Construction Costs in Papua Are the Highest in Indonesia

According to the Construction Cost Index (IKK) released by the Central Statistics Agency (BPS), Papua Province had the highest IKK in Indonesia, at 192.57 in 2022.

"The higher the IKK in a region, the higher the cost of constructing a building in that region," said BPS in its report released in October 2022.

BPS calculates the IKK using three types of weighting data. First, data on the realization of the Regional Revenue and Expenditure Budget (APBD) for the Formation of Building Capital Goods, used to calculate the power purchasing parity (PPP) of projects.

Second, data from the Bill of Quantity (BoQ) of completed projects. This weighting is used to calculate the PPP of Building Types from the System PPP.

Third, data from the Unit Price Analysis Book of the Ministry of PUPR based on the Minister of PUPR Regulation No. 28 of 2016, used to calculate the component value of material prices and construction labor costs.

"The 2022 IKK uses data on construction commodity prices, heavy equipment rental, and construction labor costs collected in four census periods: July 2021, October 2021, January 2022, and April 2022, because this period covers the planning and construction phases of a construction project," explained BPS.

This weighting data is then compared to a reference city, resulting in an IKK that represents the percentage difference in construction costs in a region compared to the reference city.

"The reference city for the 2022 IKK calculation is Makassar. The selection of the reference city is based on a region with an index close to the national average index, considering the completeness of data sources," BPS clarified.

Using this method, Papua Province's IKK of 192.57 indicates that construction costs in Papua are 92.57% more expensive than in Makassar.

Meanwhile, West Sulawesi, which has the lowest IKK at 87.44, indicates that construction costs in West Sulawesi are 12.56% cheaper than in Makassar.