Dokumentation og international benchmarking af bygge - Danmarks ...

The hedonic methodThe hedonic method is fully in accordance with the defined price concept,provided the prices included in the regression are collected from thecontractors and measure the price after the work is done.The issue here is one of what sampling frame to use. The prices could becollected from:• the building contractorso at the time of beginning the construction worko at the time of having finalized the construction work• the building investors i.e. from the person who applied for thebuilding permit• the banks on the basis of approved housing loans.The prices and consequently the regression result fully depend on thesource and hence this is a significant issue.How is a construction project priced and when is it a reasonable time tocollect the price? What sampling frame should be used?Sweden measures the prices at the beginning of actual building work. Thestart of the project is defined as the time when the foundation is laiddown. It is assumed that by that time it should be sufficient informationabout the project to be priced. Some projects can last for months andwaiting for its completion would delay the production of the index. It ismost uncertain to what extend profits and productivity is included correctlyapplying this method.Statistics Norway pointed out that the main weakness in their Price Indexof New Detached Houses is the timing of the price. The timing of the priceis connected to the quarter in which the municipalities register the constructionwork as completed and not to the first binding contract. There istherefore a significant time lag in this index. The signing of the first bindingcontract often takes place before the construction work starts, thereforethe time lag might be up to one year or more.Matched model methodWhen collecting the price of the standard construction from thecontractor, asking for the market price of the building, there is fullaccordance with the price concept demanded. What is done is to treat aconstruction like any other good in a producer price index.RepresentativityTo ensure the representativity it should be considered, whether the respectiveindices cover the construction types in accordance to the expecteduse of the index. Furthermore, to ensure representativity themethod should be good enough to keep up with the changes in the constructionindustry, such as introducing new technology and new materials.101