1. Gérard Vittek Head of section “index of the cost of construction and rent” 25 th May of 2015 The producer cost indices for construction at INSEE cost index

2. 25 th May of 2015 The producer cost indices for construction at INSEE Plan Cost of production index in construction Presentation Objectives Legal basis Scope and list of calculated indices Methodology Aggregation and reference Composition of the items and reference sources Dissemination

3. 25 th May of 2015 The producer cost indices for construction at INSEE Introduction The producer cost indices for construction are composite indices of costs which are derived from several cost items in an analytical accounting process similar to the “KLEMS” approach used by economists in relation to productivity where –K = capital for “equipment”, –L = labour, –E = energy, –M = materials, –S = services for “miscellaneous costs”), to which we have added –T = transport..

4. 25 th May of 2015 The producer cost indices for construction at INSEE Introduction They are the statistical twins of the building (BT) indices, civil engineering (TP) indices, and various indices for construction, which are used for contract escalation. The producer cost indices for construction are subject to revision and are used for national accounts, macroeconomic analysis and international comparisons.

5. 25 th May of 2015 The producer cost indices for construction at INSEE Objectives The producer cost indices for construction are primarily used for national accounts, macroeconomic analysis and international comparisons.

6. 25 th May of 2015 The producer cost indices for construction at INSEE Legal basis The Council Regulation (EC) No 1165/98 of 19 May 1998 concerning short-term statistics, amended by the regulation No 1158/2005, asks in its annex “B – construction” to provide the variables No 320, 321 and 322, which correspond to “construction costs”, with a decomposition between “material costs” and “labour costs”. Those variables, which are to be provided as indices, must correspond to the construction of new residential buildings.

7. 25 th May of 2015 The producer cost indices for construction at INSEE Legal basis More broadly, deflators are needed for national accounts and macroeconomic analysis. However, the construction sector is only partially covered by the producer price indices (see construction of new residential buildings PPI and maintenance and improvement of existing dwellings PPI- IPEA). Until now, the building (BT) indices, civil engineering (TP) indices, and various indices for construction (whose responsibility was transferred to INSEE by the Decree No 2014-114 of February 7, 2014 and the circular of May 16, 2014 relative to building indices (BT), civil engineering indices (TP) and various construction indices) were used as deflators, but they cannot be revised and their requirement to be published during the third month following the month under review leads to some temporal gaps (notably for labour costs) which are suboptimal for statistical works. These issues are corrected in the calculation of the producer cost indices for construction, which follow a calculation method similar to the one used for the BT and TP indices.

8. 25 th May of 2015 The producer cost indices for construction at INSEE Scope and list of calculated indices The entire section F of the construction is covered, except for the group “41.1 – development of building projects” and the subclass “43.99E – renting of construction equipment with operator”. The indices are completely defined in accordance with the NAF 2008, with the groupings “building” and “civil engineering” commonly used by professionals. The grouping “building” includes the activities “41.2 - construction of residential and non-residential buildings” and “43 except 43.1, 43.21B and 43.99E : Specialised construction activities except demolition and site preparation, installation works of electrical wiring and fittings on public thoroughfare and renting of construction equipment with operator”. The grouping “civil engineering” includes the activities “42 - civil engineering”, “43.1 – demolition and site preparation” and “43.21B - installation works of electrical wiring and fittings on public street”.

9. 25 th May of 2015 The producer cost indices for construction at INSEE List of producer cost indices for construction and their articulation with the NAF 2008

10. 25 th May of 2015 The producer cost indices for construction at INSEE Methodology The articulation between the items in the indices and the lines in the general accounting plan are as follows, considering that the item “transport” has been given priority over all the other items, subcontracting has been removed from production, the heading “miscellaneous costs” has been capped, and only costs that can be linked to a specific construction site are assumed to be taken into account:

11. 25 th May of 2015 The producer cost indices for construction at INSEE Methodology

12. 25 th May of 2015 The producer cost indices for construction at INSEE Methodology The weighting of each item in each index is determined by the account analysis of the involved businesses (or the involved construction works). Similarly, each item is broken up into basic indices (of cost or price) derived from public statistics, with a weighting. The weightings at all levels of aggregation are sourced from the confrontation between the 2012 Structural Business Survey in construction and the studies of the professional unions studies in the framework of the preparation of the Buildings (BT) and Civil engineering (TP) indices in base 2010 for contract escalation. The weightings of the items and basic indices are normally fixed for the duration of the base but the adopted calculation formulas could allow an update of the weightings throughout the duration of the base.

13. 25 th May of 2015 The producer cost indices for construction at INSEE Aggregation and reference

14. 25 th May of 2015 The producer cost indices for construction at INSEE Composition of the items and information sources The labour costs are sourced from the labour cost index in the construction sector, which is available every quarter between Q+75 and Q+80. Thus, the first two months of the last quarter are estimated, and the data of these two months are then available at the same time as the data from the third month.the labour cost index in the construction sector The composition of the costs item equipment is respectively specific to the construction of buildings (structural works), to the specialised construction activities in existing buildings (finishing), and to public works respectively. The “equipment” costs item of the specialised construction activities in new buildings is an average of “equipment” costs item structural works and finishing.

15. 25 th May of 2015 The producer cost indices for construction at INSEE Equipment

16. 25 th May of 2015 The producer cost indices for construction at INSEE Composition of the items and information sources The composition of the costs item “materials” is respectively specific to the construction of buildings, to the specialised construction activities in existing buildings (finishing), to the engineering works and to the specialised civil engineering works. The composition of the costs item “energy” is different in the sector of building construction (road diesel) and in the sector of engineering works (non-road diesel and heavy fuel oil). Businesses in the sector of building construction usually use their own fleet of trucks while businesses in the sector of engineering works use the services provided by freight transport companies. Thus, the transport indices of the two activities are different.

17. 25 th May of 2015 The producer cost indices for construction at INSEE Energy

18. 25 th May of 2015 The producer cost indices for construction at INSEE Materials

19. 25 th May of 2015 The producer cost indices for construction at INSEE Transport

20. 25 th May of 2015 The producer cost indices for construction at INSEE Weights of producer cost indices for construction They are sourced in Cost of construction index for escalation of contracts when it corresponds and in structural business survey.

21. 25 th May of 2015 The producer cost indices for construction at INSEE Weights of producer cost indices for construction

22. 25 th May of 2015 The producer cost indices for construction at INSEE Weights of producer cost indices for construction

23. 25 th May of 2015 The producer cost indices for construction at INSEE Weights of producer cost indices for construction

24. 25 th May of 2015 The producer cost indices for construction at INSEE Dissemination The producer cost indices for construction are disseminated around the 15 th of the third month following the month under review (m+75), on the Macro-economic database (BDM) website page, under the topic “Prices and price indices”, heading “Production and import price indices”, sub-heading “Construction producer price and costs indices” then “Producer cost indices for construction (macroeconomic indicators)”. These indices are revised mainly over the last four months, but more generally they are revised since the beginning of the year under review or since the beginning of the previous year.

25. 25 th May of 2015 The producer cost indices for construction at INSEE Graphics

26. 25 th May of 2015 The producer cost indices for construction at INSEE Graphics

27. 25 th May of 2015 The producer cost indices for construction at INSEE Graphics

28. 25 th May of 2015 The producer cost indices for construction at INSEE Publication

29. Thank you for your attention! Contact M. Gérard Vittek Tél. : 01 41 17 51 15 email : gerard.vittek@insee.frgerard.vittek@insee.fr Insee 18 bd Adolphe-Pinard 75675 Paris Cedex 14 www.insee.fr Informations statistiques : www.insee.fr / Contacter l’Insee 09 72 72 4000 (coût d’un appel local) du lundi au vendredi de 9h00 à 17h00 The producer cost indices for construction at INSEE