Model for forecasting construction cost indices in Taiwan

Abstract

A new approach to the forecasting of construction cost indices in Taiwan is presented. Construction cost indices have always been used to assess the variations in construction labour and material costs. These indices have been traditionally based on historical statistical information in Taiwan. However, the indices fall short in forecasting the future cost trends in the construction industry. By investigating the characteristic data that make up the construction cost indices, the major determining factors were identified as (1) ‘the number of difference’, (2) the required periods of preceding construction cost indices, (3) the weight associated with each preceding construction cost index, (4) the mean value of the series of construction cost indices that have been converted into a stationary series, and (5) the estimation of the errors between the predicted values of construction cost indices and the observed values of construction cost indices. An analytical model has been established to forecast the present and future construction cost indices based on these factors, and its feasibility tested by using the observed data of the construction cost indices obtained from the Executive Yuan of the Republic of China. The results suggest that this model is reasonably adequate in forecasting the trend values of construction cost indices in Taiwan.

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