5 th Regional Coordinator’s Meeting October 5-6, 2011 Washington DC Global Office

2 Presentation Outline Special Survey Areas Changes to GCL Machinery and Equipment Construction and Civil Engineering Fast Evolving Technology Products     Water  Private Health  Private Education 

3 Between April and October 2011, a few modifications were made to the ICP Global Core items list Transport Recreation and culture 4 5 Changes to GCL Food and clothing1 Housing and related goods and services3 Health Services2 Miscellaneous goods and services6 Most important changes concerned Basic Heading “Passengers transport by air” - Other changes/clarifications were made, when needed, to the following categories:

4 On Passengers transport by air, due to internal complexity of travel services industry worldwide, the Global Office, following recommendation from ICP regions, decided to lay more emphasis on return tickets to various destinations with tickets in low season at the cheapest options Changes to GCL Necessary amendments were made and regions have been informed in order to incorporate them in their regional lists - Global list of items have been developed for Machinery and Equipment Goods, Construction, Housing, Education, Compensation of employees

5 Available survey materials for the specific Water survey include the following: Collection Form of Water Tariff (English) (Arabic) (French) (Spanish) - Water Operational Guide Chapter (English) -

6 The 2011 Global Core List for Household Consumption Survey of the International Comparison Program is designed to collect cost associated with water consumption through direct pricing of three items under Basic Heading Water In addition to the Global Core List, the Global Office has developed a special form to collect important structural information to understand the formation of water tariffs in the countries These calibration information will support prices collected for Water Supply basic heading covering Global Core List and Regional items

7 Available survey materials for the Machinery and Equipment survey include the following: Machinery and Equipment Survey guidelines for Machinery and Equipment Goods (English) (Arabic) (French) (Spanish) - ICP-Kit Machinery and Equipment Goods Module (English) - Machinery and Equipment Goods product catalogue (English) - Operational Guide Chapter (English) - User Guide for the ICP-Kit Module (English) -

8 The list of items for Machinery and Equipment Goods comprises eight different Basic Headings including a total of 77 products and 177 items Machinery and Equipment All prices, costs and fees should be submitted for one unit and the order quantity must be indicated - A new version of the ICP Kit and a product catalogue have been redesigned to reflect these requirements - Updated materials for price collection of Machinery and Equipment Goods have been circulated and data will be collected through November

9 Available survey materials for the Construction and Civil Engineering include the following: A Paper describing the approach, titled as “A New Approach to International Construction Price Comparison” (English) (Arabic) (French) (Spanish) Additional Guidance 1 (FAQs) (English) Presentation (English) Construction and Civil Engineering ICP Construction Price Survey Form (English) (Arabic) (French) (Spanish) - Operational Guide Chapter (English) - Construction Materials Catalogue (English) (Spanish) -

10 Construction and Civil Engineering 10 3 Basic Headings 3 Categories of Input Resources 50 Input Resources Residential Building Civil Engineering Non- Residential Building Materials Equipment Labor Materials & Products Equipment items Labour services Materials Equipment Labor Materials & Products Equipment items Labour services Materials Equipment Labor Materials & Products Equipment items Labour services Introduction

11 Construction and Civil Engineering PPPs are calculated in 4 steps: An unweighted CPD is to be used to calculate PPPs for the 3 sub-headings: 1 Approach in brief BH PPPs will be calculated as weighted averages of the sub-heading PPPs using Resource Mixes as weights 2 BHs PPPs based on the input prices will be adjusted to outputs using mark-ups and allowances for professional fees collected in the price survey 3 Materials1 Equipment2 Labor3 Each BH has thus three sub- heading PPPs National construction PPPs are calculated by aggregating BH PPPs using expenditures on construction BHs as weights 4 38 items 5 items 7 items Importance ! Resource Mixes are typical proportions of resources (Materials, Labor and Equipment) used in construction projects relating to the 3 BHs (Residential and Non-residential building and Civil engineering work) Relevance

12 The 38 material resources are allocated to the 3 BHs based on their relevance Importance Sheet roofing and sanitary ware appear only in Residential and Non- residential building BHs Example In addition each item is to be classified as important (1) or not important (0) for each BH (R, NR, C) Importance means readily available and in common use - Only prices of important items are used in the calculation of sub-heading PPPs - Important Not Important Available Not Available Price No Price 0 0

13 Materials included in the construction survey have been selected on the basis of their common use across countries Pricing Rules (1) However these are not always available in all countries - in this case there is two options: - Prices are not provided for the material in question1 Alternative material is priced 2 Clay bricks Alternative bricks Concrete blocks Copper pipe Steel pipe Plastic pipe - In general, prices should not be provided for materials that need to be specially produced or imported ! Alternative description is to be noted; comparability to be verified during the validation

14 Prices provided should be those paid by construction contractors to their suppliers Pricing Rules (2) Prices paid after discounts, including all non-recoverable taxes and respectively excluding all recoverable taxes, such as the Value Added Tax (VAT) materials and products Rental charges paid to hire companies or internal hire rates equipment Cost to the contractor of employing the workers labor Countries are requested to provide annual and national ‘average’ prices: Prices that are an average over the survey year (mid-year prices are acceptable) Annual averages In addition the provided prices should be for items that are commonly available and commonly used in the country; not for “special” items - Prices across the country, across different types and sizes of projects National averages

15 Available survey materials for the Fast Evolving Technology Products include the following: Note describing the approach, titled as “Fast Evolving Technology Products” (English) (Arabic) (French) (Spanish) Item specifications in SPD format (English) Presentation (English) Fast Evolving Technology Products Operational Guide Chapter (English) -

16 As a result standard ICP practices cannot produce satisfactory PPPs Introduction Technology products such as audio-visual, office and information processing equipment pose unique challenges for ICP price collection and PPP computation. These are related to: Short life cycles and the overall fast changing nature of these products Tendency of consumer electronics companies to create market fragmentation by introducing models with minor variations for certain groups of countries or even for individual countries Introduction of new models according to a different schedule across the countries or regions The issue of fast evolving technology relates mainly to the Audio-visual, photographic and information processing equipment BH (3 OECD BHs)

17 Approach An approach to resolve this problem is based on the following four main elements: Focus on products with wide availability, low number of alternative models for the same product type, and relatively long lifespan or with replacement models which can be clearly identified Based on the four elements, the Global Core List (GCL) is being revised to include 16 new items Improve the item specifications so that they list the key price determining factors and indicate a product series instead of a single model Use the whole scope of the basic heading(s) Collect brand and model information for validation purposes

18 Implementation The 16 new GLC items are covering the following product types: Regional Coordinators can add additional regional items to their regional lists following the approach, if needed Photographic equipment Equipment for the reception and reproduction of pictures Equipment for the reproduction of pictures Information processing equipment The old GCL and regional items can either be kept or deleted depending on the results for previous quarters Prices for these items are to be collected in the remaining months and quarters (Q3 and Q4) of 2011 The treatment of these items is the same as for any other GCL item 1 item 4 items 1 item 9 items Equipment for the reproduction of sound1 item

19 Item Specifications Brand: Brand X Series: Series Y Model: e.g D255E Type: netbook computer Screen size: 10.1” Processor: Atom N455 Installed memory: 1 GB Hard disc: 250 GB Wireless connectivity: Wi-Fi (WLAN), Bluetooth Exclude: 3G/4G models Number of units: 1 Unit of measurement: piece SPECIFY: brand and model Item specifications define the series for the given brand and the key price determining parameters for the product Model code can differ across countries for exactly the same product and change quickly even within a country due to possibly very minor changes with actual product Reference to an actual model code is not made directly; it is included only as an example The key product features Clearly listed to facilitate the price collection and to assist the price collectors and shop assistants in finding comparable models at the national market Series are more universal and stable Prices brand and model is to be written down for validation purposes

20 Available survey materials for the Private Health include the following: Presentation (English) - Private Health Operational Guide Chapter (English) (Arabic) (French) (Spanish) - Item specifications in SPD format (English) (Arabic) (French) (Spanish) -

21 Introduction (1) Basic Headings relating to health products and services are split into household and government expenditures Government expenditure consists of: - Household expenditure consists of: - Reference PPPs Input approach Price surveys Reference PPPs 7 BHs 6 BHs 1 BH Hospital services BH 11 BHs 1 BH Compensation of employees BH 12 BHs Pharmaceutical products BH Other medical products BH Therapeutic appliances BH Medical Services BH Dental services BH Paramedical services BH

22 Introduction (2) Despite being a comparison resistant area, the overall survey process follows normal household consumption price surveys: - Regional item lists consist of both Global Core List items as well as region specific items - Price collections are to be carrier out quarterly in order to establish sound annual average prices - Normal 2011 ICP routines are to be followed on importance - Prices and resulting PPPs are to be validated at country, region and global levels All reported prices are to be full market prices; this is the total amount the seller or service provider receives for the specified product or service Full market price = Price paid by an individual + Potential government subsidy or insurer/NGO contribution -

23 Pharmaceutical Products The GCL includes 43 internationally essential drugs, that are indentified based on the following main parameters: Active SubstanceQuantityProduct examplesDosage In addition distinction is made between: Identical, or bioequivalent medicines, to an existing brand- name medicine in dosage form, safety, strength, route of administration, quality, performance characteristics and intended use Branded drugs Medicines produced and sold by their innovative pharmaceutical companies Generic drugs Referred as “Original” or “International brand” referred as “Generic” or “Generic brand”

24 Out-Patient Services Out-Patient Services covers 3 BHs and 12 GCL items Items include services such as sight test examination, extraction of a tooth and standard blood test - Prices are to be collected only from private service providers - Public service providers is covered by the BHs relating to Health expenditure by government; different comparison approaches are employed for these BHs ! Establishment whose all or most of output is market production Private (market) producers Public (non- market) producers Provide all or most of its output to others at prices that are economically significant Establishments owned by government units or NPISHs that supply goods or services free, or at prices that are not economically significant, to households or the community as a whole Most of their activity will be undertaken on a non-market basis

25 Available survey materials for the Private Education include the following: Private Education Guidelines (English) (Arabic) (French) (Spanish) Private Education - Survey Questionnaire (English) (Arabic) (French) (Spanish) Presentation on Private Education in the ICP 2011 (English) Private Education Operational Guide Chapter (English) -

26 Introduction to Private Education Country Survey  Private Education under HHC  collection of private tuition fees  Involves data collection by countries  Regional PPPs computed by Regional Coordinators then linked to Global PPPs Global Level  Public Education under Government  collection of compensation of employees working in the public education sector + productivity adjustment  Quantity indicators (Number of students)  Quality adjustment factors (scores, absenteeism, background, etc.)  No data collection by countries  Data compiled centrally by the Global Office, with the help of consultants  Regional and Global PPPs computed centrally by the Global Office, with the help of consultants

27 Survey Frame / Data Requirements Survey Frame Types of Schools Locations Number of Observations Capital city and several other areas (including both urban and rural) At least one per area At least five in the capital city All types of private schools e.g. Low-cost / High-cost schools, etc. The average prices for annual tuition of private schools All raw data and metadata General education indicators Worksheets Worksheet 1 Worksheets Data Requirements Number of Observations

28 Item List CodeBasic Heading and Product Name Education Primary Education (Primary) Secondary education (Lower Secondary) Secondary education (Upper Secondary) Tertiary education (Computer Science Degree) Tertiary education (Degree in Humanities or Social Science) Other education programs (Foreign language course or lessons) Other education programs (Private lessons in mathematics - outside school hours) Specifications are provided in the SPD format in the operational material

29 Technical Issues in Pricing Number of school days Excluding all the vacations and holidays. Two academic years in calendar Y2011 For each academic year, average tuition per school day will be calculated and multiplied by the number of school days in the calendar Y2011. Then they are summed up. Cost of education only Cost for educational materials and education support services should be excluded. Detailed Guidance is provided in the operational manual guidelines

30 THANK YOU