Abstract:
This paper explores the use of purchasing power parity (PPP) in the comparison of
construction costs between different countries, and whether the development of
construction-specific indices will improve reliability.
The approach adopted is to compare the construction cost of a typical five star
international hotel per square metre in each of ten major cities using a range of PPP
methods and to comment on their variability. In particular, this paper looks at
whether an index based on the price of a McDonalds Big Mac3 hamburger is a viable
alternative when compared against the mainstream methods. The recent publication
of construction-specific indices as part of the Eurostat-OECD joint PPP program is
also compared against generic indices and the discrepancy is calculated.
The paper concludes with reflections about which approach is preferable when
attempting to assess global construction relativities and what further research is
needed.
