# Construction cost indices

**The construction cost index (CCI) is used for the calculation of non-financial investments, as well as of the total construction volume at constant prices.**

- Table of contents
- Concepts and definitions
- Data collection and statistical processing

##
Concepts and definitions

## Construction cost index (CCI)

The construction cost index reflects changes in the costs of construction work performed during the reference period compared with the base period. For the calculation of the CCI, the following components are compared: prices of the building materials used, labour remuneration of construction workers, maintenance and operational costs of machinery and mechanical appliances.

Hourly gross labour remuneration of workers employed in construction broken down by main professions:

- bricklayers and workers of related professions,
- concrete workers and workers of related professions,
- carpenters and builders,
- workers carrying out finishing works (roofers, plasterers, sanitary technicians and others),
- painters and workers of related professions,
- electricians,
- asphalt layers,
- auxiliary workers of road building and construction of artificial structures,
- assemblers and
- welders.

The CCI is input price index, as it presents price changes for the main types of resources invested in the construction. The CCI does not include overheads, contractor’s profit indicators and efficiency changes, which is a part of output price index and presents price changes for the completed construction objects.

The CCI is not a subject to seasonal corrections.

## Construction cost index for the capital reconstruction and new building of the road

Since 2012 the CCI is calculated also for the road construction. The unified construction model necessary for the calculation of weights was developed by the joint stock company Ceļuprojekts. Construction model of 2020 was revised in cooperation with SJS Company Latvian State Roads and it reflects the volume of resources necessary for the specific construction project.

## Changes in construction costs

Changes in the construction costs over the previous period (month/quarter) reflect changes in the average cost level within a month/quarter.

Changes in the construction costs over the corresponding period of the previous year reflect changes in construction costs during a year.

Annual average changes in the construction costs reflect changes of the average costs within the last twelve months as compared to the previous twelve months.

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Data collection and statistical processing

### Survey Method and Source Data

The data obtained from survey on prices of construction resources (report 1-BC) and since 2012 – also prices provided by producers and importers (reports 1-RC and 1-IC) and since 2020 registered consumer prices of building materials are used for CCI calculation.

For calculation of the weights, information on the value of own account construction work in year t-1 is used (report 1-būvniecība).

### Statistical Population

Economically active statistical units with the main kind of economic activity belonging to 41.10 to 43.99 (section F), 46.73, 46.74 and 47.52 of Statistical Classification of Economic Activities in the European Communities (NACE Rev. 2).

The list of construction enterprises-respondents is formed by means of target sampling and it includes construction enterprises with the highest value of own account construction work (NACE Section F) in the previous year.

The sampled construction enterprises differ in specialisation and represent various regions of Latvia.

The criterion for the sample of trade enterprises is their turnover and specialisation.

### Sample size

In 2020, data on prices of resources are provided by approximately 50 construction material trade enterprises, as well as approximately 200 construction enterprises, which had the highest value of own account construction works in 2019. The share of enterprises with the value of own account construction work exceeding EUR 1 million per year amounted to 90 %, in 36 % of which the value of own account construction work exceeded EUR 5 million per year. Every month, nearly 2.5 thousand prices of construction resources are used for index calculations.

### Calculation Method

For the calculation of the CCI the approach of unified models is used. Representative construction projects (models) are selected for the prevalent construction types in the country. Each model contains a set volume of expenditure on building materials, labour force and construction equipment.

In January 2020 weights reflecting value and structure of own account construction work done in 2019 by construction enterprises which are used in calculation of construction cost index were revised.

In 2020, 11 unified models were included in CCI calculation, arranged in the following groups:

- Residential buildings;
- Non-residential buildings;
- Civil engineering structures (incl. transport facilities and underground main pipelines).

For the calculation of the CCI, a Laspeyres-type formula is applied. The price comparison (base) period is December of the previous year. Starting with 2014 all average prices are calculated as non-weighted arithmetic averages.

For the calculation of the CCI for construction models, cost structure of resources at the prices of December of the previous year is used. Once the CCI has been calculated for each unified construction model, the total index of construction costs is calculated.

For the calculation of the total CCI the value of own account construction work performed in the previous year at the prices of December of the previous year is used in breakdown by type of buildings and civil engineering structures.

### Base Period

Index base period is 2015 (2015 = 100).

### Data Revision

If upon using corrected, revised or delayed information in calculations significant (more than 0.1 percentage point) influence on the total Construction Cost Index throughout the year is found (over the corresponding quarter of the previous year), the published CCI data for the previous period are corrected. The revised indices are published together with the data of the following reporting period, with a note on correction.

In separate cases, due to the specifics of electronic data processing technologies and rounding adjustments, slight discrepancies may occur between the published data and calculations made by data users.

### Additional information

To reflect lately used construction technologies and building materials in detail, in January 2020 unified construction models used in index calculations were updated. Since 2014 weighting with value of work done by certain construction enterprises is not used in calculation of average prices. Comparable data are available since 1992.