODUCT GROUPS AND ITEMS SIC GROUPS AND PREVIOUS STUDIES 2 COLLECT ITEM PRICES 3 CALCULATE ITEM PRICES RELATIVE TO BASE COUNTRY PRICES PRICE SURVEY 4 DERIVE COUNTRY SPECIFIC WEIGHTS INPUT OUTPUT / SUPPLY AND USE TABLES VALIDATE INPUT PRICES 5 CALCULATE WEIGHTED ITEM PRICES RELATIVE TO BASE COUNTRY WEIGHTS 6 PRODUCE COUNTRY TOTAL INPUT PRICES

6 Calculating Construction PPPs VALIDATE PRICE LEVELS 10 PRODUCE AGGREGATE COUNTRY PPPs NATIONAL ACCOUNTS AND INPUT OUTPUT TABLES 6 PRODUCE COUNTRY TOTAL INPUT PRICES 7 APPLY GROSSING-UP FACTOR(S) 8 PRODUCE OUTPUT PPPs RELATIVE TO BASE COUNTRY 9 REPEAT STEPS 3 and 5 TO 8 FOR COUNTRIES IN TURN

7 List of construction inputs Item prices Item weights Grossing up factors Information sources

Selected industry groups and materials 8 SIC codeIndustry groupSelected materials and products 14Other mining and quarryingAggregates for concrete (2 items) 20Wood and wood products Softwood for carpentry, exterior plywood, interior plywood, chipboard sheet, softwood window, softwood internal door 23Petroleum productsTo follow (will include petrol and diesel) 24ChemicalsTo follow (will include paint) 25Rubber and plastic productsVinyl floor tiles, plastic pipe, PVC insulated cable 26 Glass, ceramic, clay and cement products Ordinary Portland cement, ready mix concrete (2 items), precast concrete slabs, common bricks, facing bricks, hollow concrete blocks, solid concrete blocks, clay roof tiles, concrete roof tiles, float/ sheet glass, double glazing units, ceramic wall tiles, plasterboard, white WC, white WHB, clay drain pipe 27/28Metal products High yield steel reinforcement, mild steel reinforcement, structural steel sections, cast iron drain pipe, copper pipe 29-31MachineryTo follow (will include mechanical and electrical items) 71Renting equipmentTo follow

9 Value weights for construction inputs SIC codeIndustry groupValue weightings USAUNZSingSA 14Other mining and quarrying Wood and wood products Petroleum products Chemicals to follow 25Rubber and plastic products Glass, ceramic, clay and cement products /28Metal products Machinery Renting equipment to follow All selected groups100 Selected industry groups as a proportion of intermediate consumption 46.5%59.5%76.9%39.5%81.4%77.8%

10 Value weights for 17 countries in 2005

11 Value weights in UK,

12 Availability of input output tables Region Number of countries in region Number of I/O tables identified Coverage in each region Africa521529% Asia Pacific311961% CIS9778% Latin America and Caribbean % OECD/ Eurostat % Western Asia121*8% Total %

13 Grossing up factors per type of work Type of workAustralia New Zealand Singapore South Africa UKUSA 1Residential buildings Non-residential buildings1.19 3Buildings (1 + 2) Other construction (civil engineering) Non- residential construction (2 + 4) Construction trade services Repair and maintenance2.45 8All construction

14 Preliminary results: Construction PPPs Base USA US $ Australia AU $ New Zealand NZ $ Singapore S $ South Africa Rand UK £ USA Australia New Zealand Singapore South Africa UK

15 Conclusions and next steps The approach works and produces credible PPPs The item list will be useful for any price comparison approach Developing survey instruments Pilot survey/ country visits – October Addressing outstanding issues, Developing procedures for basic headings Collecting information on input mixes and industry structures

Thank you…