JPRS ID: 10289 TRANSLATION CAPITAL CONSTRUCTION STATISTICS BY ARKADI NILOVICH USTINOV

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JPF~S L/ 10289
28 January 1982
Translation
CAPITAL CONSTRUCTION STATISTICS
By
~ Arkadiy Nilovich Ustinov
Fg~s FOREIGN BR(~ADCAST INFORMATION SERVICE
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JP RS L/i0289
28 January 1982
CAPITAL CONSTRUCTIO"! STATISTICS
Mosrow STATISTIKA KAPITAL'NOGO STRO]:TEL'STVA in Russian ].980 (signed
to press 3 Jan 80) pp 1-240
[Textbook by Arkad~r Nilovich Ustir.~v, Izdatel'stvo "Statistik.a",
14,000 copies, 240 p~ges]
~ONTENTS
Annotation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Foreworc~ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
CHAPTER I: THE CONCEPT OF CAPITAL CONSTRUCTION STATISTICS AND ITS
ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
' �1. The Subjects Studied by Capital Construction Statistics 2
~2. The Subject, Metttod and Tasks of Capital Construction Statistics 5
g3. The Organization of Capital Construction Statistics in the USSR 8
~4. Organizational Forms of Statistical Observation in Capital Construction .9
- ~5. Reporting--The Basic Form of Statistical Observation in Capital
Construction ~ . . . . . . , . . . . . . . . . . . . . . . . . . . . . . 11
CHI~PTER II: THE STATISTICAL STUDY OF THE VOLUME, COMPOSITION AND DYNAMICS
OF CAP ITAL INV'ESTTtENTS . . . . . . . . . . . . . . . . . . . . . 18
J 51. The Concept and Teclin~~logical Composition of Capital Investments 18
�2. Indicators of the Capital Investment Volume . . . . . . . . . . . . 21
~3. Basic Groupings in Capital Investment Statistics . . . . . . . . . . . 26
�4. Methods of Studying the Dynamics of the Capital Investment Volume . 29
= Q5. Incompl~te Construction and Its Composition . . . . . . . . . . . . 34
- ~6, A Statistical Study of Plan Fulfillment, the Dynamics and State�of
Incomplete Constructton . . . . . . . . . . . . . . . . . . . . . . . 37
CHAPTER III: THE STATISTICS OF PUTTING CAPACITY AND FIXED CAPITAL INTO
OPERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
�1. The Tasks of Statistics for Putting Capacity and Fixed Capital into
~ Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
�2. Accounting for the Putting of Fixed Canital Projects into Operation
in Physical Units . . . . . . . . . . . . . . . . . . . . . . . . . 45
- a - [II - USSR - FOUO]
[III - USSR - 3 FOUO]
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s3. Indicators for the Amount ot Fixed Capital Put into Operation 46
_ ~4. Studying Plan Fulfillment and the Dynamics of Putting Capacity and
Fixed Capital into Operation . . . . . . . . . . . . . . . . . . . . . 51
~5. The Statistical Study of the Duration and Intensity of Construction . 57
~6. The Relationship of the Basic Indicators in Capital Construction
Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
CHAPTER IV: THE STATISTICAL STUDY OF CAPITAL INV~STMENT ECONOMIC
- EFFECTIVL;NESS . . . . . . . . . . . . . . . . . . . . . . . . . . 67
�1. Basic Areas in the Statistical Study of Economic Efftctiveness 67
�2. A Statistical Study of the Economi.c Effectiveness of Capital
Investments in the National Economic Aspect . . . . . . . . . . . . 68
�3. A Statistical Study of the Economic Effectiveness of Capital
Investments in Construction . . . . . . . . . . . . . . . . . . . . . 75
CHAPTER V: THE STATISTICS OF CONSTRUCTION PRODUCT . . . . . . . . . . . . . . 84
- _l. The Tasks of Construction Product Statistics . . . . . . . . . . . . . 84
�2. Construction Product as an Object of Statistzcal Study 85
�3. The Concept of Construction Product . . . . . . . . . . . . . . . . . 87
�4. The Stages of Construction Product in Terms oz the Degree of Itr;
Completeness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
~5. Accounting for Construction Product in Physical Units 92
�6. Accounting for Construction Product in Cost Units . . . . . . . . . . 94
�7. Indicators for the Volume of Produced Construction Product 96
�8. Indicators for the Fulfillment of the Construction Product Plan 99
�9. Indicators for the Volume of Construction Product Under the Conditions
of Specialization and Cooperation of Cor.tracting Organiza~rions 103.
�10. The Relationsl~ips of the Indicators for the Construction ~'roduct
Volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
gll. Indicators for the Volume of Construction Work . . . . . . . . . . . . 109
�12. Gross and Net Construction Product . . . . . . . . . . . . . . . . . . 111
�13. Methods of Studying the Dynamics of the Construction Product Volume . 112 ~
�14. A Statistical Study of the Steady Output of C~nstruction Product and
Its Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
CI-[t1PTER VI: LABOR AND WAG~ STATISTICS . . . . . . . . . . . . . . . . . . . . 119
~1. The Tasks of the Statistical Study of Labor and Wag~,s in Construction. 119
~2. A Statistical Study of the Size, Compositioi; ~:.u :�iovement of the
Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
_ �3. Accounting for Working Time and the Indicators of Its Use . 125
�4. The Statistical Methodology for Measuring Labor Productivity in
Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
�5. The Statistical Methodology of Analyzing Labor Productivity 133
�6. A Statistical Study of the Wage Fund . . . . . . . . . . . . . . . . . 138
g7. The Study of Average Wag?s and Their Dynamics . . . . . . . . . . . . 140
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CHAPTER VII: FIXED CAPITAL STATISTI~CS . . . . . . . . . . . . . . . . . . . . 143
' ~ �1. The Tasks of Fixed Capital Statistics and Its Classification 143
�2. A Study of the Volume, Dynamics and State of F.'~:ed Capital 145
�3. Indicators of Fixed Capital Utilization . . . . . . . . . . . . . . . 149
�4. Accounting for the Number, Power, Composition and Condition of
Cons truc tion Machines . . . . . . . . . . . . . . . . . . . . . ~ . . 152
�5. A Statistical Study oi the Extensive Use of Construction Machines 15~
~6. Indicators for the Use of Construction Machines for Capacity and
Work Volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
CHAPTER VIII: A STATISTICAL STUDY OF THE SUBJECTS OF LABOR IN CONSTRUCTION . 163 ~
�1. The Tasks of the Statistics of the Subjects of Labor 163
�2. A Statistical Study of the Availability and Composition of Materia..ls . ~63
�3. Indicators for the Movement or Materials . . . . . . . . . . . . . . . 165
~4. A Statistical Study of the Availability of Construction Materials 167
~5. The Statistical Study of Materials Utilization in Construction 170
. CHAPTER IX: STATISTICS OF TECHNICAL PROGRESS IN CONSTRUCTICN 175
�J_. The Tasks of Technical Progress Statistics . . . . . . . . . . . . . . 175
�2. Indicators for the Elaboration and Applicatior~ of Standardized
Des.tgning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
�3. ThE. Statistical Study of Introducing Advanced Industrial Methods 177
�4. A 5tudy of the Introduction of New Technology, Progressive Production
Methods and Efficient M4terials . . . . . . . . . . . . . . . . . . . 178
�5. A Statis~'~al Study of Constructiou Mechanization . . . . . . . . . . 180
~6. A Statistical Study of Specialization, Concentration, Cooperation and
Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184
~7. A Statistical Study of the Economic Effectiveness of Technical
~ Progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190
CHAPTER X: STATISTICS OF CONSTRUCTION PRODUCT COSTS . . . . . . . . . . . . . 194
�1. The Tasks of a Statistical Study of Construction Product Costs 194
~2. Types of Construction Product Costs . . . . . . . . . . . . . . . . . ~95
~3. A Statistical Study of the Fulfillment of Quotas for Reducing Cost 197
g4. Studying the Dynamics of Construction Product Costs 199
�5. A Study of the Composition of Expenditures on Construction Products . 202 ~
~6. Studying the Dynamics and Fulfillment of the Work Costs Plan by
Expenditure Items . . . . . . . . . . . . . . . . . . . . . . . 204
�7. Methods of Analyzing the Inf luence of Individual Factors on
- Construction Product Costs . . . . . . . . . . . . . . . . . . . . . . 206
CHAPTER XI: A STATISTICAL STUDY OF FIVANCIAL ACTIVITIES AT CONSTRUCTION
ORGANIZATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . :11
�l. The Tasks of Financial Activity Statistics . . . . . . . . . . . . . . 211
�2. A Study of the Voluma and Composition of Working Capital 211
�3. A Study of the Efficient Use of Working Capital . . , . . . . . . . . 213
�4. The Study of Profit and Profitability of Construction Organizations . 215
�5. Analysis of Factors Influencing the Financial Results of Construction
Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217
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ANNOTATTON
The textbook examines ~~i~ questi~ns of capital investment and construction statis-
tics and the methodology for calculating the statistical indicators for ~the use of
capital investments and the conpletion of fixeu e~pital, production operation~ and
the economic effectiveness of capital investments and construction wor:;.
The book is designed for atudents and instructors at the economic WZes and
- facult9.es as well as for the employees of statistical bodies and construction
' organizations.
FOREWORD
In the USSR, under the leadership of the Communist Party and the Soviet government,
grandiose tasks are being carried out in laying the material and technical base of
, communism, in improving the prosperity and cultura~. standard of living of the peo-
ple and ensuring national security. Here an important role has been given to capi-
tal construction which must brir~g ab~ut a further growth and qualitative 3.mprovP-
ment in the national economy's fixed capital. The CPSU Central Committee and the
, iJSSR Council of Ministers, proceeding from the decisions of the 25th CPSU Congress,
have adopted the Decree "On Improving Planning and Strengthening the Effect af the
Economic Mechanism on Raising Production Efficiency and Work Qual.ity" in which
~ great attention has been given to capital construction. The effe~:tive activities
of capital construction at the present stage are possible only on a basis of im-
proving the organizational structure and management methods of the sector. These
are based upon complete, reliable and scientifically sound information which i.s as-
_ sembled and processed by capital construction statistics.
In the given textbook, the authc,r has endeavored as fully as possible to shed light
on the presen~t tasks of capital construction statistics. For this reason in the
book narticular atter~cion has been given to a statistical study of the economic ef-
fectiveaess of capital investments and construction by reducing the construction
time and lowering incomplete construction, technical progress and industrialization
~ of the sector as well as to improving the methodology of calculating and analyzing
t;~e statistical indicatora which characterize the result and conditions of the con-
struction organizations' production activities.
The textbook's contents encompass the sub~ects and questions of a course on capital
construct~on statistics within the limits of the curriculum of the economic WZes
and faculties. The subjects of the chapters and their sequence reflect the struc-
ture of the course adopted in the curriculum: the first four chapters are devated
to capital investment statistics and the remaining chapter to conatruction statis-
- tics.
The author expresses sincere~gratitude to thF instructors or~ the statistical chairs
of the Moscow Statistical Economics Instutute who partic:ipated in a discussion of
_ the manuscript, to the instructors of the statistics chair at the Moscow Order of .
the Labor Red Sanner Management Institute imeni Sergo Ordzhonikidze and to co-
workers from the section of the Scientiiic Research Institute for Construction
~ Organization and Management under the Moscow ~rder of the Labor Red Banner Construc-
tion Engineer Inatitute imeni V. V. Kuybyahev for a thorough editing of the text-
book.
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h'UK UH'F'~C:IAL U~~: UNLY
CHAPTER I: THE CONCEPT OF CAPITAL CONSTRUCTION STATISTICS AND ITS ORGANIZATION
_ �1. The Subjects Studied by Capital Construction Statistics
The continuous growth of social production in our country's national economy is one
of its essential development traits. The growth of Soviet social production and
its material and technical base has occurred due to the lccumulation fund with sur-
plus product being its source. The Soviet state through capital investments has
provided accumulation in the area of creating new factories, mills, mines, elec-
_ tric plants, railroads and highways, housing, hospitals, sanitoriums, schools and
other projects in the production and nonproduction spheres of the national economy.
- From 1918 through 1978, 1,833,400,000,000 rubles of capital investments were chan-
neled into the national economy and during the Tenth Five-Year Plan alone more than
620 billion rubles will be spent on adding to and replacing fixed capital.
In the creation of the material and technical base an important role has been as-
signed to construction. This can be ~udged from the following data. During t~e
Tenth Five-Year Plan the increase in the capacity of electric plants should be ap-
proximately 60-70 million kilowatts. This means that over the five-year plan we
will build pawer plants with capacity equal to 100 Dneproges [Dnepr Hydropower
Plant] or 13 such as the Krasnoyarsk GES. During the same 5-year period we plan
to build housing with a total usable area of 545-550 million m2 and this is the `
equivalent of the available housing in 5 such cities as Moscow, 10 such as Lenin-
grad or 35 such as Gor'kiy. Equal scales and rates of construction are planned in
other sectors of the na~tional economy's production and nonproduction spheres.
In line with the enormous scope and rate of capital construction, a socialist state
is confronted with the need of generalizing economic practices involved in the use
_ of capital investments and the describing of their effectiveness as well as estimat-
ing the state, results and development of construction. In this generalization an
important role is assigned to capital construction statistics.
Capital construction statistics is a sector of economic statistics. It is based on
the procedures and methods common to this science for studying phenomen?. and proces-
ses. At the same time, capital construction statistics is an independent science
which differs from the other statistical sectors in its ob~ect and subject of study.
Let us examine these impor.tant concepts of science.
Capital construction statistics has two ob~ects of study: in the area of capital
investments this is th~ aggregate of enterprises, organizations and institutions
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making capital investments, that is, participants in the investment process; in the
area of constru~tion activities this is a sector of material production, that is,
conatruction. These ob~ects each have independent aignificance but they are close-
ly interrelated and as a consequence of this within capital construction statistics
two independent parts are formed: capital investment statistics and construction
statistics.
Capital investments are the expenditures channeled into the creation of new fixed
capital, for the expansion and reconstruction of existing in both the production
and nonproduction spheres of the national economy. Statistics studies capital in-
vestments in the broad sense, viewing them as a national economic financial and eco-
nomic concept related to the patterns of socialist expanded reproduction. in ac-
cord with the estabiished planning procedures, capital investments for the acquisi-
- tion and construction of fixed capital projects are directly allocated and approved
for industrial and agricultural enterprises, construction, transportation and sup-
ply organizations as well as for ministries, departments, WZes, hospitals and
other budget-supported institutions. All of them become the holders of capital in-
vestments and at the same time are the legal representatives of the state for which
_ the fixed capital will be built or acquired in a finished form. The enterprises,
economic organizations and budget-supported institutions which make capital invest-
_ ments are called in practice the builders or the title holders.
In studying the aggregate of builders as an ob~ect, statistics encompasses only
their activities involving the use of capital investments related to the reproduc-
- tion of the means of labor. But capital investment statistics does not examine the
basic activities of the enterprises, organizations and institutions operating in
the role of builders. A significant portion of the aggregate of builders is rep-
resented by the state enterprises, organizations and institutions making state cap-
ital investments. Another portion is formed by the aggregate of cooperative (in-
cluding kolkhozes) and public organizations which invest money for acquiring and
building fixed capital projects. In addition, the individual builders (the public)
- building for personal needs is also an object of statistics' study.
- Construction as a national economic sector is the second object studied by statis-
tics. Its activities is aimed at the creation of new fixed capital as well as the
expansion, reconstruction ar_d rebuilding of existing fixed capital. The end prod-
~ uct of construction is production capacity, buildings, installations and other
- production- and nonproduction-end pro~ects. Construction has a number of particu-
lar features making it possible to differentiate it from the other sectors of the
national economic production sphere. An essential feature of construction is the
- territorial association of its products; the buildings and installations are fixed
~ objects of fixed capital while the products of industry, agriculture and the other
sectors are niovable ob~ects. The production cycle in construction is the longest
and days, w~eks, months and even years are used as the unit of ineasurement of its
duration. Construction has vividly expressed individual production. The con-
struction site is not fixed, it changes after completing the erection of the proj-
ect while the means of production and workers move to another construction site.
- Diverse activities are carried out in construction and these differ in terms of the
= purpose and nzture of the product to be created, the particular features of the
production process and other features. For this reason within construction as a
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national economic sector distitictions are drawn between subsectors or types of ac-
tivities (production): research (geological prospecting), design-estimate and
construction (construction work).
All types of construction production activities are carried out, respectively, by
research, design and actual construction organizations which in their aggregate
form th;: sector, that is, construction as an object of statistical study. In terms
of the scale of activity in this sector an essential role is played by construction
work which is based on the construction industry. The construction industry is the
aggregate of contracting construction and installation organizations eq2iipped with
modern means of production and skilled workers for carrying out construction work
using industrial methods. At present the construction induatry possesses a diverse
network of state contracting organizations (including rfi.air-construction), inter-
� kolkhoz construction organizations and the constructior, organizations of the con-
sumer cooperatives and public organizations.
- In the sphere of construction work, along with contracting organizations there are
- also temporary construction organizations which are set up with the direct labor
method of construction ir. the form of capital construction sections (OKS) and ad-
ministrations (UKS). Since in organizaticnal terms the OKS and UKS are directly
part of the enterprises and organizations making the capital investments, the des-
_ ignated aggregate, in essence, is formed by the builders carrying out construction
_ by the direct labor method. The result of individual construction by the public is
also considered as part of construction work (activity) in the broad sense.
Figure I.1 shows the structure of construction as an object of study by stacistics.
Construction
Design
Construction work estimate Research
activities activities

I
Construc-
tion by Individual
Construction industry direct construc- ~
labor tion
I method
L
Fig. I.l. Composition of constructi~n as the ob~ject of study by statistics
T}ius, capital constructian statistics has two ob~ects of study which differ in
terms of their economic content. The uniting of the two different objects into a
single science cannot be considered fully sound. The reason for such a solucion to
the question is to be found in the particular features of organizing and accounting
for fixed capital reproduction. In the construction stage capital investments are
made into the designing, manufacturing and acquiring of equipment and into construc-
- tion work per se. As a consequence of what has been stated, accounting for capital
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investments and construction activities is concentrated in the same organizations,
enterprises and institutions, that is, it coincides in time and piace. However an
examination of two objects by one science does not mean their ~erging into a single
object as capital investment statistics and construction statistics are independent
but closely interlinked sectors of economic statistics. From the viewpoint of the
science's content it would be more correct to call "capita~ construction statistics"
as "capital investment and construction statistics."
�2. The Sub~ect, Method and Tasks of Capital Construction Statistics
Canital investments and construction are studied not only by statistics but also by
- other economic and technical sciences, ~or example, construction economics and plan-
ning, construction technology and so forth. The content of each of these sciences
is determined by its subject which differentiates one science from another. Statis-
tics studies the quantitative aspect of economic phenomena in an inseparable link
_ with their qualitative features which are manifested in their development patterns.
_ The subjecc of capital construction statistics is the quantitative expressions and
ratios of r,~ass economic phenomena and processes which arise and develop in the
sphere of fixed capital reproduction which is carried out by capital investments
as well as in construction as a national economic sector under the specific condi-
tions of place and time.
Capital construction statistics works out and scientifically establishes systems of
indicators which ref lect the dimensions, directions, structure and effectiveness of
capital investments made into fixed capital reproduction as well as the state, di-
mensions and .ratios of labor, material and financial resources of thp construction
and design-research organizations, the result of their work, technicai progress in
construction, the econonmic effectiveness of construction worlc and other economic
phenomena.
Political economy and sectorial economics serve as the theoretic+zl basis fox capital
construction statistics. In accord with the laws of these sciences, capital con-
struction statistics provides a numerical description of phenomena and processes.
Marxist-Leninist dialectics is the general methodological basis of staCtistics, as
it is for other social sciences. At the same time capital construction statistics
employs procedures and methods for calculating indicators which are characteristic
for all statistical science. These include the methods of mass observation, statis-
tical groupings, average values, index and balance methods, correlation-regression
analysis and others.
Capital construction statistics is closely tied to capii:~l construction economics,
organization and planning as well as accountancy in construction. Construction
economics examines and formulates the developmental patterns and paths of the sec-
tor and studies the principles of construction organization, its specialization,
combining and concentration zzd so forth. On the basis of the theoretical pr_emises
of sectorial economics, capital construction economics elaborates the inuicaLors
and their systems which in a numerical form characterize the dimensions and rela-
tionships of the economic concepts, the degree of interaction of phenomena and
processes and establishes the boundaries and conditions for employing the statisti-
cal methodology in the study of capital construction. The statistical data are
used by conetruction economics for the further development of the science.
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ruK vrr~~ ~A~, u~N: UNLI'
Statisti~~ :.s ~lso directly linked with capital construction planning and this link
is expressed, in th~ first place, in the fact that statistics provides information
on the state and development of capital construction for drawing up the current and
long-range plans and, secondly, statist~.cs monitors the carrying out of eapital con-
struction plans and disr_loses reserves for overfulfilling the plans and saving re-
sources. For these reasons the range of indicators employed in planning and statis-
tics, as a rule, coincides. At the same time the aggregate of indicators employed
in statistics is signif icantly greater than the aggregate of planning indicators as
statistics studies phenomena and events which have occurred and many of these could
not be planned ahead of time, for example, the amount of rejected work, unproduc-
tive expenditures and so forth. Capital construction statistics is also linked ~o
accountancy the data of which serve as the source for obtaining and calculating
many statistical indicators, in particular, censuses and other speci~i statiszical
surveys. In order to gain the fullest notion of the content of the subject of capi-
tal construction statistics, let us examine the tasks of this science.
~ The chief task of capital construction statistics consists in the prompt obtaining
- and processing of reliable and scientifically sound data on construction and capi-
tal investments into the reproduction.of the nation's fixed capital. Under the con-
ditiozs of a planned economic system, great significance is assumed by the task of
monitoring the course of carrying out capit~l construction plans on all levels from
the individual enterprises and organizations up to the sectar and the national econ-
omy as a whole. Among the general tasks of r_apital construction statistics are the
elaboration of new systems of capital investment and construction indicators and
the improving of the existing ones. This task is particularly acute in line with
the implementing of a system of ineasures to accelPrate the completion oi production
capacity and projects and to improve capital investment effactiveness as envisaged
by the Decree of the CPSU Central Committee and the USSR Council of Ministers "On
Zmproving Planning and Strengthening the Effect of the Economic ~Iechanism on Rais-
ing Production Efficiency and Work Quality."
The carrying out and improving of the economic reform in capital construction have
_ increased the role of statistical economics analysis in the aim of disclosing the
intrasectorial reserves for increasing production, saving expenditures, shortening
construction times, reducing its cost and increasing effectiveness. At present
particular importance is be~n~ assumed by cautionary information as based upon com-
prehensive analysis of capital construction rer~rt-ir_~. Finally, among the tasks of
capital construction statistics is the improving ~f the forms of observation,
processing and collating statistical data on the basi~ of computers which are the
technical basis for the automated state statistical system (ASGS).
In the Ninth P'ive-Year Plan a new stage of the ASGS was adopted with the creat?.on
~~f installations to electronically proc~ss the statistical information. Work is
- being done on developing the second stage of the ASGS which will be based on func-
_ tional subsystems f.or the most important national economic sectors and, in partic-
ular, capital construction.
As was shown above, capital construction statisti~s consists of two independent
parts, each of which has an independent object and subject of study. For this
reason capital investment statistics and construction statistics, along with com-
mon tasks, also have specific ones determined by the corresponding object of study.
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Among the basic tasks of capital investment statistics are the foll~wing:
1) A s;.udy of the volume, structure, direction and concentration of capital in-
vestments and an elucidation of their role in bringing about an accelEration in
scientific and technical progress as well as in the reequipping and reconstruction
~ of existing product.ion capacity;
2) Supervising the course of carrying out capital investment plans for the depart-
ments, ministries, as we11 as the sectors and national economy as a whale. The
task of statistics includes not only evaluating plan fulfillment but also elucidat-
ing the so:.ndness of the plan itself, the supply of the planned projects with �
material and monetary reaources and the observance of ineasures which prevent the
- scattering of capital investments;
_ 3) Evaluating plan fulfillment for the completion of capacity and fixed capital in
terms of the volume, dates, quality and composition of the pro~ects and the estab-
lishing of reasons for deviation from the plan and changea in the pro~ects to be
put into operation, their capacity and cost;
4) Studying the volume of incomplete construction, its conformity to the planned
level or norm and disclosing instances and the analysis of reasons for the scatter-
_ ing of capital investments over projects;
5) A description of the dynamics of capital investment volumes, pro3uction capaci-
ty put into operation and fixed capital in operation. An important part of this
task is the elaboration of a me[.hodology to calculate the capital investment in-
dexes;
6) A study of capi.tal investment economic effectiveness. This task is a task of
primary importance. In carrying it out, statistics should improve the system of
indicators which describe actual capital investment effectiveness.
Construction statistics should solve the problems which directly involve the area
of design and research activities and canstruction work. The central task of con-
struction atatistics is to study the entire result of production activities in this
sector and to assess plan fulfillment for conatruction products. This task con-
tains questions which involve a description of construction products as a national
economic sector as a whole as well as the result of activities carried out by its
component parts, that is, design-research activities and construction work. In
- studying the result of constructiori work a special place is held by the construc-
tion industry's product and, in part~cular, monitoring the fulfillment of the pro-
duction programs by the construction organizations.
The next task of statistics is ta study labor. This encompasses the questions of
labor resources and their use, measuring the level and dynamics of labor produc-
tivi~y as well as wage characteristics.
A study of the means of production is also a maior task of construction statistics.
This involves a group of questions among which an important place is held by the
study of the efficient use of fixed capital and sub~ects of labor and elucidati.ng
reserves for saving the employed means of production.
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A description of technical progress and industrialization in c~nstruction is an
important statistical task since the employment of new highly p~.ductive equipment
and advanced production and technical methods has a decisive impact on the growth
- of labor productivity, the savin~ of expenditures and the improving of product and
work quality.
A study of the costs of c~nstruction products, the ways to reduce these as well as
_ an exar.~ination of the financial state of the construction and design-research ar-
ganizations are the final task of statistics.

- ihe designated tasks determint the content and sequence of laying out the theoreti-
cal material in the textbook's chapters.
~3. The Organization of Capital Construction Statistics in the USSR
Construction, as a natior~al economic sector, was formed only after the Great October
Socialist Revolution. For precisely this ~eason in prerevolutionary Russia there
was no capital construction statistics either as a sector of scientific knowledge
or as a sector of practical activity. Only scattered information on the construc-
eion of fixed capital projects was gather.ed by the Central ~tatistical Committee
under the Ministry of Internal Affairs. The completeness and reliability of this
_ ~nformation were extremely unsatisfactory.
Capital construction statistics, alflng with the other economic statistics sectors,
arose along with the formation of the socialist state. On 25 July 1918, b;~ a Decree
of the Soviet of People's Commissars over the signature of V. I. Lenin there was
ratified the "Regulation Governing State Statistics" which served as the basis for
the creation of the Central Statistical Administration (TsSU). However, during the
period of the reconstruction of the national economy and the establishing of state
sratistics, that is, up to the 1930's, capital construction statistics did not have
org~.nizational independence.
In line with the elaboration of the first five-year plan for the development of the
, n~tional economy, the leading departments of the nation (the Gosplan, the people's
commissariats and so forth) needed detailed and accurate information on construc-
r.i.~n and its resources on a statewide scale. This circumstarace served as an impe-
tus for. the rise of capital construction statistics in the USSR as a sector of prac-
_ tical activity of state statistics with corresponding organizational independence.
In 1932, as part of the Central Adminietration for National Economic Accounting
('1'sUNKnii) under the USSR Gusplan, a sector was organized for the accounting of
capital wor.k and construction. Subsequently, along with the developmeut of capital
construction in the nation, this area of woik for state statistics also developed,
- ~:~s improved and became an important sector in statistics' practical activities.
~1 characteristic Leature of statistical practices in the 1930's and 1940's was the
departmental approach to organizing the obser~~ation, collecting and processing of
statistical material. With such a system, the elaboration of report data and the
very forms for capital construction ~aas carried out not only by the state statisti-
_ cal bc~dies but also to a si;nificant degree by the USSR people's commissari~.ts and
depar.t~ner.~~. However, as of January 1951, new standar3 reporting forms were intro-
' ~luced for a.11 the nation's construction organizations.
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The improvement in the organizational forma " .nanaging capital construction
brought about a further reorganization in acc.,.:nting and statistics. In 1960, the
USSR Council of Ministers adopted a new regulation governing the USSR TsSU and
this became a Union republic body which provided centralized leadership over ac-
counting and statistics throughout the nation. Since this time the entire elabor-
. atio~i of data, and in parricular for ca~;ital construction, has been centralized and
concentrated in the state statistical bodies. The USSR TsSU carries out this work
through the Union republic TsSU, the statistj.cal administrations of the oblasts,
krays and autonomous republics as well as the rayon state statistics inspectorates.
At present the Capital Construction Statistics Administration of the USSR TsSU and
analogous bodies in the Union republic TsSU are the leading capital construction
statistics center. The Administration includes capit~l construction sections or--
ganized along s~ctorial and functional principles, for example, sections for en-
dustrial construction, housing and municipal construction, contracting and design-
research work, methodology and others. Within the oblast, kray and city statistical
administrations capital construction statistics sectior~s have been set up and these
provide methodological leadership, the preparation of statistical collections, sta-
tistical economics analysis f or the party and soviet bodies as well as computer
centers engaged in the collecting of atattstical mater_ials, their monitoring, proc-
eseing, grouping and summarizing of data.
- Depa.rtmental statistics holds a significant place in capital construction statis-
tics. The Union and Union republic ministries and dnpartments include sections and
sectors which carr~ out statistical work. The iiSSR TsSU provides overall leadershzp
and control over ~he organization of departmental statistics.
Finally, in the construction, design and re5earch organizations, the employees of
the planning and other economic sections are engaged ~.n statistical work related to
the c~llecting of data, the f illing out of forms for annual and current zeporting
and conducttng statistical surveys for the needs of the associations, ministzies
and departments.
~4. Organizational Forms of Statistical Observation in Capi.tal Construct~on
Statistical observation as the planned and scientifically organized collecting of
mass data on economic phenomena is carried out in capital construction in accoid
_ with the state statistical tasks. Work in the area of obtaining and monitoring
_ statistical data is carried out by the city, oblast and kray statistical adminis-
trations and in individual instances also by the central statistical bodies.
Methodological leadership over the organization of staeistical observation, that
is, the establishing of data which must be obtained, the procedure, periodicity,
place, time and methods of obtaining them, is carried out by the Capital Construc-
tion Statistics Administration of the USSR and Union republic TsSU.
Statistical observation in capital construction should ensure the obtaining of sci-
entifically sound data needed for drawing up the current and long-range capital in-
vestment and construction plan~ as well as for monitoring plan fulfil].ment. Tl~e
assembled etatistical information should be reliable and f.ully cover the entire ag-
gregate of studied econ~mic phenomena in capital constructioi.. These demands are
reflected in the observation programs, in the instructions for filling out the
statistical forms as we11 as in the inatructions of the central statistical bodies.
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Capital construction has employed various forms of statistical observation and these
have been of varyin~ signifjcance in the individual historical development states
of ttie Soviet state. Starting with 1917 and almost up ~o the end of 1930, a large
portion of the statistical information on capital construction was based on materi-
als of so-called construction registration. Its essence was that each construction
project was registered with the local statistical organization and for this the ap-
propriate statistical form was filled out. This gave the name of the project, the
production capacity of the objects, estimated cost and other information. After
the completion of construction on the same blank additional informatian was given
and changes made in the initially indicated information. Constructior; registra-
tion in essence was not a form of current or periodic observation and i?- did not
contain a complete coverage of the aggregate of sites and projects and information
about them was not always correct. This form of observation was very primitive and
for this reason could not satisfy the needs of capital construction statistics.
The other part of information on capital construction was collected in conducting
population censuses and various industrial surveys which, as a rule, were organized
by the individual departments and people's commissariats.
In 1932, as part of the TsUNKhU under the USSR Gosplan, a sector was organized for
the accounting of capital work and consL-ruction. The main task of this sector was
- to organize a new form of statistical observation, that is, reporting in capital
construction. This became the bas~c form for collecting statistical data on capi-
tal construction.
The statistical reporting on capital construction has been systematically improved
and altered in accord with the tasks and directions of national economic development
and with its management and planning. At present, this form of observation has
reached a high level of organization and virtually solves all the basic problems
confronting state statistics. Along with introducing reporting in capital construc-
tion, primary accounting has been systematized in the nation's construction organi-
zations and projects. Subsequently extensive work was carried out to standardize
the primary accounting documents and to in~roduce them into practice.
Along with reporting in capital construction, specially organized statistical ob-
servation was also employed, that is, censuse~, one-shot counts and surveys. In
- 1932, for the first time in the history of capital construction statistics, using
a program elaboratpd by the TsiJNKhU under the USSR Gosplan and an organizational
plan, a census of :he construction industry was carried out. This census assembled
extensive statisti:al material on the number and composition of construction organ-
izations, on the ai.~ount of work carried out by them and, most importantly, on the
- t~umber, composition, capacity and state of the fleet of construction machines in
1932. The extensiveness of the program for the construction industry census for a
long time held up the elaboration of its materials and led to a decl~ne in its
t�meliness.
Subsequently this form of statistical abservation was developed, improved and be-
came an important source of information complementing the basic source of data,
that is, the st3tistical reporting on capital investments and construction. Among
the most important of this type of work for the national economy we must mention
the censuses for incomplete construction carried out according to a very extensive
survey program, the construction machinery and equipment censuses, the annual ac-
counts of construction-installation organizations, the censuses of inventories of
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materials and equipment at construction projects, of individual housing construc-
tion, sampling surveys for the length of construction, for the influence of factors
on labor productivity dynamics and others.
One of the particular features in organizing and conducting censuses and surveys i.n
capital construction is that they are carried out on the basis of data from the ~
primary and bookkeeping accounting of the construction organizations and projects
(the builders). For this reason in capital construction the censu~:es have the
nature of and are termed one-shot counts and surveys.
�5. Reporting--The Basic Form of Statistical Observation in Capital Construction
- State statistical reporting is the most significant source in terms of importance
and scale (sr_ope) for obtaining information on capital construction. The organiza-
tion and configuration of reporting should conform to the tasks of capital construc-
- tion statistics, to the essence of its ob~ects of study, to the forms and principles
of capital construction management, planning and organization.
Considering all these requirements in capital construction statistics traditionally
a system of reporting has develaped in which two independent but closely related
groups of forms of reports have clearly been formed. These are for capital invest-
ments and for construction as a national economic sector. In addition, as part of
the construction reporting there is an independent subgroup for design and research
activities.
Reporting for capital investments and for construction differs both in the composi-
tion and nature of the report units as weLl as in the contents of their survey pro-
grams. At ttie same time, capital in~estment statistics and construction statistics
have much in common, for example, the same indicators; the same report units and so
i forth.
The initial stage of the given statistical observ~tion is the drawing up of lists of
report units, that is, a list of all the operating enterprises, institutions and or-
ganizations which shoul.d submit reporting on their operations to the statistical
bodies and to the superior departments. In capital investment statistics, the basic
report unit is the builder, that is, the enterprise, institution or organization
which is legally Qmpowered by the state to represent the client and carry out the
capital investments.. Here each construction project should be entered on the title
lists which are approved in the established procedure and are the official permis-
sion for the legal existence of the construction project and fol the builder. The
title lists of the construction projects become permanent planning documents for the
entire construction period.
All industrial, agricultural and transport enterprises, construction, supply and
other organizations as well as ministries, departments and budget-supported institu-
tions having administrative-managerial independence may be granted the right to be
a builder. Such enterprises, institutions and organizations which make capital in-
vestments solely for the acquisition of equipment, machinery and farm equipment
without the involvement of construction are also conditionally considered builders.
_ They also act as reporting units in a statistical observatj.~n.
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ruK vrrt~iwL u~~: UNLY
Builders
State enterprises, Cooperative enterprises, puhlic
organizations, insti- and public organizations
tutions
Builders operatin~; on Bu~lders operating on Individual
independent capital balance of basic builders
investment balance . operations
Contracting Direct-labor Contracting Direct-labor
method method method method
New con- Major con- Ma~or con- Construc- UKS & OKS Construc-
struction struction struction tion eites of execu- tion sites
(construc- �at existing at opera- of operat- tive com- of operating
" tion direc- enterprises ting enter- ing enter- mittees enterprises
torates & organiza- prises priaes, or- (UKS, OKS)
administra- tions and (iJKS) ganizations
tions institu- & institu-
tions (UKS) tions (UKS,
OKS)
Fig. I.2. Composition of builders as an object of study by capital
investment statistice
The aggregate of builders is extremely heterogeneous. Certain differences among the
- builders, for example, in terms of the forms of ownership, the volume of capital in-
vestments, the method of ;naking them and so forth, are considered in organizing the
reporting. A notion of the composition of builders in terms of features which are
of importance in the organizing of a atatiatical observation and, in particular, in
reporting, can be gained from Fig. I.2.
.
The groups of units given in the diagram, that is, builders, submit various forms
of reports according to the numbering and content of the programs which character-
ize the activities of the builders in the area of capital investment use.
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A builder's capital investment plan may include not one but rather several construc-
tion sites. The sites can be large numbering scores of projects or small consisting
of one or several projects. The large construction sites of the ministries and de-
partments are usually made separate in administrative-management terms, that is,
thpy are put on an independent balance sheet for the capital investments and they
form a site directorate or construction administration. Such sites become inde-
pendent report units.
Below we have given a list of the basic forms of capital investment reporting as
submitted by the builders for a year.
No 1(builder) Balance sheet for capital investments
No 7-ks Report on capital investment financing
No 2-ks Report on fulfillment of plan for completion of
_ capacity, fixed capital and capital investment plan
Appendix to Form Production capacity and esti.mated construction cost
No 2-ks of enterprises and pro~ects in backlog
Appendix 1 to Form Report on construction cost of housing and civil
No 2-ks projects
Appendix 2 to Form Report on capital investments for measures to protect
No 2-ks and rationally utilize natural resources
Appendix 3 to Form Statement on completion of fixed capital, capital
~ No 2-ks investments and housing construction in territorial
breakdown
Appendix to Form Report on quality of construction projects put into
No 1-ks and Form operation
No 2-ks
Zn addition to the listed forms, in a number of instances the builder submits spe-
cialized reporting forms on capital investments, for example, Form No 2-ks (agricul-
ture) "Report of Agricultural Enterprise on Fulf illment of Plan for ~ompletion oi
Capacity, Fixed Capital and Capital Investment Plan." The standard forms of peri-
odic reporting for capital investments, as a rule, coincide in terms of names, aum-
bering and basic indicators with the annual reporting, but its survey program is
significantly narrower than the annual.
_ Construction reporting is more diverse than that for capital investments, for it en-
compasses various forms of construction activities as an object of statist?cs (see
Table I.1) In accord with the sectorial construction structure, two reporting sub-
groups have traditionally existed: for the activities of the construction organiza-
tions and of the design and research organizations.
Reporting on construction activities should encompass all its areas where construc-
tion per se is carried out independently of the method, that is, the contracting
construction methodl and the direct labor method. The activities of the population
'Tle contracting method encompasses all construction organizations and enterprises
which carry out construction-installation and other work under contract. Industri-
al enterprises which perform contracting work, like the enterprises carrying out
- construction by the direct labor method, are not included in the system of the con-
struction industry.
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rvn vrr.~,ru, vOf.. ~ilvl.y
in individual construction are not reflected in the reporting but rather are ac-
counted for by a specially organized obser.vation, the annual one-shot surveys.
_ Table I.1
Reporting Units
Number
of Name of Reporting Form Builders Contracting Design,
Report (Direct Construction P.esearch
Form Labor Organizations Or~anizations
Method)
No 1 'Balance sheet for basic
(contractor) operations of contracting X X
organization ~
~ppendices 1, Appendix to balance sheet
_ 2 and 2a to of contracting organization X X
Form No 1
Form No 3 Movement of charter capital X X
Form No 10 Movement of financing money
(construction) and special funds X X
Form No 11 Report on availability and
(construction) movement of fixed capital X X X
~ and amortization fund
Form No 12 Presen_ce and composition of
(cnnstruction) fleet of construction
machinery on balance sheet X X X
of reporting organization
Form No 20 Profit and loss X
(construction)
Form No 1-ks Report on fulfillment of
- plan for completing capacity X X
and plan for contracting work
Corm t4o 2-ks Iteport on EulfLllment of plan
for completion oE capacity of X
fixed capital and capital in-
vestment plan
l~r~rm No 3-t Report on fulfillment of X X X
labor plan in construction
Form No 2-s Report on cost of construc-
tion and installation work X
Form No 4-ks Report on fulfillment of plan X
for design and research work
Form No 11-ks Report of interkolkhoz con-
struction organizations on
fulfillment of plan for com- X
pletion of capacity and con-
tracting plan �
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Within the contracting construction organizations, in terms of the type of owner-
ship of the means of production, a distinction is drawn between the state, coopera-
tive and public organizataon enterprises. Reporting for the construction industry
is organized in a corresponding manner. The basic production elements of the state
organizations in the construction industry are the construction and installation
trusts, the housing construction combines (DSK), the plant construction combines
(ZSK) and the rural construction combines (SSK). As a rule, these are covered by
the Regulation Governing a Socialist State Production Enterprise. The above-listed
contracting organizations and combines have been adopted in construction statistics
as the basic report units.
Trusts are ordinarily made up of construction and installation administrations, of-
f ices, construction detachments and other subunits which are termed the primary con-
tracting construction organizations. Like the trusts, they are given administrative
and managerial independence. These self-financing construction subdivisions of the
trusts are also considered report unj.ts in construction statistics. With such a
system for organizing the report unit:s for study in statistics, the reporting of
the trusts will always be summary in relation to the reports of the primary organi-
zations.
The system of trusts and their subordinate primary construction organizations is
part of the depart~ents organized along territorial lines (Glavmosstroy [Main Admin-
_ istration for Housing and Civil Engineering Construction in Moscow City], Glavlenin-
gradstroy [Main Administration for Houaing, Civil Engineering and Industrial Con-
struction of the Leningrad City Executive Committee] and so forth), along sectorial
lines as well as along territorial-sectorial lines together. In a number of in-
stances, the statistical bodies recei~.?e summary reports from the ministries and de-
partments (the reporting of which is *~.ot centralized) and this significantly facil-
itates their work in summarizing the statistical data.
For obtaining information on construction acvitivies of enterprises carrying out
construction by the direct labor method, these builder enterpris~s or more precise-
ly their capital. construction sections and enterprl.ses are adopted as the report
units. This is caused by the fact that in the given instance the builder, simultan-
eously with the function of the client, carries out the function of the construction
. organization in performing the work. The direct labor method of construction, as a
consequence of the temporary nature of activity, does not create the conditions for
industrial construction. For this reason its employment is justified �or small ~
amounta of construction and installation work or in instances when it is difficult
to carry out the work by contracting organizations.
A ma~ority of the builders, regardless of the method of carrying out the work, in
the form of the OKS and UKS perform the functions of general management anc' leader-
ship of construction. These functions consiet in coordinating the activities of
the design-research and construction-installation organizations and the industrial
enterprises manufacturing equipment for the construction sites. In addition, the
builder accounts for the expenditure of capital investments for the creatiou and
acquisition of fixed capital and for putting it into operation. Thus, the builder,
in terms of the nature of the activities performed by him in the reproduc[ion of
fixed capital, acts as a report unit in the statistical study not only of capital
investments but also of construction as a national economic sector. However, the
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rvec vrri~iP?~ uaG c~ivLY
Report units in construction statistics
Design-research Contracting con-
organizations struction organiza- Builders
- tions
I
State organizations Cooperative and
public organi-
zations
Combin~.s Interkolkhoz Public
Trusts tionsia ~pSK, ~~K, organizations organizations
SSK)
I Primary construction organizations (construction admini-
~ strations, construction-installation administrations,
; installation administrations, mobile mechanized columns,
~ construction trains and so forth)
i
Design Design- Research Buildera Builders per-
institutes research organiza- using direct forming con-
- or~;aniza- tions labor method struction
tions (UKS, OKS) leadership
(organization)
functions
Fig. I.3. Composition of report units in construction
statistics
buj.lder does not submit reporting on capital inv~estments and construction separate-
ly but rather together and this is completely justified in practical terms, for ex-
= aral~le, Form No 2-ks and the appendices to it.
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In the statistics of design and research activities, the design and research organ-
izations are used as the report units when these operate with the rights of cost
accounting and work out the necessary doc~nents for construction. In practice these
are usually named institutes for designing and engineering-research organizations
(Promstroyproyekt [State Planning Institute for General Construction and Sanitary-
Engineering Planning of Industrial Enterprises], Gipromez [State All-Union Insti-
tute for the Planning of Metallurgical Plants] and others).
The composition of report units for construction statistics by types is shown in
_ Fig. I.3. The report units of each of the groups given in the diagram present
statistical reporting according to the forms and programs established for them and
s determined by the functions performed by them in construction. The composition of
construction reporting as a wliole (and for the designat~:d forms of the reports to a
certain degree also the conterit of their programs) can ue judged from the list of
basic forms of annual reporting (see Table I.l).
=i
~ All questions related to the organization of reporting (composition, periodicity,
dates of submission and so forth) are settled by the Methodology Section of the
Capital Construction Statistics Administration under the USSR Ts5U. The reporting
provided for in the list is approved by the USSR TsSU jointly with the USSR Ministry
of Finances, the USSR Gosstroy and other involved departments.
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CHAPTER II: THE STATISTICAL STUDY OF THE VO~UME, COMPOSITION AND DYNAMICS OF
CAPITAL INVESTMENTS
�1. fhe Concept and Technological Compoaition of Capital J.nvestments
In the USSR fixed capital is reproduced chiefly by capital investments. The aggre-
gate of expenditures going to create productive and nonproductive fixed capital in
the national economy is termed capital investments. Statistics studies capital in-
vestments not only as a financial category but primarily as a many-sided process of
fixed capital reproduction. Several production aectora of the national economy are
involved in this process, but it is chiefly conatruction and industry.
In terms of the nature of the expenditures included in them and their purpose, capi-
tal investnients are extremely heterogeneous. Depending upon the structure and the
specific features of the fixed capital to be created, in varying proportions capital
investments include expenditures on research, designing and construction-
installation work to erect the buildings and structures, expenditures to purchase
equipment and so forth. For this reason statist~cs should primarily describe the
production-technical or, as they say, the technological structure of the assets in-
vested into the creation of fixed capital.
A study of the technological structure of capital investments is of importance for
coordinating the capital investmen.t plans with the development plans of all the
national economic sectors, for setting the needs of construction for material,
~ labor and monetary resources, in estimating capital investment effectiveness and in
studying other problems. .
In the technological composition of capital investments, a distinction is made be-
tween the following types of expenditures.
For design and res~arch work. These include onl.y expenditures on individual design-
ing and the eiigineer and research work to build the fixed capital pro~ects and com-
plexes. Expenditures on geological pro~pecting to establish mineral resources as
well as for working out the standard plans of buildings and installations, the
projects for regional planning and development of cities and others not related to
construction are financed directly from the state budget and not from captial in-
vestments. Theoretically these expenditures should be accounted for in determining
the overall amount ~f ~eproduced f ixed capital, that is, related to the capital in-
r.
_ vestments.
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For construction work. Expenditures on this work comprise the most significant
- share of capital investments. Among construction work is all the work related to
the erection, expansion, reconstruction and restoring of buildings and installa-
tions as envisaged in the plans, for example, drilling work, the digging of founda-
tion pits, the laying of foui~dations and building walls, the installation of inetal
and reinforced concrete structural elements of buildings and installations, the
work of installing sanitary-technical equipment, the landscaping of territory and
other work.
For work to install equipment. In the installation of equipment is put the work
related to installing and assembling production, power and other equipment and pro-
duction structural elements, the bring~ng in of utilities, insulation work and so
forth.
- Work related to the installation of equipment which is a part of the buildings and
installations is not considered in the given type of capital investments.
For the acquisition of equipment requiring installation. This includes production,
power, transport and other equipment which can be put into operation only after its
assembly and attaching to supports, for example, steam turbines, electric genera-
' tors, metal-cutting equipment, textile looms, printing equipment and much else. Ex-
penditures for this equipment comprise a high proportional amount.
For the purchasing of equipment not requiring installation. In terms of the nature
of use, this equipment does not raquire assembly, attachment or other installation
work, for example, motor vehicles, internal combustion engine and battery operated
~ plant trucks, bulldozers, excavators and other types of equipment. This type of
capital investment in planning and statistical practices also makes separate pro-
vision for expenditures on equipment which is not included in the construction esti-
mates. This includes equipment for replacing worn out machines or adding to the
fleet of machines at an existing enterprise as well as the equipment which, in
accord with the adopted procedure for elaborating the plans, is not included in the
- construction estimates.
For production tools and st:pplies. This includes all types of production tools as
well as rapidly worn out and inexpensive articles expenditures on the acquisiti~n
of which are included in the capital investment volume for the construction esti-
mate.
For the purchasing af draft animals, that is, the purchasing of adult draft animals
(horses, mules and so forth) which are included as fixed capital.
~ Expenditures which do not increase the cost of fixed capital. These include expend-
itures on the training of operational personnel, forestry and land use measures, for
- totally cancelled construction and installation work ("throw-away" work) and others.
A majority of these expenditures is not involved in construction but from the
national economic viewpoint they are inevitable.
Other capital expenditures. These include expenditures on the purchasing of struc-
tures from cooperative organizations and kolkhozes, for resettlement from areas al-
located for construction, for the support of the administration and technical super-
vision and for the planting and raising of perennial crops (orchards, preserves and
so forth).
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r~ec ~rr~c,~A~ U~~: UNLY
TY:e technological composition of capi.tal investments is periodically revised in
planning and statistical practices. For example, expenditures on design and re-
search work were not included as part of ~apital investments during the period from
July 1950 through October 1959, since during the desigrLated period the activities
of the design and research organizations were financed directly from the state
budget. Up to 1950, capital investments did include expenditures on geological
prospecting as well as for forming the producing herd [of ~nimals]. The change
in the capital investment composition must be considered in ~tudying the dynamics
of its volume.
Capital expenditures on all types of works and equipment requiring installation
have come to be termed capital work while expenditures on equipment (2xcept that re-
quiring installation), production tools, supplies and draft animals are considered
capital acquisitions. In planning and statistical practices, the technological com-
position of capital investments is represented by three consolidated groups (Table
II.1). Here in the statistical reporting within the first group special provision
is made for expenditures on the installation of equipment; as part of the second
group expenditures on equipment not included in the construction estimates; in the
third group, expenditures on design and research.
Table II.1
Sixth Seventh Eighth Ninth
Types of Capital Investments Five-Year Five-Year Five-Year Five-Year
Plan Plan Plan Plan
Construction-installation work 69 65 62 60
Equipment, tools, supplies 26 29 31 32
Other capital work and expenditures 5 6 7 g
Total 100 100 100 100
Capital investments do not include expenditures on the major overhaul of fixed cap-
ital objects, although the construction organizations carry out this. This is due
to the fact that, in the first place, as a result of a major overhaul only the pre-
viously created consumer value is t~~stored and, secondly, a ma~or overhaul is car-
ried out from a certain portton oL the amortization fund which is earmarked for the
partial rebuilding of the fixed capital.
1'he data given in the table on the technological structure of USSR capital invest-
ments (in percen~) show that a predominant portion of the capital investments
(:iround two-thirds) goes to carry out construction-installation work, approximately
one-third for equipment, supplies and so forth, and here one can clearly trace a
tendency for a rise in the proportional amount of expenditures for equipment. This
- tendency means an improvement in the technological structure of capital investments
and leads to an increased proportional amount of the active part of fixed productive
capital in the national economic. sectors and, consequently, to a rise in the eco-
nomic effectiveness of capital investments.
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�2. Indicators of the ^~_pital Investment Volume
_ In studying the use of capital investments, in planning and statistics use is mad~
of a number of indicators which reflect the economic features and result of this
process, starting out with research and designing of the projects up to their com-
pletion. Among the most important of them are the indicators describing the capi-
tal investment volume, the investment structure, incomplete construction, the com-
pletion of capacity and fixed capital, the readiness of projects and construction
sites, capital investment effectiveness and o~h.Pr.s.
The capital investment volume is a generalizing indicator which in monetary terms
describes the amount of expenditures on fixed capital reproduction by capital con-
struction and for the acquisition of equipment not included in the constructian es-
timates and plans. Being a cost indicator, this is formed as the total of financial.
expenditures going for the creation and acquisition of fixed capital and, thus,
characterizes the result of using the capital investments. The economic sense of
this indicator makes it possible to successfully apply it not only in studying
fixed capital reproduction but also a nation's economic potential, the~directions,
pace and scale of the development and placement of the material and technical base
for all the national economic sectors.
- T.he capital investment volume is planned for the national economy as a whole broken
dc~.-z for the sectors, ministries, departments and so forth, down to the individual
builders. The task of statistics is to establish. the actual amounts of capital in-
vestments and in establishing control over the fulfillment of the current and long-
range capital investment plans on the various ~rganizational levels. For carrying
out this task it is essential first of all to dr~et~~.ine the actually completed cap-
ital investment volume.
As was stated above, the builders are the immediate disposers of the capital invest-
ments. Capital investment accounting is concentrated in the technical supervision
sections and the boolckeeping offices of the builders (OKS and UKS). For this reason
the builders are the primary report units in capital construction statistics and
they submit data on the completed volume of capital ~nvestments using the estab-
- lished reporting forms. Control over the ful�111ment of capital investment plans
starts with the builders.
The amount of capital investments is expressed by tha estimated cost and this is set
in the designing of the projects ar~d installations for fixed capital. For each con-
struction site, along with a plan, an estimate is drawn up and this contains infor-
mati~n on the monetary outlays for creating each individual object and the entire
pro~ect as a whole, that is, the estimated coat of the objects and the project.
Here the monetary outlays are determined for the types of capital investments in
- accord with the specific features of the fixed capital to be built or acquired.
The setting of the estimated cost of construction, installation, design and research
work is based on the methodological provisione formu].ated in the Construction Stand-
ards and Rules and is marked by labor intensiveness and complexity. A de~ailed ex-
position of ttie methodology for calculating the estimated cost of this work has been
given in the chapter on construction product of which all the above-listed work is a
component part. Here we wi11 merely point out that the estimated cost of
. , .
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construction-installation work is set by estimate rates for the expenditure of pro-
ductiun resources, by the wholesale prices and rates for transportin~ materials
put in efr'ect on 1 January 1969 considering the increased wages of construction
workers in 197U and the reduction factors for construction-installation�work as of
_ 1 Janu~,ry 1976 the ~~orrecti.ons to reduce the rates and the change in the prices
f or individual types of materials and equipment. _
The methods for deterr.:iiiing the estimated cost of production equipment differ de-
pending upon whether its acquisition is related to construction or not. Thus, the
estimated cost of equipment for projects under construction is set from the whole-
sale ind ustrial prices on 1 Janiiary 1973 considering its delivery, storage, crating
and assembly at the estimate ratea and charges for preparatory-warehousing and
transport expenditures. The cost of equipment and machines not included in the
_ construction estimates in the completed capital investment volume is accounted for
_ es adopted in drawing up the capital investment plan. To a certain
degree this marks a deviacion rule.
The estimated cost of ~?e~ign and research work is determined in the des gnin
mates on the basis of special manuals for consolidated rates which contain the
_ price lists for this work. The estimated coat of other capital work is set accord-
ing to ratas on the b a~is of the design data.
_ Capital investments are an interval indicator characterizing their volume over a
report period. The actually completed capital investment volume includes the esti-
mated cost of all cap ital work produced during the re~,ort period, the acquisitions
as well as all other capital expenditures made from capital investments. Here, from
the viewpoint o� accounting, the types of capital investments which are considered
actually completed are those which satisfy the set requirements for the state and
completeness of the corresponding work, acquisitions and expenditures and have been
formulated in approved documents of internal project accounting regardless of the
level of completeness of the projects under construction.
_ The heterogeniety of the technological composition of capital investments predeter-
mines the use of various methods for calculating the types of capital investments.
These _~-:damental provisions are given in the Construction Standards and Principles
and in the capital construction fiuancing rules. ~
'ftlc~ principles of incorporating the cost of construction product in the~completed
capital investment volume are correlated to the adopted payment systems between the
_ builders and executors and, in particular, with payments for the finished project
and work ~tage without intermediate payments. The builder considers as completed
capiral investments the cost of only that construction-installation work which re-
l,~~es t~ completed pro~cc~s and work stages as formulated in the proper documents.
:;~.~cti oEf icial documencs f.or a complete pro~ect ie the statement of Form No 2 and
tfie statement of Foi~~i No 2a for a completed construction stage. In addition, as an
exc~_ption the completed capital investment volume may include the value of work
wltere the volume, nature and methods of executing this work become clear only in
the course of construction. In these instances the work is accepted by the clients
according to the percentage of technical completeness (the statement of Form No 2b)
and Eor completed structural elements and consolidated types of work (the statement
oi F'orm No 2c). With nonthly payments in these instances the information of Form
tio 3 is employed .
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The changeover to the new for_n of payments has led to certain complications and dis-
ruptions in the unif orm methodology for calculating actually completed capital in-
_ vestments. In the first place, for the construction organizations trere was a
sharp rise in the volume of incomplete construction work, that is, work on projects
- and work stages that were incomplete and not turned over to the client and thus
kept on the balance sheets for the basic operations of the organizations. Naturally
this amount of work could not help but be reflected in the capital investments.
Secondly, in payments for completed pro~ects and work stages a significant port.ion
of them could have been completed not in the report but rather in the preceding
periods. With the turning over of completed projects and work stages to the build-
ers the statements would show their full cost regardless of when they had been
started.
As a consequence of what has been described, in determining the volume of the actu-
ally made capital investments a number of troublesome methodological questions arise.
For example, is it necessary or in what manner is it possible to account for incom-
plete production ~aithin the volume of capital investments. Should the completed
amount of capital investments include the work Uone on completed pro~ects, stages or
~ of work. at the full estimated cost or for the portion of the cost of the work
done only in t e rt~,~ ~ forth. The solution to these questions de-
pends upon the economic tasks in study~_ng capital ii~v~~~W~.. . osition
of the national economy the economic sense of an indicator describing the full vo -
ume of used capital investments demands that this be calculated as the total of all
monetary outlays made in the report peciod by the builder in reproducing the f i~:ed
capital. In terms of the construction industry this means that the capital invest-
ment volume should take into consideration the value of the work done only in the
report period for all projects regardless of the lEVel of their completeness. In
accord with this principle it is possible to determine the capital investment vol-
- ume since each month the builders receive informaeion from the contracting organi-
zations on the amount ot- work carried out in the report period for all incomplete
projects {the information of Form No 3) .
However, in capital investment planning, as a consequence of a number of circum-
stances incomplete work is not always taken into account. It may algo happen that
a capital investment plan considers the full cost of the work on pro~ects, stages
and groups of work to be completed in the report periosi. These and other questions
in statistical practice are resolved depending upon the planning procedure em-
ployed in the reporting organization, n:mely: the actually completed capital in-
vestment volume is determined using the same methodology as the planning indicator.
For example, if incomplete construction work was included in the capital investment
volume under the plan, then it should also be considered in the actual capital in-
vestment volume.
Such a solution to the question cannot be viewed as successful, since, in the first
place, it takes into account only the conditions of comparability between the actual
and plannecl capital investment indicators; secondly, there is no correlar.ion to the
acceptance of incomp.l_ete production by the client and this disrupts the methodolog-
ical unity.
In carrying out constructlon by the direct labor method, the completed capital in-
vestment volume also includes the work according to the estimated value and in the
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same procedure as with the contracting method, only these calculations are made by
the builder or its OKS and UKS.
The carrying out of capit al investments for installation work is accounted for with
. certain deviations from t h e general rules. The estimated cost of work related to
the installation of equipment is included in the completed capital investment volume
if~the installation of ma chine tools, machinery, units and so forth has been com-
pleted and formally accep ted. With the installation of large units and machines,
for example the turbines or boilers at GRES or rolling mills, the estimated cost of
the work related to installing parts of the units which have been formally accepted
by the appropriate statements is accounted for in the completed capital investment
volume.
Design and research work is accounted for in the capital investment volume accord-
ing to a methodology anal ogous to the one examined for construction-installation
work. In instances when payments with builders are made for completed plans for
projects or work stages, the statement of Form No 4 is used as the basis for includ-
ing their value in the cap ital investment volume. Information on the value of de-
sign and research work re lating to incomplete pro~ects and stages is submitted by
the executor to the builder in the information of Form No 3.
The estimate cos u ring installation is accounted for in the com-
pleted capital investment volume under the condition t at ~ o ,
been installed. The actual fact of the beginning or completion of installation is
established by any accept ance document or by the inventorying of installation work.
_ The estimated cost of equ ipment not requiring installation as well as tools and sup-
plies are accounted for in the completed capital investment volume after they have
been delivered to their d estination, usually to the construction site, and after
_ they have been accepted by the builder's bookkeeping office, that is, with the
presence of a statement, bill or invoice on the acceptance of the given equipment.
The official documents dr awn up in the established order (statements, lists, bills
- and so forth) are the gro unds for including other capital work and expenditures in
the completed capital investment volume.
llepending upon the nature of fixed capital reproduction, the volume of capital in-
vestments can be determin ed, in the first place, as an indicator describing the
capital i.nvestment volume to be carried out through construction; secondly, as an
inclicator describing the capital investment volume for the purchase of completed
fixed capital without the involvement of construction; in still other instances, as
~ the total capital investment volume for the creation and acquisition of fixed capi-
tal.
I.e~ us give an example wh ich illustrates the methodology of calculating the capital
investment volume. 1.et u s assume that during the report year a capital investment
plan has been established for a machine building plant totaling 1.58 million rubles
and the volume of constru ction-installation work is to be included only for the
projects completed durin g this year for their full cost. Over the report year the
plant`s OKS has made the following capital expenditures (Table II.2).
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Table II.2
Estimated
Name of Capital Work, Acquisitions and Expenditures Name of cost,
Documents 1,000
rubles
I. For plant reconstruction and expansion
1. Construction-installation work for erecting Statement
building of machine shop (second stage) No 2a 1,450
Including work carried out in report year 380
2. 12 DS-2 machine tools accepted by warehouse for Acceptance
installation statement 36
3. Work of installing 12 DS-2 machine tools Statement
~ of incom-
plete in-
stallation 1.8
4. Construction-installation work carried out in Information
report year for incomplete projects and stages of Form
No 3 280
5. Expenditures on the training of operational
personnel Bill 1.6
II.~A~quisitioc _ es outside con-
struction estimates
1. 14 battery operated trucks accepted by warehouse Invoice 7.8
2. 3 trucks accepted by garage Acceptance
statement 24.4
3. Equipment and supplies acquired for nursery
(under Article 12 of the budget) Bill 5.2
_ III. Designing of reconstructed shop Statement
No 4 88
IV. Major overhaul on main plant building Statement
No 2 164
_ The total volume of capital investments as the total value of all the capital work
actually carried out in the report period, the purchases and other capital expendi-
tures will be:
380+36+1.8+280+1.6+7.8+24.4+p8 = 819,600 rubles.
The actually completed capital investment volume in terms of the planning procedure
adopted by the builder as a whole equals:
1,450+36+1.6+38 = 1,607,800 rubles,
while the percentage of the capital investment plan fulfillment will be, respective-
ly:
1,607.8 � 100 = 101.76;
1,580
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the volume of capital investments to be made by capital construction equals:
1,450 + 36 + 1.6 + 88 = 1, 575,600 rubles;
the volume of capital investments to be made by purchasing outside the construction
estimates equals:
7.8 + 24.4 = 32,200 rubles.
- According to the established planning procedures the capital investment volume does
not account for a number of expenditures also made for the acquisition and creation
of fixed capital but paid for out of other financing sources. These include ex-
penditures on the acquisition of equipment and supplies by state institutions under
Article 12 of the budget classification, for the planting of forests and.shelter
belts, for the forming of the basic livestock herd, ma~or overhauls and certain
others. As a consequence of what has been stated above, the need arises to define
the volume of all outlays on the reproduction of fixed capital, that iG, the plan-
ned capital investments plus the expenditures not reflected in the capital invest-
ment plan. Thus, in the USSR, over the period from 1918 through 1978, the capital
investment volume was 1,833,400,000,000 rubles, and considering all expenditures on
fixed capital reproduction, 2,023,000,000,000 rubles. Around 10 percent of all ex-
penditures on fixed capital is for outlays not accounted for as part of capital in-
vestments.
In the given example (see Table II.2), the actual amount of expenditures on fixed
,...Y' __t financin sources was: 1,607.8+5.2+164 = 1,777,Q00
rubles. ~
�3. Basic Groupings in Capital Investment Statistics
The groupxng method assumes important significance in studying many questions of
capital investment statistics and pr.imarily in aggregating the builders' data and
in assessing the fulfillment of capital investment plans. The capital investment
groupings make it possible to gain a notion of the diversity of the fixed capital
reproduction process, to detect the formed and insipient forms of this process, to
describe the structure of the studied object using features expressing the qualita-
tive Ce:itures oE fi:ted capital repr.oduction under the conditions of the socialist
ma~iagement of the economy as we11 as carry out other tasks of economics and statis-
t ics .
L,et us examine tlic basic ~;roupings employed in summarizing, in planning and super-
vising the fulEillment of capital investment plans. From the national economic
5!~~ndpoint among the mc~st imE~ortant are the capital investment groupings by eco-
nom:c purpose, national economic sectors and then for subsectors and types of pro-
ciuc[ion, for ttie direction, forms of ownership, for the financing sources and for
_ other features. For a correct understanding of each type of grouping it is essen-
tial to disclose its purpose, the essence of the grouping features, the nature of
the aggregate and the methodological features of the groupings.
- OE great interest in studying the economic development of a nation and the conform-
ity ut this developme~~t ro the economic and political tasks posed in the given
p~~riod is a clas5ific,~~tiun uC the capital investments. This is a sort of complex
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grouping formed according to several economic features: according to the spheres
and aectors of the national economy, the subaectors, types of production and activ-
ity. In terms of the national economic spheres, two groups are formed: capital
investments into production-end projects and capital investments into nonproduction
_ pro~ects. Among the production-end pro~ects are those which are involved in creat-
ing any products and production services, for example, power plants, mines, rail-
roads and so forth. The nonproduction pro~ects are destined for serving state in-
stitutions and public organizations, the cultural, educational and other needs of
the public, for example, housing, schools, theaters, hospitals and so forth.
Capital investments into the production and nonproduction spheres of the national
economy are in turn allocated over the national economic sectors. In the first in-
stance these are industry, agriculture, transportation and other sectors, and in
the second instance these are housing construction, municipal construction and other
sectors. Subsequently the capital investments of each national economic sector are
distributed in terms of types of production and activity.
The designated complex capital investment grouping has been organized in accord with
the national classifier of national economic sectors as approved in 1972. Its ap-
plication has made it possible to superviae the observance of correct proportions in
national economic development and enaure the more rapiu development of the leading
production sectors and the systematic rise in the material and cultural level of
- the workers.
The allocating of capital investments over the sectors of their classification is
ordinarily carried out in the process of summarizing the stati~tical data. Here
not the capital expenditures and not the builders are subjected to grouping but
rat er t e aggre . the re ort of Form No
2-ks the information can be found for the construction projects as required or
this grouping. In instances when the construction project consists of a number of
installations which differ in terms of economic purpose ~r sectorial affiliation,
these are classified in one or another sector or group according to the predominant
nurpcse o: the o:~~~a~~ 2s a whote
From what has been stated it follows that a construction site is a consolidated unit
of an aggregate which in the grouping will lead to an inaccurate allocation of the
capital investments in terms of sectorial purpose. For this reason in the given
capital investment grouping it is advisable to use an individual construction proj-
ect as a unit of the aggregate. However, the appropriate data cannot be found in
the reporting and they can be gained from the accounting carried out by the build-
ers. In order to fill out this grouping, it is essential to formulate precise sta-
tistical concepta of the construction site and the construction project. By the
construction site in planning and statistical practices one understands the aggre-
gate of construction pro~ects the erection, expansion and reconstruction of which
_ are carried oue according to a single plan and estimate. For example, construction
sites include the construction of a power plant, plant, mine, sanitorium and so
forth. A construction project is considered to be a separate standing building or
installation with all related equipment, additions, utilities for the erection of
which a plan and estimate have been drawn up.
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Also known in the practice of a statistical summary is a grouping of capital invest-
ments by the areas of fixed capital reproduction, and as a consequence of this it
is also termed a reproduction grouping. In terms of purpose, all capitai invest-
ments are divided into the following groups: New construction, expansion, recon-
~ struction, technical reequipping of operating enterprises and the maintaining of ex-
isting capacity.
The erection of buildings, -Lnstallations, enterprises and so forth is considered to
be new construction (a new construction site) when this is carried out at new con-
struction sites according to the initially approved plans, for example, :~aw mines,
power plants, plants and so forth. The expansion of operating enterprises means
the building of new shops, installations, stages and so forth at operating enter-
prises, for example, a new assembly shop at a motor vehicle plant. The reconstruc-
- tion of operating enterprises is the partial or complete reorganization of enter-
prises, for example, the reequipping of a foundry for employing new piece-casting
technology. The technical reequipping of operating enterprises includes the carry-
ing out of a range of technical measur~s provided for by the technical development
plan for introducing new equipment, for mechanizing and automating existing produc-
tion as well as for replacing old worn out equipment with new, more productive and
economic equipment. The maintaining of capacity at operating enterprises includes
measures to replace fixed capital which has been withdrawn as a consequence of com-
plete wearing out and decrepitness. In this grouping the construction site must be
cunsidered as the unit of the aggregate and this facilitates the summarizing of
capital investments using the reporting data.
In the various historical stages of the nation's development, the party and govern-
ment have given varying significance to one or another area of capital investments.
At the present stage of our nation's economic development, a large portion of the
capital iuve5~~:~C~ ~ echnical reequipping of
- existing enterprises thereby making it possible to obtain the greatest economic
effect with the same expenditures.
' u�der ~c,.uitions ~f a ~ocialist state, the grouping of capital investments by
forms of ownership is of important significance. According to this principle, a
distinrtion is made between the capital investments of the state enterprises and
organi-r.ations, rhe cooperative and public organizations and by the public for in-
~l.ividual construction. 'rhis grouping is made by the data of the builders which
le~ally represent one or another form of ownership.
The gro �ping of capital investments by financing sources is of importance for de-
scribin~; not only the sources for the formation of assets for capital investments
Lut :ilso in studyinK their reproduction structure by formation sources and the role
nt natLonal income and the amortization fund in fixed capital reproduction. Among
ttie basic sources of assets fr~r capital investments are: funds from the state bud-
~;et (the centralized source) and various noncentralized financing sources (the
Eunds of enterprises and the amortization fund). In addition to these groupings,
dat,i on capital investments ar.e summarized in a territorial breakdown (for the re-
pt~blics, oblasts and so forth), in terms of subordination (to the ministries, de-
partments) and by forms of subordination (Union, Union republic, republic).
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�4. Methods of Studying the Dynamics of the Capital Investment Volume
For studying changes in the capital inveatment volume over time or space, statis-
tics employs the index method. The aggregate formula for the index of the capital
investment volume has the following form:
~Qlpcm
I =
EQpPcm ~
where q~ and ql--capital work and purchases in physical units, respectively, in the
base and report period;
- p~m -estimate prices taken for comparison.
The observance of comparability of the compared levels is a fundamental methodolog-
ical question for constructing the time series and for calculating the index of the
capital investment volume. This is achieved by meeting two basic requirements: in
the first place, the composition of capital investments in terms of the types of
compared periods should be the same; secondly, the capital investments of the com-
pared periods should be expressed in the same (comparable) estimate prices.
In order to bring the composition of capital investments to a comparable form, one
should proceed in the following manner. From the capital investment volume of the
preceding period (periods), those types of investments are excluded which accord-
ing to the adopted planning procedures are not entered as part of them for the re-
port date. Conversely, to the capital investment volume of the previous period
(periods) one should add those types of investments which according to the adopted
planning procedure are part of the capital investments on the report date but were
not considered as part of them in the previous period (periods). In instances when
the necessary information is not available, only those capital investment elements
. ~ ~ . ~he compared capital investment
volumes.
- For reducing the capital investment volumes to a comparable form from the viewpoint
of prices it is essential to recalculate them in estimated prices adopted for the
comparison. In statistical practices the capital inv~stment volumes are recalcu-
lated by estimated price indexes (previously these were called conversion factors)
which ordinarily are set for the basic types of capital investments, including:
construction-installation work, equi.pment which does and does not require installa-
tion and design-research work. The c~stimated price index is calculated from the
formula of the aggregate index:
EQ1Pcm1
Iy - ~qiP~mo ~
where p~ml and p~m0--new and previous estimated prices.
The price index is ordinarily determined for the year preceding the year the new
_ estimated prices come into effect, and for this information on capital investments
in the ol.d and new estimated prices is given in Form No 2-ks or a special form.
Using these data, the price indexes are calculated for the types of capital invest-
ments broken down for the ministries, republics and so forth. In statistical
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practices the recalculating of the capital investments in estimated prices used for
the comparison is frequently done by multiplying the volume of the given type of
capital investments by the appropriate estimated price index. T~eoretically, such a
calculation is not beyond reproach as the requirements of inethodological compara-
. bility are violated. But the use of other procedures leads to even greater condi-
_ tionality.
It is possible to calculate the index of the capital investment volume directly us-
ing the above-given formula without any adjustments and constraints over a period
of time that the same estimated prices are in effect and under conditions of a
stable composition of capital investments according to the adopted planning pro-
cedure. For calculating the index of the capital investment volume when either
changes do occur, it is essential: in the first place, to bring the technological
composition of the capital investments to a comparable form; secondly, to establish
the estimated price indexes for each type of capital investments; thirdly, using the
estimated price indexes to recalculate the capital investment volume for a compar-
able composition in estimated prices adopted for the comparison; fourthly, using the
above-given formul.a to calculate the index of the capital investment volume.
During the 1960's and 1970's, the composition of capital investmenrs was not changed
- and for this reason the methodology for calculating the indexes of the capital in-
vestment volume was simplified. However, during these years there were repeated
general or partial changes in the estimated prices and this somewhat complicated
the calculating of ~he indexes and a comparison of the time series for the capital
investment volume. In these instances, the capital investment volumes in estimated
pricPS adopted for the comparison (usually current prices) are recalculated by the
chain method, that is, according to the formula:
QP~ = Qpo � Ip1 � Ip2...,
wliere Q~~--the capital investment volume of the base period recalculated in com-
parable estimated prices;
~lp~--the capital lnvestment volume of the base period in estimated prices of
- this period;
IP1, f~,~, ...--estimated price indexes for the corresponding time segments of the
overall period.
Tat~le 1I.3 gives an example illustrating the methodology for calculating the index
of the capital investment voltune using data for one of the RSFSR oblasts.
The volume of capital investments (col. 7) was established by multiplying the data
c~f ~�c~ls. 4, 5 and 6. The tndex of. the capital investment volume in 1978, in com-
p~~ris~~n Wlt}1 1953, wilt be: 52~3-14 � 100 = 489%. Since there are no data on the
105.1
expenditures for research and design in 1953, for the observir.g of comparability
expendi.tures on this work liave been excluded from the capital investment volume.
In addition to the designated demands which ensure compatibility of the capital in-
vestment volumes, in constructing time series and calculating the indexes it is es-
sential to clarify the limits of the studied aggregate (the number and composition
of builders in a ministry, department, rayon and so forth).
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Table II.3
Capital in- Capital invest- Estimated Capital
vestments in ments for 1953 in price in- investments
Technological compositicn 1978 in es- ~950 estimated dex in for 1973 in
of capital investments timated__1969 prices, million portions 1969 esti-
. prices, rubles of a unit mated prices,
~ million million
rubles rubles
for 1953 for com- 1955 1969
composi- pared 1950 1955 ~col. 4 x
- tion composi- col. 5 x
tion col. 6)
1 2 3 4 5 6 7
1. Construction-installation ~
work 322 62 62 1.02 0.96 60.7
2. Equipment, tools and
supplies 180 40 40 1.04 1.02 42.4
3. Geological prospecting 4
- 4. Design-research work 14
5. Other capital work and
expenditures 12 2 2 1.0 1.0 2.0
Total capital investments 528 108 102 105.1
In statistical practices, for characterizing the developmental intensity of the cap-
ital investment time szries, frequently the average absolute increase, the average
increase rate and increment are determined. Usually the average absolute increase
is calculated for the formula of the arithmetic average and the average growth rate
for the formula of the geometric average. However statistical theory does not con-
sider these indicators universal. In particular, the designated me;:hod for calcu-
_ lating the average indicators for a time series ie related solely to the growth rate
which is common to the entire period and this is determined by the ratio of just
the beginning and end levels of the series and doea not depend upon the intermedi-
ate levels of the series while the total calculated levels of the time series does
not equal the total of its actual levels.
At the same time, in studying capital investment dynamics, very often one encounters
the problem of determtning the average absolute increase, the average growth rate
and average increase rate which would be related to the overall caj~l`al investment
volume during the period limiting the time series. For example, in a five-year plan
it ts imp~~rtant to monitor not only the fulf illment of the plan over the years but
alsu the annual growth rates of capital investmEnts and their absolute increase in
order to see what indicators have been achieved and what ones must exist for the use
of capital investments to carry out the five-year plan as a whole.
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- For calculating the average absolute increase of capital investments (G) which
would satisfy the above-advanced condition, theory recommends the following
formula:l
, n
2 ~ Yi-nY0
i=1 ~1~
G n(n+l) '
n
where ~ yi--the total of all the terms for the levels of the time series with the
i=1 exception of the base one;
y~--the base (initial) level of the time series;
n--the number of terms in the series with the exception of the initial
(base) level.
Statistical theory recocmnends that the average growth rate satisfying the above-
advanced condition be defined as the parabolic average which is the positive root
of a n-order polynomial:
n
G Yi
T+T2+...+Tn = i~l ~
y0
- where T--average parabolic growth rate.
It is possible to cetermine the sought root of this equation only by approximate
methods.2
Let us give an example which illustrates the calculation for indicators showing the
average rate and intensity of change in the time series for the volume of Soviet
capital investments in the Ninth Five-Year Plan. According 'o the plan, the Soviet
capital investment volume for the Ninth Five-Year Plan was to be a total of 501
billion rubles. In actual terms over the years of the five-year plan, capital in-
vestments were allocated in the following manner (billion rubles):3
1970 1971 1972 1973 1974 1975
n
~Yp) ~Y1) ~Y2) ~Yg) ~Yq) ~ys) ~ Yi
i=1
- 82 ~38.0 94.3 98.7 105.7 114.9 ~01.6
1See: L. S. Kazinets, "Tempy rosta i absolyutnyye prirosty" [Growth Rates and
Absolute Increases], Moscow, Statistika, 1975, p 84.
zlbid., pp 104, 105.
3See: "Narodnoye khozyaystvo SSSR v 1975 g." [The Soviet National Economy in 1975],
Moscow, Statistika, 1976, p 502.
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Let us calculate the average absolute increase and the growth rate of capital in-
vestments as correlated to the overall absolute increase and growth rate for the S-
year period:
GaP _ ynnyo _ 114.5-82 _ 6.58 (billion rubles);
- Tg = n yn = 5 1 829 = 1.0698.
yo
It is easy to check that ys = 82 � 1.06985 = 114.9 billion rubles and the total of
the calculated levels for these data over the five-year plan will be 508.7 billion
rubles and this is 7.1 billion rubles more than the actually used capital invest-
ments. However, in studying the dynamics and the fulfillment of the capital invest-
ment plan much more often in practice the task is set of determining these same in-
dicators but correlated to the overall capital investment volume for the five-year
plan. Let us calculate the average annual absolute increase of capital investments
. over the Ninth Five-Year Plan:
according to plan GP,~ = 2~505�6�82> 30 - 6.067 billion rubles;
actual Gf = 2~501.6-5�82) _ 183.2 _ 6.107 billion rubles,
5� 6 30
that is, the actual average annual increase in capital investments during the Ninth
Five-Year Plan was above the planned.
Let us determine with these same conditions the average growth rate of capital in-
vestments. We have according to the plan T+ T2 + T3 + T4 + T5 = 501/82 = 6.1098.
Hence, using the table of average parabolic rates for n= 5 given in the book of
L. S. Kazinets, T= 1.067.
In actual terms
T+T2+T3+T4+T5 = 5826 = 6.117,
hence T= 1.068, that is, above that envisaged in the plan.
Let us check the conformity of the average growth rate to the capital investments
volume for the five-year plan and for this we determine the calculated levels of
the series and add them up. We have: 87.576 + 93.531 + 99.891 + 106.084 + 113.938
= 501.62 billion rubles, that is, the error is 0.02 billion rubles, or 0.004 per-
cent.
Let us formulate the problem differently. The capital investment volume carried
out over the first 3 years of the Ninth Five-Year Plan was 281 billion rubles.
What average annual increase and growth rate of capital investments must be ensured
during the last 2 years of the five-year plan in order to carry out the 5-year plan?
The capital investment volume over the last 2 years will be 220 billion'rubles (501
- 281). The average annual absolute increase will be:
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GaP _ 2(22022398.7) _ ~,533 billion rubles,
while the average annual growth rate will be
T+ T2 = 98 2. 229,
- hence T= 1.074, that is, 107.4 percent. This means that for carrying out the five-
year capital investment plan, during the remaining 2 years, the average annual
growth rate must be increased by 0.7 percent in comparison with the planned.
/
As a consequence of the fact that the fulfillment of the capital investment plan
for the five-year plan as a whole and not the achieving of a set level for its last
year is of the greatest importance for the national economy, the designated method-
ology for calculating the average indicators of the time series assumes predominant
significance for studying the dynamics and fulfillment of the capital invest~?ent
plan. In instances when the intermediate levels of the series are of no importance
in analyzing cap ital investment dynamics and the achieving of the end level, on the
contrary, is seen as the ~hief condition of the economic problem, the indicators
- for the average absolute increase and growth rate must b~ figured, respectively,
using the formula for the arithmetic average and for the geometric average.
~5. Incomplete Construction and Its Composition
The enormous, ever-growing scale of capital construction requires significant and
annually increasing capital investments. Under the conditions of a protracted con-
struction cycle, in the country's national economy a large number of incomplete
- buildings, installations, production capacity and other fixed capital objects is
formed. The aggregate of incomplete and not operating projects and construction
sites in planning, accounting and statistical practices is termed incomplete con-
struction. The task for statistics is to work out the indicators describing the
absolute amount of incomplete construction, its relative level and the conformity
uE the actual absolute and relative amour_ts of incomplete construction to the es-
tablis}ied plans and standards, to study ttie composition of incomplete construction
and ~o cietect and pr.event the scattering of capital investments.
Incomplete constructio~i is among the momentary indicators, that is, its absolute
amount is determined as of a certain date, usually at the beginning (end) of a re-
- port period. The volume of incomplete construction can be expressed in physical
and monetary units.
1'tie accounting for incomplete construction in physical terms is carried out in vari-
ous units of ineasurement the choice of which is determined by the aims and tasks of
research. In form they are analogous to the units employed for describing the com-
pl.etion of pro,jects. Por general purposes the voli:me of incomplete construction is
ct~aracterize~l by the ilumber of sites or projects as of the end (start) of a report
period. However, the significant conditionality of this measurement narrows the
limits oE its use. Information on the number of incomplete projects and sites is
given in the reports in Form No 2-ks at the beginning and end of the report year
and in the appendices to it.
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' The amount of incomplete construction is also expressed in units of production
capacity, volume capacity or the dimensions of the buildings and structures under
construction. For example, for industrial enterprises under construction this is
expressed by the annual product output, for railroads and highways by their length,
for housing by the total and net living area and so forth. The use of such phy~icgl
measurements f~r summary indicators is restricted to structures of the same type.
In statistical and planning practices the most widespread is the indicator of incom-
plete construction in monetary terms, as this makes it possible to generalize data
on any organizational and territorial level regardless of.the degree of complete-
ness of the projects. Incomplete construction in monetary terms is the actually
used capital investments for construction projects which have been commenced but
have not been completed to any degree or are in operation as of a certain date.
usually in practice this cost indicator is simply termed incomplete construction.
- It characterizes only the capital investments into fixed capital created as a result
of construction and does not encompass the expenditures on equipment outside of the
construction estimates.
Incomplete construction can be expressed both in terms of estimated and actual cost
for the builder. The latter estimate is established from bookkeeping data and dif-
fers from the estimated by the amount of expenditures (compensation and benefits
above the estimated cost) which are formed because of changes in wholesale prices,
wage rates and other circumstances not accounted for in the estimate.
Incomplete construction is determined primarily at the lowest element of a sector,
the builder. However, the information contained in the builder's accounting on in-
complete construction is not sufficient to establish its full volume. Because of
the new forms of payment, the builder's accounting reflects only the portion of con-
struction product represented by the value of the construction-installation work on
work stages which have been completed and turned over to the clients. The remain-
ing portion of the construction product, that is, the amount of work on incomplete
projects, stages and groups of work, is shown in the accounting of the conr.racting
construction organizations. Consequently, the full amount of incomplete cc~nstruc-
tion can be obtained by adding up the two components: 1) the volume of capital in-
vestments accounted for by the builder for incomplete pro~ects as of the report
date, and 2) the amount of incomplete construction work accounted for on the balance
sheet for basic operations of the contracting organizations as of the same date.
The contracting organizations submit information on incomplete construction work to
the builders each month in the statement of Form No 3.
In planning and statistical practicea, an indicator is employed which describes the
relative level of incomplete construction:
incomplete production at end of period U
UDT volume of capital investments for period K'
In this indicator, incomplete construction and capital investments are accounted
for in the same prices, that is, according to the estimated cost or accordi:~g to
the actual cost for the builder. The relative level of incomplete construction is
of no use determining for an individual construction site and particularly for a
project. It gains economic importance only in assessing an aggregate of construc-
tion sites for builders (sector, department and so forth). In the dynamic
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_ comparisons it is es5ential to consider the dependence of the indicator upon the
size of the period for which the capital investments have been taken. Wich an in-
- crease in this period the ind icator declines while with a shortening of the period
its a:aount rises. In practice most often incomplete construction is compared with
the annual volume of capital investments.
Table II.4
Indicators 1975 1976 1977
1. Capital investments for year, billion rubles 102.3 105.1 108.7
_ 2. Incomplete construction at year's end, billion
rubles 76.7 84.1 92.4
3. Relative level of incomplete construction
- (].ine 2:line 1), % 75 80 85
In Table II.4, from an example of hypothetical. data on capital investments and in-
complete construction, the r esult has been shown of calculating the relaLiv~ level
of. incomplete construction,
Incomplete construction represents an aggregate of diverse projects and sites which
ha~~e not been compler.ed for various reasons. For this reason a study of the compo-
sition of incomplete construc tion is an independent task for statistics. By group-
ing the projects, sites and b uilders it is possible to investigate the incomplete
construction structure and disclose actual disruptions of the normal course of con-
struction, the scattering of capital investments and other particular features of
their use. The composition of incomplete construction can also be studied from the
previously examined capital investment groupings (see �3, Chapter II). In addi-
tion, statistics *_�ecommends g rouping them according to features showing the varying
state of the construction projects and sites.
In terms of the staee of prod uction activities at the projects and sites the latter
can be distributed into tlie following groups:
Projects under construction which encompass pro~ects or sites where construction is
unclerwriy. '1'his group also includes the pr.ojects which have been put into operation
but the acceptance statement has not been drawn up;
Temporarily halted cot:struction. Thi.s includes projects and sites where construc-
tion and installatio~i work fias been tialted temporarily upon instructions of the de-
p;~rtments and construction organizatlons;
~i~~thballed construction is comprised of projects and sites where construction has
been halted and f inanctng cea sed f or an indeterminate time upon a ruling of the
ministries, the USSR Council of MinisCers or the Unior. republics and the projects
have been mothballed;
Cot~~lly halted con5tr.uction i s comprised of pro~ectr, rhe further erection ~f which
is con~idered ill-advised for various reasons and all the expenditures made for
tt~ese projects upon a decision of the departments are to be written off and are net
losses for the natio? al economy.
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Of the above examine~3 groups of incomplete construction, only the first one de-
scribes a normal state in capital construction. The preser~ce of the last three
groups within incomplete construction shows serious shortcomings in planning and de-
signing.
In terms of the time for commencing construction, the aggregate of projects or sites
is distributed into two groups: a) carryover from previous years, b) newly started
in the given year. An analogous grouping of incomplete construction is made in
terms of the time of completing construction and this also is comprised of two
- groups: a) nearly completed projECts, that is, projects which are to be put in op-
eration in the report year, b) construction of projects which is to be carried over
to the following year. This grouping is employed in planning capital construction
and in studying the supply of the sites with material and labor resources as well as
financing. The composition of incomplete construction is further studied in terms
of the length of construction, in terms of the degree of completeness and other
featurs characterizing particular questions in the process of utilizing the capital
investments. .
Statistical information on incomplete construction is found in two basic sources:
reporting and censuses. The statistical reporting on capital investments four~d in
Form No 2-ks with the appendices to it in their annual version is a stable source
of data. The program for this reporting provides information on the volume of in-
complete construction in monetary terms broken down for the technological composi-
tion of capital investments and in physical terms for the individual groups charac-
terizing the state of the projects and sites. Prior to 1968, in the aim of obtain-
ing the data necessary for long-range planning, the USSR TsSU periodically carried
out specially organized surveys (censuses) for incomplete construction in following
very extensive programs.
~6. A Statistical Study of Plan Fulfillment, the Dynamics and State of Incomplete
Construction ~
- A task for statistical study of incomplete construction is a description of the
conformity of its actual volume to the level set by the plan or norm. In the work-
ing out of capital investment pla.ns by the departments, the volume of incomplete
construction is set as an obligatory indicator and in practice this is called the
production backlog. The volume and composition of the backlog are determined by
the procedure set in the plan on the basis of standards which ensure the completion
of the f ixed capital at the dates stipulated by the plan. Here capital investments
by the builder for the acquisition of equipment and machinery which are not part of
the site estimates are not considered nor are the expenditures that do not increase
the value of the fixed capital. The planned volume of incomplete construction also
does not include expenditures on pro~ects the erection of which has been temporarily
or permanently halted or mothballed or those put into operation but without the
proper documents drawn up.
The above-examined planning features should be considered in assessing plan fulfill-
ment for incomplete construction and this can be characterized by a relative indi-
cator, the index and absolute ratio of the planned vo].ume, that is:
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rvK vrr~~.~Hi, t~JC, v~vLY
~qlPcm
I=~ and Du = Eq1Pcm- EQp.2Pcm~
qp~Pcm
where q and qP~--capital work and acquisitions in physical units according to
projects accounted for in incomplete construction on the report
date actually and by the plan;
p~m -estimated prices.
The plan fulfillment indicators for incomplete constru~tion can be calculated with-
out corrections for its actual volume and with adjustments of its amount in accord
with the adopted planning procedure. In the first instance the indicator will re-
flect the influence of all the factors shaping the actual level of incomplete con-
struction on the deviation from the planned. In the second instance, when the actu-
al volume of incomplete construction is brought into accord with the adopted plan-
ning conditions (in terms of the composition of the projects and expenditures on
them), its deviation from the planned volume will reflect the degree of conformity
to the production backlog and thereby the support for the pr~grams to complete
- capacity and fixed capital in the following report period. The specific interpreta-
tion of the plan fulf illment results in terms of incomplete construction is such
that the overfulfillment of the plan, like its nonfulfillment, is considered a vio-
" lation of planning and production discipline. In observing the established tech-
nology, the rational organization and rates of construction duration and with cor-
rect planning of the capital investment volume, the actual volume of incomplete con-
struction should correspond to the planned backlog. '
Let us give an example. Let us assume that for an oblast at the end of a report
_ year the incomplete construction according to the plan is 228 million rubles (accord-
ing to the estimated cost). Actually this indicator according to the data of Form
No 2-ks on th~ same date reached 263.5 million rubles, including 17.3 million
rubles for ten.porarily halted and mothballed construction, 2.4 million rubles for
permanently halted construction and 16.7 million rubles for operable projects the
- completion of which has not been formalized. It is known that the expenditures
which do not increase the value of fixed capital for the projects under construc-
tion on the report date equal 1.2 million rubles.
The percentage of plan fulfillment for incomplete construction without correcting
its actual volume eguals: 263.5 , 100 = 115.6, that is, the production backlog was
_ 228.0
exceeded by 15.6 per~ent or by 35.5 million rubles.
7'I~~~ percentage ot- plan fulfillment for incomplete construction in accord with the
aclopted planning procedure equals:
263. 5-(17 . 3+ 2. 4+ 16. 7+ 1. 2) , 100 = 225' 9� 100 = 99.1,
_ 228 228
that is, the planned backlog for the end of the report year actually was not
achieved.
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The significant discrepancy between the first and second indicators for plan fulfill-
ment points to the presence within incomplete construction of expenditures not re-
lated to the formation of a normal production backlog. The absolute amount of eco-
- nomically unjustif ied capital investments into incomplete construction is determined
by the total expenditures not caused by production necessity, for example, expendi-
tures on projects the construction of which has been temporarily or permanently
halted, mothballed and so forth. In our example this amount is: 17.3 + 2.4 + 16.7 +
1.2 = 37.6 million rubles, or 14.2 percent (37.6:263.5). The difference of 100 -
14.2 = 85.8 percent characterizes the share of the production backlog which had
actually formed by the year's end in incomplete construction.
Along with the volume and structural characteristics of incomplete construction, an
important place in studying it is held by the indicators reflecting the state of
completeness of the projects and sites. The overall completeness level of incom-
plete construction is reflected by the shares (by the proportional amount) of the
actually completed construction volume for commenced and uncompleted projects and
sites in the total construction volume needed to put them into operation. The in-
dicators reflecting the completeness level of incomplete construction differ in
their economic content and calculation methods. In practice two methods of calcu-
lating them are known, one of which is based on data on capital investments at the
estimated cost and thz second on data on normed labor expenditures. In the f irst
instance the indicator is termed simply the degree of completeness and in the
second, the degree of technical completeness.
For calculating the technical completeness of incomplete construction and the back-
log, informati~~n is needed on the normed expenditures of working time not only for
the project (site) as a whole but alsa for the individual parts of the project and
types of construction-installation work. This information is far from always avail-
able in the design and estimate documents for the projects and sites and this sig-
nificantly impedes the application of this method.
In statistical practices the most widespread are the indicators calculated using
estimated cost since the builders, departments and statistical bodies have available
- all the initial data needed for the calculation by this method. The degree of com-
pleteness is calculated for the individual pro~ects and sites as well as for the
aggregate of projects and sites. The semantic and methodological differences of
these indicators are caused by the fact that in certain instances a project has
_ been used as the unit of observation (counting) and in others it has been the site
as a whole.
If a project is adopted as the counting unit, then the degree of completeness is
determined for the projects which are in incomplete construction on the report date.
In instances when the site as a whole is used as the counting unit, the calculating
of the indicator will also include the pro~ects of the site which have either not
. been started at all or are already in operation. Let us examine the indicators of
the degree of completeness and the methodology for calculating them using a hypo-
thetical example of two construction sites in a rayon (Table II.S; thousand rubles
of estimated cost).
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Table II.S
Full Capital Fixed capital Incomplete
estimated investments put into construction
_ Name of sites and projects cost made from operation at end of
start of from start of report year
construction construction
I. Textile mill--
total 5,240 3,386 2,27p
1) Main building 3,164 2,003 2,003
2) Boiler shop 1,116 1,116 1,116 ~
3) Administrative building 960 267 temporarily 267 ~
halted
II. Motor pool--
total 3,782 2,997 460
1) Garage 2,537 2,537 2,53?
2) Machine shop 1,245 460 460
Total for sites 9,022 6,383 3,653 2,730
Let us calculate the compieteness indicators in which a project has been adopted as
the counting unit.
capital investments made from start
, of pro~ect's construction
: Degree of project s completeness = estimated cost of project '
We have: for site I, respectively, for the projects: No 1 2003 ~100 = 63.3
3164
No 2 100%, No 3 960 ~100 = 27.8
For site II, respectively, for the projects: No 1 100%, No 2 14205 �100 = 36.9
Degree of. completion of _ Incomplete construction at end of report period
incomplete construction L'stimated cost of pro~ects in incomplete construction'
[de have: for site I 2'270 �100 = 55%; for site No II 460 .100 = 36.9%; for
3,164+960 1,245
the two together 2~2~0+460 �100 = 50.8%.
3,164+960+1,245
Backlog for projects under construction
Degree of completion of at year's end
production backlog for projects Estimated cost of pro~ects under
construction at year's end
We have: for eite I 2~003 , 100 = 63.3%; for site II 460 , 100 = 36.9%; for the
3,164 1,245
two sites together 2~003+460 . 100 = 55.9%.
3,164+1,245
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Let us determine the completion indicators in which the site as a whole is used as
the counting unit.
Capital investments since start of construction
_ Percentage of completeness for all projects of the site (sites)
of site (sites) Estimated cost of site (sites) ~
We have: for site I 4~250 ~100 = 64.6%; for site II 3'982 � 100 = 79.2%; for the
_ > >
two sites together ''386+2'99~ � 100 = 70.7%.
_ 5,240+3,782
In contrast to the first group, all the projects of the sites regardless of their
state have been considered in the base of comparison (the denominator) for the in-
dicators of the second group. For this reason they describe, in essence, the shaie
of used capital investments in their total volume for building the entire fixed
capital complex.
For analysis indicators are also calculated for the completeness of the sites in
_ terms of the pro,jects completed and put into operation. These include the complete-
ness percentage of the site in terms of putting into operation and the coefficient
for the output of end construction product; these can be determined for the indi-
vidual sites and their aggregate.
Estimated cost of projects put into
Percentage of completeness for _ operation
putting site (sites) into operation Estimated cost of site (sites) '
This indicator expresses the share of the estimated cost of a site (sites) which is
represented by completed pro,jects. In the example it will equal: for site I
. 5~240 ~ 100 = 21.3% and for site II 3'782 � 100 = 67.1%; for the two sites together
> >
1,116+2,537 . 100 = 40.5%.
5,240+3,782
Coefficient for output of end Estimated cost of projects put into operation
construction product Capital investments since start of construction'
In the example this indicator equals: for site I 1,116. 100 = 33~ and for site II
3,386
2,537 1 116+2 537
2,997 ~ 100 = 84.6%; for the two sites together 3,386+2,997 ~ 100 = 57.2%.
The calculated indicator characterizes the share of capital investments made for
the projects completed and put into operation.
In addition to the examined questions, the constructing of time series and the cal-
culating of analytical indicators are part of the problem of a statistical study of
incomplete construction. Indices hold an important place among these indicators.
For calculating the index of the volume of incomplete construction, the same formula
and methodological principles are employed as for the capital investment volume (see
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Chapter II, �5). Here incomplete construction can be taken in terms of estimated
cost and in terms of actual cost for the builder. In the first instance this will
reflect the dynamics of the volume of incomplete construction and in the second,
the dynamics of actual expenditures. In either instance it is essential to observe
the conditions of comparability as was already mentioned in �5 of Chapter II. In
particular, for eliminating the influence of the seasonal factor it is essential to
compare the levels of inco~nplete construction on the same date.
In analyzing plan fulfillment and the dynamics of incomplete construction it is very
important to bring out the reasons and influence of various factors on its devia-
tions from the base conditions. In instances when these factors can be expressed by
statistical indices correlated intc, a system of comultipliers, it is always possible
to construct a system of factor indexes and on their basis to establish in absolute
and relative terms the impact of each factor. For example, incomplete construction
(U) can be represented as the product of the estimated cost of all the projects ac-
counted for in incomplete construction (C) and the degree of its completeness (F =
U:C), that is, U= C�F. Hence the influence of a change in the total estimated cost
of projects under construction on the change in incomplete construction can be de-
termined from the formula _(C1- Cp)Fp, and the influence of a change in the de-
gree of completeness of incomplete construction by the formula ~F = C1(F1- F~).
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CHAPTER III. THE STATISTICS OF PUTTING CAPACITY ANI) FIXED CAPITAL INTO OPERATION
�l. The Tasks of Statistics for Putting Capacity and Fixed Capital into Operation
The completion of construction on enterprises, roads, canals, housing and other in-
stallations and their putting into operation are the ultimate aim of capital con-
struction and, in particular, the use of capital investments. The decisions uf con-
gresses and plenums of the CPSU Central Committee, the sessions of the USSR Supreme
Soviet and the governmental documents have repeatedly emphasized the enormous im-
portance of the prompt completion of construction on the dates stipulated by the
plan.l
The great attention shown by the party and the socialist state to the above-
examined economic questions gives great importai:~e to a statistical study of the
completion of capacity and fixed capital. The range c;f statistical problems in-
cludes: the elaboration of the indicators which characterize the amount of com-
pleted capacity and other fixed capital projects in physical and monetary terms;
the studying of the fulfillment of the plans for the completion of capacity and
fixed capital and the dynamics of their volume; the elaboration of indicators for
the construction time of fixed capital pro~ects and installations; the carrying out
of comprehensive analysis for the fulfillment of plans and the dynamics of comple-
tion in the aim of disclosing reserves for accelerating construction rates, reduc-
ing its cost and improving the quality.
Before moving on to an examination of these problems, it is essential to bring out
the economic content of the completion of pro~ects. In accounting and statistics
completion is charact~rized by the fact of the concluding of construction on the
projects and their installations and the putting of them into operation as fixed
capital in accord with their purpose as provided by the plans. The designated level
of completion means that at the given pro~ect or group of pro~ects, the construction
and installation work envisaged in the plans has been fully carried out, the tech-
nical and other production equipment has been installed and has been provided with
the supplies, production tools and attachment envisaged in the estimate. For ex-
ample, a grain elevator has been built, if all the construction work of erecting it
is carried out, the production equipment installed, the supplies and other articles
1See: "Materialy XXV s"yezda KPSS" [Materials of the 25th CPSU Congress], Moscow,
Politizdat, 1976, p 211.
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envisaged in the estimate ~cquired and the utilities attached, the grain elevator is
ready to receive and store grain.
In capital construction practices a distinction is made between complete and partial
putting into operation. Complete putting into operation means that all the projects
of the site envisaged in the plans have been completed and put into operation.
Partial putting into operation means that the plans envisage different times for
putting individual projects of the site into operation, for example, the starting up
of a sulfuric acid shop before completing the construction of a superphosphate plant
as a whole. In the power industry, the extracting, metallurgical and other indus-
trial sectors, the completion of a construction stage is considered to be partial
putting into operation and by this one understands the planned portion of the enter-
~ prise or group of installations which ensure the output of the product. For exam-
ple, in designing the construction of thermal power plants, two, three and more con-
- struction stages are designated for the power units.
In the practice of constructing large industrial, transport, agricultural and other
national economic enterprises it is far from always economically advisable to com-
plete all the projects of the site by a single date in order to begin producing the
product or operating the fixed capital. In designing an enterprise often provision
is made within the projects of the site for a group of production projects in basic
and auxiliary activities which ensure the production of the product under normal
labor conditions. Such a group of pro~ects at a site is termed the starting-u~
group and the finishing of its construction marks the putting of production capacity
into operation.
- The accounting for fixed capital which has been completed and put into operation,
like capital investments, is carried out by the builder. In accord with the provi-
sions of the Construction Standards and Rules on the procedure for accepting and put-
ting buildings and installations into operation,2 the projects which have beedn com-
pleted for construction and are ready to operate are submitted by the builders to
the state acceptance commissions.
The statement of the state acceptance commission is the accounting document which
varifies the fact that the project (group) is in operation. This statement is ap-
proved by the authority which appointed this commission. The date of signing ~he
statement is officially considered the date for putting the project or group of
fixed capital into operation.
Along with the putting of projects and groups into operation, in practice there are
instances when at operating enterprises machinery and equipment which are not in- '
cluded in the construction plans and estimates are put into operation, for example,
a~;ricultur~l machines, means of transport, equipment requiring installation but
designate~, for inventary (reserve). Such equipment is considered as put into oper-
ation as ~it is received at the operating enterprise. Here the entry of the equip-
- ment on the balance sheet of basic operations as fixed capital is considered to be
the Formal. indication of its putting into operation.
2See: "Construction Standard and R.ule III-3-76," Moscow, Stroyizdat, l~)77.
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�~2. Accounting for the Putting of Fixed Capital Pro~ects into Operation in Physical
Units
The putting of capacity and fixed capital into operation is the main indicator for
the national economic capital investment plan. In order to assess the fulfillment
of the plan for this indicator, it is essential to correctly determine the amount
of fixed capital projects put into operation.
The amount of projects put into operation can be characterized in physical and
monetary terms. Each of these methods of ineasuring the amount of completion is of
independent. significance in solving the economic problems of capital investment
statistics.
An accounting of the putting of capacity and fj.xed capital projects into operation
in physical units is essential for plann~ing and supervising the observance of pro-
portional development for the sectors in the production and nonproduction spheres
_ of the national economy. For these purposes ~t is important to know in what amounts
and at what pace capacity should be increased �or the output of electric power,
- metal, motor vehicles, machine tools, agricultural machinery and so forth, how many
highways and railroads must be built and have been built and how much housing,
schools, hospitals and other nonproductian projects have been built. A physical
accounting for putting into operation makes it possi.ble also to run international.
comparisons.
In planning and statistics different scales and units of ineasurement are employed
for physically expressing the completion of capacity. From the above-examined gen-
eral provisions in the methodology for accounting for putring into operation it fol-
lows that the project, starting-up installation and site as a whole are the primary
units of observation in thP statistics for putting into operation. For precisely
this reason in statistical practice these are also employed as a unit for measuring
the amount of. putting into operation in physical terms. In determining the summary
data for putting into operation, the projects and enterprises are grouped according
to features of sectorial purpose, departmental affiliation, size and other features
adopted in the capital investment grouping (see Chapter II, �3). For example, ac-
cording to the data of the USSR TsSU, in 1978, 230 new ma~or state industrial en-
terprises went into operation.
Regardless of the simplicity and clarity of accounting for the putting of pro3ects
and enterprises into operation, it far from always provides an exhaustive descrip-
tion of the true amounts of completed construction, since the aggregates formed in
the summary bring together enterprises which differ in terms of purpose, capacity,
size and other featu~es. More accurate information on the amount of putting into
operation in physical terms is provided by measurements of production capacity,
length, volume capacity and other consumer properties of the pro~ects.
For expressing the capacity of production-end projects more often the annual (dail.y
or shift) product output or the. quantity of processed basic raw material in physi-
cal units is employed and more rarely this is done i.n cost terms. For example, the
putting of capacity into operation for the production of i_ron, steel and rolled
products is characterized by metal product~on over the year in tons, while the com-
pletion of capacity for producing sugar (granulated) is by beet processing per day
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in tons. For determining the amount of production capacity for a project or group
to be put into operation, it is possible to adopt a certain technical parameter or
directly use the capacity of the basic equipment, for example, the construction of a
railroad or its electrification can be characterized by the length in kilometers or
its daily traffic capacity, the completion of a power plant is expressed by its
- capacity in kilowatts and so forth.
For nonproduction-end projects and in a number of instances a:1so for production-end
ones, measurements for the volume and area of projects as well as indicators of
their volumetric capacity are employed as physical units of ineasurement. For ex-
- ample, the construction volume of hospitals is characterized by their capacity,
that is, by the number of beds, school construction is described by the number of
student seats, theaters by the number of seats and so forth.
Since production- and nonproduction-end buildings are one of the predominant forms
of product in construction, an opportunity arises to employ measurements of area
and volume for a general description of putting into operatio~i. This is also wide-
ly employed in practice. Thus, the capacity cf buildings is characterized by their
total and effective volume. The total volume is determined by multiplying the area
bounded by the external perimeter of the building by its height fr.om the f loor of
the first floor to the ceiling of the top story. In practice the indicators of the
effective volume of a building are employed and this is the total volume of the
~ basic and auxiliary spaces of the building, f.or examl~le, in housing, the cubic vol-
ume of dwelling rooms and auxiliary quarters.
The area of buildings is measured in an analogous maniier. A distinction is drawn
between the built-up area which is bounded by the external perimeter of the build-
ing walls and the effective area which describes the inner area of. the building
without counting the stair landings, that is, the floor area of all stories of the
- buildings. In production buildings, the area of the space allocated directly for
the production process is termed the prodsction area; the putting of enterprises in-
to operation in the machine building industry is often expressed in units of this
area. As part of the effective area of housing, the dwelling area is considered
apart, that is, the area of the dwelling rooms.
The accounting of completed projecte in physical terms carries an element of some
conditionality. For example, in adding up the production capacity for iron casting,
we bring together, in essence, projects which are the same in terms of purpose but
which differ in their design, size, in the composition of the pro~ects and the
- amount of work performed. In permitting such conditionality, we are able to calcu-
late general indicators for putting into operation in physical terms. Detailed in-
- Eormation on the putting of capacity and fixed capital pro~ects into operation is
C~~uticl in the statistical reporting on state capital investments in Form No 2-ks and
the appendices to it.
- �3. Indicators for the Amount of Fixed Capital Put into Operation
The accounting for putting into operation in physical terms, regardless of its im-
porrance, does not make it possible to fully carry out the statistical and planning
tasks using general indicators. The cost of the projects i.s the sole all-
iacompassing measure of diverse construction pro~ects making it possible to obtain
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general indicators. The putting of projects and sites into operation in monetary
terms is usually called the putting of fixed capital into operation. Accounting in
monetary terms makes it possible to establish the volume of fixed capital put into
operation for any aggregate of builders and, consequently, to determine the summary
indicators for plan fulfillment and dynamics on a varying organizational level and
to obtain diverse general quality characteristics for the fixed capital put into
operation.
The putting of fixed capital into operation in accounting and statistics is ex-
pressed both in terms of the estimated and the actual cost for the builder. The
estimated cost is the base estimate which is used as the basis for determining the
actual cost for the builder. This is kept in the summary estimate for the techni-
- cal construction plans. The plans and the estimate contain information on the labor,
material and monetary expenditures for construction as a whole and its individual
pro~ects. They reflect the socially necessary expenditures on construction and,
consequently, the estimated cost of the individual projects and the site as a whole
_ performs the function of the price for the fixed capital to be created.
A distinction is drawn between the estimated cost of a project and the site as a
whole. For an individual pro~e~t the full estimated cost and the so-called esti-
mated construction costs are determined. The former reflects all the expenditures
which are made directly in erecting and equipping the given project, considering the
general site and other expenditures related to the entire site as a whole in a share
proportional to the estimated construction cost of the project. The general site
expenditures incltide the leveling of the construction site, the building of various
_ utilities, the landscaping of the territory, the erection of temporary buildings
and structurea and so forth. Most often in practice the estimated construction cost
of a project is employed and this is set by the estimate as the total expenditures
provided directly for its erection. These total expenditures are formed by the
estimated cost of the construction work, the work of installing equipment, equip-
ment and not requiring installation, attachments and supplies provided for in the
estimate for the praject.
The estimated cost for the fixed capital of the site as a whole is characterized by
the expenditures on erecting the basic, auxiliary, service and temporary projects
of the site as well as all general construction expenditures provided for in the
summary estimate. This cost can be determined by adding up the estimated construc-
tion cost of all the pro~ects, the general site expenditures, the expenses for the
support of the administration and technical supervision and the estimated cost of
design and research.
Let us give an example. Let us assume that we know the following data for a produc-
tion association from the summary estimate for the construction of a footwear mill
consisting of three projects (Table III.1). The general site work and ex*~enditures
on the mill are 146,000 rubles, expenditures for the aupport of the administration
and technical supervision are 68,000 rubles, design and research are 184,000 rubles
and thP training of operating personnel is 152,000 rubles.
The estimated construction cost of each pro~ect~is represented by the total of the
table's corresponding column. The full estimated cost of the main building is:
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Table III.1
Ccnstruction projects, 1,000 rubles
Types of work and purchases Main building Raw materials Boiler
' warehouse plant and
- garage
Construction work 436 192 102
Installation work 87 19 114
Equipment requiring installation 643 134 193
Equipment not requiring installation 102 107
Production tools and supplies 18 2 4
Total 1,28(i 347 520
_ 1, 286 +(146 + 68 + 184 1, 286 + 348 + 520 - 1, 286 + 398 � 2~ 153 - 1, 523, 700 rubles;
for the raw materials warehouse 347 + 398�23153 - 411,100 rubles;
boiler plant and garage 520 + 398 � 25i~3 = 616,100 rubles.
The full estimated cost for the fixed capital of the footwear mill is: 1,286 + 347 +
520 + 146 + 68 + 184 = 2, 551, 000 rubles .
The volume of capital investments according to the estimate for the construction and
putting of the footwear mill into operation is: 2,551 + 152 = 2,703,000 rubles.
From the given example it follows that the estimated cost of the projects and the
fixed capital of the mill as a whole does not include the so-called expenditures
- which do not increase the cost of the fixed capital (in this example, expenditures
on personnel training), although theae are carried out from the capital investments.
The expressing of the putting of fixed capital into operation according to the esti-
mated cost makes it possible to characterize its physical volume and, consequently,
to provide an estimate for plan fulfillment and dynamics for this indicator. How-
ever, in a number of instances when the estimated prices change in the course of
construction, an important condition of the methodology is violated. The problem
is that the capitzl investment volume at pr~jects put into operation is accounted
for by the builder in estimated prices of the corresponding years and namely, be-
Eore the change, in the old estimated prices and after their change in the new ones.
- For this reason the total cost of the fixed capital put into operation in this in-
stance in essence is a mixed estimate. Such a methodology ensures the commonn~ess of
the bookkeeping and statistical data on the estimated cost of fixed capital put into
operation. But since these changes are reflected both in the plan and in the re-
port, the estimate for the carrying out of the plan for putting fixed capital into
operation is virtually not distorted.
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But in studying the dynamics of this indicator, the designated features of the
methociology for determining estimated cost complicate the calculating of indexes
for the putting of fixed capital into operation and the compared levels of the time
series. In order to oY,tain an estimated cost of the fixed capital calculated ac-
cording to the uniform price methodology, in the program for the statistical survey
(Form No 1-ef), the volume of capital investments (projects put into operation) used
prior to the date of the change in the estimated prices is recalculated in new
prices by the index for the estimated capital investment prices. The estimated
price index in the given instance is determined by the relating of the new (recalcu-
lated) estimated cost of the capital investments remaining after the change in the
prices to the estimated cost of the investments before the recalculation.
Let us give an examplE:. Let us assume that initially the approved estimated cost
for a textile mill which started construction in 1975 wa~ 3.72 million rubles. As
_ of 1 January 1976, the estimated cost was changed as a consequence of introducing
new prices for equipment and the reduction factors. Prior to the change in prices,
1,246,000 rubles had been used on building the mill. The remaining total of capi-
tal investments was recalculated and considering the new prices and correction fac-
tors was 2,721,400 rubles.
In the report from the builder, the estimated cost of the mill put into operation
(the mixed cost) was set at 1,246 + 2,721.4 = 3,967,400 rubles. For the recalcula-
tion let us determine the estimated price index for the capital investments as a
whole: 2'~21'4 = 1.1. Hence the estimated cost of the mill in the new (recal-
_ - 3,720-1,246
- culated) estimated prices will be: 1,246 �1.1 + 2,721.4 = 4,092,000 rubles.
' The initial data for recalculating the estimated cost of the projects are found
only in the builder's figures. They do not exist in the statistical reporting.
After the completion of construction and the fixed capital is in operation, the ac-
tuai cost for the builder is determined and this describes the real total of expend-
itures made by the builder in the construction period. The need to determine this
is caused primarily by the fact that as a consequence of various circumstances the
actually developing construction conditions differ from those envisaged in the
plans and estimate. Consequently, tl~e amount of the builder's expenditures is
- changed. The accounting for putting into operation at the builder's actual cost is
also important for supervising the observance of estimate and financial discipline
in construction as well as for establishing the full initial value of the fixed
capital. For this reason in accounting and statistical practices, the actual cost
for the builder is termed the inventory cost.
The inventory cost is usually determined for each project built and put into oper-
ation and is given in the statement of the state acceptance commission. For an in-
dividual pro,ject its amount can be represented as the total of the following three
components: 1) The project's estimated construction cost; 2) the estimated expend-
itures related directly to the given pro~ect but not incorporated in its estimated
construction cost; 3) the general site expenditures, compensation and benefits
- above the estimated cost, losses, the cost of temporary structures and other ex-
penditures of a general construction nature considered in the proportional estimated
construction cost of the project, with the exclusion of the expenditures that do
not increase the cost of the fixed capital.
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ruK urri~~n~. u~r. u~t.v
Let us calculate the inventory cost of fixed capital put into operation using the
data in tr~e example shown on page 48 supplemented by the following information:
Compensation above the estimated cost for building the main building was 89,000
rubles and losses for construction as a whole were -21,000 rubles. Hence the in-
ventory cost of the main building put into operation will be:
1,286+89+ (146+68+184+21) � 1'286 = 1,625,300 rubles.
2,153
The putting of fixed capital into operation is determined by the buildEr using ac-
tual and estimated costs on the basis of the established documents. The total vol-
ume of f ixed capital put into operation is obtained by adding the following: a)
The cost of the enterprises, starting-up complexes, installations, buildings and
- other projects which have been provided for in the plans and estimate and have b een
completed and put into operation (completely or partially); b) the cost of equip-
- ment and machinery acquired by operating enterprises, organizations and institu-
tions outside the construction estimates (means of transport, agricultural machin-
ery, equipment requiring installation but earmarked for reserves and so forth). In
those instances when the acceptance statementis have established uncompleted con-
struction and inatallation work (unf inished work) and their cost has been given,
then the full estimated or actual cost of the projects put into operatj.on (the first
component) should be reduced by the estimated cost of the unfinished work. If the
projects or capacity are actually in operation but their putting into operation has
not been formalized by the proper documents, then their cost is not to be included
in the volume of fixed capital put into operation.
Using the data from builder reports, these statistical bodies on various levels de-
termine the summary indicator for putting into operation the fixed capital which has
been created ar~d acquired by capital investments. At the same time according to the
existing planning and financing procedures, fixed capital can be acquired and pur-
chased also using other funds aside from capital investments (see 2, Chapter I I).
Consequently, in order to establish the full volume of fixed capital put into opera-
tion in a report period, it is essential to add the expenditures made on the cr ea-
tion and acquisition of fixed capital from funds of the state budget and other
sources aside from capital investmen*~ to the value of the fixed capital put into
operation from capital investments. ic~:~ardless of the seeming simplicity for de-
termining the sought indicator, the methodology of calculating it in actuality en-
c~~u~iters difficulties caused by the presence of expenditures which are only par tial-
ly linked to the given volume of fixed capital put into operation (the plans for the
layc~ut and building up of residential districts and so forth).
Let us assume tliat in the preceding exampie it has become known that in putting the
mill into operation, the statement of the state acceptance commission pointed to in-
~:umplete. work and incomplete supply of production tools (according to the estimate)
totaling 310,0(10 rubles. During the report year for the association, out of capital
investments motor vehicles and machine tools were acquired for reserves (outside of
the c.onstruction estimates) at prices envisaged in the plan and for a total of
624,000 rub les. In addition, equipment and supplies under Article 12 of the budget
estimate worth 74,000 rubles were purchased for the vocational training school and
_ the nursery. Then the volume of fixed capital put into operation (according to the
estimated cost) from capital investments for the association as a whole willbe in
ti~e report year 2,55i-310+624 = 2,865,000 rubles, while the total volume of fixed
50
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capital put into operation from all financing sources will be 2,865 + 74 = 2,939,000
rubles.
Information on the putting of fixed capital into operation from capital investments
will be found in statistical reporting in Form No 2-ks and the appendices to it.
In these reports the data on the putting of fixed capital into operation are given
in terms of estimated cost broken down for the sectorial purpose of the fixed capi--
tal projects and their structure and as a whole also for actual cost.
�4. Studying Plan Fulfillment and the Dynamics of Putting Capacity and Fixed
Capital into Operation
The carrying out of the grandiose tasks to develop the Soviet national economy to a
significant degree depends upon the successful implementation of the capital con-
struction programs. The task for statistics is to thoroughly describe the result oi
plan fulfillment and namely to give a general estimate and disclose the structure
for carrying out the plan for putting pro~ects into operation, to disclose the rea-
sons impeding the prompt and complete finishing of construction for capacity and
projects and to disclose reserves for accelerating and reducing the cost of con-
_ struction.
A most general notion of the studied question can be gained by determining the per-
centage of plan fulfillment for putting capacity and fixed capital into operation
and the absolute deviations from the plan. The indicators calcular_ed for data in
physical units make it possible to disclose the material and physical content of
fulfilling the plan for putting projects into operation. However the opportunity
of obtaining general descriptions on the basis of physical measurements is extremely
limited. An overall approximate estimate for plan fulf illment can be gained by com-
paring the number of projects actually put into operation (starting-up complexes,
enterprises and so forth) with that provided in the plan during the report period.
The conditionality of such an indicator is obvious as one is comparing aggregates
which consist of projects which are extremely different in terms of purpose, size,
capacity and other features.
The total percentage of �ulfilling the plan for putting capacity into operation is
calculated only for groups of projects and starting-up complexes which are the
same in terms of purpose and functions performed and as expressed in uniform units
_ of their capacity. For example, the fulfillment of the plan for putting into oper-
ation power plants, blast furnaces, rolling mills, housing and so forth is described
in this manner. In determining the indicators for plan fulfillment it is essential
to consider the capacity and the pro~ects which are included only in�the given ag-
gregate of builders (a department, republic, economic region and so forth) and,
naturally, those which were envisaged by the plan in the report period.
The methodology of calculating the relative and absolute indicators for the fulfill-
ment of the plan for putting fixed capital into operation is analogous to the one
examined above for capacity with the sole difference that in the given case the es-
timated cost of the projects put into operation is compared, that is:
I=~~lp~m and Eq Pcm- EqP~.Pcm~
Eqp~p~m 1
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N'UK Urb7l:1A1, U5~ (INLY
where qp~, ql--the pro~ects put into operation in phyaical units according to the
plan and actually;
p~m -estimated prices (estimated unit cost).
These indicators, in contrast to the ones examined above (in physical units), can be
calculated for any aggregate of projects, starting-up complexes or builders (in
~ terms of affiliation, sectorial ~urisdiction, territorial placement and so forth)
and, consequently, they are applicable for a general description of the fulfillment
of five-year as well as annual plans in a running total. In turn, the high degree
of commonness in these indicators raises a number of demands in terms of observing
the comparability of the actual and planned amounts of' fixed capital put into oper-
ation. The provisions of the methodology for calculat~.ng the indicator of plan ful-
fillment are given in the instructions on drawing up the plan and for filling out
the statistical reporting forms. In particular, in observing the principle of com-
parability for the range of objects under study, the actual volume of fixed capital
put into operation should include the projects (starting-up complexes and so forth)
which are designated in the rlan for the report period. However, in practice, for
the purposes of encouraging accelerated construction, a deviation from this princi-
ple is permitted and namely the pro~ects put into operation ahead of time are ac-
counted for in the fulfillment of the plan but the plan itself is not changed here.
The builder is the primary element in which plan fulfillment is determined for com-
pleting capacity and fixed capital. Let us show a calculation of the designated in-
dicators using the example of a production association for the report year (Table
III.2).
Table III.2
Putting of fixed capital into operation,
1,000 rubles of estimated cost
Name of Projects According to plan Actual
Previous Including
Report year Total ahead of
years
time
ComprESSOr station 286 274
Raw materials warehouse 212 212
Boiler plant and garage 1,314 1,314 1,298
Liquid fuel warehouse 118
Model shop 310 280
Total 1,718 1,624 2,064 212
The percentage of fulfilling the plan f.or putting fixed capital into operation dur-
ing the report year for the production association will be:
274+ 212+ 1,298 _ 1,784 _ 1.038, or 103.8 percent,
- 1,718 1,718
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which means the overfulfillment of the plan by 3.8 percent or 66,000 rubles (1,784 -
1,718). The calculated indicator is a balance one and it has been obtained as a
- result of adding the deviations from the plan for putting fixed capital into opera-
tion in the direction of overfulfillment (212,000 rubles) and nonfulfillment
(-146,000 rubles), that is, 1,784 - 1,718 = 212 +(274 - 286)+(1,298 - 1,314) +(0 - 118);
212 + (-146) = 66.
The result of the calculation made can be used in analyzing the fulfillment of the
plan for putting fixed capital into operation by the builder. Here it is important
to draw attention to the total nonfulfillment of the plan at the expense of the
cost of work provided in the estimate but not carried out at the project put into
operation and because of the incomplete delivery of equipment. The nonfulfillment
of this portion of the plans is the reason for the discrepancy in the estimated cost
of pro~ects put into operation according to the plan and the actual one. The cost
of the unfulfilled work and undelivered equipment is usually indicated in the state-
ment of the state acceptance commission but it can also be determined by calculation
as the difference of the full estimated cost of the completed project as given in
the plan and the estimated cost of the fixed capital actually put into operation for
this project. In our example this amo!~.nt will be ~286 - 274) +(1,314 - 1,298) _
28,000 rubles.
The evaluation and analysis of fulfillment of the plan for putting fixed capital in-
to operation for the aggregate of builders differ from the above-examined m~thod-
ology in the more complicated calculations since in a summary description there are
additional factors which are not of significance in evaluating the work of an indi-
vidual builder. The task of summary analysis consists not only in an overall esti-
mate of plan fulfillment but also elucidating the role of the component parts (de-
viations from the plan) characterizing the result of the specific organizational
actions of the builders. From an example let us demonstrate L-he possibilities of
summary analysis for the fulfillment of the plan to put fixed capital into opera-
tion on a departmental level (Table III.3).
The percentage of f ulfilling the plan for putting fixed capital into operation for
the department as a whole is determined by comparing the fixed capital actually
put into operation and planned for the builders during the report year and that
completed ahead of time with the volume of putting into operation according to the
plan, that is,
21 472 + 1 793 23 265
~25 486~ ' 100 = 25~486 ' 100 = 91.3 percent,
> >
or the nonfulfillment of the plan by 2,221,000 rubles which is 8.7 percent.
In analyzing the overall result for fulfilling the plan for putting fixed capital
into operation, it is advisable to determine its component parts formed from the
deviations in the direction of an overfulfillment and nonfulfillment of the plan by
each builder. For this let us separately add up the results of the same-sign devia-
tions from the plan, that is, with the sign and with the sign In the ex-
ample (col. 8) the volume of nonfulfillment of the plan for putting fixed capital
into operation is: 1,694,000 rubles, that is, (1,015 + 6?9), *.�rhile the volume of
fixed capital envisaged by the plan but not put into operation is -3,915,000
rubles (-814) +(-1,601) +(-1,500). The total deviations equal the balance indi-
cator, that is, 1,694 +(-3,915) _-2,221,000 rubles.
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IY)R O~b'ICIAL [1SE ONI.Y
Table III.3
' BPOd H ncAcTmic CTO{IMOCTb npcay-
OCIIOIfI1M7f (bO11AQ11 ~aKTNROCKN 1100AC110 B CMOT~CIIIIMx CM0- k
IIO Ii11aHY B OT~IeT- dCAC7AH2 OCf10BIfIJ7C Ir1011A08 TOA, !10 IIC BHf10A-
$ IIOM I'Olly~ TtaC. B OT4CTlION POAy, rMC. py6. ucxxax pe6or, TMC.
py6. cwcruoq CNCTHOO CTOHNOCTN QY~S. CMCTIIOA CTON~ OTKDOIICIINC
HaNMeiweanNe b C70NNOtT{i d wocrx or nnana
BBOdA 8
_ 9~ (aaeoe~ �B npeaycWOrpeuHbx ; aepcreNe
e vHCac nnexoM or~teTxoro \j' e e row ~~HCae -rpp 13+
roae ene eac
npedy- f~ Aoe t- P + rp. 5)
e c c r o cMOrpe- xo A c e r o no n~axx-
� HOBOCp- B TOM qHC- (DyCMNM
f Bd~ e c~ r o ae eqePpd~ o6blKT8M
A
1 2 3 ~ 5 6 7 6
1 JIaKOttpaco~i~twt~ 5 A46 4 498 5 032 3 712 - 216 188 -814
m pTN 2 550 2 550 2 485 2 485 I 080 65 , G5 1 015
' nYRO6peHH~ 9 R42 G 222 8 241 4 694 - 118 45 -I 60l '
p CaiirHrNex~ 5 GW 4 23fi 4 100 4 100 - 136 13G -I 500 ~
pilnacTwacc i G48 - I 614 - 713 34 - 679
q B c e r o 25 ~48GI 17 fiOG ~ 21 472I 14 991 I 1 7~J3 I 5G9 434 I-2 221
Key: a--Name of builders (plant); b--Putting of fixed capital into ~
operation according to plan in report year, 1,000 rubles of
- estimated cost; c--Fixed capital actually put into operation
in report year, 1,000 rubles of estimated cost; d--Cost of work
envisaged in estimate but not carried out, 1,000 rubles of
estimated cost; e--Total; f--Including planned for first time;
g--Envisaged in plan of report year; h--Including for first
time; i--Ahead of time; j--Including for the first time for
planned projects; k--Deviation from plan for putting into
operation (col. 3- col. 1+ col. 5); 1--Paint; m--Industrial
rubber products; n--Fertilizers; o--Sanitary-hygiene; p--
plastics; q--Total.
The absolute deviations from the plan can be shown in a relative expression if they
are compared with a common base, that is, with the amount of fixed capital put into
operation according to the plan. In the example, we have:
-3 915 1 694 -2 221
25 , 486 ~ 100 + 25 , 486 ' 100 = 25 , 486 ' 100; -15 . 3 + 6 . 6 = -8 . 7 percent .
From the analytical calculations it can be concluded that, as a consequence of the
early putting of the projects into operation, the overall plan fulfillment was in-
creased by 6.6 percent and because of the nonfulfillment of the plan by individual
builders this was reduced by 15.3 percent. This led to an overall nonfulfillment
of the plan for putting fixed capital into operation of 8.7 percent for the depart-
ment.
In using the accounting data of the builder, it is possible to go f.urther in analyz-
ing the fulfillment of the plan for putting fixed capital into operation. In par-
ticular, in possessing information on the composition of the projects and starting-
up complexes completed in the report period, similar to that given in cols. 2, 4,
5, 6 and 7 of Table III.3, it is possible to disclose additional component elements
in the deviation from the plan and thereby disclose certain common factors for this
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Y
phenomenon and the force of their action which are of importance for managing the
department's activities. A balance sheet comparison of the composition of the plan-
ned and actual completion of fixed capital lies at the basis of this analytical cal-
culation.
The composition of the fixed capital put into operation (q) in capital construction
planning practices includes, in the first place, the cost of the projects the com-
pletion of which is envisaged for the first time in the plan (a), and secondly, the
cost of projects the completion of which was planned for previous years (b). The
actual putting of fixed capital into operation is formed from the same component
- parts and, in addition, it can also include projects put into operation ahead of
time (c). Under the conditions of scientifically sound planning and normal produc-
tion operations in capital construction, the putting of fixed capital into operation
should consist solely of the first group of pro~ects. The presence of projects from
the second group shows violations in planning, designing and construction. The ac-
tual putting of fixed capital into operation can also deviate from what was estab-
lished by the plan by the value of the work provided for in the estimate for the
projects but not carried out as well as by the cost of undelivered equipment, tools
and supplies also envisaged in the estimate (d).
Let us solve the posed analytical problem in a general form. For this in addition
to the previously indicated let us adopt the following index designations:
~a and ~b--the estimated cost of pro~ects not put into operation in report period
and included, respectively, in the pla.^. f~r the f irst time and repeatedly;
da and db--the estimated cost of incomplete work for projects put into operation in
the report period and included, respectively, in the plan for the first ,
time and repeatedly.
By the symbols "0" and "1" we will designate, respectively, the plan and report
data. Let us represent the putting of fixed capital into operation by the component
parts needed for analysis. According to the plan we have q0 = a~+ b0, and actually
_ q~ n~ c~ ~~o ~a do) (bu ~n ~ln) c~�
In the given algebraic expression, the deviations from the plan (~a, ~b~ da~ db~
theoretically can be accepted as both positive and negative values. However, in
practice these deviations can either equal zero (the plan was fulfilled by 100 per-
cent) or characterize the nonfulfillment of the plan, thar is, assume negative
values. The overfulfillment of the plan, that is, the early putting into operation,
in the given expression is represented by an independent, always positive value (c).
Let us subtract the planned from the actual indicator and let us regroup the terms
into a combination which makes economic sense. Here it is essential to bear in
mind that depending upon the quantity of data, the problem of analyzing the fulfill-
ment of the plan for putting fixed capital into operation can be carried out with a
varying degree of detailing. Let us show several variations.
The first variation:
9i - 90 = ~~~n -f- do) -F- (bo ~e ~r,) -f- c~ ~an bo)) _
--(~�-~-~b)+(dn+dn)`~1-~~,==0+d+c~.
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In this instance, p characterizes the full estimated cost of the projects envisaged
in the plan but not put into operation during the report period; d expresses the
overall estimated cost of the work envisaged in the estimate but not carried out and
the undelivered equipment, supplies and so forth for the projects put into operation;
ci--the cost of the projects completed ahead of time and put into operation. Th2se
component parts of the overall deviation from the plan can easily be determined:
c 1 is the total of col. 5, d is the total of col. 6, while (q 1- q p) - c 1- d,
c:.zt is, [-2, 221 - 1, 793 -(-569) 3,445,000 rublea.
The second variation:
9~ - 90 ~~Q -f- dR) -I- de) -F- c~ = hQ -I- kn c~ �
In this expression, ha = ~a + da characterizes the overall estimated cost of fixed
capital not put into operation (completely and partially) for projects the comple-
tion of which is planned for the first time, hb = ~b + db--the overall estimated cost
of fixed capital not put into operation (completely or partially) for projects the
completion of which was already planned in previous years, that is, for them the
f irst planned date for the completion of construction has already been passed. In
the example, the absolute value ha which is a part of the deviation from the plan
is defined as the difference between the actual and planned putting of fixed capital
into operation for the projects envisaged in the plan for the first time, that is,
col. 4- col. 2, or ha = 14,991 - 17,506 =-2,515,000 rubles, while the absolute
amount hb is determined from the examp~.e's data as (the total of col. 3- col. 4)
-(result of col. 1- col. 2), that is: ,
hb = [(21,472 - 14,991) - ~25,486 - 17,506)] _ -1,499,000 rubles.
The third, most developed variation for analyzing the fulfillment of the plan for
putting fixed capital into operation for the aggregate of builders is represented
by five components which make economic sense:
9t-'9u= ~n-~"Oh-~'da+~b~'~~�
Regardless of the fact that all the remaining parts of the general deviation from
the plan are s~mple indicators, they can be directly determined only from the ac-
counting data of the builders. In our example, there are no direct data for each
of the five components but they car, be obtained by calculation. We will determine
~ the value of ~a if, from ~he total value o� the fixed capital envisaged in the plan
for the first time but not put into operation (ha = ~a + da) equal to -2,515,000
rubles (14,991 - 17,506) we subtract the value of the work envisaged in the estimate
but not carried out (db) with this cost being a component part of the overall devia-
_ tion and equal to (-434,000 rubles) (col. 7), that is, (-2,515) -(-434) _-2,081,000
rubles.
The total cost of pro~ects not put into operation but repeatedly provided for in the
annual plans (~b) can be determined by subtracting from the expression hb = ~b + db '
the value db which is also a component part of the general deviation. The value of
db is obtained as the difference of the total of col. 6 and col. 7, that is, (-569)
- (-434) _ -135,000 rubles. Hence~~~, _ (-1,499) - (-135) _ -1,364,000 rubles.
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Thus, in our example, the complete breakdown of the total deviation for the compo-
nent parts is as follows:
-2, 221 = (-2,081) + (-1, 364) + (-434) + (-135) + 1, 793.
A study of the dynamics of the volume of putting capacity and fixed capital into
operation is an independent problem in statistics, In solving it, statistics dis-
closes the scale and rate of fixed capital reproduction, the role of capital con-
struction in this and its impact upon the development of the material and technical
base of all national economic sectors.
The time series and indexes (growth rates) provide an overall notion of the change
in the volume of putting capacity and fixed capital into operation over time. Tha
methodology for calculating the relative indicators for the dynamics of the amount
of putting capacity and fixed capital into operation is not fundamentally different.
In particular, the volumes for the fixed capital put into operation for comparable
periods in calculating the index and in the time series should be expressed in the
same estimated prices, usually in the current ones (see �3, Chapter III). In this
indicator it is essential to consider all the projects which have been completed
and put into operation and which relate to the given aggregate, regardless of the
adopted planning procedure. Depending upon the set task, it is essential to also
consider the other statistical requirements for the comparability of time series
levels (comparability in terms of the unit of ineasurement for capacity, territorial,
departmental and methodological comparability).
The dynamics of putting capacity and fixed capital into operation, like the fulfill-
ment of the plan for these indicators, is better described in various aspects, and
namely within the limits of construction as a national economic sector, from capital
investments, for fixed capital created and acquired from all financing sources, that
is, capital investments, the state budget and the personal funds of the public taken
together. An evaluation of plan fulfillment and the dynamics of putting fixed capi-
tal and capacity into operation in statistical practices is made in a breakdown for
_ the major capital construction groupings in terms of economic purpose and national
e~onomic sectors, areas of fixed capital reproduction, according to affiliation and
the territorial placement of the builders, according to forms of ownership and
others.
�5. The Statistical Study of the Duration and Intensity of Construction
Important statistical characteristics for cunstruction are the indicators for the
duration and intensity (rate) of carrying out the process itself. A rise in the
intensity and a ahortening of the construction time have a direct impact upon in-
creasing the volume of capacity and fixed capttal put into operation, on lowering
the cost of erecting the projects and on increa~ing capital investment effectiveness.
The task for statistics is to elaborate a system of indicators which characterize
the duration and speed of construction both for the individual projects, enterprises
and so forth as well as on an average basis for their aggregate. There must also be
a methodology for determining the impact of these indicators on capital construction
- effectiveness.
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A solution to this problem requires a clarification of the concept of the construc-
tion duration. The overall calendar time of the entire investment cycle, from the
start of research to the moment of complete operational readiness of the project or
enterprise (starting-up complex) characterizes the duration of construction. This
period encompasses the time of research, designing, construction, installation and
the starting up of equipment, that is, the putting of the pro~ect into operation.
The time of construction work is considered to be the most important, crucial peri-
od in the investment cycle, that is, the period from the moment (day) of starting
construction work in the preparatory period to the putting of the project, capacity
or enterprise as a whole into operation. The duration of construction is viewed
precisely in this sense in planning and statistical practice.
The duration of construction can be accounted for in days, weeks, months and years.
In practice a distinction is made between the normative, design, planned and actual
length or duration of construction. The normed duration of construction is set
from standards approved by the USSR Gosstroy (Construction Standards 440-72). The
design and planned duration of construction is determined on the basis of approved
standards. Statistics records the actual duration of construction.
The date for the actual start on construction is set by a bilateral statement of the
builder and general contractor. The date the state commission signs the statement
for putting the groject (enterprise) into opera:ion is considered to be the end of
the construction period.
In solving many questions related to capital construction planning and.statistics
the need arises to determine not only the duration for erecting individual projects,
starting up complexes and enterprises but also the average length of construction
for their aggregate. Regardless of the seeming simplicity in solving this problem,
in 1972-1974, on the pages of the journal VESTNIK STATISTIKI there arose a major
discussion over the methodology of determining the average duration of construc-
tion.3 This made a number of important scientific clarifications for selecting the
type of average and for elucidating the tasks to be carried out using various tyges
of averages.
For a general description of the length of construction, statistical theory recom-
mends the calculating of several types of averages for the given aggregate of proj-
ects. These averages differ not only in the method of calculation and numerical
value but chiefly in their economic meaning, the essence of which also determines
the choice of the problems for their use. Let us take up certain types of averages
for the duration of construction, illustrating their calculation from the example
of building reinforced concrete products plants (Table III.4).
Frum the data in Table III.4 it is possible to determine the arithmetic average and
t}ie harmonic average, both simple and weighted. As the "weights" it is possible to
use the capacity or cost of the plants. A multiple-valued solution to the problem
confronts statistics with the need for scientifically establishing the choice of
the type and method for calculating the average duration of construction. Here,
_ 3VESTNIK STATISTIKI, No 9, 1972, Nos 6-9, 1973; No 4 and 8, 1974.
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' Tab'_e III.4
- Annual plant Estimated Duration of plant Rate of plant
Plant capacit~, cost of construction (T) construction (V)
number 1,000 m of plant,
products (N) 1,000 Months Years 1,000 tons Months per
� rubles (QP) per month 1,000 tons
1 60 1,200 26.4 2.2 2.27 0.44
2 90 2,020 38.4 3.2 2.34 I 0.43
- 3 140 2,600 43.2 3.6 3.24 0.31
- along with other provisions, it is important to consider the requirements of sta-
tistical theory about the homogeneity of the units in the aggregate in relation to
the feature to b e averaged, the presence of a goal for which the average is being
_ determined, the economic sense of the formula for calculatinz it and their conform-
ity to the dete rmining property of the average.
Let us calcula te the average duration of plant construction in years using the for-
mula of the simple arithmetic average (see the designations in the table), that is,
~T
Ta = n ~
where n--the number of plants (projects).
T _2.2+3.2+3.6_9_3years.
a 3 3
In this average, the determining property is expressed by the total calendar dura-
tion for erecting the tY?ree plants. This means that a simple arithmetic average can
be employed fo r solving problems in which it is essential to establish the total
duration of building the projects. In other words, it characterizes the average
duration of construction from the technical and organizational aspects. This aver-
age will make sense only for an aggregate of projects (plants) which are uniform in
terms of capaci ty, cost, composition and other features, since in the given instance
the construction project itself and not its consumer property is the measurement of
the aggregate.
The average duration of construction calculated for the formula of the arithmetic
capacity-weighted average in the example equals:
~ TN 2. 2� GO 3.2 � 90 3. G� 140 924
~'nh Z~ y- ~0 -F I~10 -2y~= 3.2 years.
Calculating an average using this formula has the following economic sense: the
numerator describes the conditional product output by the plants over all the years
of their construction (if the duration is expressed in months and not in years, then
, capacity and duration will be measured by different units of time), while the
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denominator gives ~he total annual capacity of the plants. After dividing this
produces an average duration of plant construction. In contrast to the simple
arithmetic average, this calculated average is oriented at a dif�er~ent determining
property, that is, at the total product output oy all plants during the years of
their construction. For this reason the given average can be employed in econotnic
calculations where it is essential to determine product losses or its additional
output as a consequence of the extending or reducing of construction times. This
method for calculating the average duration of construction is frequently applied
in planning.
If in the formula for the weighted arithmetic average the estimated cost of the
enterprises is used as the "weights," then the formula for the average is difficult
to interpret economically. Its numerator ETQP does not directly express any eco-
nomic concept, as is not the case in the previous instances. The absence of a clear
economic sense does not make it possible to formulate the conditions of the problem
in the solution to which the arithmetic average weighted for estimated cost could
be applied. However, what has been stated does not completely exclude the use of
this average.
The average duration of construction using a formula for a simple harmonic average
in our example equals:
Th_~rtl = I ~+~+i 2.87 years.
~ T 2.2 + 3,2 + 3,6
This average will make sense if all the pro~ects in the aggregate are of the same
type. Under the conditions of our example, like a simple arithmetic average, its
use is not applicable due to the heterogeneity (in terms of capacity) in the studied
- aggregate of new construction sites. It is oriented at a number of simultaneously
erected projects and, consequently, is applicable in problems which take this con-
dition into account. ~
The harmonic average for the durati~n of construction when weighted for plant capac-
- ~..ty in the example equals:
N GO S)0 140 _ 290
ThW N-' 6l 140-' 94,3 - 3.1 years.
u l,l + 3.2 + 3.G
The economic sense of calculating the average using this formula is obvious. This
average is related te the total amount of plant production capacity put into opera-
tion and this is alsc� its determining property and, consequently, the chief condi-
tion for the economic problems solved with its aid. The designated method for calcu-
lating the average duration of construction has been adopted in the practice of the
USSR TsSU.
For calculating the weighted harmonic average, it is possible to proceed from the
estimated cost of the pro~ects (enterprises). In the example, such an average will
equal:
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L~ ~ f) 2~~ `2 r~ R~
Thw - t~ Qp - I 2oU 2020 2 ~~UO - ISS~J.9 = 3. 06 years .
T Z.2 + 3.'' + 3.6
In contrast to the previous one, the obtained average is oriented at the total vol-
ume of capital investments for building all the enterprises. This is also its de-
termining property which is the main condition of the problems solved by the given
average. In the practices of the USSR TsSU, this average is calculated in instances
when it is nec:essary to determine the average duration for projects having a differ-
ent unit of ineasurement for capacity. The use of various methods for calculating
the average duration of construction in planning and statistical practices compli-
_ cates a comparative evaluation of the construction results. For this reason an im-
portant conditions for the comparability of the average actual construction times
with the design, planned and normed ones is a uniform methodology for determining
the averages. A clear formulation of the conditions for the economic problem must
be considered an essential prerequisite for correctly choosing the type of average.
In analyzing the duration cf construction it is advisable to compare individual
projects, starting-up complexes, enterprises as well as their various groups for
this indicator. For this the actual length of construction is ordinarily compared
with that approved by the plan and the normed and in addition the last two indi-
cators are compared between each other. In this manner the absolute and relative
deviations are calculated as is shown in Table III.S using the example of three
chemical fiber plants.
Table III.S
Full capacity actually Deviation of actual
put into operation, Length of construction, ~length of construction
Plant 1,000 tons of f iber months from planned
number per month
Planned Actual Months %
1 10 36 41 5 114
2 15 42 45 3 107
3 20 48 50 2 104
Average 43.3 46.3 3 107
_ Information on the length of construction for enterprises and their production
- capacity can be used for determining the amount of conditional losses in product
output as a consequence of exceeding the construction times of the plants. The
- solution to this problem is provided by the capacity-weighted arithmetic average
which is calculated in the table. As is seen from the calculations, the average
actual duration of plant construction (46.3 months) was increased in comparison
with the average planned length (43.3 months) by 3 months or 7 percent. The amount
of losses as a consequence of extending the construction times is obtained by multi-
plying the total volume of production capacity for the enterprlses under construc-
tion (calculated per unit of time as adopted for expressing the duration of con-
struction) by the deviation of the average Iength of construction, that is,
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Q= NOTab, In the example thi_s is 3�45 = 135,000 tons of chemical fiber.. The same
amount can be obtained by a direct calculation (10~5 + 15�3 + 20�2 = 135).
To a certain degree the duration of construction is a synthetic indicator the
amount of which is influenced by numerous factors related to construction work,
the organization and designing of enterprises, the area of their construction and
so forth. The use of statistical groupings in factor analysis for the duration of
project and enterprise construction makes it possible to establish in a general form
the nature of its dependence upon the individual factors, for example, upon the
amount of production capacity (Table III.6), its composition by projects, technical
- and design features of the projects, territorial placement and so forth. A more
thorough study of the duration of construction can be carried out on the basis of
correlation regression analysis making it possible to measure the closeness of the
link of the resulting and factor features as well as to obtain multifactor models
for the construction duration of the pro~ects.
- Table III.6
Capacity actually Total length of Rate of construction,
Plant put into operation, construction, capacity in 1,000 Growth
- groups 1,000 tons of months tons per month rate for
by pro- product per year speed of
duction construc-
volume a b a b a b tion
Small 50 55 41 37 1.22 1.49 1.22
Medium 75 85 45 42 1.67 2.02 1.21
Large 100 120 50 48 2.00 2.50 1.25
Total 225 260 136 127 1.65 2.05 1.24
Key: a--Previous five-year plan; b--Current five-year plan
In a statistical study of the duration of construction, the characteristics of the
intensity or speed of carr}ing out this process are of importance. The indicator
for the rate of construction is expressed by the amount of capacity put into opera-
ticn per unit of time (the direct value of the speed or rate), that is, v= N/T.
These indicators can be calculated not only for individual projects but also for
groups of projects wliich are similar in terms of the features of purpose or amount
of capacity, design and production solutions and so forth (see Table III.6).
T'he methodology for calculating the average speed of construction for projects does
nut differ from the one examined for individual projects. The table gives an exam-
ple of building bakeries in a republic during the current (report) and previous
(base) five-year plans.
Informarion on the duration of project construction is contained in the builder's
ac.counting documents (the statement of the state acceptance commission) as well as
in a number of statistical reports (forms No 8-ks, 1-ef and others) and in the
planning documents (title lists of the pro~ects and the intrasite title lists).
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�6. The Relationship of the Basic Indicators in Capital Construction Statistics
In a statistical study of capital construction, various indicators are employed
which reflect the process of fixed capital reproduction. From the viewpoint of im-
portance there stands out the group of basic indicators which most fully describe
the results of this sector's operations in fixed capital reproduction. These in-
_ clude: the putting of capacity and fixed capital into operation, capital invest-
ments and incomplete construction. An isolated evaluation of capital construction
results from the basic indicators at the present level of statistical economics
analysis is insufficient and a comprehensive and systematic approach to solving
this problem is required. An elucidation of the relationships between the basic
capital construction indicators also creates a theoretical premise for employing a
statistical methodology in an integrated analysis of the processes occurring in the
use of capital investments, their distribution and concentration, and in ensuring
- the fulfillment of quotas related to the putting of fixed capital and production
capacity into operation.
The relationship between the basic capital construction indicators is expressed in
various forms. Under present-day conditions, the balance relation and the ratios
of the basic indicators have assumed the greatest importance. On the basis of the
balance meth~d it is possible ta construct several schemes for the relationship of
the indicators using data in physical and cost terms. In the first instance this
will be a balance for the number of construction sites the simplest scheme of which
is shawn in Table III.7.
Table III.7
Resources a b Distribution a b
1. Construction sites on hand 1. Sites put into opera-
at year's start (ra~s) 372 695.2 tion in report year
(ra) 151 241.6
including starting-up 123 196.8 including starting-up 138 224.6
2. Newly commenced sites in
_ report year (rneW) 164 262.4 2� Sites on hand at
~ year s end (ra~e) 385 716.0
including starting-up 37 59.2 including starting-up
of report year 22 34.4
- Total 536 957.6 Total 536 957.6
Key: a--Number of construction sites; b--Full estimated cost of sites,
million rubles
The relationship of the indicators in this balance can be represented by the expres-
sion ra~s + rrie~, = ro + ra~e. For the purposes of analysis, the positions of the bal-
ance can be differentiated. For examp?e, the total number of construction sites at
the beginning of the period is represented by groups formed in terms of the features
of the state of the construction sites, the dates of their beginning and completion,
purpose, cost and so forth. From the data of a multiposition balance it is possible
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- rutc urr~~~~L u~r, uivLl
- to determine the indicators for the structure of the total number of sites in the
report period in the aim, for example, of disclosing the dispersion or concentra-
tion of capital construction and other tasks. In the example the share of the num-
ber of starting-up projects in the total number of those in operation during the
year was 29.9%
1253637 '100 I, cahile the share actually put into operation was
1
-25'~~ 536 '100~, that is, it declined. In turn, the share of the number of projects
)
not complete at tlie year's end rose in comparison with their number at the beginning
of the year, respectively, from 69.4 to 71.8 percent. The nonfulfillment of the
quotas f or putting starting-up projects into operation and the increase in the abso-
lute and relative expression of incomplete construction show a dispersion of capital
investmznts.
On the basis of this same scheme, it is possible to construct a balance for the
- sites in terms of the fu11 estimated cost. Its difference from the balance in phys-
ical terms consists solely in the cost orientation of the same balance positions and
this makes it possible to unite them in one table (see Table iII.7). This balance
solves analogous problems but now in a cost aspect. This makes it more homogeneous
and eliminates the conditionalities related to the numerous different features of
the projects and sites. Th~ structure indicat~rs worked out from the data af the
cost balance more accurately reflect the existing conditions in the capital con-
struction proportions. Thus, in the example, the proportional amount of sites at
_ the year's start according to the estimated cost is 72.6 percent and this is higher
- than the propo rtional amount of the number of construction sites (69.4 percent).
This shows the presence of larger sites in the composition of incomplete construc-
- tion at the year's start than in the composition of the newly commenced ones.
The capital investment balance'` is of independent significance and it can be con-
structed both in terms of the estimated cost (Table III.8) as well as i7 terms of
- the actual. The relationship of the cost indicators for capital construction in it
is characterized by the expression US+K~ = V~+C+Ue. The scheme for the capital
investment balance can be modified on the basis of the previously examined groupings
znd this will make it r~ossible to study the structure of incomplete construction,
cripital investments and putting of capacity into operation as well as obtain ratios
for t:~ese indicators reflecting the particular features of the capital construction
process .
The sec~nd form for a quanti.tative espression of the relationship for the basic
capital construction indicators is characterized by their ratios in the form of
' relative uni~s of plan Fulfillment, intensity and so forth. Under the actually
~~xisting cond itions of deviation from the plan, each basic indicators can have a
varying direction and value anc! this creates a number of variations each of which
].eads ro certain economic conclusions, Here, as a consequence of the balance link
between the indicators, the levels of fulfillment and the directions of their devia-
tions from the plan cannot devc~lop ~~.-bitrarily and this must be considered in
_ `'[n the giverr case it is a qu~s~ion of a statistical balance and not a bookkeeping
one.
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~
Table III.8
Resources million Distribution ~illion
rubles rubles
1. Incomplete construction at l. Fixed capital put into
year's start (US) 326 operation over year (V~) 278
2. Volume of capital investments 2. Written off by estab lished
carried out over year (K~) 284 procedure (C) 14
3. Incomplete construc tion at
year's end (Ue) 318
`Total 610 Total 610
analyzing the fulfillment of the capital construction plan. For example, if the
capital investment plan in the report year has not been fulfilled, then under no
conditions is it possible to fulfill or overfulfill the plan for putting fixed
capital into operation or the plan for the incomplete construction on hand at the
year's end simultaneously.s
On the basis of the examined capital constr~xction cost indicators it is possible to
calculate intensity indicators and in particular to construct three pairs (direct
_ and inverse) of relative values:
U U
~ and K; U and K and U,
c ~
where V--the volume of fixed capital put into operation over the report period;
K--the volume of capital investments over the report period;
U~--incomplete construction at the end of the report period.
. Since each pair of relative values (direct and inverse) in essence reflects the same
relationship ~f economic phenomena, in the system of indicators it is enough to ex-
amine one indicator of each pair. One of the ~~roperties of this sysyem of indi-
cators is that the product of the three relative values for intensity equals one,
that is:
U U
K�~ 1 (1)~ or V c' K= 1� (2)
V U~ K K~ V U~
This property makes it possible to use it primarily for control purposes in check-
ing the correct calculation of the indicators.6 Each of the three indicators in
this system has a specific economic sense and at the same time can be viewed as the
normed amount of one basic capital construction indicator in relation to the second.
5It is assumed that the plan and its actual fulfillment have been determined in ac-
cord with the planning and statistical principles.
6Below we will use formula (1).
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As a consequence of the balance relation in the basic capital construction indica-
tors, the relative values of intensity cannot assume arbitrary values and this makes
it possible to use them in elaborating norms, in particular for incomplete construc-
tion.
The relative indicator expressed by the value ~ characterizes the ratio of the value
of all material, labor and financial expenditures going to the reproduction of fixed
capital dur.ing the given ~eriod and the amount (value) of fixed capital which has
compl.eted construction in this period and gone into operation. Under the conditions
- of simple and even fixed capital reproduction this amount equals one. However, in
actuality, these conditions do not occur as socialist production is expanded produc-
tion and the projects being created differ in terms of the duration and cost of con-
struction and for other features. Here one group of factors, for example, technical
, progress and industrialization of construction, tend to reduce this indicator, while
another, for example an increase in the capital investment rate or a greater number
of large pro~ects with a long completion date, leads ~o the growth of this indicator.
- For this reason the amount of the ratio will be greater or less than one depending
upon what production conditions have been dominant in the report period.
The relative indicator expressed by the value U characterizes the ratio of the
c
amount of assets circulating in the national economy in the form of fixed capital
and the amount of assets tied up by the end of the given period in forming the capi-
tal construction backlog. An increase in this indicator or the maintaining of it on
the previous level, in following the planned conditions and growth rates for the
capital investment volume, means successful capital construction activities.
U
The relative indicator expressed by the amount K characterizes the ratio of assets
diverted for fixed capital reproduction at the end of the period and the amount of
capital investments used in the given period. This indicator which is calculated
for an annual period can be conditionally interpreted as the average duration of
_ utilizing the assets (in years) as embodied in incomplete construction at the year's
- end. In practice this same indicator is adopted as the normed value in planning
- calculations.
The above-examined relationships can be employed in factor index analysis and in
- rcf;ressi.on currelation analysis of capital construction activities.
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CHAPTER IV: THE STATISTICAL STUDY OF CAPITAL INVESTMENT ECONOMIC EFFECTIVENESS
41. Basic Areas in the Statistical Study of Economic Effectiveness
The enormous scope of capital construction being carried out in our nation puts in
the forefront the problem of increasing capital investment effectiveness. The deci-
sions of the 25th CPSU Congress state that "in capital construction the basic task
is to increase capital investment effectiveness and to ensure the further growth
and quality improvement of the fixed capital, the rapid completion and development
of new productive capital in all the national economic sectors by improving planning,
designing and the organization of construction work, shortening the time and lower-
ing the cost of construction.l
Statistics has been confronted with the important task of working out a system and
methodology for the indicators characterizing the levels of the actual economic
_ effectiveness of capital investments into national economic fixed capital. The im-
portance and timeliness of this task are determined by the need of monitoring the
achieving of the efficiency levels set in the designs and plans, by the need for a
scientific basis for the normed and planned effectiveness indicators and by the im-
portance and the analysis of the disclosure of reserves for raising capital invest-
ment effectiveness. The task of statistics is also to improve the observation of
the actual capital investment effectiveness, in particular sampling surveys of indi-
vidual enterprises and production complexes.
In the statistical study of capital investment effectiveness it is advisable to dif-
ferentiate two areas which have independent systems of indicators and various evalu-
ation criteria. One area encompasses the aggregate of indicators reflecting the
effectiveness of the ceproduction cycle in which capital investments operate as an
element of society's expenditures in the expanded reproduction process and expresses
the national economic aspect of their effectiveness. For this reason in the given
instance the increase in national income (net product) as well as the product or
profit created as a result of applying the fixed productive capital into which the
funds were invested is adopted as the economic effect from the capital investments.
The other area unites the indicators which characteri,ze capital investment effective-
ness as expenditures in a specific national economic sector, that is, construction,
and thereby reflects the sectorial aspect of effectiveness. In this instance thQ
1iMaterialy XXV s"yezda KPSS," p 211.
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end result of production activities in the given sector, that is, the completion of
construction and the putting of fixed capital into operation, is the economic ef-
fect from the capital investments made in capital construction. A study of the
effectiveness of construction work and design-research activities comprises inde-
- pendent component parts of this area.
- �2. A Statistical Study of the Economic Effectiveness of Capital Investments in
= the National Economic Aspect
The economic effectiveness of capital investments, in being viewed within expanded
socialist reproduction, reflects the national economic approach to solving the giv-
- en problem. For this reason, the indicators and methodology in a statistical study
of actual capital investment effectiveness are based upon the common theoretical
principles given in the Standard Procerdure2 and which are required in the calcula-
tions and establishing of capital investment effectiveness ir~ all national economic
sectors. Let us examine these indicators and the methodology of calculating them.
Capital investment effectiveness is expressed by the ratio of effect and expendi-
tures. Here a distinction is drawn between the indicators for the overall (abso-
lute) and comparative capital investment effectiveness. The indicators for overall
capital investment effectiveness for the national economy, its sectors and the Union
republics are calculated using the formulas:
~D K
Z~a = K or T~a = OD '
where Z~a--the coefficient for the overall (absolute) capital investment effective-
ness;
_ T~a--the capital intensiveness or capital-output ratio of national income;
~D--the increase in the annual volume of national income (net product);
K--capital investments causing an increase in national income (net product).
For the individual sectors and types of production in industry, transportation, ag-
riculture and so forth as well as for the ministries and departments, if net prod-
uct is not calculated for them, the economic effectiveness of capital investments
_ can be determined on the basis of prof it using the formulas:
~P K
Z~p = K or T~p = ~P '
where Z~P--effectiveness coefficient;
T~p--the repayment time of capital investments;
~P--the increase in annual prof it;
2See: "Tipovaya metodika opredeleniya ekonomicheskoy effektivnosti kapital'nykh
vlozheniy, utverzhdennaya 8 sentyabrya 1969 g. Gosplanom SS~T'., Gostroyem SSSR i
AN SSSR" [Standard Procedure for Determining Economic Effectiveness of Caiptal In-
vestments as Approved on 8 September 1969 by the USSR Gosplan, the USSR Gosstroy
and the USSR Academy of Scjences], Moscow, Ekonomika, 1969.
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K--capital investments into building production-end projects causing an
increase in profit.
The overall economic effectiveness of capital investments into the cc~nstruction of
individual enterprises as well as for individual measures is determined on the basis
of profits using the formulas:
Z _ W-C or T _ K
~P K ~P W-C '
where Z~P--effectiveness coefficient;
T~p--repayment time for capital investments;
W--the value of annual product output according to the plans (in enterprise
wholesale prices);
C--the costs of annual product output.
In instances when the enterprises operate at a planned loss, the effect is character-
ized by the savings established as a result of reducing product costs as a conse-
quence of employing the given capital investments.
The comparative economic effectiveness of capital investments is characterized by a
comparison of different variations of new construction and reconstruction of exist-
ing enterprises. The minimum ad~usted expenditures is the indicator for the high-
est comparative effectiveness for capital investments into different construction
variations. The latter expressed the total current expenditures and capital invest-
ments ad~usted for the same unit. In terms of the production volume per year the
adjusted expenditures are determined using the formula Pe = C+ EnK and for the capi-
tal investment repayment time using the formula Pr = K+ TnC,
= where En -the normed effectiveness coefficient;
Tn -the normed repayment time. For the national economy these are equal, re-
spectively, to 0.12 and 8.3 years.
In the formulas for the ad~usted expenditures, the costs of the product and capital
investments for pro~ects which are equal in capacity are set in the full amounts and
for different-capacity pro3ects in the form of proportional expenditures per unit of
product. In instances when the compared variations differ not only in terms of con-
struction times but also in the distribution of the share of capital investments
over the years and current expenditures change over time, the need arises of adjust-
ing these expenditures made at different times to the initial moment of time by mul-
tiplying them by the reduction factor B=~1+~~~ , equal to 0.08 for the national
economy as a whole, where t--the period of the reduction time in years.
The designated indicators o~ the Standard Procedure for Determining Economic Effec-
tiveness have been well worked out for the stages of construction designing and
planning. However, the direct application of these same indicators in studying
actual captial investment effectiveness encounters difficulties related to obtain-
ing the initial data and mainly to observing the demands of their statistical com-
parability, for example, in terms of the object of observation (the aggregate of
enterprises, measures and so forth), in terms of the time of making the capital
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investments and obtaining an effect, in terms of the methodology of prices and cal-
culating the cost indicators and so forth. At present these difficulties have been
partially overcome and statistical theory and practice possess a methodology for

_j. measuring the level of actual economic effectiveness for capital investments.
In 1973, the Capital Canstruction Administration of the USSR TsSU and the USSR TsSU
Scientific Research Institute for the first time worked out a"Procedure for the
Statistical Study of Capital Investment ~conomic Effectiveness." Since 1974, the
USSR TsSU using this procedure has begun each year to make one-shot samplings of the
actual economic effectiveness of capital investments into industrial production ca-
pacity which has been put into operation. Subsequently the system of indicators em-
ployed by the statistical bodies like the work itself of conducting the samplings
have been improved and enlarged.
The repayment (recoverage) time and the effectiveness coefficient of capital invest-
ments are among the basic indicators reflecting the level of ac~ual capital invest-
ment effectiveness. The former indicator characterizes the length of th~e period
during which the total actually earned profit reaches the amount of the actually
made capital investments. The latter indicator expresses a relative amount charac-
terizing that portion of the actually used capital investments which on an annual
average has been repaid out of profit. This amount is inverse to the length of time
for capital investment repayment. Thus, in determining actual effectiveness one
considers the actually obtained profit and not its fixed amount as is done in de-
sign and planning calculations.
The economic sense of the actual effectiveness indicators predetermines the area of
their application and the particular features of the nethodology involved in calcu-
lating them. The actual repayment time of capital investments is directly deter-
mined for the individual enterprises and production capacity which have already been
paid off in the operating period. In the instances when the capital investments
have not been repaid, it is possible to determine only the anticipated date of their
repayment. The methodology for calculating the actual repayment date differs also
depending upon the nature of construction and the procedure for putting the capacity
and pro~ects into operation. The least conditionality is permitted in calculating
the indicators for the actual effectiveness of new construction sites while the
greatest is permitted for reconstruction and expansion of existing enterprises with
their partial putting into operation. Let us take up the individual fundamentally
important provisions of the methodology.3
It is reconm~ended that the capital investment repayment time be expressed in years
but shorter units of time are also possible. The overall formula for calculating
this indicator is as follows:
_ Ti = Ti + Ti + Ti ,
3"P~Ietodika statisticheslcogo izucheniya ekonomicheskoy effektivnosti kapital'nykh
vlozheiiiy" [Procedure for a Statistic~tl Study of Capital Investment F.conomic Effec-
tiveness], Moscow, NII TsSU SSSR, 1973.
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where Ti -the duration of the enterprise's operation during the year it was put into
operation (in years);
Ti--the number of the enterprise's complete operating years during the period
of repaying the capital investments;
Ti--the duration of the repayment period during the year this is completed
(in years).
The amounts of time Ti and Ti are insignificant and as a total they comprise not
more than 2 years. However, the determining of them provides the greatest diffi-
culty in calculating the recovery time. One of the existing methods for establish-
ing these component parts consists in the following. The amount Ti, as a portion of
- the first operating year, is obt~ined by dividing the number of months the enter-:
prise operates during this year (T') by 12, that is, T':12. The second component
- part of the recovery time (Ti) is also expressed in years and is determined propor-
tionately to the profit during the year the recovery is complete, that is, accord-
ing to the formula:
T� _ K- EP t
i pr ~
where EPt--total profit (including losaes) over the period from the putting of the
enterprise into operation to the year of recovery;
Pr--profit during the year of recovery.
In the aim of eliminating the influence of prices in calculating the repayment time,
the initial data, that is, the capital investment volume and the profit, are ex-
pressed in fixed prices, namely: capital investments, including unfinished work,
according to the estimated cost, and profit according to data on commodity product
and its costs in prices in effect during the survey year. For this, for recalculat-
ing commodity product and costs into com~arable prices, the chain price indexes for
each year of recovering the capital investments are employed.
The expected time for the recovery of capital investments (Ti) is calculated from
the formula:
0 ~
Ti = Ti + Ti + Trem ~
where Ti--the number of complete years during the enterprise's operation to the
critical moment of the survey, that is, the date at which the survey was
made; .
Trem -the conditional duration of the period after the critical moment of the
survey to the end of the recovery period.
Since the amount of Trem is calculated on the basis of a fixed profit level usually
for the last year of the enterprise's operation, the expected time for recovering
the capital investments assumes a certain conditionality. The greater tr.e value of
Trem the greater the indicator's conditionality. This part of the recovery time
can be calculated by the formula
_ K-EP
Trem - P ~
s
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where EP--total profit over enterprise operating period after being put into opera-
tion (including losses);
PS--profit in survey year.
Let us give an example which illustrates the calculating of the designated indic~-
tors. Let us assume that for an administration in the woodworking industry we know
data on the construction and operation of three sawmills (Table IV.1):
Table IV.1
.3eIfQA CMlTHSG CTON- 3~SpA Z: CMETHiw fTONMOCTb .3lNOII 3: CNlTHeA CTONMOCTb
wocTb 3400 te+c. py6., ~ ~pp py6., roaonoA 3
0.70. The construction pref abrication coefficient according to the data on con-
sumed materials was: last year 6~400 0.72; in the report year 9~048 - 0.78. The
? ~
divergence in the change of the coefficients is caused by the different sense of
_ the indicators and by the methods of determining, the~n. While the former indicator
reflects changes in the composition of the work carried out as well as in the cost
of the employed materials and other production resourcea, the latter considers
changes only in the realm of material expenditures.
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Table IX.1
Indicators Previous year Report year
Volume of construction-installation work carried out 8,200 11,600
Including for projects erected from prefabricated
elements 5,250 8,120
Value of expended materials 6,400 9,048
Including prefabricated pieces and structures 4,608 7,030
Finally, the degree to which the prefabricatior. method has spread in construction
can be judged from the number of projects built from prefabricated pieces and struc-
tures and their proportional amount in the total number of projects. In housing
construction, analogous indicators can be calculated using data on the number of
m2, respectively, of the effective or dwelling area of the buildings put into oper-
ation. The statistical Form No 1-ks gives information in the area of buildings put
into operation with the isolating of buildings from factory-manufactured large-
sized elements and assemblies. This information ie given separately for industrial,
housing, civil and rural construction and this makes it possible to consider the
sectorial differences of prefabricated construction.
For studying the prefabrication level in cons truction, indicators are also calcu-
lated for. the proportional amount of prefabricated assemblies and units in physical
terms. The proportional consumption of pref abricated elements is determined per
unit of capacity or power of the fixed capitai project as well as per 100, 1,000
and so forth rubles of the e,timated cost of construction and installation work.
Information on the consumption of prefabricated elements in physical terms can be
found in Form No 2-SN and No 1-ks.
Let us give an example. Let us assume that during the report year a construction
trust completed 21.,000 m2 of housing, including 14,200 m2 of housing from prefabri-
cated elements. For constructi*~g the buildings from prefabricated elements,
4,800 m3 of prefabricated reinforced concrete elements were used along with 5,200 m3
of large wall modules and 1,800 m2 of large wall panels. Let us determine the pro-
portional expenditure of preEabricated elemen ts per m2 of housing. As a whole for
housing constructic~n ~-8 + 5.2 + 1.8 = 11.8 _ 0.831 m; including for the prefabri-
14.2 4.8 14.2 5.2
cated reinforced concrete units 14.2 = 0.338 m; for wall modules 14.2 = 0.366 m,
for wall panels 4$= 0.127 m. The prefabr ication coeff icient for housing con-
construction at the ~;iven tr.ust was: 14'2 = 0.676, or 67.6 percent.
21.0
~ 'i'he statistical methodulogy for studying other industrial construction methods is
analo~ous to the above-examined one for pref abricated construction.
~4. A Study of the Introduction of New Technology, Progressive Production Methods
and Efficient Platerials
Technical progress in construction is characterized not only by an increase in the
fleet of construction machines but chiefly by the ongoing improvement in the means
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I
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~
of production. This is sided by the creation of 'nighly productive, more powerful
and economic machines, by the introduction of new progrPasive technology and by
the use of new types of efficient materials. Technical progress statistics should
provide answers to the questions of how the plans for the introduction of new tech-
rivlbgy are being carried out and what is the actual scale of the spread of new
technology, improved production methods and new efficient materials in construc-
tion.
New equipment is studied by statistic s primarily using data on the composition, num-
ber and puwer of the new, advanced types of machines. From these same indicators
the fulfillment of the plan for the technical development of the construction or-
ganizations and sites is monitored. On tha basis of data concerning the number and
power of new machines at contracting organizatione, it is possible to determine
relative indicators for their introduction into construction, for example, the pro-
portional amount (by number and cost) of new advanced machines in the total fleet
of the given type of construction equipment. The absolute and relative indicators
for new equipment must be compared wi th the analogous indicators of the worn out
and obsolete machines to be replaced. Among the new types of construction machines
in practice are those which differ s ubstantially from the previously produced and
employed analogous models of Soviet and foreign equipment in terms of the most im-
portant technical an' economic specif ications, for example, in terms of improved
design, increased po~ er and other features which make the new machine more produc-�
tive and economic.
In describing new construction equipment it is important to have the average unit
values for the operating parameters of the machines, for example, the average shovel
capacity af an excavator (clamshell) and scraper, the average hoisting capacity of
a given type of crane and so forth (s ee Chapter VII, �4). Such average indicators
are employed in studying the dynamics of new equipment and the prospects for its
_ development.
The coefficient for the renewal of the fleet of construction machines can be a gen-
eral summary indicator for the introd uction of new equipment in construction. This
is figured as the ratio of the value of new construction equipment put into produc-
tion over the period (ordinarily a year) to the total value of the fleet of exist-
ing construction machines at the end of the period (year). In employing this co-
efficient in a study of technical pro gress, it is essential to consider that with
an increase in the period for which i t is calculated the machines considered new at
the start of the period can be :,~bsolete at the end of it. For this reas~n it is
essentia~ to systematically ad~ust the list of construction machines which in the
national economic plan are considered among new equipment.
An important manifestation oF technical progress is the tise of new, efficient (pro-
gressive) materials in construction a s they ma:.e it possible to improve the quality,
reliability and economy of the fixed capital construction projects. For example,
an increase in the output vo].ume and the use of synthetic materials (epoxy resins,
plastics and so forth) on the basis of introducing chemistry in industrial produc-
tion makes it possiblr_ to substantial ly reduce th.e weight of buildings and installa-
tions, to obtain high thermoacoustic and waterproof properties in the pro~ects and
obtain an economic eCfect in reducing expenditures on materials and as a whole for
the construction product. The intr ~d uction of new efficient materials can be jud-
ged from the very list and number of tvpes and 6rades of these material~ employed
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in construction. But a more certain notion of the improvement in the subjects of
labor is provided by the quantity of the individual types of efficient materials
employed in construction over this period. By comparing the absolute actual and
planned indicators for the use of efficient materi~ls, it is possible to gain a
_ notion of the degree of fulfilling an important part of the technical development
plan for the c~ntracting organizations.
Technical progress is also manif.ested in the improving of production methods. The
_ introduction of new, more advanced technology provides the same economic effect as
the use of new equipment. Statistics, in studying this area of technical progress,
monitors the fulfillment of the plan for introducing new technology into construc-
tion and describe: the dynamics of this process. The indicator most often used
for judging the amount of the introduction of new progressive technology is the
volume of construction-installation work carried out over the report period under
- conditions of new technology. An analogous relative indicator is the proportional
amount of the volume of construction-installation work carried out under the condi-
tions of employing new technology in ttte total volume of all the estimated cost of
the work carried out during the given period.
' �5. A Statistical Study of Construction Machanization
The mechanization of construction is an important factor in raising labor produc-
tivity of the workers. In the lorg-range national economic plans primary measures
are envisaged to mechanize the labor intensive and most widespread jobs in con-
struction. These include earthmoving and loading, the installation of inetal struc-
_ tural elements, finishing work and many others. Construction statistics studies
plan fulfillment and the dynamics of work mechanization in terms of their individu-
al types and as a whole, it determines the effectiveness of inechanizing the work
and brings out the influence of factors on changing the degree of work mechaniza-
tion in construction.
In carrying out these tasks, it is essential to delimit and determine the basic con-
' cepts related to construction mechanization. In construction, all work performed
from the viewpoint of its mechanization can be divided into unmechanized and mech-
anized. The unmecti~~nized includes work which is performed by man using simple im-
pLements of labor powered by human musclea, that is, manual ~obs, for example the
laying uf waLls frum brick, dig~;in~; a pit or ditch with a pick and shovel. Work is
consi~?ered mechanize~ when one or several of the basic operations is performed iis-
in~ machines or mechanisms driven by any type of engine but not by human muscle
power. .Jobs where all the basic and auxiliary labor-intensive operations of the
production process are pertormed by machines or mechanisms are considered to be
f.ully mechanized or inte~;rally mechanized. For example, fu11 mechanization of
earthmoving occurs if the digging of the dirt, its tranaporting, unloading, level-
ing out and compactin~; ar.e done by machine.
A nutiun of the level (degree) of inechanizing construction and installation work
is provided by the following statistical indicators: coefficients of inechaniza-
tion and full mechanization of individual types of construction and installation
w~rk; a summary coefFicient for the mechanization of construction and installation
work; a coefficient of labor mechanization.
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The c~efficient for the mechanization of individual types of construction and in-
stallation work is calculated by comparing the amount of work performed by any
mechanized method with the total volume of work performed in physical units, that
is, according to the formula
qm
Kmc q~ + qn '
where qm -the amount of work performed mechanically in physical units;
qn -the amount of work performed manually in physical units.
This indicator expressed in percent is termed the mechanization level. It charac-
terizes the overall mechanization level of the given type of construction or instal-
lation work in the broad sense, since the numerator of its formula includes the
amount of work done by a mechanized method and, in particular, a fully mechanized
one. In 1978, the level of full mechanization for the installation of concrete and
reinforced concrete elements in the USSR reached 97.1 percent and for earthmoving,
98.0 percent.
- The coefficients for the full mechanization of work are calculated by dividing the
amount of work performed by the fully mechanized method by the total volume of the
given type of performed work. In calculating this indicator it is possible to use
- data from the quarterly reporting of Form No 1-hT "Report on the Mechanization of
Construction and the Use of Construction Machines." Along with the mechanization
coefficients, in construction indicators are calculated for the fulfillment of the
mechanized work plan such as Im = qmf~qmp,Q�
The degree of inechanization for several types of construction and installation
work can be described by a summary mechanization coefficient in which the volumes
of various types of work are compared in their labor intensiveness, that is, by
t.he formula:
Eqmt
Ksm Eqmt + Eqnt ~
where t--working time expenditures per unit of work (labor intensiveness).
In calculatin~ the summary coefficient using this formula, as the comeasurements,
it is possible to use the actual and normed labor intensiveness levels in mechanized
and unmechanized ~obs as well as the average actual levels of labar intensiveness
in mechanized and manual ,jobs taken together. The choice of the comeasurement is
determined by the availability of initial data for calculating the coefficient.
In practical tcrms an always possible but not unconditional variation for deter-
mining the summary work mechanization coeff icient can be considered the one in which
the average labor intensiveness of the work performed by the mechanized and unmech-
anized method is adopted as ~he comeasurement. The summary work mechanizat:ion co-
efficient can be employed for an aggregate of jobs united in a single production
_ process in building a project, for example, for painting and stuccoing and so forth.
Let us give an example. Let us assume that the following data are available on
finishing work and the time expensitures for them in a construction trust in Septem-
ber of the report year (Table IX.2).
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Table IX.2
Plan Actual
Indicators
a b a b
1. Volume of work performed, total, m2 1,780 4,360 2,000 4,000
2. Including mechanized 1,510 3,050 1,600 3,000
3. Man-hours spent, total 600 2,150 640 2,160
4. Including in mechanized jobs 325 1,380 320 1,560
5. Level of work mechanization, %
line 2�100 g5 70 80 75
line 1
6. Level of labor mechanization, %
(line 4�1001
l line 3 ~ 54 64 50 72
Key: a--Painting; b--Plastering
In the table, line 5 shows the mechanization levels of the individual types of fin-
ishing work. In particular, in comparison with the plan the painting mechanization
level has dropped while th at for plastering has risen. Here the mechanized paint-
ing ~lan was fulfill~:d by 106%~i~5~~�100J and for plastering by 98.4%I3~~~~�100~.
~ l J
The summary work mechanization coefficient can be calculated by the last method.
The actual overall labor intensiveness for m~chanized and manual painting for 1 m2
of surface equals 0.32 man-hour (640:2,000) and for plastering 0.54 man-hour .
(2,160:4,000). Hence the actual summary coefficient for painting and plastering
mechanizaticn during the report month will be:
1,600�0.32 + 3,000�0.54 2,132 _ 0.761, or 76.1%.
_ 2,OG0�0.32 + 4,000�0.54 2,800
The labor mechanization coefficient is calculated by comparing labor expenditures
in mechanized jobs (Tm) with the overall labor expenditures for the given type of
jobs (T), namely ICmt = Tm:T. Expressed in percent, this indicator is called the
labor mechanizatiun level. The table gives the initial data and the calculation of
the labor mechanization level for the report month (line 6). The summary labor
mechanization coeffictent in finishing work for September equals: 320 + 1,560 _
640 + 2,160
1,880 _ 0.671, or 67.1%.
2,800
In determining the labor mechanization level it is possible to proceed from the
number of workers employed in mechanized jobs and the total number of workers em-
ployed in the given ~jobs as of a separate date.. Here, however, it is essential to
~learly define the professions of the workers involved in mechanized jobs. Basi-
cally these are workers who are employed in controlling or�servicing construction
machines and mechanisms, for example, bulldozer, crane or excavator operators and
others. The indicator calculated by this methodology describes the labor mechaniza-
tion level on an individual date.
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The labor mechanization coefficient ia always leas or equal to the corresponding
work mechanization coefficient. The reason is that the labor mechanization coeffi-
cient reflects ~nly the ratio of the volumes of labor expenditures on mechanized
and manual jobs and gives no consideration to the differences in labor productivity
_ in this work. One hour. of work by an excavator operator in terms of its productiv-
ity cannot be equated to an hour of work by a ditchdigger supplied with a shovel,
although in the denominator of the labor mechanization coefficient the work time of
both workers is added together. For this reason, in the mechanization of manual .
labor, the labor and work mechanizatioa coefficients will rise. With further mech-
_ anization of labor already equipped with machines, with other conditions being
- equal, the labor mechanization coefficient will decline since the quantity of man-
ual labor or the equal volume of work remains unchanged while the quantity of ine4ch-
anized more productive labor declines.
The above-examined dependence of economic characteristics can be expressed in a
system of interrelated indicators:
Kmw = Rmt ' R'pr = TT ' ~Tm : T~ ,
_ where K~--work mechanization coefficient;
Kmt--labor mechanization coefficient;
KPr--relative amount indicating by how many times the productivity of inech-
anized labor is greater than labor productivity in the gi.ven type of
work as a whole.
This system of indicators can underlie factor index analysis for the mechanization
of construction-installation work and from its methodology it is possible to deter-
mine by how many percent the labor mechanization level has changed depending upon
a char_ge in the degree of labor mechanization (the labor mechanization coefficient)
and the change in mechanized labor productivity in comparison with all labor produc-
tivity. Let us show the influence of these factors from the example of plastering
(see Table IX.2). The excess of inechanized labor ~,roductivity over the productivi-
ty of all labor in September equaled:
actual 3,000 ,4,000 _ 1.92:1.85 = 1.038,
1,560 ' 2,160
plan 3,050 , 4,360 _ 2.21:2.03 = 1.089.
1, 380 ' 2 ,150
Hence the change in the work mechanization level as a consequence of the change in
- the labor mechanization level ~Icmw - Kpri ~~n?tl - KmtO) = 1.038(0.72 - 0.64) = 0.083,
or 8.3%. The change in the work mechanization le~~el as a consequence of a change
in the ratio of the productivity of inechanized and all labor of the workers is:
~kpr � ~nt0'~Kprl' KprO~ = 0.64(1.038 - 1.089) _ -0.033, or -3.3%.
The total deviation in the mechanization levels of plastering in percent equals the
total of the changes for the factors: 8.3 +(-3.3) = 5%. Consequently, the plaster-
ing mechanization level increased in comparison with the plan due to a rise in the
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labor mechanization level in pastering and mainly because of the mechanizing of
manual labor (according to the plan 770 man-hours should have been worked in manual
plastering but in fact 600 man-hours were worked).
~6. A Statistical Study of Specialization, Concentration, Cooperation and
Integration
Specialization, cooperation [subcontracting] and other forms of managing construc-
tion are an important condition for accelerating industrialization and technical
progress in construction. These contribute to the successful carrying out of the
long-range capital construction plans in our nation. Two types of specialization
- among contracting organizations are distinguished: sectorial (product) and tech-
nological (by types of work). Sectorial specialization occurs when the construc-
tion Qrganizations focus their basic operations on the performing of work to erect
' the projects of a single sector, for example, power plants, metallurgical plants,
railroads, housing and so forth. Technological specialization consists in the
focusing of a construction organization's basic operati~ns on the performing of in-
dividual types of construction and installation work or on erecting individual
parts of buildings and installations.
The designated types of specialization lie at the basis of the statistical study of
construction organziations in this area. An idea of sectorial specialization can
be gained from the grouping of construction organizations by the sectors of indus-
try, transportation, agriculture and so fcrth as well as in terms of the nonproduc-
tion sphere of the national economy, for example, the housing and utility systems,
public he~lth and so forth. The distribution of the aggregate of contracting or-
ganizations by sectorial group~ can also be carried out using the data of the con-
tractin~ organization censuses (one-shot counts) conducted annually by the statisti-
cal bodies. Current reporting does not contain sufficiently complete materials for
this purpose. A ~tructural description of sectorial specialization can be gained
from the group absolute and relative data on the number of con~truction organiza-
tions and the volume of construction-installation work performed by their own
forces.
~ The sectorial specialization level af an individual construction organization is
described by the proportional amount of the volume of construction-installation
work done by its own forces in accord with the sectorial specialization of this
: organization in the total volume of work carried out during the period. This indi-
cator is calculated tti an analogous manner for the aggregate of contracting organ-
izati.ons. But from tt~e statistical reporting it is not always possible to obtain
information on the nmount of work carried out along sectorial lines. For this rea-
son, for det:ermining the overall sectorial specialization level for the aggregate
. oE construction organizations in a republic or administrative rayon, for the sector
and department it is possible to calculate the proportional amount of the volume of
work performed by the organizations having sectorial specialization in the volume
of work carried out by all the organizations of the studied aggr~gate.
- A study of tt~e development of technological specialization in construction is also
bz~sed upon the method uf. grouping the contracting organizations. In practice all
c~~nsLruction organizations are divided i~ito two large groups: gEneral construction
and specialized. 1't~e specialized ~.onstruction and installation organizations per-
C~~rm only individual types of work or erect the parts af building~ and installations.
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Such organizations are considered specialized by the technological feature, for
example, organizations performing earthmoving or finishing work and others. A
structural description of these two groups of organizations by absolute and rela-
tive (proportional) indicators for the number of organizations and the volume of
work performed by them provides an overall notion of the level of technological.
specialization in the aggregate of construction organizations. A more detailed
_ description of the areas and the level of technological specialization can be gained
by grouping the aggregate of specialized organi.zations according to the actually de-
veloped types of technological specialization (Table I X.3).
Table IX.3
1965 1978
a b a b
1 2 3 4 5
~
Total primary contracting organiz-- .:~~ns 11,890 100 22,932 1~0
Including:
General construction 5,482 44 9,800 37
Specialized 6,408 56 13,032 63
Including by types of work:
Earthmoving 663 4.0 1,021 4.5
Laying exterior utilities 386 3.5 591 2.6
Installatian of larg~-sized building and
structural elements i55 2.5 284 2.9
Finishing work 318 2.9 621 2.7
Hydraulic engineering work 124 1.6 108 1.3
Sanitary-technical work 631 5.1 1,013 4.0
Electrical installation 594 5.9 796 5.1
Work on low-voltage equipment 251 1.7 316 1.1
Installation of production and other equipment 542 7.0 966 6.7
Key: a--Number of organizations; b--Proportional amount of work performed by
these organizations in total volume ~f work, percent
The technological specialization level of an individual construction organization
is characterized by the proportional amount of the volume of work performed by the
organizat~.on's own forces in accord with izs production specialty in the tctal vol-
ume of work performed by it during the period. In an analogous manner this indica-
tor is calculated for the aggregate of organizations specialized in the given type
of work. However, the information needed for the calculation is found only in the
organization's accounting documenta. From the data of statistical reporting (Form
No 1-ks), the level of an individual type of technological specialization can be de-
termined as the proportional amount of the volume of work carried out by the own
forces of the organizations having the given specialty in the total volume of the
work carried out by all the specialized organ'.zations in the given aggregate. Fre-
- quently in statistical practices as the basis they employ the amount of work carried
out by all the construction orgar.izations (specialize~. and general construction).
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Table IX.3 gives the indica.tors for the technological specialization of primary con-
struction and installation organizations according to the individual types.l From
this it follows that the highest specialization level has been achieved for equip-
ment installation while the greatest growth in the technological specialization
level has been achieved in earthmoving.
Specialization in construction requires the establishing of production ties between
the construction organizations and the enterprises involved in the joint erection
of fixed capital projects. The planned organization of these ties is termed coopera-
tion. The forms of cooperation in construction are rather diverse. In terms of the
affiliatiu,l of the organizations, a distinction is drawn between intradepartmental
cooperarion and interdepartmental cooperation. From the viewpoint of the terri*or-
ial loca~tion of the organizations, there is also intraregional and interregional
cooperation.
Cooperation in construction can be described by different indicators. An approxi-
mate notion of the cooperation level can be gained from the number of specialized
organizations participating in the given construction or the aggregate of sites as
well as from the number of specialized organizations acting as subcontractors for
the general contracting organization. A general indicator for the cooperation level
is the average number of subcontracting organizations per general organization for
the aggregate as of a certain date. This can be calculated from the formula:
KoP ~g ,
where OS--the number of subcontracting organizations ior the given general organiza-
tion;
Og--the number of general organizations in the given aggregate of contracting
organizations.
Since cooperation is cloaked in the appropriate contractual form, the fullest notion
of. its level is provided by an indicator calculated using data on the amount of work
carried out by the organizations under different contracts. The cooperation level
using these data is expressed by the prop~rtional amount cf work carried out by
the organizations under subcontracts in the total amount of work done under general
contracts. According to the data of statistical reporting in Form No 1-ks, it is
possible to determine the cooperation level achieved by a construction organiza-
tion as a whole as well as separately for the existing forms of cooperation.
Let us examine an example. Let us assume that there is information on the fulfill-
ment ot the cc,..tractl.ng program by the construction organizations for one of the
RSFSR oblasts (Table IX.4; 1,000 rubles of estimated cost).
Tlie cooperation level of construction organizati~r,is on the oblast scale is charac-
terized in the following manner:

~1 -
1See: "Narodnoye kliozyaystvo S~SR v 1978 g." [The USSR National Economy in 1978],
Statistical Annual, Moscow, Statistika, p 356.
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Table IX.4
Indicators Previous year Report,year
s
Contracting wory under general contracts with builders 25,440 38,360
Including:
By own forces of reporting organization 13,605 16,440
By outside organizations, total 11,835 21,920
Including:
Other trusts of one's glavk 10,215 21,498
Other ministries of given Union republic 1,620 422
o ~ 1
As a whole in the previous year: 46.5/ 11 835 . 100 , and in the report year:
25,440 ~
o , 1
57.1/ 21 920 ,100 , that is, the production ties between the contracting organiza-
38,360
tions in the oblast increased;
With the trusts of their own glavk in the previous year: 40.1/ 10 215 ~100 , and
- 25,440
~ , 1
(21 498 1
in the report year 56.0% 138,360 ' 100~;
l
With trusts of other minisr~ies in the given Union republic in the previous year:
6.4% f25~440 '1001, and in the report year: 1.1% ~384360 '1001.
~ ~ ~ ~
The overall cooperation level in each year can be represented as the total of the
particular cooperation levels with the organizations of the various systems: in
the previous year 46.5 = 40.1 + 6.4; in the report year 57.1 = 56.0 + 1.1.
By a parallel comparison of cooperation levels it is possible to describe not only
their overall change but also the role of the specific production tie~ which have
developed in th~ given period among the construction organizations from different
systems as well as the direction and amount of their changes over the period. In
the example, along with an overall rise ~n production ties, there has been signifi-
cant development of cooperation among the construction organizations within their
own glavk and a decline in the cooperation level with the organizations of differ-
ent ministries.
Along with specialization and cooperation, integration is an effective form for
organizing construction in o number of instances. This form is characterized b'y
the organizational unification of the construction enterprises with different spe-
cialties as well as by combining them with industrial enterprises. The latter type
of integration has been expressed in the creation of the housing construction com-
bines (DSK), plant cor~struction combiTas (ZSK) and other combines, associations and
firms. The scale of integration in construction can be judged from the number of
- the DSK, ZSK and uther associations as well as from the volume of product produced
by them. The integration level in construction can be expressed by the proportion-
ai amount of the volume of construction-installation work carried out by the
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Integrated associatic~ns in the total volume of the work carried out by all the con-
struction organizations of the sector, ministry, republic and so forth.
Significant reserves for increasing construction efficiency by spe~ialization and
integration can be activated by increasing the level of its concentration. The
advantage of large construction enterprises over small- and medium-sized ones is
great and they operate more successfully and profitably. For studying this process,
statistics works out indicators which describe the concentration level and its dy-
namics and determines the influence of production concentration on its effective-
ness.
A notion of the level and dynamics of concentration can be gained on the basis of
average indicators expressing the amount of the production volume, the fixed capi-
tal or the number of employees per organization. Let us assume that a main admin-
istration has 30 construction trusts of which four trusts have an annual work vol-
ume of 3 million rubles; six trusts have 4 million rubles, eight trusts have 5 mil-
lion rubles, ten trusts have 6 million rubles and two trusts have 10 million rubles.
The average annual volume of work for one trust of the glavk equals:
3.4+4.6+5.8+6.10+10.2 15E~ _ 5.2 million rubles.
q 30 30
Zf in the base year the average annual volume of one trust in the glavk was S mil-
lion rubles, then production cancentration occurred in the given glavk and its
growth rate was 104 percent (5.2:5.0)�100. As an additional description for this
indicator, the coefficient of variation is determined making it possib le to differ-
entiate the aggregates of organizations having the same average but a varying range
of fluctuation in the concentration feature.
Attention should be given to the theoretical recommendation for measuring the pro-
duction concentration level by an antiharmonic average using the formula:
~ qi
qah _ t-~
Z 9t ' .
where qi--the volume of work carried out by the given organization over the period
- (or other vari~itions of the feature to be averaged).
Accordin� to the data of the previous example, the average annual volume of work
f.or one trust 1s:
3~�4+42�6+52�8+62�10+102�2 892 _ 5.7 million rubles.
qah - 3�4+4�6+5�8+6�10+10�2 156
T~~e average calculated using the formula of the antiharmonic is much greater ttian
the arithmetic average. This is caused by the fact that the given indicator, in
contrast to ~he one examined above, also conslders the characteristics of the aver-
age arithmetic v~lue of the concentration feature as well as the variation of organ-
ization sizes. This is confirr?ed by the following equality:
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- Qah = ~ni (1+v2)~
where n--number of organizations;
v--coefficient of variation for feature.
In analyzing concentration it is advisable to calculate the average indicators not
for one but rather for several concentration features simultaneously and a multi-
dimensional average should be employed as the general indicator.2 These indicators
make it possible to judge not only the level but also the qualitative features of
concentration. Table IX.S as an example gives the average sizes of construction
organizations according to a series of features and their growth rates in Soviet
~ construction.3 The increased concentration level of the construction volume has
occurred as a result of a concentration of th~e means of labor and a reduced level
of manpower concentration. Thia has been caused by the growth of worker labor pro-
ductivity as a consequence of increasing the amount of equipment available per
worker.
Table IX.S
Average per construction Growth rate,
- organization
%
1965 1975
Volume of construction-installation work
- over year in 1,000 rubles of estimated cost 2,239 2,276 101.7
Average listed number of employees 602 462 76.7
Value of fixed productive capital at year's
end, 1,000 rubles 992 1,500 151.2
It is also possible to describe the concentration level by a graphic method (by a
Lorenz curve). Its essence consists in constructing a curve on the basis of the
two-dimensional distribution of variants for the ranked, cumulative series of indi-
cators, that is: the share of the number of organizations and the proportional
amount of the volume of their work. Here along the absciss~. axis the first indi-
cator is plotted off while the second indicator is plotted on the ordinate axis.
In the event that the accumiil.ated share of the number of organizations and their
- proportional amount by the volume ot work are equal, that is, there is 10 percent
- of the volume of work for 10 percent of the number of organizations, 2Q ~ercent of
the volume of work, respectively, for 20 percent of the organizazions and so forth,
then the curve on the graph coincides with the diagonal of the square. The higher
the level of concentration the more convex the curve will be.
2See: G. S. Kil'dishev and Yu. I. Abolentsev, "Mnogomernyye gruppirovki" [Multi-
dimensional GroupingsJ, Moscow, Statistika, 1978.
_ 3Calculated from the data of the statistical annual "Narodnoye khozyaystvo SSSR"
(The USSR National Economy in ?975].
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