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International Construction Costs 2018

As the global market heats up, a continued focus on productivity and cost reduction is needed. With constrained capacity in many markets, the only way to deliver on aspirations is to do things differently and deliver more with available resources.

International Construction Cost

Digitisation in construction presents an opportunity to improve productivity and reduce cost

Digital transformation offers construction clients everywhere a huge opportunity to be smarter and more creative and innovative. Leveraging digital technologies and data enable collaboration and integration across pre- and post-contract processes to drive efficiency and value.

Arcadis’ work with construction clients shows that those who invest in digital technologies gain a sustainable competitive advantage. This factor is likely to become more pronounced as economies grow, especially in markets where demand for construction services exceeds the supply of skilled labour.

The latest Arcadis International Construction Costs report details and ranks the relative cost of construction in 50 of the world’s major cities. The regional spotlights in the report identify some of the ways the changing costs have impacted these cities, and shares insights about how cost certainty through digitally enabled techniques can help.

Which cities are most expensive for construction?

The relative strength of the U.S. dollar is a key factor influencing the positioning of cities in the index this year. The strong dollar places North American cities higher in the index compared to markets where the domestic currency is relatively weaker against the greenback.

This year we expanded the cities featured in our construction cost comparison to provide a spread of key construction markets around the world. New to the comparison are eight cities in the United States and Toronto in Canada, representing six of the top 10 cities. Australia’s Brisbane and Sydney have also been added, along with three cities in India.

Commenting on what this means for the UK, Will Waller, Director - Head of Futures said:

“Constructions costs in London remain high and have seen continued inflation in the past year.  This is a result of reasonably good demand, coupled with upward pressure on labour and materials costs, because of skills shortages and weak sterling increasing the cost of imports."  

However, London’s relative construction cost position in the world remains moderately supressed compared to previous years, coming in 8th.  This is because of the comparative weakness of sterling against the US dollar.  The stronger dollar means that markets trading in dollars are relatively more expensive than markets trading in weaker currencies when compared on a dollar basis.

Whilst sterling’s valuation has raised the cost of materials, we have also seen a boost to foreign investment levels across the UK.  However, all clients continue to pursue productivity gains with digital-solutions sitting at the heart of many of these initiatives."

Andy Beard, Global Leader Cost & Commercial Management adds:

“This is an important piece of research particularly given the trends in the global market, where certain regions including the UK are attracting significant interest and foreign investment. Crucially, when it comes to informing investment decisions and delivery, digitalization in construction presents an opportunity to help improve productivity and reduce cost. Achieving this by making processes more efficient is a typical example of the possibilities that can arise from digitalization in construction, but the biggest prize will be for those who completely reinvent how things are done.”   

Questions about this article

Andrew Beard

Global Leader Cost & Commercial Management Ask me a question

Will Waller

Director - Head of Market Intelligence +44 (0)7787 152 097 Ask me a question

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