The construction cost index for legal escalation Construction
- Slides: 61
The construction cost index for legal escalation Construction cost index Gérard Vittek Head of section “index of the cost of construction and rent” 25 th May of 2015
Plan Cost of production index in construction Finalities of these indices KLEMS analyse Indices by item Statistical sources Macroeconomics' database The construction cost index for legal escalation 25 th May of 2015
Price index and cost index in construction Input : BT-TP Output : PRLN-ICC The construction cost index for legal escalation Sales 25 th May of 2015
Background and purpose of buildings and civil engineering indices Buildings and civil engineering indices replaced in 1974 et 1975 respectively regional indices of 1967. Before they were computed by INSEE and published by the ministry of Ecology with the help professional federation of building and of civil engineering (FFB et FNTP). The goal is to guarantee the price of a contract of construction until the end of the achievement of the works, and to reflect the change in price of the inputs of the firms. . Since February 2014, INSEE is in charge of the calculation and the publication of these indices. INSEE ought to manage the quality of these series The construction cost index for legal escalation 25 th May of 2015
Cost of construction index : Legal finality • A contract of construction is a deal between a buyer and a producer in order to build a construction or a road. • When the contract is signed no one is able to know the change of the prices of the inputs until the end of the contract. The construction cost index for legal escalation 25 th May of 2015
Cost of construction index : Legal finality • In general, states defined by the law a possibility contract escalation (during the process of production) or of revision of the prices (before the beginning of the production) The construction cost index for legal escalation 25 th May of 2015
Finalities of cost of construction indices Cost of Production Indices are Producer cost indices of an activity in a price indexing logic of contract costs. These indexes are composed of six items (themselves composed of elementary indices), which should summarize the function of cost in a price relationship and average cost or price and marginal cost (or even "direct costs" with margin to cover indirect costs). This relationship is necessarily established in an accounting framework, national, general and cost accounting. The definition of the boundaries between the six items can be subtle and depends on conventions, including an order in determining these six items. The resulting weights associated, with the adequacy of the accounting sources with defined concepts. The construction cost index for legal escalation 25 th May of 2015
KLEMS analyse Economists present an analyse of productivity named KLMES 1. 2. 3. 4. 5. K Capital (equipment) L Labour E Energy M Materials S Services During the study with professional federations we have split services in control) Services, T Transport et D (pollution The construction cost index for legal escalation 25 th May of 2015
Producer cost index for construction: Methodology of cost index : KLEMST The construction cost index for legal escalation 25 th May of 2015
Producer cost index for construction: Methodology of cost index : KLEMST The construction cost index for legal escalation 25 th May of 2015
Example of Building index - BT 01 - All trades works BT 01 index is mainly composed of Labour (44. 9%), materials (36. 5%) and of services (9. 3%). The construction cost index for legal escalation 25 th May of 2015
Example of Building index - BT 01 - All trades works K Capital (equipment) Capital is composed of: 1. 001653776 : IPPI CPF 28. 92 - Machinery for mining, quarrying and construction - Base 2010 - (FM 0 D 289200) 2. 001653203 : IPOI CPF 29. 10 Commercial vehicles - Base 2010 - (M 00 D 291000) The construction cost index for legal escalation 25 th May of 2015
The available data In French macroeconomics database are available: Monthly Industrial producer price index (NACE 4 and some 5 or 6) Consumer price index (COICOP) Quarterly Services producer price index (NACE 2, 3 and some 4) Labour cost index (NACE Section) Hourly labour cost index (it a monthly index published quarterly) The construction cost index for legal escalation 25 th May of 2015
Capital The construction cost index for legal escalation 25 th May of 2015
Example of Building index - BT 01 - All trades works L Labour The “Labour” item is made of the hourly labour cost index in the construction sector, produced by INSEE, with a lag of 3 months. : 1. 001565188 : ICHT in Construction (NAF révision 2 poste F) - (Base 100 in dec. 2008) The construction cost index for legal escalation 25 th May of 2015
Labour The construction cost index for legal escalation 25 th May of 2015
Energy E Energy items is composed of consumer price index : 1. 000641310 IPC - Gasoil The construction cost index for legal escalation 25 th May of 2015
Energy The construction cost index for legal escalation 25 th May of 2015
Materials The construction cost index for legal escalation 25 th May of 2015
Services The construction cost index for legal escalation 25 th May of 2015
Example of BT 01 all trades works T Transport The post transport is composed of: 1. 001565190 : Monthly index of revised hourly labour cost Wages and payroll taxes - In the sector: Transportation and storage (NAF rev. 2, item H) - Base 100 in December 2008 2. 001653203 : Total supply of industrial products price index CPF 29. 10 - Motor vehicles 3. 000641310 : Consumer price index - Diesel oil 4. 001653189: Total supply of industrial products price index CPF 22. 11 - New and retreated tires- (M 00 D 221101) The construction cost index for legal escalation 25 th May of 2015
Transport The construction cost index for legal escalation 25 th May of 2015
Producer cost index : statistical sources The weight of each KLMEST item are given by the annual structural survey and the data from business tax returns. The breakdown of each item is achieved by a comparison of the analyse of some contracts by professional organizations and the analyse of the result of the annual structural survey and the data from business tax returns. The idea is to realise a survey in order to obtain the breakdown of each item. The construction cost index for legal escalation 25 th May of 2015
Producer cost index : statistical sources These indices are in INSEE Macro-economic database 1. Producer cost indices for construction (contract escalation) - Building (BT) indices http: //www. bdm. insee. fr/bdm 2/choix. Criteres? code. Groupe=1 606 2. Producer cost indices for construction (contract escalation) – Civil engineering (TP) http: //www. bdm. insee. fr/bdm 2/choix. Criteres? code. Groupe=1 607 3. Producer cost indices for construction (contract escalation) - Various indices for Construction (EV, FD, FG, FV, ING, PMR, TRBT, TRTP, MABTGO, MABTSO and MATP) http: //www. bdm. insee. fr/bdm 2/choix. Criteres? code. Groupe=1 608 4. Index for updating material assets in construction (IM) http: //www. bdm. insee. fr/bdm 2/liste. Series The construction cost index for legal escalation 25 th May of 2015
How to estimate these six items? From the index to the activities and vice versa From the French activity nomenclature 2008 and the list of indexes, INSEE has developed a conversion table between the index and the official nomenclature. This table identifies correspondences, but also potential gaps and needs of the profession at a fine level (with and without providing coating for example). The construction cost index for legal escalation 25 th May of 2015
From activities to index The construction cost index for legal escalation 25 th May of 2015
From activities to index The construction cost index for legal escalation 25 th May of 2015
The existing indexes for Cost construction index In order to represent the evolution of different items must be selected indices of prices or of labour cost opposable to third parties. Since INSEE manages these indexes, they are calculated only from PPI (industry, services, transport), CPI (energy and miscellaneous) and Hourly labour cost index. The construction cost index for legal escalation 25 th May of 2015
Material for Earthworks The construction cost index for legal escalation 25 th May of 2015
Material for Masonry The construction cost index for legal escalation 25 th May of 2015
Material for Framework, reinforced concrete structures (BT 06) The construction cost index for legal escalation 25 th May of 2015
Material for Framework and metal frames (BT 07) The construction cost index for legal escalation 25 th May of 2015
Material for Plaster and prefabricated plaster (BT 08) The construction cost index for legal escalation 25 th May of 2015
Material for Ceramic coatings and tiles (BT 09) The construction cost index for legal escalation 25 th May of 2015
Material for Synthetic textile coatings (BT 11) The construction cost index for legal escalation 25 th May of 2015
Material for Interior joinery (BT 18 a) The construction cost index for legal escalation 25 th May of 2015
Material for Exterior joinery (BT 19 b) The construction cost index for legal escalation 25 th May of 2015
Material for Plastic bay closing works including PVC window (BT 26) The construction cost index for legal escalation 25 th May of 2015
Material for Central heating (excluding electrical heating) (BT 40) The construction cost index for legal escalation 25 th May of 2015
Material for Ventilation and air conditioning (BT 41) The construction cost index for legal escalation 25 th May of 2015
Material for Joinery of steel and locksmiths (BT 42) The construction cost index for legal escalation 25 th May of 2015
Material for Glazing works - Mirror works (BT 45) The construction cost index for legal escalation 25 th May of 2015
Material for Painting, wall hanging, wall coverings (BT 46) The construction cost index for legal escalation 25 th May of 2015
Material for Electricity (BT 47) The construction cost index for legal escalation 25 th May of 2015
Material for Elevators (BT 48) The construction cost index for legal escalation 25 th May of 2015
Material for Ribbed sheet steel roofing and cladding with waterproofing membrane (BT 49) The construction cost index for legal escalation 25 th May of 2015
Material for PVC joinery (BT 51) The construction cost index for legal escalation 25 th May of 2015
Material for Exterior waterproofing coatings (BT 52) The construction cost index for legal escalation 25 th May of 2015
Material for Waterproofing works (BT 53) The construction cost index for legal escalation 25 th May of 2015
Material for Wood framework (BT 54) The construction cost index for legal escalation 25 th May of 2015
BT 01 and its components The construction cost index for legal escalation 25 th May of 2015
The contribution of professional associations, convergence We sought consensus on positions concepts. The KLEMST approach seems most interesting to INSEE, but for now that everything related to real estate is not followed in the "capital (equipment), " but in "miscellaneous fees and services ". We want to match an approach "top-down" conducted by INSEE, with business structural survey source, comprehensive, formal approach. . . with a "bottom-up" of prices of the detail of some sites, with a sample reduced. For this it is necessary to identify the accounting items, more or less fine, but roughly ~ 3 digits. The construction cost index for legal escalation 25 th May of 2015
From indices to activities In some cases, professional associations can even access cost accounting that distinguishes two or more activities by index within the same company. By providing INSEE list of the sample investigated and possibly a wider list of companies assumed to exert a "pure" activity within the meaning of a given index, INSEE could exploit its near-exhaustive basis for business determine a "framing" of the aggregate structure (calculated on an entire industry; calculated on a broad list of single companies active for a given index, calculated on the sample investigated by professional federations). The construction cost index for legal escalation 25 th May of 2015
e. g. "double" Index Building index are often « double » • • • BT 30 - Schist slates roofing BT 32 - Baked clay tiles roofing BT 33 - Concrete tiles roofing BT 34 - Zinc and metal roofing (except copper) BT 35 - Asphalt shingles roofing BT 49 - Ribbed sheet steel roofing and cladding with waterproofing membrane The calculation of the weights should be done at one time on all indexes associated with the same set of activities or on all indexes at a time. The construction cost index for legal escalation 25 th May of 2015
The finalities of the reform of the indices Currently the overhaul of index has made a first step: • Stop using price collection of professional federations in the calculation of indices • Using the price indices for production or consumption • Using the hourly labour cost index Currently the overhaul of index has made a final step: • Based on faithful and updatable weights • Based on the nomenclature of French activities (possibly a subdivision) nearly done • Perform Laspeyres indices The construction cost index for legal escalation 25 th May of 2015
Balance sheet of building indices The construction cost index for legal escalation 25 th May of 2015
Bilan sur les index Travaux Publics The construction cost index for legal escalation 25 th May of 2015
Bilan sur les index Travaux Publics The construction cost index for legal escalation 25 th May of 2015
Balance sheet of Cost indices In January 2015, the all new cost index have been published since January 2010 (year 2010=100) In March 2015, macroeconomics cost indices in construction have been published since January 1998 (year 2010=100) Both are publish monthly the first for contract escalation and the second for macroeconomics analyze and for national accounts. The construction cost index for legal escalation 25 th May of 2015
Publication The construction cost index for legal escalation 25 th May of 2015
The construction cost index for legal escalation Thank you for your attention! Insee 18 bd Adolphe-Pinard 75675 Paris Cedex 14 www. insee. fr Contact M. Gérard Vittek Tél. : 01 41 17 51 15 email : gerard. vittek@insee. fr Informations statistiques : www. insee. fr / Contacter l’Insee 09 72 72 4000 (coût d’un appel local) du lundi au vendredi de 9 h 00 à 17 h 00