Forecasting residential construction demand in Singapore: A comparative study of the accuracy of time series, regression and artificial neural network techniques

It is widely believed that the construction industry is more volatile than other sectors of the economy. Accurate predictions of the level of aggregate demand for construction are of vital importance to all sectors of this industry (e.g. developers, builders and consultants). Empirical studies have shown that accuracy performance varies according to the type of forecasting technique and the variable to be forecast. Hence, there is a need to gain useful insights into how different techniques perform, in terms of accuracy, in the prediction of demand for construction. In Singapore, the residential sector has often been regarded as one of the most important owing to its large percentage share in the total value of construction contracts awarded per year. In view of this, there is an increasing need to objectively identify a forecasting technique which can produce accurate demand forecasts for this vital sector of the economy. The three techniques examined in the present study are the univariate Box-Jenkins approach, the multiple loglinear regression and artificial neural networks. A comparison of the accuracy of the demand models developed shows that the artificial neural network model performs best overall. The univariate Box-Jenkins model is the next best, while the multiple loglinear regression model is the least accurate. Relative measures of forecasting accuracy dealing with percentage errors are used to compare the forecasting accuracy of the three different techniques.