Using the Big Mac index for comparing construction costs internationally

This paper explores the use of purchasing power parity (PPP) in the comparison of construction costs between different countries, and whether the development of construction-specific indices will improve reliability.<br /><br />The approach adopted is to compare the construction cost of a typical five star international hotel per square metre in each of ten major cities using a range of PPP methods and to comment on their variability. In particular, this paper looks at whether an index based on the price of a McDonalds Big Mac3 hamburger is a viable alternative when compared against the mainstream methods. The recent publication of construction-specific indices as part of the Eurostat-OECD joint PPP program is also compared against generic indices and the discrepancy is calculated.<br /><br />The paper concludes with reflections about which approach is preferable when attempting to assess global construction relativities and what further research is needed.<br />