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An Integrated Regression Analysis and Time Series Model for Construction Tender Price Index Forecasting

Ng, S. Thomas, Cheung, Sai On, Skitmore, Martin, & Wong, Toby C. Y. (2004) An Integrated Regression Analysis and Time Series Model for Construction Tender Price Index Forecasting. Construction Management and Economics, 22(5), pp. 483-493.

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Abstract

Clients need to be informed in advance of their likely future financial commitments and cost implications as the design evolves. This requires the estimation of building cost based on historic cost data that is updated by a forecasted Tender Price Index (TPI), with the reliability of the estimates depending significantly on accurate projections being obtained of the TPI for the forthcoming quarters. In practice, the prediction of construction tender price index movement entails a judgemental projection of future market conditions, including inflation. Statistical techniques such as Regression Analysis (RA) and Time Series (TS) modelling provide a powerful means of improving predictive accuracy when used individually. An integrated RA-TS model is developed and its predictive power compared with the individual RA or TS models. The accuracy of the RA-TS model is shown to outperform the individual RA and TS models in both one and two-period forecasts, with the integrated RA-TS model accurately predicting (95% confidence level) one-quarter forecasts for all the 34 holdout periods involved, with only one period not meeting the confidence limit for two-quarter forecasts.

Impact and interest:

20 citations in Scopus
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ID Code: 4135
Item Type: Journal Article
Keywords: Cost estimate, integrated forecasting model, tender price index forecast, time series modelling, regression analysis
DOI: 10.1080/0144619042000202799
ISSN: 1466-433X
Subjects: Australian and New Zealand Standard Research Classification > BUILT ENVIRONMENT AND DESIGN (120000) > BUILDING (120200) > Quantity Surveying (120203)
Australian and New Zealand Standard Research Classification > BUILT ENVIRONMENT AND DESIGN (120000) > BUILDING (120200) > Building Construction Management and Project Planning (120201)
Divisions: Past > QUT Faculties & Divisions > Faculty of Built Environment and Engineering
Copyright Owner: Copyright 2004 Taylor & Francis
Copyright Statement: First published in Construction Management and Economics 22(5):pp. 483-493.
Deposited On: 16 May 2006
Last Modified: 29 Feb 2012 23:04

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