Towards the establishment of a relevant national tender price index for the South African building industry

Abstract

There is currently only one published tender price index available in South Africa for use by built-environment practitioners. The purpose of this article is to report on an investigation into the nature of a more recent tender price index. A literature study was conducted to examine the theory of indices in order to establish which type of index as well as which formula would be appropriate for use in South Africa. Thereafter, the priced bills of quantities of a selected number of projects were analysed in order to identify representative indicator items as well as the weighting thereof for an index. Thirty-two indicator items were identified that could be used for calculating an index. In addition, sourced priced bills of quantities for a number of projects over a six-and-a-half year period were analysed to calculate average rates for the 32 selected indicator items. These rates, together with the established weightings of items, were used to calculate an index. The main finding that emerged from the research was that, by using the above methodology, an alternative tender price index could be determined for use by the South African building industry.