Kwa Zulu Natal Provincial leads and lags 3.9

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  • 1. Province of KwaZulu-Natal Provincial Treasury IMES Unit THE KWAZULUNATAL ECONOMY – A LEADS AND LAGS ANALYSIS1 UPDATE 9 Clive Coetzee General Manager: IMES Unit Economist clive.coetzee@kzntreasury.gov.za 033 8974538 Working Paper 3.9:dd May 2014 1 The views expressed in this working paper are the views of the author and might not necessarily reflect the views of the Provincial Treasury. All rights reserved – 2009-2014
  • 2. KZN LEADS AND LAGS ANALYSIS Introduction There is natural time delay between when a building plan is approved and completed. The following graph illustrates this. Graph 1: Building Plans Approved and Completed for Non Buildings, Offices and Banking space This analysis attempts to calculate approved and completed variable. The total number of lags ranges from 20 to 30 graph below. Graph 2: Building Plans Completed for Non and Banking space and Lags 1 to 15 0 20 000 40 000 60 000 80 000 100 000 120 000 140 000 Jan-94 Nov-94 Sep-95 Jul-96 May-97 Mar-98 Jan-99 Plans Approved (MA LEADS AND LAGS ANALYSIS –1st Quarter 2014 natural time delay between when a building plan is approved and completed. The following graph illustrates this. Building Plans Approved and Completed for Non Buildings, Offices and Banking space – South Africa mpts to calculate theaverage time delay between building plans by using various lags of the building plans completed variable. The total number of lags ranges from 20 to 30. This is illustrated in the Building Plans Completed for Non-Residential Buildings, Offices and Lags 1 to 15– South Africa Jan-99 Nov-99 Sep-00 Jul-01 May-02 Mar-03 Jan-04 Nov-04 Sep-05 Jul-06 May-07 Mar-08 Jan-09 Plans Approved (MA-12) Buildings Completed (MA natural time delay between when a building plan is approved and Building Plans Approved and Completed for Non-Residential between building plans by using various lags of the building plans completed This is illustrated in the Residential Buildings, Offices Nov-09 Sep-10 Jul-11 May-12 Mar-13 Jan-14 Buildings Completed (MA-12)
  • 3. All things equal a building plan approved should become a building plan completed.The reality is however that some approvals might not be co whatever reason. However, unknown and most likely fairly approvals will be completed i.e., zero percent non completed approvals. The analysis further assumes that the average time delay stay for example the average time delay completed in 2013 was the same as in 1994 The analysis then attempts to compute this average time dela categories of building plans approved and completed, i.e., • Residential Buildings, Dwelling • Residential Buildings, Flat and Townhouses • Non-Residential Buildings, Offices and Banking space • Non-Residential Buildi • Non-Residential Buildings, Industrial and Warehouse 0 20 000 40 000 60 000 80 000 100 000 120 000 140 000 Jan-94 Nov-94 Sep-95 Jul-96 May-97 Mar-98 Jan-99 Plans Approved (MA 3 Lag 6 Lag 9 Lag 12 Lag 15 Lag equal a building plan approved should become a building plan completed.The reality is however that some approvals might not be co whatever reason. However, the percentage of non completed approvals is both most likely fairly unstable. This analysis therefore approvals will be completed i.e., zero percent non completed approvals. analysis further assumes that the average time delay stays constant over time for example the average time delay between a building plan approved and was the same as in 1994. attempts to compute this average time delay for each of the 5 categories of building plans approved and completed, i.e., Residential Buildings, Dwelling-Houses>80 square metre Residential Buildings, Flat and Townhouses Residential Buildings, Offices and Banking space Residential Buildings, Shopping space Residential Buildings, Industrial and Warehouse Jan-99 Nov-99 Sep-00 Jul-01 May-02 Mar-03 Jan-04 Nov-04 Sep-05 Jul-06 May-07 Mar-08 Jan-09 Plans Approved (MA-12) 1 Lag 4 Lag 7 Lag 10 Lag 13 Lag equal a building plan approved should become a building plan completed.The reality is however that some approvals might not be completed for the percentage of non completed approvals is both therefore assumes that all approvals will be completed i.e., zero percent non completed approvals. constant over time between a building plan approved and y for each of the 5 Nov-09 Sep-10 Jul-11 May-12 Mar-13 Jan-14 2 Lag 5 Lag 8 Lag 11 Lag 14 Lag
  • 4. The average time delay between a building plan approved and building plan completed is calculated by computing a correlation coefficient matrix and root mean square error matrix between the building plans approved variable and the various lagged building plans completed variables. The analysis will compute this average time delay on both a national and provincial level and then compare the two average time delays for each of the 5 categories of building plans approved and completed. One would assume that the average time delay between a building plan approved and building plan completed on a national and provincial should be the same. However this might not be true. There might be provincial factors that might increase or decrease the average time delay between a building plan approved and building plan completed on a provincial level compared to the national level. Methodology Employed The steps followed in the analysis are as follows: • Step 1 = Capture SA and KZN Building Plans Approved data from Stats SA (Jan 1994 to May 2012) for each of the 5 categories • Step 2 = Capture SA and KZN Building Plans Completed data from Stats SA (Jan 1994 to May 2012) for each of the 5 categories • Step 3 = Apply 12 month moving average to each of the 10 variables • Step 4 = Construct a lagged (lags 1 – 25) time series of building plans completed variable for each of the 5categories • Step 5 = Calculate correlation coefficient between the approved and lag building plans completed time seriesfor each of the 5 categories • Step 6 = Determine the highest lagged correlation coefficient • Step 7 = Calculate the root mean square error (RMSE) between building plans approved and lag building plans completed • Step 8= Determine the least lagged RMSE value
  • 5. • Step 9 = Compare the best fit lagged building plans completed between SA and KZN, based on the correlation and RMSE methods Results of the Analysis The results of the analysis can be interpreted as follows; • The average time delay between a building plan approved and completed on a national level for Dwelling-Houses>=80 square metre based on the correlation coefficient is 12 months and based on the RMSE it is also 11 months compared to 10 and 11 months on a provincial level, respectively. • The average time delay between a building plan approved and completed on a national level for Flats and Townhouses based on the correlation coefficient is 9 months and based on the RMSE is 8 months compared to 11 and 11 months on a provincial level, respectively. • The average time delay between a building plan approved and completed on a national level for Office and Banking Space based on the correlation coefficient is 14 months and based on the RMSE is 13 months compared to 18 and 22 months on a provincial level, respectively. • The average time delay between a building plan approved and completed on a national level for Shopping Space based on the correlation coefficient is 13 months and based on the RMSE is 14 months compared to 29 and 29 months on a provincial level, respectively. • The average time delay between a building plan approved and completed on a national level for Industrial and Warehouse Space based on the correlation coefficient is 10 months and based on the RMSE is 12 months compared to 14 and 14 months on a provincial level, respectively
  • 6. Summary The analysis indicates that the average time delay between building plans approved and building plans completed (all categories) based on the correlation coefficient method is 12 months on a national level and 16 months on a provincial level and based on the RMSE method is 12 months on a national level and 17 months on a provincial level. This suggested that on average the time delay between national and provincial is between 4 to 5 months i.e., it takes between 4 to 5 months longer for a building plan to be completed on a provincial level compared to the time it takes on a national level. SA (Correlation) KZN (correlation) SA (RMSE) KZN (RMSE) Residential Buildings, Dwelling-Houses>=80 square metre 12 10 11 11 Residential Buildings, Flat and Townhouses 9 11 8 11 Non-Residential Buildings, Offices and Banking space 14 18 13 22 Non-Residential Buildings, Shopping space 13 29 14 29 Non-Residential Buildings, Industrial and Warehouse space 10 14 12 14 Average 12 16 12 17