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Comparison of construction costs in the United Kingdom and Hungary
HABITAT
INTL,
Vol
3. No. I/Z. pp. 65-69
Pergamon Press, 1978 Prrnted I” Great Briban.
Comparison of Construction Costs in the United Kingdom and Hungary”’ GYULA SEBESTYkN
This study describes one possible method of international comparison of construction costs. The method is one in which costs per functional unit are assessed for the main types of construction industry product in both countries and in which, evaluated with appropriately weighted factors, aggregate conversion indices are calculated. The following expressions are obtained: CqUK (a)
cq”K$
‘PH =
I,= CqUK
CqH
c ‘&JK
‘AJK
CqH’
‘PH
I)H AJK
(b)
Ib=
CqH’PUK
=
’
,
CqH
and
(d) Id=
Cqc-PH cqc
where
,
‘PUK
quK = the total volume of the various types of construction the United Kingdom (expressed in functional units),
industry products in
qu = the total volume of the various types of construction Hungary (expressed in functional units),
industry products in
qc = the total volume of the various types of construction
industry products in a “common” third country, used as a base for comparison (expressed in functional units),
“‘Thts study is based on a paper prepared for the U.N. Economic Commission for Europe in September 1969 and was also associated with work carried out by Professor Turin and Dr. Patricia Hillebrandt of University College London.
65
Gyula
SebestyyPn
&,K =
construction
cost/functional
unit in the United Kingdom (in E),
pu =
COtIStrUCtiOB
COSt/fUBCtiOI’Kil
unit in Hungary (in Ft).
We carried out calculations using the expressions shown on the right hand side of (a) and (b); the main results are shown in Table 1. Based on these two indices, the geometrical mean (c) of the two indices-or even their arithmetical mean-can also be calculated. It should be noted that construction costs quoted for both countries do not include the following: price of the building site; design costs; costs of mobile equipment and furniture. We have not investigated in detail how far the various types of buildings in the two countries are equivalent. Obviously, this may considerably qualify any conclusions drawn. On the other hand, the purpose of this experimental calculation was to establish whether it is possible to devise a useful conversion factor between the construction costs of the two countries, by simple means and a minimum amount of calculation. A more detailed investigation of the types of buildings would have rendered the calculation much more complicated. Table 1. Comparison of construction costs in Hungary and the U.K. Number
Type of construction
of units for which the costs are quoted
U.K.
Unit cost U.K. (f)
Hungary
-
Hungary (Ft)
cost index (Ft/f) 51.45
3350.0
192,500.O
Universities
(Arts)
3 100 places
830 places
1750.0
66400.0
37.94
Universities
(Pure Science)
3300 places
360 places
4050.0
128,000.0
31.60
Universities Sciences)
(Applied I I.000 places
I270 places
5250.0
123,000.0
23.47
8000 places
540 places
1900.0
50600.0
26.63
186,000 places
1,300 places
247.0
15,400.o
62.35
I35 ,ooO places
4000 places
22.200.0
52.61
Housing
3%,000
Colleges Primary
schools
Secondary
schools
Hospitals Single-storey factories attached offices
dwellings
422.0
4185 beds
-
7090.0
91,100 sq.m.
1,216 sq.m.
36.60
235 I .O
40.000 sq.m.
14,700 sq.m.
53.10
3176.0
Il8,300.0
16.90
with
Single-storey factories having no attached offices
62.24 124.41
Dual two-lane
trunk roads
24.5 km
-
0.367
13.0
40.87
Dual two-lane
motorways
64.2 km
-
0.46
27.5
51.29
U.K. Sources (i)
(via Professor
H.M. Treasury:
Turin):
‘A Selection
of Unit Costs in Public Expenditure’,
London,
HMSO,
1968;
(ii) National Statistics (Ministry of Public Building and Works, Monthly Bulletins, etc.); (iii) Private communications from Ministry of Public Building and Works, Department of Health Security, private architectural practices. In some cases, such as cost/hospital the most consistent and reliable. Hungarian
bed, these sources
conflicted:
those data were chosen
Sources
Housing construction-Ministry of Building and Urban Development; Universities, schools, colleges-Ministry for Cultural Affairs; Hospitals-Ministry of Health: Offices-Design Office for Public Buildings; Factories-Design Office for Industrial Buildings; Motorways-Ministry of Transport and Communication.
and Social
which appeared
to be
Compartson
of Constnrctran
Casts m the United Kingdom
and Hungary
67
This problem is underlined by the more detailed analysis of housing construction costs. Based on these figures, construction costs were calculated uniformly for one square metre Table 2 shows the results of using the indices described above on a sample of housing, comparing houses with the same number of stories, in the U.K. and Hungary. The approach is methodologically crude, but sufficient for our means. It is remarkable how much the resulting conversion factor (Ft/f) in Table 1 deviates from that in Table 2: 57.45 against 94.65. As the U.K. sample excludes London, average
Table 2. A naiysis of residential
U.K.(‘) (f1sq.m)
buildings
Hungary (Ft1sq.m)
Ft/f
3-4 stories
35.93
3633
101.11
5 stories (Note: in Hungary there were still some residential houses of five stories constructed without lifts) 6-8 stories
36.41
3595
98.73
6-1
I stories
43.41
-
43.14
-
6-10 stories 4078 : 43.41 = 4078 : 43.14 =
4078 93.71 94.53
Residential buildings of 6-10 stories (average of the former two factors)
94.12
3-10 stories (average)
94.65
Sources: U.K. Ministry of Housing and Local Government, quarterly statistics; Hungarian Institute for Building Economy and Organisation. tt) Public sector only and excluding London area.
U.K. housing costs may be higher than quoted. Moreover the values given for the U.K. (totalled and averaged) refer to flats of an approximate area of 66 sq. m. Those for Hungarian flats built at the same time were for flats with an average area of 52 sq. m. This means that the U.K. flats included in this study are on average 28.8% larger than flats in Hungary. Taking this into account, the conversion factor 1.288 x 57.45 = Ft 74.00/f is obtained, which is still significantly less than Ft 94.65/f (or Ft 85.18/f if we allow for 10% increase in the U.K. cost figure attributable to London ‘weighting’). It is open to debate which functions unit is appropriate: that based on the flat or that based on unit area? If we assume that the housing requirements of families of the same size in the two countries can be satisfied by flats of different areas, this unit cannot be disregarded without further consideration. Let us industry. technical following
assume that similar differences exist for the other products of the construction If we require both the conversion factor for one functional unit and that for one unit (e.g. for 1 sq. m) these can be obtained by the following multiplication, Table 3:
1.288 x63.04=
Ft81.20/f.
68
Gyula Sebestybn
Thus the conversion factors between the construction calculated as being:
costs in the U.K. and Hungary are
for one functional unit, It, = Ft 63.04/E , for one technical unit, I,, = Ft 8 1.20/f , (for 1 sq. m etc.). Both results differ from the currency conversion factor but agree fairly well with observation and calculations so far obtained on construction cost levels.
Table 3. Comparison of construction costs MIthe U.K. and Hungary Calculation of overall cost index (Ft/f)
Weighting factors used in
With U.K. weights
With Hungarian weights
Type of construction
U.K.
Hungary
cost Index (Ft/f)
Housing Public buildings (offices, cultural, educational, etc.) Industrial, agricultural, commercial, etc. buildings Roads, railways, bridges, gas, electricity, water, sewerage, harbours, etc.
40.2
26.4
51.45
23.09
15.17
10.6
9.4
35.93
3.81
3.38
25.2
28.7
94.32
23.77
27.07
24.0
35.5
49.08
11.78
17.42
100.0
100.0
-
62.45
63.04
Total
Investigation of Table 1 shows that housing has gained a role more important than would be justified: 84% by volume of the construction in the sample is housing, whereas in reality this proportion is 20-40%. Therefore, some form of weighting is required. For the calculation of the total cost index, obtained from the cost indices concerning the various types of buildings, it is also necessary to devise weightings. This is possible in two ways: volumes of construction per 1000 inhabitants, expressed in natural units; breakdown of construction costs in monetary terms. The former is attractive, but we do not propose to use it. It would be justified only if the left-hand side formulae had been used of those shown in expressions (a) and (b) above. These data are not available in the statistics of most countries. Even when such data are available, agreement on their international comparability is unlikely. However it would probably be easier to obtain stable weightings for the second method: express this as percentages according to types of buildings. The percentage distribution of total expenditure on buildings and works has been taken from the national statistics of both countries; in the case of U.K. this is related only to new buildings and works. Using these two aspects as a basis for weighting, Table 3 gives an adjusted calculation for cost indices. In each group of buildings the individual cost indices have been concentrated into one index (a simple arithmetic mean in each group). In view of the above we provisionally suggest that international construction costs be based on the following basket.
comparisons
of new
Cornparson
of Construction
Costs in the Unrted Kmgdom
ond Hungary
Housing
33%
Public buildings (offices, cultural, educational, etc.)
12%
Industrial, agricultural, commercial, etc. buildings
25%
Roads, railways, bridges, gas, electricity, water, sewerage, harbours, etc. Total:
69
30% 100%
Notwithstanding the qualifications noted, the method proposed seems to be appropriate to the international comparison of construction costs and to provide a useful basis for further investigation.
INTL,
Vol
3. No. I/Z. pp. 65-69
Pergamon Press, 1978 Prrnted I” Great Briban.
Comparison of Construction Costs in the United Kingdom and Hungary”’ GYULA SEBESTYkN
This study describes one possible method of international comparison of construction costs. The method is one in which costs per functional unit are assessed for the main types of construction industry product in both countries and in which, evaluated with appropriately weighted factors, aggregate conversion indices are calculated. The following expressions are obtained: CqUK (a)
cq”K$
‘PH =
I,= CqUK
CqH
c ‘&JK
‘AJK
CqH’
‘PH
I)H AJK
(b)
Ib=
CqH’PUK
=
’
,
CqH
and
(d) Id=
Cqc-PH cqc
where
,
‘PUK
quK = the total volume of the various types of construction the United Kingdom (expressed in functional units),
industry products in
qu = the total volume of the various types of construction Hungary (expressed in functional units),
industry products in
qc = the total volume of the various types of construction
industry products in a “common” third country, used as a base for comparison (expressed in functional units),
“‘Thts study is based on a paper prepared for the U.N. Economic Commission for Europe in September 1969 and was also associated with work carried out by Professor Turin and Dr. Patricia Hillebrandt of University College London.
65
Gyula
SebestyyPn
&,K =
construction
cost/functional
unit in the United Kingdom (in E),
pu =
COtIStrUCtiOB
COSt/fUBCtiOI’Kil
unit in Hungary (in Ft).
We carried out calculations using the expressions shown on the right hand side of (a) and (b); the main results are shown in Table 1. Based on these two indices, the geometrical mean (c) of the two indices-or even their arithmetical mean-can also be calculated. It should be noted that construction costs quoted for both countries do not include the following: price of the building site; design costs; costs of mobile equipment and furniture. We have not investigated in detail how far the various types of buildings in the two countries are equivalent. Obviously, this may considerably qualify any conclusions drawn. On the other hand, the purpose of this experimental calculation was to establish whether it is possible to devise a useful conversion factor between the construction costs of the two countries, by simple means and a minimum amount of calculation. A more detailed investigation of the types of buildings would have rendered the calculation much more complicated. Table 1. Comparison of construction costs in Hungary and the U.K. Number
Type of construction
of units for which the costs are quoted
U.K.
Unit cost U.K. (f)
Hungary
-
Hungary (Ft)
cost index (Ft/f) 51.45
3350.0
192,500.O
Universities
(Arts)
3 100 places
830 places
1750.0
66400.0
37.94
Universities
(Pure Science)
3300 places
360 places
4050.0
128,000.0
31.60
Universities Sciences)
(Applied I I.000 places
I270 places
5250.0
123,000.0
23.47
8000 places
540 places
1900.0
50600.0
26.63
186,000 places
1,300 places
247.0
15,400.o
62.35
I35 ,ooO places
4000 places
22.200.0
52.61
Housing
3%,000
Colleges Primary
schools
Secondary
schools
Hospitals Single-storey factories attached offices
dwellings
422.0
4185 beds
-
7090.0
91,100 sq.m.
1,216 sq.m.
36.60
235 I .O
40.000 sq.m.
14,700 sq.m.
53.10
3176.0
Il8,300.0
16.90
with
Single-storey factories having no attached offices
62.24 124.41
Dual two-lane
trunk roads
24.5 km
-
0.367
13.0
40.87
Dual two-lane
motorways
64.2 km
-
0.46
27.5
51.29
U.K. Sources (i)
(via Professor
H.M. Treasury:
Turin):
‘A Selection
of Unit Costs in Public Expenditure’,
London,
HMSO,
1968;
(ii) National Statistics (Ministry of Public Building and Works, Monthly Bulletins, etc.); (iii) Private communications from Ministry of Public Building and Works, Department of Health Security, private architectural practices. In some cases, such as cost/hospital the most consistent and reliable. Hungarian
bed, these sources
conflicted:
those data were chosen
Sources
Housing construction-Ministry of Building and Urban Development; Universities, schools, colleges-Ministry for Cultural Affairs; Hospitals-Ministry of Health: Offices-Design Office for Public Buildings; Factories-Design Office for Industrial Buildings; Motorways-Ministry of Transport and Communication.
and Social
which appeared
to be
Compartson
of Constnrctran
Casts m the United Kingdom
and Hungary
67
This problem is underlined by the more detailed analysis of housing construction costs. Based on these figures, construction costs were calculated uniformly for one square metre Table 2 shows the results of using the indices described above on a sample of housing, comparing houses with the same number of stories, in the U.K. and Hungary. The approach is methodologically crude, but sufficient for our means. It is remarkable how much the resulting conversion factor (Ft/f) in Table 1 deviates from that in Table 2: 57.45 against 94.65. As the U.K. sample excludes London, average
Table 2. A naiysis of residential
U.K.(‘) (f1sq.m)
buildings
Hungary (Ft1sq.m)
Ft/f
3-4 stories
35.93
3633
101.11
5 stories (Note: in Hungary there were still some residential houses of five stories constructed without lifts) 6-8 stories
36.41
3595
98.73
6-1
I stories
43.41
-
43.14
-
6-10 stories 4078 : 43.41 = 4078 : 43.14 =
4078 93.71 94.53
Residential buildings of 6-10 stories (average of the former two factors)
94.12
3-10 stories (average)
94.65
Sources: U.K. Ministry of Housing and Local Government, quarterly statistics; Hungarian Institute for Building Economy and Organisation. tt) Public sector only and excluding London area.
U.K. housing costs may be higher than quoted. Moreover the values given for the U.K. (totalled and averaged) refer to flats of an approximate area of 66 sq. m. Those for Hungarian flats built at the same time were for flats with an average area of 52 sq. m. This means that the U.K. flats included in this study are on average 28.8% larger than flats in Hungary. Taking this into account, the conversion factor 1.288 x 57.45 = Ft 74.00/f is obtained, which is still significantly less than Ft 94.65/f (or Ft 85.18/f if we allow for 10% increase in the U.K. cost figure attributable to London ‘weighting’). It is open to debate which functions unit is appropriate: that based on the flat or that based on unit area? If we assume that the housing requirements of families of the same size in the two countries can be satisfied by flats of different areas, this unit cannot be disregarded without further consideration. Let us industry. technical following
assume that similar differences exist for the other products of the construction If we require both the conversion factor for one functional unit and that for one unit (e.g. for 1 sq. m) these can be obtained by the following multiplication, Table 3:
1.288 x63.04=
Ft81.20/f.
68
Gyula Sebestybn
Thus the conversion factors between the construction calculated as being:
costs in the U.K. and Hungary are
for one functional unit, It, = Ft 63.04/E , for one technical unit, I,, = Ft 8 1.20/f , (for 1 sq. m etc.). Both results differ from the currency conversion factor but agree fairly well with observation and calculations so far obtained on construction cost levels.
Table 3. Comparison of construction costs MIthe U.K. and Hungary Calculation of overall cost index (Ft/f)
Weighting factors used in
With U.K. weights
With Hungarian weights
Type of construction
U.K.
Hungary
cost Index (Ft/f)
Housing Public buildings (offices, cultural, educational, etc.) Industrial, agricultural, commercial, etc. buildings Roads, railways, bridges, gas, electricity, water, sewerage, harbours, etc.
40.2
26.4
51.45
23.09
15.17
10.6
9.4
35.93
3.81
3.38
25.2
28.7
94.32
23.77
27.07
24.0
35.5
49.08
11.78
17.42
100.0
100.0
-
62.45
63.04
Total
Investigation of Table 1 shows that housing has gained a role more important than would be justified: 84% by volume of the construction in the sample is housing, whereas in reality this proportion is 20-40%. Therefore, some form of weighting is required. For the calculation of the total cost index, obtained from the cost indices concerning the various types of buildings, it is also necessary to devise weightings. This is possible in two ways: volumes of construction per 1000 inhabitants, expressed in natural units; breakdown of construction costs in monetary terms. The former is attractive, but we do not propose to use it. It would be justified only if the left-hand side formulae had been used of those shown in expressions (a) and (b) above. These data are not available in the statistics of most countries. Even when such data are available, agreement on their international comparability is unlikely. However it would probably be easier to obtain stable weightings for the second method: express this as percentages according to types of buildings. The percentage distribution of total expenditure on buildings and works has been taken from the national statistics of both countries; in the case of U.K. this is related only to new buildings and works. Using these two aspects as a basis for weighting, Table 3 gives an adjusted calculation for cost indices. In each group of buildings the individual cost indices have been concentrated into one index (a simple arithmetic mean in each group). In view of the above we provisionally suggest that international construction costs be based on the following basket.
comparisons
of new
Cornparson
of Construction
Costs in the Unrted Kmgdom
ond Hungary
Housing
33%
Public buildings (offices, cultural, educational, etc.)
12%
Industrial, agricultural, commercial, etc. buildings
25%
Roads, railways, bridges, gas, electricity, water, sewerage, harbours, etc. Total:
69
30% 100%
Notwithstanding the qualifications noted, the method proposed seems to be appropriate to the international comparison of construction costs and to provide a useful basis for further investigation.