Engineering Construction Activity, Australia methodology

The Engineering Construction Survey aims to measure the value of all engineering construction work undertaken in Australia, and provides estimates by state, commodity and sector (public and private). It does not include construction of buildings i.e. houses, offices etc. 

The main output from the survey is the value of work done, which is available at the State and Territory level by the type of construction. Projects are classified as private sector or public sector according to the expected ownership of the project at the time of completion and are classified to a category of construction without regard to end use. Preliminary estimates of the data are available in Construction Work Done, Australia along with preliminary estimates of building activity data. This data are the major source data used to compile the national accounts estimates for private gross fixed capital formation of dwellings, and other buildings and structures in Australia.

The scope of the collection comprises:

• value of engineering projects commenced during the quarter
• value of engineering work done during the quarter
• value of engineering work still to be done at the end of the quarter
• values exclude the cost of land and repair and maintenance activity, as well as the value of any transfers of existing assets, the value of installed machinery and equipment not integral to the structure and the expenses for relocation of utility services. However, a contract for the installation of machinery and equipment which is an integral part of a construction project is included.

For the purpose of this collection Engineering Construction is any construction that does not have a roof. Where projects include elements of both building and engineering construction (for example, electricity generation, heavy industrial plant) every effort is taken to exclude the building component from these statistics.

A project is classified to a type of construction (bridges, roads) rather than to its end use eg mining. Data is collected separately for operations in each state and split into work for the private sector and work for the public sector.

The classification of work done for Public Private Partnerships and Joint Ventures may be classified as private sector although eventual ownership of the asset may reside with the public sector, depending who derives the economic benefit of the project upon completion.

From the September quarter 2002, engineering construction activity in the External Territories of Australia is included in these statistics. Jervis Bay is included in New South Wales, while Christmas Island and Cocos (Keeling) Islands are included in Western Australia.
The collection has been undertaken since September 1986. From the September quarter 1999, the methodology of the survey was changed to use the ABS central business register which is stratified according to industry, using the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 and employment. The most recent impact on the survey was the change in ANZSIC classification from ANZSIC '93 to ANZSIC '06 from the September 2007 quarter. There was no break in the series resulting from the implementation of this change.

Data is collected from the primary contractor (not subcontractor) of projects and selections are made from any business which may undertake Engineering Construction activity. In most cases the statistical unit used to represent businesses, and for which statistics are reported, is the Australian Business Number (ABN) unit. The ABN unit is the business unit which has registered for an ABN, and thus appears on the Australian Taxation Office (ATO) administered Australian Business Register. The unit is classified to the relevant subdivision of Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 (Revision 2.0).

The sample of businesses approached each quarter is between 2500 and 3000 taken from the ABS business register. 

The sample is augmented by supplementary units which are identified from coverage checks as undertaking significant engineering construction work.

The response rate is normally between 90-95% and data is imputed for non-responding units. 

Selected businesses report on all of the engineering projects they are undertaking. 

The survey frames and samples are revised each quarter to ensure that they remain representative of the survey population. The timing for creating each quarter's survey frame is consistent with that of other ABS surveys. This provides for greater consistency when comparing data across surveys.

Further details about the ABS economic statistical units used in this survey, and in other ABS economic surveys (both sample surveys and censuses), can be found in Chapter 2 of the Standard Economic Sector Classifications of Australia (SESCA) 2008.
ABS publications draw extensively on information provided freely by individuals, businesses, governments and other organisations. Their continued cooperation is very much appreciated: without it, the wide range of statistics published by the ABS would not be available. Information received by the ABS is treated in strict confidence as required by the Census and Statistics Act 1905.

A project is classified to a category of construction without regard to end use. For example, a project involving coal handling equipment at an electricity generating plant is included under 'Heavy industry - Oil, gas, coal, bauxite, aluminia and other minerals' and not under 'Electricity generation, transmission and distribution'. Where a project involves more than one category of construction the project is included under the category which accounts for the major part of the contract in terms of value.

Projects are classified as private sector or public sector according to the expected ownership of the project at the time of completion. When a project is undertaken as a Private Public Partnership (PPP), or other similar arrangement, these projects will be classified according to the expected ownership of the asset at the time of completion. Projects undertaken as PPP's may be classified as private sector although ownership of the asset could eventually reside with the public sector.

The public sector includes Commonwealth Departments and Authorities, State Departments and Authorities, Local Government Authorities, Water, Sewerage and Electricity Authorities and government owned businesses and Statutory Authorities. All remaining organisations are classified as private sector. This publication contains separate estimates for the private sector, Local Government and Commonwealth, State and Territory Government.

Seasonal adjustment

Seasonal adjustment is a means of removing the estimated effects of seasonal and calendar related variation from a series so that the effects of other influences can be more clearly recognised. It does not remove the effect of irregular or other influences (e.g. the approval of large projects or a change in the administrative arrangements of approving authorities). Since seasonally adjusted statistics reflect both irregular and trend movements, an upward or downward movement in a seasonally adjusted series does not necessarily indicate a change of trend. Particular care should therefore be taken in interpreting individual quarter to quarter movements.

Some of the component series shown have been seasonally adjusted independently. As a consequence, while the unadjusted components in the original series shown add to the totals, the adjusted components may not add to the adjusted totals. (For example, the sum of the adjusted state or sector series may not add to the adjusted Australian total). Therefore, figures should not be derived using the adjusted totals. 
Seasonally adjusted estimates are produced by a seasonal adjustment method which takes account of the latest available original estimates. A detailed review of seasonal factors is conducted annually, generally prior to the release of data for the December quarter. 

The ABS produces trend estimates to best represent the underlying behaviour in a series. Trend estimates are created by smoothing seasonally adjusted series to reduce the impact of the irregular component of the seasonally adjusted series. Abnormally high or low values (outliers) are discounted or excluded from the trend estimates.
Seasonally adjusted and trend estimates may be revised as new periods of data become available. Generally, revisions become smaller over time. Revisions to original data may also lead to revisions to seasonally adjusted and trend estimates.

As a general rule, caution should be exercised in using the seasonally adjusted series for dwelling unit commencements in Northern Territory and Australian Capital Territory. The small numbers and volatile nature of these data makes reliable estimation of the seasonal pattern very difficult. 

Further information on seasonally adjusted and trend estimates can be found in the ABS Information papers Time Series Analysis Frequently Asked Questions, 2003 and A Guide to Interpreting Time Series - Monitoring Trends, 2003.

Chain volume measures

Chain volume estimates of the value of work done are presented in original, seasonally adjusted and trend terms for Australia and for each state and territory.

While current price estimates of value of work done reflect both price and volume changes, chain volume estimates measure changes in value after the direct effects of price changes have been eliminated and therefore only reflect volume changes. The direct impact of the Goods and Service Tax is a price change, and hence is removed from chain volume estimates. The deflators used to revalue the current price estimates in this publication are derived from the same price data underlying the deflators compiled for the dwellings and new other building components, and the new engineering construction component, of the national accounts aggregate ‘Gross fixed capital formation’.

The chain volume measures of work done appearing in this publication are annually reweighted chain Laspeyres indexes referenced to current price values in a chosen reference year. The reference year is updated annually in the September quarter publication. Each year’s data in the value of work done series are based on the prices of the previous year, except for the quarters of the latest incomplete year which are based upon the current reference year. Comparability with previous years is achieved by linking (or chaining) the series together to form a continuous time series.

Chain volume measures do not, in general, sum exactly to the extrapolated total value of the components. Further information on the nature and concepts of chain volume measures is contained in the ABS Information Paper: Introduction of Chain Volume Measures in the Australian National Accounts.

The factors used to seasonally adjust the chain volume measures are identical to those used to adjust the corresponding current price series.

Since the estimates for private sector and public sector organisations are based on a sample of organisations they are subject to sampling error; that is, they may differ from the figures that would have been obtained if information for all organisations for the relevant period had been included in the survey. A measure of the likely difference is given by the relative standard error (RSE) of each estimate. There are about 2 chances in 3 that a sample estimate will differ by less than one standard error from the figure that would have been obtained if all units had been included, and about 19 chances in 20 that the difference will be less than 2 standard errors. Approximate RSEs of the estimates can be found in datacubes under 'data downloads'.

An example of the use of RSEs is as follows. If the total value of work done during the quarter is $2,500m and the associated RSE is 0.5% then there are about 2 chances in 3 that the value which would have been obtained if there had been a complete collection would have been within the range $2,488m to $2,513m and about 19 chances in 20 that the value would have been within the range $2,475m to $2,525m.

Estimates that have an estimated relative standard error between 10% and 25% are annotated with the symbol ‘^’. These estimates should be used with caution as they are subject to sampling variability too high for some purposes. Estimates with an RSE between 25% and 50% are annotated with the symbol ‘*’, indicating that the estimate should be used with caution as it is subject to sampling variability too high for most practical purposes. Estimates with an RSE greater than 50% are annotated with the symbol ‘**’ indicating that the sampling variability causes the estimates to be considered too unreliable for general use.

The imprecision due to sampling variability, which is measured by the RSE, should not be confused with inaccuracies that may occur because of inadequacies in the source of information, imperfections in reporting by respondents, and errors made in the coding and processing of data. Inaccuracies of this kind are referred to as non-sampling error, and may occur in any enumeration whether it be a full count or only a sample. Every effort is made to reduce the non-sampling error to a minimum by the careful design of questionnaires, efforts to obtain responses for all selected organisations, and efficient operating procedures.

Caution is advised in respect of the value of work commenced (and consequently, the value of work yet to be done) reported by the public sector. It is known that data reported for value of work commenced are a combination of the following: annual works budget estimates which are reported as commencements in the September quarter (and in some cases may subsequently be undertaken by the private sector); genuine commencements as defined in the Glossary, and reported quarterly; commencements being reported as equal to the value of work done for the quarter; commencements of major stages in the case of long-term projects.
Revisions are made to the survey data as required as a result of new and updated information available from providers. Generally revisions are confined to the last 2-3 quarters.

Statistics are released for the March, June, September and December quarters, approximately 13 weeks after the end of the reference period. 

Preliminary building work done estimates are available approximately nine weeks after the end of the reference period in Construction Work Done, Australia.
 

For enquiries about these and related statistics, contact the Customer Assistance Service via the ABS website Contact Us page. The ABS Privacy Policy outlines how the ABS will handle any personal information that you provide to us. 

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