ABSTRACT
INTRODUCTION The need to compare construction costs1 across national boundaries arises in all manner of studies that compare industry productivity and/or performance, in pure pricing studies, and in the production of purchasing power parities (PPPs) as part of exercises such as the International Comparison Program (ICP) run by the World Bank. Money market exchange rates are acknowledged to be an unsuitable means for converting costs to a common base as they reflect changes in the money market but not the value of construction (e.g. Blake et al. 2004; Pilat 1996; Vermande and van Mulligen 1999); indeed the whole philosophy behind PPPs is based on the notion of comparing value while excluding differences in price (Schreyer and Koechlin 2002; Pakko and Pollard 1996; Vachris and Thomas 1999).
