90938 International Comparison Program Validation of the Construction and Civil Engineering Survey Global Office 6th Regional Coordinators Meeting April 23-25, 2012 Paris Table of Contents 1. INTRODUCTION ............................................................................................................................................. 3 2. OVERVIEW OF APPROACH FOR CONSTRUCTION AND CIVIL ENGINEERING PPPS ........................................... 3 2.1. ESTABLISHMENT OF SUB-HEADINGS......................................................................................................................4 2.2. SUB-HEADING PPPS ..........................................................................................................................................5 2.2.1. Construction Expenditure and Resource Mixes ...................................................................................6 2.2.2. Establishment of Sub-Heading weights ...............................................................................................7 2.2.3. Aggregation of PPPs ............................................................................................................................8 2.3. ADJUSTMENT FOR PRODUCTIVITY .........................................................................................................................8 3. VALIDATION OF CONSTRUCTION AND CIVIL ENGINEERING SURVEY .............................................................. 8 3.1. INTRA-COUNTRY VALIDATION ..............................................................................................................................9 3.1.1. Prices ...................................................................................................................................................9 3.1.2. Equivalent materials ..........................................................................................................................10 3.1.3. Unit of Measurement and Dimensions ..............................................................................................10 3.1.4. Importance ........................................................................................................................................11 3.1.5. Other information ..............................................................................................................................11 3.1.6. Completeness of questionnaire .........................................................................................................13 3.2. INTER-COUNTRY VALIDATION ............................................................................................................................13 3.2.1. Initial Data Validation .......................................................................................................................13 3.2.2. Validation of price data using Validation Tables ...............................................................................13 3.2.3. Importance ........................................................................................................................................14 3.2.4. Resource Mixes ..................................................................................................................................14 3.2.5. Construction PPPs ..............................................................................................................................16 3.2.6. Approximate Project Prices ...............................................................................................................16 3.3. GLOBAL VALIDATION .......................................................................................................................................17 ANNEX 1: MATERIAL INPUTS ............................................................................................................................... 18 ANNEX 2: COMPLETE LIST OF HEADINGS AND ITEMS FOR PPP COMPUTATION ................................................... 19 ANNEX 3: LIST OF HEADINGS AND ITEMS FOR VALIDATION ................................................................................. 24 ANNEX 4: CLASSIFICATION OF COUNTRIES INTO INCOME GROUPS ..................................................................... 26 ANNEX 5: LIST OF PROJECT PRICE HEADINGS AND ITEMS FOR VALIDATION ........................................................ 29 Validation of the Construction and Civil Engineering Survey1 1. Introduction The 2011 ICP Construction and Civil Engineering survey is based on input approach, where countries price 50 basic and common resources for construction work which are selected to correspond with the main inputs to national construction output. In addition, respondents to a national survey provide information on importance, resource mixes, typical mark-ups and professional fees, and approximated project prices. These data are used to calculate and validate the Construction and Civil Engineering PPPs. This chapter of the ICP Operational Guide provides an overview of the steps required to calculate PPPs for the Construction and Civil Engineering component of the GDP. In addition, covered is the process for validating input data and subsequent PPPs. The chapter is divided into 5 sections, starting with the introduction. Second section describes method for calculating the PPPs and the following three sections cover the validation steps at Country, Regional and Global levels. 2. Overview of approach for Construction and Civil Engineering PPPs Construction is one of the two categories under Gross Fixed Capital Formation Aggregate. The Category is further broken down into three Groups, Classes and Basic Headings (BHs) as shown in Table 1 below. The objective of the Construction and Civil Engineering survey is to estimate PPPs for the three BHs and to further aggregate these up to the Construction Category. Table 1: Construction headings Level ICP Code Heading Aggregate 150000 GROSS FIXED CAPITAL FORMATION Category 150200 CONSTRUCTION Group 150210 RESIDENTIAL BUILDINGS Class 150211 Residential buildings BH 150211.1 Residential buildings Group 150220 NON-RESIDENTIAL BUILDINGS Class 150221 Non-residential buildings BH 150221.1 Non-residential buildings Group 150230 CIVIL ENGINEERING WORKS Class 150231 Civil engineering works BH 150231.1 Civil engineering works 1 This chapter is prepared by Marko Rissanen with input from with input from Michel Mouyelo-Katoula and Nada Hamadeh, based on the material prepared by Jim Meikle. 3 In order to reach this objective, four separate and consecutive steps are to be taken. First step is formation of Sub-Headings, followed by calculation of Sub-Heading PPPs. Next, PPPs are aggregated up to the level of Category. Finally, the Category level PPPs are adjusted for productivity differentials. Each step is described below in detail. 2.1. Establishment of Sub-Headings The 50 basic and common construction resources are grouped into three Sub-Headings as follows:  Materials Sub-Heading: 38 material inputs;  Equipment Sub-Heading: 5 types of equipment hire services;  Labor Sub-Heading: 7 categories of construction labor. These Sub-Headings are allocated under the three Construction BHs (Residential and Non-residential buildings and Civil engineering work), so that each BH has three Sub-Headings, totaling to nine Sub- Headings. Inputs included in the Equipment and Labor Sub-Headings are identical for all BHs, but the number and set of material inputs included in the Materials Sub-Heading may differ depending on the BH. This is because items, such as concrete and steel reinforcement, can be relevant for all construction projects, and thus for all BHs, while other items, sheet roofing and sanitary ware, for example, may be used only in residential and non-residential projects. Annex 1 gives indicative list of relevant materials for each BH. National experts are required to indicate if a material is commonly used or, in other words, whether the material in question is relevant, for each type of construction project. This is done by deeming materials either important or not-important for each BH. It is suggested that indicative list given in Annex 1 is used as a starting point. Table 2 below summarizes the headings and number of items included in each Sub- Heading and BH. The actual number of items under Material Sub-Heading may vary between the BHs, as explained above. Table 2: Sub-Headings and associated number of items Level ICP Code Heading # Items BH 150211.1 Residential buildings 50 Sub-Heading Materials 38 Sub-Heading Equipment 5 Sub-Heading Labor 7 BH 150221.1 Non-residential buildings 50 Sub-Heading Materials 38 Sub-Heading Equipment 5 Sub-Heading Labor 7 4 BH 150231.1 Civil engineering works 50 Sub-Heading Materials 19 Sub-Heading Equipment 5 Sub-Heading Labor 7 2.2. Sub-Heading PPPs Having the Sub-Headings established for all countries and each BH, the next step is calculation of the PPPs. For practical computation reasons, Sub-Headings are treated as “Basic Headings” in the subsequent process for calculating the PPPs, whereas actual BHs are treated as aggregate level as shown in Table 3 below. Table 3: Sub-Headings as “Basic Headings” Actual Levels Considered as ICP Code Aggregate or BH Aggregate Aggregate level 150000 GROSS FIXED CAPITAL FORMATION Category Aggregate level 150200 CONSTRUCTION Group Aggregate level 150210 RESIDENTIAL BUILDINGS Class Aggregate level 150211 Residential buildings BH Aggregate level 150211.1 Residential buildings Sub-Heading Basic Heading 150211.11 Materials Sub-Heading Basic Heading 150211.12 Equipment Sub-Heading Basic Heading 150211.13 Labor Group Aggregate level 150220 NON-RESIDENTIAL BUILDINGS Class Aggregate level 150221 Non-residential buildings BH Aggregate level 150221.1 Non-residential buildings Sub-Heading Basic Heading 150221.11 Materials Sub-Heading Basic Heading 150221.12 Equipment Sub-Heading Basic Heading 150221.13 Labor Group Aggregate level 150230 CIVIL ENGINEERING WORKS Class Aggregate level 150231 Civil engineering works BH Aggregate level 150231.1 Civil engineering works Sub-Heading Basic Heading 150231.11 Materials Sub-Heading Basic Heading 150231.12 Equipment Sub-Heading Basic Heading 150231.13 Labor The method for calculating Sub-Heading PPPs is unweigted CPD. This method is selected instead of CPRD or weighted CPD, as all items included in the calculation of PPPs are deemed important, as explained 5 above in section 2.1 Establishment of Sub-Headings2. As all items are important, different calculation methods yield the same results. The next step is the aggregation of the Sub-heading PPPs to the actual BH level. As construction BHs are identical to their parent classes and groups, one single aggregation step will fill all these identical aggregation levels. In this process both National Account Expenditures and Resource mixes are used, as explained below. 2.2.1. Construction Expenditure and Resource Mixes National Accounts Construction Expenditure data is reported for the Construction headings listed in Table 1 above. Resource Mixes are cost of materials, equipment and labor expressed as a percentage share of the total expenditure value of a BH. The shares in different clusters of countries are dependents to the skills and technology available in the countries and other factors, and average values can vary from country to country, within countries, and across types of work3. Primarily, information on Resource Mixes will be collected during the price survey. However, in cases where national construction experts are not able to provide this information or if there is considerable doubt on the reliability of this information, default values estimated based on gross national income (GNI) per capita and relative construction labor costs can be used. Indicative values are presented below in section 3.2.3. Resource Mixes. 2 Classifying an item as important in the Construction and Civil Engineering survey means that the material in question is commonly used in residential, non-residential or civil engineering construction projects within a country. Respectively if an item is classified as not-important, it means that the material in question is not used commonly in construction projects within the country. As such, it is less likely to represent the construction material costs for the country realistically. 3 In most countries and in most types of work, with possible exception of civil engineering work, Material inputs represent the greatest proportion of construction value, typically as high as 50 – 75%. Building work labor represents the next greatest share, approximately 20 – 40%, whereas Equipment has the smallest proportion with 5 – 20% share. In civil engineering work, the relative significance of labor and equipment can be reversed, and materials and products may not be the most significant component. 6 2.2.2. Establishment of Sub-Heading weights Aggregation of the Sub-Heading PPPs to the actual BH level requires Sub-Heading Expenditure. These are formed by breaking down the BH level Expenditure over each Sub-Heading using Resource Mixes as weights. As an example in Table 4 below, Nominal Expenditure for Construction Category is 70, which is further broken down into Groups and Classes, as shown in the Table. Column “RM Shares” gives Resource Mix shares for each Sub-Heading. The last column gives the Nominal Expenditures to be applied, when the Sub-Headings are aggregated up to the BH level. Table 4: Establishment of BH weights Nominal Expenditure RM RM weighted Nominal Actual Levels Considered as Code Aggregate or BH (LCU) Shares Expenditure (LCU) Aggregate Aggregate level 150000 GROSS FIXED CAPITAL FORMATION 120 Category Aggregate level 150200 CONSTRUCTION 70 Group Aggregate level 150210 RESIDENTIAL BUILDINGS 18 Class Aggregate level 150211 Residential buildings 18 BH Aggregate level 150211.1 Residential buildings Sub-Heading Basic Heading 150211.11 Materials 70% 12.6 Sub-Heading Basic Heading 150211.12 Equipment 5% 0.9 Sub-Heading Basic Heading 150211.13 Labor 25% 4.5 Group Aggregate level 150220 NON-RESIDENTIAL BUILDINGS 12 Class Aggregate level 150221 Non-residential buildings 12 BH Aggregate level 150221.1 Non-residential buildings Sub-Heading Basic Heading 150221.11 Materials 67.5% 8.1 Sub-Heading Basic Heading 150221.12 Equipment 7.5% 0.9 Sub-Heading Basic Heading 150221.13 Labor 25% 3.0 Group Aggregate level 150230 CIVIL ENGINEERING WORKS 40 Class Aggregate level 150231 Civil engineering works 40 BH Aggregate level 150231.1 Civil engineering works Sub-Heading Basic Heading 150231.11 Materials 50% 20.0 Sub-Heading Basic Heading 150231.12 Equipment 27.5% 11.0 Sub-Heading Basic Heading 150231.13 Labor 22.5% 9.0 2.2.3. Aggregation of PPPs After the Sub-Headings weights are established, the Sub-Heading PPPs can be aggregated to BH, Class, Group and finally up to the level of Construction Category, using the selected aggregating method4. 2.3. Adjustment for productivity The final step in the calculation process is adjustment of the Category level PPPs for productivity differentials. The main reason for productivity differentials across countries is on how efficiently the material, labor and capital inputs are used in the transformation into output quantity. If this efficiency is lower, the output price will be higher, as more input quantities are needed to arrive at the same output quantity. Respectively if this efficiency is higher, the output price will be lower as less input quantities are needed to get the same output quantity. Adjustment for productivity can be done by applying factors based on specific capital and productivity levels of a country. Applying this method would means that capital stocks are be estimated based on investment flows by asset type for each country, and that total factor productivity level would be derived from labor and capital income shares, using a production function framework5. 3. Validation of Construction and Civil Engineering Survey Overall validation process for the Construction and Civil Engineering Survey follows the general ICP validation process. This means that the validation work is carried out on three stages as follows: 1. Intra-country validation at country level; 2. Inter-country validation at regional level; 3. Global validation at global level. However, due to distinct methodology applied for the survey, a number of steps are specific to the Construction and Civil Engineering Survey. This section focuses on these specificities. General description of the ICP validation process can be found in the Validation of Household Consumption Survey and Validation Tables chapters of the ICP Operational Guide. 4 The selected method can be Elteto, Koves, Szulc (EKS), Geary-Khamis (GK) or Iklé. 5 The work on the productivity adjustment in the 2011 ICP round is ongoing. 3.1. Intra-country Validation During the intra-country validation process, National Coordinators (NCs) together with national construction experts verify completeness and correctness of the information collected during the survey. The sections below cover the checks needed to be done for prices, equivalent materials, unit of measurements and quantities, importance, and for other reported information. 3.1.1. Prices Regarding the prices to be reported, NCs must confirm with national construction experts that the prices: - Are the prices paid by established contractors to their suppliers; - Are reflecting the buying power of contractors undertaking significant amounts of work6; - Include all non-recoverable taxes; - Exclude all recoverable taxes, such as the Value Added Tax (VAT); - Are representing national average prices7; - Are the prices for typical construction projects within a country8; - Are representing annual averages; Further, prices should be provided for products that are commonly available and commonly used in the country; they should not be provided for products that: 6 The size of projects can influence the cost of resources, particularly materials and equipment – large quantities and long periods of hire, for example, can reduce unit costs and vice versa. Prices should be provided for medium- sized projects, that is, projects which are not unusually small or unusually large. 7 Construction prices can vary across countries as a result of local resource and distribution costs, geographic, seismic or climatic conditions, local market conditions, etc, particularly in large countries and where these variations could be significant. National construction experts should consider the extent of geographical variations when pricing items and making a judgment on what represents the national average. 8 Construction prices can vary depending on detailed site conditions, for example, constrained city centre sites, greenfield sites adjacent to urban areas and remote sites that are difficult to access; when pricing items, respondents of the price survey questionnaire should assume reasonable site contexts with good access. 9 - Involve “special” items i.e., items that are either not generally available or is only available at a premium price in the country. 3.1.2. Equivalent materials Materials included in the construction survey have been selected on the basis of their common use across countries. However, listed materials may not be always available or used in all countries and in these cases, equivalent materials are selected and priced. When equivalent materials are to be priced, NCs need to verify the following with the national construction experts: - Alternative material is indeed equivalent to the original material9; - Substitution is clearly indicated in the price survey questionnaire, and sufficient information on the material is provided. 3.1.3. Unit of Measurement and Dimensions Each material, equipment and labor item defines a preferred unit and respective quantity in which the prices are to be reported. It is crucial to check that the reported prices respond to the requested unit. In addition the prices can be reported in alternative units, i.e. either in based on metric or imperial systems. If this is done, NCs need to check that the following points are taken into account: - Alternative unit is clearly indicated and all relevant information is given; - Alternative unit can be converted to the preferred unit. For example, if cubic meters are asked, prices can be reported in cubic feet, however, price shall not be reported in running meters, which cannot be converted to cubic meters. Errors and problems in units are the most common reason for incomparable prices across the countries. Thus, utmost attention should be paid to this point during the intra-country validation. 9 For example, where countries do not have clay and use alternative materials for bricks, prices for the alternative bricks should be provided and the alternative description noted. However where countries do not use bricks at all but only use concrete blocks, prices for concrete blocks should not be provided since they cannot be treated as equivalent to bricks. In this case the brick item should not be priced. Another example is that in some countries copper pipe is not used; instead used are steel and plastic pipes. In this case steel pipe can be treated as equivalent to copper pipe and respective prices should be provided and the alternative description noted. Plastic pipes are not considered equivalent to copper or steel pipes. 10 3.1.4. Importance National experts indicate whether a material is commonly used in the construction projects within the country or not. This is done by indicating importance of items separately for each BH. NOTE: The current price survey questionnaire asks respondents to indicate the importance of an item with an asterisk (*). However for the sake of further data processing, numbers should be used instead to classify an item as important or unimportant: - “1”: Material is important for a given BH (Residential, Non-Residential or Civil work) - “0”: Material is unimportant for a given BH (Residential, Non-Residential or Civil work) Regarding the classification of items as important and unimportant, NCs should verify that the following points are taken into account: - If a material is available and commonly used in all three BHs, it should be priced and classified as important by inserting “1” in each BH’s importance column; - If a material is available and commonly used in only some BHs, it should be priced, and classified as: important (1) for those BHs for which the material is important; and unimportant (0) for those BHs for which the material is unimportant; - If a material is available but not important for any of the BHs, a price should be provided, but classified as unimportant material (0) for all BHs; - If a material is not available and not used, it should not be priced and classified as unimportant (0) material for all BHs. Finally, NCs should check that importance is indicated for each item. 3.1.5. Other information Percentages for Resource Mixes, mark-ups and professional fees should be provided for each Construction BHs separately. Table 5 below gives an example of questionnaire used to collect this information. Regarding these reported figures, NCs need to ensure that: - Provided information is complete for each element (yellow cells in Table 5); - Percentages add up to total figures (underlined figures in Table 5). 11 Table 5: Example of a completed questionnaire The mix of construction resources Non- Residential Civil engineering residential buildings works buildings 1 Construction materials and products 30.0% 30.0% 20.0% 2 Construction equipment 7.5% 10.0% 30.0% 3 Construction site labor 62.5% 60.0% 50.0% Total project value 100% 100% 100% Contractors’ mark-ups Non- Residential Civil engineering Cost headings residential buildings works buildings 1 Total mark-up of which: 25.0% 30.0% 25.0% 2 General site costs and temporary works 18.0% 21.0% 18.0% 3 Head office overheads 2.0% 4.0% 2.0% 4 Profit 5.0% 5.0% 5.0% 5 Other contractors costs (please specify) N/A N/A N/A Professional fees Non- Residential Civil engineering Cost headings residential buildings works buildings Overall percentage addition for professional 1 12.0% 13.0% 11.0% services Reporting approximate project prices is voluntary, but when these prices are given, NCs should confirm the following points with the national experts that the prices: - Represent annual average prices; mid-year prices can be treated as such; - Refer to a midpoint in a range of prices. This means that in case a country has a range of mid- year prices for a given project, the middle price should be selected and reported10; - Are those charged by construction contractors and paid by purchasers. For example, purchasers can be housing developers or public authorities; 10 In practice it may be useful to provide several prices per location and then take the midpoint (or average) per location which would then be used to determine the national midpoint or national average. 12 - Exclude external works11; and - Exclude the value of land. 3.1.6. Completeness of questionnaire Prior to submission of the questionnaire, it has to be checked that all required information is provided. It is extremely critical to check the completeness of prices and related quantities. 3.2. Inter-country Validation During the inter-country validation, RCs together with NCs, check the completeness and correctness of the data submission and conduct validation of price and metadata across countries. 3.2.1. Initial Data Validation Upon verification of the submitted data, RCs should conduct the following checks: - Completeness of questionnaires; - Comparability of unit of measurement in which the prices are provided; - Initial comparability of equivalent materials. If any of the above mentioned points require further review, it should be checked with the NCs right after the submission and prior to entering the next validation phases. 3.2.2. Validation of price data using Validation Tables After initially reviewing the submitted data, the next step is to validate the data using Validation Tables, i.e. either Quaranta or Diknanov Tables. For practical price validation purposes these tables can calculate by treating the Sub-Headings for Materials, Equipment and Labor as Basic Headings and further by including all items under these Basic Headings as follows: 11 External works are construction works often included in contracts, but outside the external walls of the building concerned. They may include boundary walls, footpaths, landscaping, car parking and utilities outside the building. They are excluded because they are site dependant and extremely variable in scope. 13 - Materials BH: 38 material inputs; - Equipment BH: 5 types of equipment hire rates; - Labor BH: 7 categories of construction labor. This means that all 38 material inputs are included in the Materials Sub-Heading, without distinction of BH specific selection of items, which were presented in Table 2 above. The reason behind is that while each submitted average price has to be validated, there is no need to replicate each average price for each BH, since they are identical. Further, it makes sense to compare relative prices across countries for all materials together, rather than clustering them according to actual construction project usage for each BH. Annex 3 gives a list of Sub-Headings and items together with the respective coding that can be used for price validation purposes. After the calculation of the Validation Tables, analysis is to be conducted following the steps introduced in the chapter Validation of Household Consumption Survey of the ICP Operational Guide. 3.2.3. Importance It is important to validate the provided information by checking: - Plausibility of the classification within a country; - That the rationale for classifying item as important is comparable across the countries; - That sufficient number of items is classified as important. RCs should review doubtful cases regarding the classification with NCs, as differences in the interpretation of the approach can lead into biased results when the PPPs are being calculated. 3.2.4. Resource Mixes As noted earlier, an initial set of resource percentages has been estimated centrally by the Global Office. These figures are presented in Table 6 below. The clustering of countries is based on: - Gross national income (GNI): Higher, Middle and Lower - Relative construction labor costs: Higher, Middle and Lower 14 Gross national income (GNI) per capita is used as a proxy for estimating resource mix differentials, as it can be suggested that the main factors influencing resource mixes across countries, particularly for building work, are the relative wealth of the countries and, within countries, the relative wage levels of construction workers. The shaded areas indicate less plausible combinations of national wealth and cost of construction labor. Annex 4 gives clustering of countries based on GNI per capita and construction labor costs. Countries will be further clustered based on the relative labor costs, based on the data derived from the Construction and Civil Engineering price survey. Table 6: Initial estimated Resource Mixes Relative cost of Gross national income (GNI) construction labor Higher Middle Lower Residential building Labor 30% Higher Equipment 7.5% Materials 62.5% Labor 25% Labor 25% Middle Equipment 5% Equipment 5% Materials 70% Materials 70% Labor 20% Labor 20% Labor 20% Lower Equipment 2.5% Equipment 5% Equipment 7.5% Materials 77.5% Materials 75% Materials 72.5% Non-residential building Labor 30% Higher Equipment 10% Materials 60% Labor 25% Labor 25% Middle Equipment 7.5% Equipment 7.5% Materials 67.5% Materials 67.5% Labor 22.5% Labor 20% Labor 17.5% Lower Equipment 5% Equipment 7.5% Equipment 10% Materials 72.5% Materials 72.5% Materials 72.5% Civil engineering Labor 20% Higher Equipment 30% Materials 50% Labor 22.5% Labor 22.5% Middle Equipment 27.5% Equipment 27.5% Materials 50% Materials 50% Labor 25% Labor 20% Labor 15% Lower Equipment 25% Equipment 30% Equipment 35% Materials 50% Materials 50% Materials 50% 15 Generally, labor percentages tend to increase and material percentages decrease, as national wealth and the cost of construction labor increase. Where construction labor is relatively cheap, contractors prefer to use labor rather than equipments. Civil engineering is most variable area across countries and over time, particularly in small and developing countries. Normally, there are more options in richer than in poorer, countries. Australia, for example, tends to use relatively expensive and highly skilled local labor, while Singapore uses relatively cheap, and unskilled migrant labor (Australia and Singapore are both wealthy countries with similar income levels). As such, Australia would be located in higher labor costs row, whereas Singapore would belong to lower row of higher GNI column. The estimated initial Resource Mix shares, presented in Table 6 below, can be used in two ways during the validation process: - As a check on the data provided by national experts; - As an estimation where data has not been provided. When submitted values are substantially different from the default values, it should be confirmed that this is due to plausible reasons and not a result of an error or misinterpretation of the approach. However, it is important to note that provided estimates are based on initial data; only after resource mix data is gather across the countries, final figures can be produced. As such, the estimated values are as well a subject of validation. 3.2.5. Construction PPPs Once the input data has been validated, it is possible to calculate and validate Construction PPPs, following the steps 1 to 3 explained above in section 2. Overview of steps to calculate Construction and Civil Engineering PPPs12. Validation of the PPPs should follow the process described in the chapter 10 Validation of Basic Heading and Aggregated PPPs of the ICP Operational Guide. 3.2.6. Approximate Project Prices Approximate project prices provide an additional tool for checking the plausibility of the input price based PPPs. The project prices reflect real-world construction projects within countries as they include all related costs. They can thus be used to estimate the total costs of construction projects. Project prices are asked for: - Four residential building projects 12 Step 4, adjustment for productivity differentials, will be carried out centrally by the Global Office for both Regional and Global results. 16 - Four non-residential building projects - Three civil engineering projects PPPs can be calculated as treating the above listing titles as Basic Headings, and further the projects as items. As such, the PPPs can be calculated and aggregated up to the level of Construction Category, using NA Expenditures as weights and selected aggregating method. Annex 5 gives a list of these Basic Headings and items together with the respective coding that can be used for validation purposes. The approximate project price based PPPs can be compared against the input price based PPPs. Should the comparison show substantial differences between the two sets of PPPs, there may be need for further verification of input prices. 3.3. Global Validation During the Global Validation the GO, together with the RCs and NCs work together to ensure that: 1. Prices are validated consistently across the regions; 2. Price data is comparable across all the countries; 3. Resulting Global PPPs are plausible. In addition, adjustment for productivity differentials will be carried out centrally by the Global Office for both Regional and Global Results. 17 Annex 1: Material inputs Use in Material or product Residential Non-residential Civil engineering building building works 1 Aggregate for concrete X X X 2 Sand for concrete and mortar X X X 3 Softwood for carpentry X X X 4 Softwood for joinery X X 5 Exterior plywood X X X 6 Interior plywood X X 7 Chipboard sheet X X 8 Petrol/ gasoline X X X 9 Diesel fuel X X X 10 Oil paint X X 11 Emulsion paint X X 12 Ordinary Portland cement X X X 13 Ready-mix concrete X X X 14 Precast concrete slabs X X 15 Common bricks X X X 16 Facing bricks X X 17 Hollow concrete blocks X X X 18 Solid concrete blocks X X X 19 Clay roof tiles X 20 Concrete roof tiles X 21 Float/ sheet glass X X 22 Double glazing units X X 23 Ceramic wall tiles X X 24 Plasterboard X X 25 White wash hand basin X X 26 High yield steel reinforcement X X X 27 Mild steel reinforcement X X X 28 Structural steel sections X X X 29 Sheet metal roofing X X 30 Metal storage tank X X 31 Cast iron drain pipe X X X 32 Copper pipe X X 33 Electric pump X X 34 Electric fan X 35 Air-conditioning equipment X X 36 Stand-by generator X 37 Solar collector X X X 38 Electricity X X X Totals 34 36 19 18 Annex 2: Complete list of headings and items for PPP computation Level ICP Code Heading GDP 1000000 GROSS DOMESTIC PRODUCT Aggregate 150000 GROSS FIXED CAPITAL FORMATION Category 150200 CONSTRUCTION Group 150210 RESIDENTIAL BUILDINGS Class 150211 Residential buildings BH 1502111 Residential buildings Sub-Heading 15021111 Materials Item 1502111101 Aggregate for concrete Item 1502111102 Sand for concrete and mortar Item 1502111103 Softwood for carpentry Item 1502111104 Softwood for joinery Item 1502111105 Exterior plywood Item 1502111106 Interior plywood Item 1502111107 Chipboard sheet Item 1502111108 Petrol/ gasoline Item 1502111109 Diesel fuel Item 1502111110 Oil paint Item 1502111111 Emulsion paint Item 1502111112 Ordinary Portland cement Item 1502111113 Ready-mix concrete Item 1502111114 Precast concrete slabs Item 1502111115 Common bricks Item 1502111116 Facing bricks Item 1502111117 Hollow concrete blocks Item 1502111118 Solid concrete blocks Item 1502111119 Clay roof tiles Item 1502111120 Concrete roof tiles Item 1502111121 Float/ sheet glass Item 1502111122 Double glazing units Item 1502111123 Ceramic wall tiles Item 1502111124 Plasterboard Item 1502111125 White wash hand basin Item 1502111126 High yield steel reinforcement Item 1502111127 Mild steel reinforcement Item 1502111128 Structural steel sections Item 1502111129 Sheet metal roofing Item 1502111130 Metal storage tank 19 Item 1502111131 Cast iron drain pipe Item 1502111132 Copper pipe Item 1502111133 Electric pump Item 1502111134 Electric fan Item 1502111135 Air-conditioning equipment Item 1502111136 Stand-by generator Item 1502111137 Solar collector Item 1502111138 Electricity Sub-Heading 15021112 Equipment Item 1502111201 Wheeled loader and excavator Item 1502111202 Tracked tractor Item 1502111203 Skid steer loader Item 1502111204 Tandem vibrating roller Item 1502111205 Compact track loader Sub-Heading 15021113 Labour Item 1502111301 General (unskilled) labourers [1] Item 1502111302 Bricklayer [2] Item 1502111303 Plumber [2] Item 1502111304 Carpenter [2] Item 1502111305 Structural steel worker [2] Item 1502111306 Electrician [2] Item 1502111307 Machine (equipment) operator [2] Group 150220 NON-RESIDENTIAL BUILDINGS Class 150221 Non-residential buildings BH 1502211 Non-residential buildings Sub-Heading 15022111 Materials Item 1502211101 Aggregate for concrete Item 1502211102 Sand for concrete and mortar Item 1502211103 Softwood for carpentry Item 1502211104 Softwood for joinery Item 1502211105 Exterior plywood Item 1502211106 Interior plywood Item 1502211107 Chipboard sheet Item 1502211108 Petrol/ gasoline Item 1502211109 Diesel fuel Item 1502211110 Oil paint Item 1502211111 Emulsion paint Item 1502211112 Ordinary Portland cement Item 1502211113 Ready-mix concrete Item 1502211114 Precast concrete slabs 20 Item 1502211115 Common bricks Item 1502211116 Facing bricks Item 1502211117 Hollow concrete blocks Item 1502211118 Solid concrete blocks Item 1502211119 Clay roof tiles Item 1502211120 Concrete roof tiles Item 1502211121 Float/ sheet glass Item 1502211122 Double glazing units Item 1502211123 Ceramic wall tiles Item 1502211124 Plasterboard Item 1502211125 White wash hand basin Item 1502211126 High yield steel reinforcement Item 1502211127 Mild steel reinforcement Item 1502211128 Structural steel sections Item 1502211129 Sheet metal roofing Item 1502211130 Metal storage tank Item 1502211131 Cast iron drain pipe Item 1502211132 Copper pipe Item 1502211133 Electric pump Item 1502211134 Electric fan Item 1502211135 Air-conditioning equipment Item 1502211136 Stand-by generator Item 1502211137 Solar collector Item 1502211138 Electricity Sub-Heading 15022112 Equipment Item 1502211201 Wheeled loader and excavator Item 1502211202 Tracked tractor Item 1502211203 Skid steer loader Item 1502211204 Tandem vibrating roller Item 1502211205 Compact track loader Sub-Heading 15022113 Labour Item 1502211301 General (unskilled) labourers [1] Item 1502211302 Bricklayer [2] Item 1502211303 Plumber [2] Item 1502211304 Carpenter [2] Item 1502211305 Structural steel worker [2] Item 1502211306 Electrician [2] Item 1502211307 Machine (equipment) operator [2] Group 150230 CIVIL ENGINEERING WORKS Class 150231 Civil engineering works 21 BH 1502311 Civil engineering works Sub-Heading 15023111 Materials Item 1502311101 Aggregate for concrete Item 1502311102 Sand for concrete and mortar Item 1502311103 Softwood for carpentry Item 1502311104 Softwood for joinery Item 1502311105 Exterior plywood Item 1502311106 Interior plywood Item 1502311107 Chipboard sheet Item 1502311108 Petrol/ gasoline Item 1502311109 Diesel fuel Item 1502311110 Oil paint Item 1502311111 Emulsion paint Item 1502311112 Ordinary Portland cement Item 1502311113 Ready-mix concrete Item 1502311114 Precast concrete slabs Item 1502311115 Common bricks Item 1502311116 Facing bricks Item 1502311117 Hollow concrete blocks Item 1502311118 Solid concrete blocks Item 1502311119 Clay roof tiles Item 1502311120 Concrete roof tiles Item 1502311121 Float/ sheet glass Item 1502311122 Double glazing units Item 1502311123 Ceramic wall tiles Item 1502311124 Plasterboard Item 1502311125 White wash hand basin Item 1502311126 High yield steel reinforcement Item 1502311127 Mild steel reinforcement Item 1502311128 Structural steel sections Item 1502311129 Sheet metal roofing Item 1502311130 Metal storage tank Item 1502311131 Cast iron drain pipe Item 1502311132 Copper pipe Item 1502311133 Electric pump Item 1502311134 Electric fan Item 1502311135 Air-conditioning equipment Item 1502311136 Stand-by generator Item 1502311137 Solar collector Item 1502311138 Electricity 22 Sub-Heading 15023112 Equipment Item 1502311201 Wheeled loader and excavator Item 1502311202 Tracked tractor Item 1502311203 Skid steer loader Item 1502311204 Tandem vibrating roller Item 1502311205 Compact track loader Sub-Heading 15023113 Labour Item 1502311301 General (unskilled) labourers [1] Item 1502311302 Bricklayer [2] Item 1502311303 Plumber [2] Item 1502311304 Carpenter [2] Item 1502311305 Structural steel worker [2] Item 1502311306 Electrician [2] Item 1502311307 Machine (equipment) operator [2] 23 Annex 3: List of headings and items for validation Level Validation Code Heading Sub-Heading 1 Materials Item 101 Aggregate for concrete Item 102 Sand for concrete and mortar Item 103 Softwood for carpentry Item 104 Softwood for joinery Item 105 Exterior plywood Item 106 Interior plywood Item 107 Chipboard sheet Item 108 Petrol/ gasoline Item 109 Diesel fuel Item 110 Oil paint Item 111 Emulsion paint Item 112 Ordinary Portland cement Item 113 Ready-mix concrete Item 114 Precast concrete slabs Item 115 Common bricks Item 116 Facing bricks Item 117 Hollow concrete blocks Item 118 Solid concrete blocks Item 119 Clay roof tiles Item 120 Concrete roof tiles Item 121 Float/ sheet glass Item 122 Double glazing units Item 123 Ceramic wall tiles Item 124 Plasterboard Item 125 White wash hand basin Item 126 High yield steel reinforcement Item 127 Mild steel reinforcement Item 128 Structural steel sections Item 129 Sheet metal roofing Item 130 Metal storage tank Item 131 Cast iron drain pipe Item 132 Copper pipe Item 133 Electric pump Item 134 Electric fan Item 135 Air-conditioning equipment 24 Level Validation Code Heading Item 136 Stand-by generator Item 137 Solar collector Item 138 Electricity Sub-Heading 2 Equipment Item 201 Wheeled loader and excavator Item 202 Tracked tractor Item 203 Skid steer loader Item 204 Tandem vibrating roller Item 205 Compact track loader Sub-Heading 3 Labor Item 301 General (unskilled) laborers [1] Item 302 Bricklayer [2] Item 303 Plumber [2] Item 304 Carpenter [2] Item 305 Structural steel worker [2] Item 306 Electrician [2] Item 307 Machine (equipment) operator [2] 25 Annex 4: Classification of countries into income groups 215 economies are divided into income groups according to 2010 gross national income (GNI) per capita and calculated using the World Bank Atlas method. The groups are: - Low income, $1,005 or less; - Middle income, $1,006 - $12,275; and - High income, $12,276 or more. Further details are given on the World Bank website at: http://data.worldbank.org/about/country-classifications Low-income economies ($1,005 or less) 35 Afghanistan Gambia, The Myanmar Bangladesh Guinea Nepal Benin Guinea-Bisau Niger Burkina Faso Haiti Rwanda Burundi Kenya Sierra Leone Cambodia Korea, Dem Rep. Somalia Central African Republic Kyrgyz Republic Tajikistan Chad Liberia Tanzania Comoros Madagascar Togo Congo, Dem. Rep Malawi Uganda Eritrea Mali Zimbabwe Ethiopia Mozambique 26 Middle-income economies ($1,006 to to $12,275) 110 Albania Guyana Paraguay Algeria Honduras Peru American Samoa India Philippines Angola Indonesia Romania Antigua and Barbuda Iran, Islamic Rep. Russian Federation Argentina Iraq Samoa Armenia Jamaica São Tomé and Principe Azerbaijan Jordan Senegal Belarus Kazakhstan Serbia Belize Kiribati Seychelles Bhutan Kosovo Solomon Islands Bolivia Lao PDR South Africa Bosnia and Herzegovina Latvia Sri Lanka Botswana Lebanon St. Kitts and Nevis Brazil Lesotho St. Lucia Bulgaria Libya St. Vincent and the Grenadines Cameroon Lithuania Sudan Cape Verde Macedonia, FYR Suriname Chile Malaysia Swaziland China Maldives Syrian Arab Republic Colombia Marshall Islands Thailand Congo, Rep. Mauritania Timor-Leste Costa Rica Mauritius Tonga Côte d'Ivoire Mayotte Tunisia Cuba Mexico Turkey Djibouti Micronesia, Fed. Sts. Turkmenistan Dominica Moldova Tuvalu Dominican Republic Mongolia Ukraine Ecuador Montenegro Uruguay Egypt, Arab Rep. Morocco Uzbekistan El Salvador Namibia Vanuatu Fiji Nicaragua Venezuela, RB Gabon Nigeria Vietnam Georgia Pakistan West Bank and Gaza Ghana Palau Yemen, Rep. Grenada Panama Zambia Guatemala Papua New Guinea 27 High-income economies ($12,276 or more) 70 Andorra Germany Norway Aruba Gibraltar Oman Australia Greece Poland Austria Greenland Portugal Bahamas, The Guam Puerto Rico Bahrain Hong Kong SAR, China Qatar Barbados Hungary San Marino Belgium Iceland Saudi Arabia Bermuda Ireland Singapore Brunei Darussalam Isle of Man Sint Maarten Canada Israel Slovak Republic Cayman Islands Italy Slovenia Channel Islands Japan Spain Croatia Korea, Rep. St. Martin Curaçao Kuwait Sweden Cyprus Liechtenstein Switzerland Czech Republic Luxembourg Trinidad and Tobago Denmark Macao SAR, China Turks and Caicos Islands Estonia Malta United Arab Emirates Equatorial Guinea Monaco United Kingdom Faeroe Islands Netherlands United States Finland New Caledonia Virgin Islands (U.S.) France New Zealand French Polynesia Northern Mariana Islands 28 Annex 5: List of project price headings and items for validation Level Validation Code Heading GDP 1000000 GROSS DOMESTIC PRODUCT Aggregate 150000 GROSS FIXED CAPITAL FORMATION Category 150200 CONSTRUCTION Group 150210 RESIDENTIAL BUILDINGS Class 150211 Residential buildings BH 1502111 Residential buildings Item 150211101 Single storey average quality detached house Item 150211102 Two storey attached house Item 150211103 Low rise apartment Item 150211104 High rise apartment Group 150220 NON-RESIDENTIAL BUILDINGS Class 150221 Non-residential buildings BH 1502211 Non-residential buildings Item 150221101 High rise office/ administrative building Item 150221102 Medium rise office/ administrative building Item 150221103 Primary school one or two storey Item 150221104 Factory/ warehouse building Group 150230 CIVIL ENGINEERING WORKS Class 150231 Civil engineering works BH 1502311 Civil engineering works Sub-Heading 1502312 Materials Item 150231201 Highway Item 150231201 Concrete sewer pipes, 0.5m diameter, average 2 m depth Item 150231201 Concrete sewer pipes, 1m diameter, average 3 m depth 29