15.8.2022 valid documentation

Basic data of the statistics

Data description

Building cost indices are input price indices that describe the price development of production inputs used in building construction relative to the chosen base period. The basic inputs used in building construction can be divided into three main categories: labour, materials and services. The official building cost index, which is usually the centre of interest, measures the price development of production inputs used in the construction of new buildings from the viewpoint of a construction enterprise or contractor. The total index of the official building cost index is calculated as the weighted average of four house project types. A production input distribution has been defined for each house project type based on how large the share of the input in question is in the total costs of the house project. Throughout the calculation period of the index (5 years), the house project types and the production technology of building construction defined during the base period are kept constant.

Of the types of buildings in the Classification of Buildings 2018 (intended use categories) four types of building projects have been formed for the building cost index:  detached and semi-detached house, block of flats, service building and industrial and warehouse building. The project type detached and semi-detached house describes professional, producer-form construction of one-dwelling houses, two-dwelling houses and terraced houses. The project type block of flats consists of the classes block of flats, residential buildings for communities and dwellings for special groups. Service building represents the average project type of many different commercial, office, transport and communications, institutional care, assembly and educational buildings. Service building corresponds to the building project type office and commercial building of the previous base year. The type of project idustrial and warehouse building represents different industrial and warehouse buildings in the index.

Statistical population

The population of the building cost index comprises all production factors used in building construction. They are usually grouped into labour, materials and services.
 

Statistical unit

The statistical unit of the building cost index is a building cost that must be paid by the contractor in building construction. A typical reporting unit from which data are collected is such as different enterprises selling building materials for material costs, but Statistics Finland's other indices are used as data sources for measuring services and labour costs, for example.
 

Unit of measure

The data of the building cost index are published as index point figures. Monthly and annual change percentages are also calculated from the index point figures.
 

Base period

The base year of the latest building cost index is 2021 (2021=100). Indices are also published in database tables for the base years 1951, 1964, 1973, 1980, 1990, 1995, 2000, 2005, 2010 and 2015. The indices of old base years are chained starting from the introduction of the new base year with changes in the index of the latest base year.
 

Reference period

The reference period of the building cost index is a month. The price data are collected on the 15th day of the month.
The building cost index is published on the 15th day of the month following the reference month. If the day is on a weekend, the index is published on the previous weekday.
 

Reference area

The geographical reference area of the building cost index is the whole of Finland. The index does not give information about possible differences between different regions.
 

Sector coverage

The building cost index describes the cost development of professional (commercial) newbuilding. The index measures the cost development of building construction from the perspective of the constructor or contractor. The building cost index does not include all costs incurred by the constructor, such as planning and financing costs. Indices on professional renovation building are available only on residential building construction.
The building cost index does not cover all categories of the Classification of Buildings. Categories 02 Free-time residential buildings, 10 Energy supply buildings, 11 Public utility buildings, 13 Rescue service buildings, 14 Agricultural buildings and livestock shelters and 19 Other buildings are not taken into account in the official building cost index.  
 

Time coverage

The oldest total indices of the building cost index derived from database tables are from 1922 onwards. Transfer price coefficients are published from 1949 onwards. Index clause sub-indices are available starting from 1980. The length of time series of indices by type of house depends on when the index in question was started to be produced.
The published index point figures of the building cost index are always final at the time of publication. After this, the figures are not changed apart from in exceptional circumstances.
 

Frequency of dissemination

The data of the statistics are published monthly on Statistics Finland's website.
 

Concepts

Building cost index

The building cost index is an index of input prices that describes development in the prices of factors of production, materials, wages and salaries and other inputs of building trade relative to the average price level of a base year.

Building trade

Building trade refers to commercial building against payment. Cf. Independent building.

Independent building

Independent building refers to building projects undertaken by households themselves, which include new and renovation building of single-family houses, free-time residences, agricultural buildings and other domestic utility buildings without paid labour. Cf. Building trade.

Input of supplies

Inputs of supplies describe development in the prices of supplies and material used in the construction industry relative to the price level of a base year. The prices are monitored with an inquiry conducted among producers, wholesalers and retailers of building supplies.

Labour input

Labour input describes development in the cost of labour in the construction industry relative to a base year. It is monitored against average hourly earnings for regular working hours in the construction industry, indirect labour costs complying with collective agreements, and estimated development of earnings.

Other inputs

Other inputs comprise data on the prices of services that are not directly associated with building construction. Some of them relate to building contracting and some to the overhead costs of building sites. Data on the costs of transport, machine works and lift installations are collected by monitoring subcontracting costs.

Transfer price coefficient

Transfer price coefficients are calculated from changes in the building cost index. They are used in calculating compensations paid in transferring shares in a tenement building of a joint-stock property company or housing company or the maximum price of a tenement building financed with a long-term renovation loan.

The coefficient is calculated using the currently valid building cost index. Building cost indices of different years have their own product selections and weight structures. This ensures that the index measures correctly the structure of building costs prevalent at each point in time.

Accuracy, reliability and timeliness

Overall accuracy

The building cost index is calculated using more than 1,000 price data items collected from approximately 260 data suppliers. The official building cost index describes the average national price development of the basic inputs in building construction. The index does not give information about possible differences between different regions. It is not suitable for measuring the output prices of construction either (so-called construction price index).
The data collection for the building cost index is based on a judicious sample of representative commodities selected for monthly price monitoring. Price changes in these goods are monitored on the pure price index principle, i.e. by eliminating the price change due to quality changes from observed price changes.
The accuracy of the building price index is affected by possible sampling error and data processing errors. The magnitude of the errors has not been estimated.
The correctness of the indices is also influenced by non-response, which in the building price index is between four and five per cent on monthly level. Efforts are made to reduce non-response by reminding respondents to supply the requested data.
 

Timeliness

The price data are collected on the 15th day of the month.
The building cost index is published on the 15th day of the month following the reference month. If the day is on a weekend, the index is published on the previous weekday.
 

Punctuality

The data of the building cost index are published precisely on the days indicated in the release calendar.
 

Data revision

Revisions – i.e. improvements in the accuracy of statistical data already published – are a normal feature of statistical production and result in improved quality of statistics. The principle is that statistical data are based on the best available data and information concerning the statistical phenomenon. On the other hand, the revisions are communicated as transparently as possible in advance. Advance communication ensures that the users can prepare for the data revisions. 

The reason why data in statistical releases become revised is often caused by the data becoming supplemented. Then the new, revised statistical figure is based on a wider information basis and describes the phenomenon more accurately than before. 

Revisions of statistical data may also be caused by the calculation method used, such as annual benchmarking or updating of weight structures. Changes of base years and used classifications may also cause revisions to data. 

The data of the building cost index are not revised.

 

Sampling error

There are no exhaustive register data for the drawing of the sample on the inputs used for building construction and the characteristics data required for it. Empirically, however, it is known that many different types of labour, materials and services are used as inputs in building construction production. The consequence of this is that a selection must be made of the key inputs to be monitored and the headings used for their measurement. The selection is made judiciously, i.e. it is a question of judicious sampling (so-called sample). The skills of experts in the field of construction at the Technical Research Centre of Finland (VTT) has been used for a long time to select representative headings.
Because there is a judicious sample in the statistics, estimating the sampling error is not relevant.
 

Mesurement error

The basic objective in the building cost index is to monitor monthly changes in the price of building materials remaining unchanged in terms of quality and other definitions.

Price changes in commodities selected to price collection are monitored on the pure price index principle, i.e. by eliminating the price change due to quality changes from observed price changes. The building products included in the data collection should be described and specified as precisely as possible. Then the price data of the monitored products are temporally comparable. If comparable data cannot be collected for successive periods for a certain product or the production of the product or the quality in question ceases, the old product can be changed to a new one flexibly in statistics production.
The magnitude of the possible measurement error has not been estimated.
 

Non-response error

The non-response rate of the data collection for the building cost index is around four to five per cent on the monthly level. Efforts are made to reduce non-response by reminding respondents to supply the requested data.
 

Comparability

Comparability - geographical

The price concepts and cost types of the building cost index comply with the European Regulation 2019/2152, so the data of the statistics are partly internationally comparable.

However, Statistics Finland also publishes more comprehensive data from the building cost index than required by the EU Regulation. For example, there are more building types than the international minimum level. In addition, renovation indices, index clause sub-indices and transfer price coefficients of residential building construction are published for national needs, so there may not necessarily be an international reference point for them.
 

Comparability - over time

The time series of the building cost index are comparable. In connection with the base year revision, the calculation of old indices with their own weight structure is discontinued and the calculation is continued by chaining. The old indices are always calculated with the weight structure of the newest index and based on the latest cost data.
 

CC2

Long time series are published on the building cost index. The oldest overall index 1935 = 100 published in database tables is from 1922 onwards (annual data only).
 

Coherence - internal

The data of the building cost index are internally uniform.
 

Source data and data collections

Source data

The source data for the building cost index are price observations obtained from Statistics Finland's own data collection and other price indices.

The data collection collects price data from producers of building materials and various wholesale and retail trade stores. The distribution route of the inquired products is taken into account in the weight structure of the building cost index. The same product is generally asked from different distribution channels in the supply chain and price changes collected from different sales locations are weighted with the distribution weights defined for each product. The following distribution routes (by order of numbers of observations) have been taken into account in the building cost index:
1.    Delivery from factory
2.    Hardware store
3.    Installation wholesale firm
4.    Electrical supplier wholesaler
5.    Timber firm
6.    Paint, wallpaper and tile store or other special store
7.    Household appliance store
8.    Other (e.g. importer)

Data on the cost index of civil engineering works, the consumer price index, the producer price index for services and the producer price index are also utilised in the calculation. To measure labour costs, the index of wage and salary earnings is used, to which social costs updated once a year from employer organisations are combined.
The calculation of the building cost index is based on a total of around 1,100 prices from approximately 260 data suppliers.
 

Data collection

The data for the building cost index are collected monthly. Some of the data are of such nature that they are updated only once a year.
 

Frequency of data collection

The data for the building cost index are collected monthly. Some of the data are of such nature that they are updated only once a year.
 

Methods

Data compilation

Updated price data are obtained monthly for the products to be measured (so-called product manifestations). In the first stage of the index calculation, paired comparison of prices is made for product manifestations (current price/comparison price of the previous month). Once the price ratios formed in this way have been completed, price ratio aggregates are calculated for the products and later for product groups using the weighted geometric average formula. This way, the product group-specific level series, or elementary price indices on a chain basis, can also be calculated for the actual index calculation. After this, the actual indices are calculated from the elementary price indices of product groups according to the index hierarchy.
The building cost index is calculated in accordance with the Laspeyres index. The weights of the index are from the base period and they are kept fixed throughout the calculation period of the base year (around five years).
The total index of the building cost index is calculated as the weighted (geometric) average of four house project types. The weight of the house project type in the overall index is determined by the value of building production by building type derived from Statistics Finland's statistics on building and dwelling production.

A separate input distribution has been defined for each house type project. Inputs are measured with one or more products. The distribution routes previously presented are taken into account in weighting between products and product groups. The distribution routes of the product and their weights vary from one product to another, but factory suppliers, as well as installation and electrical supplier wholesalers are most significant as a whole.
The expert help of VTT Technical Research Centre of Finland and several data sources have been used to define the input weights inside the project types. The VTT report (in Finnish) describes the latest weight structure 2021=100. 
 

Data validation

The data of the building cost index are systematically validated. The calculation system puts price changes exceeding a certain threshold on the check list. In addition, missing observations or product changes reported by the data supplier are addressed. If necessary, the data supplier is contacted or missing data are estimated. Changes in products can be treated in the calculation of the statistics by changing the price of the previous month so that the price paired comparison between two months is made for the same product standardised for quality.
 

Documentation on methodology

The User’s Handbook for Building Cost Index 2000=100 describes different building cost indices and their calculation methods and provides guidance in their use. The weights of the latest base year 2021=100 are described in VTT report (in Finnish). Weights for the latest base year is available here: Input indices 2021=100, Building cost index 2021=100 by type of building, Residential building 2021=100.
The VTT Building Technology’s publication relating to the Building Cost Index 2000 = 100 has also been published on the methodological descriptions page of the statistics (in Finnish).
 

Principles and outlines

Contact organisation

Statistics Finland

Legal acts and other agreements

The compilation of statistics is guided by the Statistics Act. The Statistics Act contains provisions on collection of data, processing of data and the obligation to provide data. Besides the Statistics Act, the Data Protection Act and the Act on the Openness of Government Activities are applied to processing of data when producing statistics. 

Statistics Finland compiles statistics in line with the EU’s regulations applicable to statistics, which steer the statistical agencies of all EU Member States.  

Further information: Statistical legislation 

The production and data content of the building cost index are guided by EU regulation 2019/2152 on European business statistics
 

Confidentiality - policy

The data protection of data collected for statistical purposes is guaranteed in accordance with the requirements of the Statistics Act (280/2004), the Act on the Openness of Government Activities (621/1999), the EU's General Data Protection Regulation (EU) 2016/679 and the Data Protection Act (1050/2018). The data materials are protected at all stages of processing with the necessary physical and technical solutions. Statistics Finland has compiled detailed directions and instructions for confidential processing of the data. Employees have access only to the data essential for their duties. The premises where unit-level data are processed are not accessible to outsiders. Members of the personnel have signed a pledge of secrecy upon entering the service. Violation of data protection is punishable. 

Further information: Data protection | Statistics Finland (stat.fi) 

Confidentiality - data treatment

The data of the building cost index can be handled only by persons involved in the production of the statistics. Enterprises acting as data providers or products’ price data are not published, but the published data are always aggregated index point figures comprised of several observations. 
 

Release policy

Statistics Finland publishes new statistical data at 8 am on weekdays in its web service. The release times of statistics are given in advance in the release calendar available in the web service. The data are public after they have been updated in the web service. 

Further information: Publication principles for statistics at Statistics Finland 

Data sharing

The indices of renovation building of residential building construction are supplied monthly to the consumer price index. In addition, the data of the statistics are supplied monthly to Eurostat on the day of their publication and Eurostat releases the data on its web pages.
 

Accessibility and clarity

A press release (statistical release) and database tables are published monthly from the statistics.
 

User needs

The building cost index is one inflation indicator in the construction industry. It is well suited for examining long-term cost development in building construction.

The building cost index is used to deflate inputs in national accounts and the indices of renovation building of residential building construction are used as source data in the consumer price index, for example. The building cost index and its index-clause sub-indices (P2000=100) have been used as a compensation index for building projects. The revision indices currently used in contract agreements can, however, be freely agreed upon. The building cost index is still used for the time being as a revision index in real estate taxation when updating the base value of the taxable values of buildings. Many insurance premiums are also tied to the building cost index. A transfer price coefficient tied to changes in the building cost index is used in the maximum price calculations of government-subsidised dwellings. The building cost index can also be used in the maximum price calculations of price controlled HITAS dwellings.
 

User satisfaction

Views on user satisfaction are collected through stakeholder cooperation and by receiving user feedback by email and telephone.
 

Quality assessment

The quality of the building cost index is evaluated in several stages of the statistical process. The number of respondents to the data collection and the non-response rate are monitored in production and reminders are sent for missing responses. The correctness of the biggest price changes is checked.
 

Quality assurance

Quality management requires comprehensive guidance of activities. The quality management framework of the field of statistics is the European Statistics Code of Practice (CoP). The frameworks complement each other. The quality criteria of Official Statistics of Finland are also compatible with the European Statistics Code of Practice. 

Further information: Quality management | Statistics Finland (stat.fi) 

User access

Data are released to all users at the same time. Statistical data may only be handled at Statistics Finland and information on them may be given before release only by persons involved in the production of the statistics concerned or who need the data of the statistics concerned in their own work before the data are published. 

Further information: Publication principles for statistics 

Unless otherwise separately stated in connection with the product, data or service concerned, Statistics Finland is the producer of the data and the owner of the copyright. The terms of use for statistical data. 

Statistical experts

Liina Arhosalo
Senior Statistician
029 551 3612