The Prime Building Costs Index (PBCI) has expanded year-on-year by 10 percent, pointing to an increasing trajectory of the costs of building materials in the construction industry of Ghana driven mainly by labor and timber costs.
Computed by the Ghana Statistical Service (GSS) quarterly, the PBCI measures the month-to-month changes in the prices of building materials for the construction industry.
The overall index rose from 4830.2 in December 2019 to 5320.1 in December 2020. Between January and December last year, the cost of building materials in the construction industry went up by 3.9 percent. The average PBCI for 2020 was 5237.05 compared to 4759.6 recorded in 2019.
Quarterly analysis of the data provided by the GSS shows that the cost of building materials in the country rose by 0.2 percent in the last quarter of 2020 as the overall PBCI increased from 5309.6 in October to 5320.1 in December 2020.
In the third quarter of 2020, the cumulative PBCI increased to 5313.4 in September from 5234.3 recorded in July, a 1.5 percentage point rise compared to 1.2 percent and 0.6 percent recorded in the first and second quarters of 2020 respectively. However, in the first half of last year, the overall PBCI increased by 1.7 percent.
The PBCI captures labor costs which comprise both skilled and unskilled labor, as well as non-labor costs and cost of materials. The costs of materials include costs of cement, sand, roofing materials, steel materials, stones, timber, and other miscellaneous expenditures.
Labour constitutes an indispensable resource in the construction industry. Without labor, it will be practically impossible for any construction activity to be undertaken as the machines and other equipment used in this industry require highly skilled labor to operate. Similarly, the work of unskilled labor cannot be underestimated in this industry. Labor costs, therefore, accounted for a larger proportion of the total costs of the construction industry.
The available data shows that the index for labor costs rose from 6963.7 in December 2019 to 8081.1 in the corresponding month of 2020. The above implies that the cost of labor which includes wages and salaries went up by 16 percent in the construction industry over the past year.
Also, labor costs rose by 5.3 percent between January and December last year compared to the same period in 2019 where labor costs went up by 1 percent.
Whereas both skilled and unskilled labor costs went up last, the former experienced a higher rise than the latter. Skilled labor costs increased by 8.6 percent shown by the increment of the price index of skilled labor from 6825.6 in January 2020 to 7410.2 in December 2020. On the other hand, the costs for unskilled labor went up by 1.5 percent as the index for this category of workers rose from 9399.8 in January 2020 to 9544.7 in December 2020.
Cement also plays an indispensable role in the construction industry. The cost of cement rose by 8.9 percent over the past year under review, as shown by an increase in the index from 2725.1 in January 2020 to 2966.3 in December 2020. However, with an index of 2735.6 in December 2019, the cost of cement rose by 8.4 percent year-on-year.
The average price of roofing materials went up marginally by 1.6 percent between December 2019 and December 2020. Similarly, the cost of sand also went up by 1.8 percent over the past year. The cost of steel materials despite remaining unchanged throughout 2020, experienced a 7.5 percentage point rise year-on-year.
Aside from labor costs that experienced a 16 percent increment between December 2019 and December 2020, the cost of timber experienced a significant rise by 12.2 percent year-on-year. However, the cost of stones only rose marginally by 0.4 percent over the past year.
