What is the Building Industry Comparative Index (BICI)?
What activity is included in BICI?
What does the BICI mean for the building industry in each State?
What does BICI mean for the Victorian building industry?
How is BICI interpreted? What does an Index point mean?
What measures or variables are in BICI?
What causes BICI to rise and fall?
How do BICI variables relate to each other?
Can BICI show data pre-2000 or predict the future?
Why is BICI credible?
Are all the stakeholders committed to BICI?
BICI provides a transparent, credible measure of comparative building industry performance across Victoria, New South Wales, Queensland and Western Australia.
BICI is calculated over 16 variables agreed by investors and building industry leaders as the most significant indicators of cost and risk in the sector.
It aggregates external data and uses a methodology verified by independent third parties to demonstrate comparative performance of the four States at six-monthly intervals from June 2000.
BICI tracks commercial building activity in Victoria, New South Wales, Queensland and Western Australia
BICI concentrates on large-scale residential, commercial, industrial or retail developments including high-rise towers, office blocks and shopping centres.
BICI does not cover the cottage or domestic building industry. It does not include infrastructure projects like roads, railways or bridges.
BICI deals only with the building phase of developments, which is where the building industry is able to directly influence outcomes. It does not cover the planning and occupancy phases of a commercial investment.
Where industry data can not be captured at a level that exactly matches BICI activity, the nearest available industry data is used. For example, data on Industrial disputes is only available from the ABS at the whole of building and construction industry level.
BICI provides investors, industry participants and observers with an independent, credible tool to help them build an informed, rational understanding of the performance of the building industry in Victoria, New South Wales, Queensland and Western Australia, relative to the other States.
BICI presents a clear comparison of relative performance and reflects the general trend of the commercial building industry in each State.
For example, if the score for Queensland is three points higher than Western Australia it simply suggests that at that point in time, the Queensland commercial building industry is performing relatively better than the industry in Western Australia.
A score is purely an indication of relative building industry performance. BICI results cannot be translated into other values such as dollar equivalents. Direct cost comparisons, for example, can be made by looking at individual Index variables related to the total cost of building such as tender price relativity, commercial tender prices or cost per square metre.
BICI results to December 2006 indicate that the Victorian commercial building industry is increasingly competitive with New South Wales, Queensland and Western Australia. The overall trend is positive and demonstrates improvement in the environment in which the Victorian building industry operates.
BICI compares Victoria, New South Wales, Queensland and Western Australia for each variable on a score of zero to 100, relative to a benchmark of 50.
The benchmark is calculated as the average performance of the four States against that variable over the previous two years. This average moves from period to period, as the two year timeframe changes, but is always scored as 50.
Results in each State are compared with this benchmark. The distance from the benchmark value of 50 indicates how far that State is at that point of time from the average across all four States. In statistical terms, this is similar to the way in which the standard deviation shows variation from the average.
Calculating a score based on a benchmark allows BICI to combine variables that are individually expressed in terms of dollars or percentages or days lost. To measure the differences between States with regard to cost or risk it is best to look at the relevant BICI variables, just as investors look at quantity surveyors' estimates when comparing the total cost of building.
It is possible for all States to be simultaneously above (or below) the benchmark of 50 at any time if the most recent figures are all above (or below) the average over the last two-year period.
The 16 variables in BICI are the most important measures of building industry competitiveness in the commercial environment, as determined by key industry investors and other stakeholders.
Twelve indicators are attributed to cost and a further four to risk, with 70 per cent of the total weight of the Index assigned to cost, and 30 per cent to risk. Variable are weighted in accordance with a formula agreed to best reflect the relative importance of each individual variable.
BICI indicates the change over time for the following variables.
| VARIABLES | WEIGHT |
| Cost factors | |
| Tender price relativity | 10% |
| Commercial tender prices | 10% |
| Cost per square metre | 10% |
| Building price movements | 10% |
| Average weekly earning | 5% |
| Productive days worked | 5% |
| Labour productivity | 5% |
| Cost of building materials | 10% |
| Stamp duty | 2% |
| Payroll tax | 1% |
| Land tax | 1% |
| Workers compensation premiums | 1% |
| Sub-total | 70% |
| Risk factors | |
| Contingencies | 10% |
| Industrial disputes | 10% |
| Labour supply | 5% |
| Injury rates | 5% |
| Sub-total | 30% |
BICI combines data from 16 weighted variables to determine an overall score from zero to 100 compared against a benchmark of 50. If the score of an individual variable rises or falls, the overall score will move up or down in proportion to the weighting of that variable.
A change in a variable with a higher weighting will influence the overall score more than a variable of a lesser weighting.
BICI cannot determine exactly how specific events or incidents may influence the rise or fall of the Index, as BICI is the product of data from four States over a two-year time period.
Explanation as to what events or circumstances may or may not have contributed to any particular shift in an industry variable is open to interpretation and debate.
BICI has 16 variables that address a blend of cost and risk factors.
The variables are not independent as the individual components all end up, directly or indirectly, in the total cost of building.
The weights applied to the individual variables across BICI mean that the contributions of labour-related factors (for example, industrial disputes, labour supply, average weekly earnings), materials and other costs to the total Index are consistent with quantity surveyors' estimates of the relative contributions of these factors to the total cost of building.
An Index score at any point in time is based on the average performance of the four States over the previous two years. BICI data dates from June 2000, and does not provide any comparisons or analysis before that date.
BICI does not forecast the future performance of any State, although it is possible to look at a general trend. Accurate predictions cannot be made without speculating on future data and industry outcomes.
The Index is a tool for investors, industry and the community to view an independent, credible set of numbers to make informed, rational decisions about commercial building industry competitiveness.
BICI data is impartial and credible. It is third party data that cannot be manipulated to meet the needs of any particular group or individual.
BICI is an initiative of the Building Industry Consultative Council (BICC), a tripartite advisory group comprising employers and peak bodies, trade unions and the State Government.
The use of third party data and a methodology verified by external parties mean that all stakeholders can be confident in BICI and its findings.
BICI is a tool and a resource that will be used by the BICC to continue to improve the performance of Victoria's commercial building industry.
