Comparing construction costs
It is important to compare construction costs between countries to inform expansion decisions. It can enable productivity comparisons and highlight how different practices and tools such as BIM and modular construction can improve design and delivery. Opportunities to enhance the proficiency of the construction sector and lower costs are also opportunities to grow the global economy faster.
Here we look at the advantages and disadvantages of comparing construction costs using an example building type: Central Business District (CBD) offices – high-rise prestige.
Source: Turner & Townsend International construction market survey 2022
Convert to a single currency such as USD
This is the most common means of comparison, useful for a multinational organisation paying for projects in its home currency.
- Easy to understand and visualise.
- Gives the cost of typical building in each country.
- A change in the exchange rate makes a significant difference: if a particular currency is strong compared to the base currency, the cost of construction looks expensive.
- Is not a reliable indicator of relative costs and efficiency of construction between countries.
The location index provided in this document offers a common base to compare costs of construction across different markets. London equals 100 as the initial reference point, with the deviation from 100 driven by our average cost in USD of several different building types of construction.
Terms and references
Building costs per m²
In this survey, building costs per m², sometimes referred to as direct costs (as opposed to indirect costs), are for construction of the building, including preliminaries (or general conditions) costs and substructure, columns, upper floors, staircases, roof, external walls, external doors, internal walls, internal doors, wall finishes, floor finishes, ceiling finishes, fitments, plumbing, HVAC, fire protection, electrical and communication systems and transportation systems.
It is assumed that building costs are based on the typical building standards and building methods for the region.
This survey’s building costs per m² information comes from programmes underway at the beginning of 2022, relevant for Q1 2022, and excludes applicable taxes. All exchange rates are from March 2022.
Our international building costs per m² comparison has been calculated using the average values of the typical costs of all asset classes within our survey – excluding new data entries. Cost per m² information, collated from our survey, has formed the baseline of our in-house view of international building cost comparisons and rankings. Expert opinions of experienced colleagues and sector specialists, informed by projects and programmes delivered in each location, and external data have been used to support decision making.
Costs, comparisons and location factors are only applicable for generalised building works as a high-level indication of preliminary costs. They are only suitable as an initial assessment of approximate build costs and quoted figures are to be treated with at least a +/-10 percent range of accuracy.
Actual costs are dependent on building design, inclusions, exclusions, and site conditions. Cost comparisons between countries are subject to different interpretations, building methods, and standards for costing, measurement and construction. Costs may vary substantially between regions within countries.
Exclusions from building costs per m2
External works, landscaping, professional fees, demolition, loose furniture, fittings and equipment, developer’s internal costs and finance, local authority fees and headworks charges, land, legal, finance and holding costs, GST or sales taxes, site investigation and test bores, removal of significant obstructions in the ground, abnormal footings. Allowance for underground or onsite car parking is also excluded from the building cost unless stated otherwise.
Fit-out cost data
We have provided a low, medium and high fit out cost range for our data. These classifications denote quality of space, capacity, resilience, number of cellular spaces (meeting rooms, offices) and interventions of the base building.
For ease of comparison across global markets we have used ‘Category B Construction costs’ as the baseline in our fit-out data. This cost is expressed against the usable square meterage of office space.
Category B Construction costs include; Main Contractor Preliminaries and Overhead & Profit, internal walls, partitions and doors, floor finishes, wall finishes, ceiling finishes, joinery (tea points, restaurants etc), MEP systems, Structured Cabling, Loose furniture (desks, chairs, breakout furniture) and AV (tv screens, conference room VC equipment, room booking systems).
Category B Construction costs exclude; Category A works (Developer spec raised access floors, ceilings, lighting and cooling), Professional Fees, IT Equipment and Software and move costs). All local taxes are excluded.
All regions have individual nuances. Please reach out to a local Turner & Townsend lead to provide cost data on the exclusions listed above.
Labour costs are the all-inclusive cost to the employer, which includes the basic hourly wage, allowances, taxes, annual leave cost, and where paid by the employer, workers’ compensation and health insurance, pensions, and travel costs and fares. It excludes overheads, margins, overtime and bonuses.
This report contains forward looking construction cost inflation data that are subject to risk factors associated with global and local market changes. It is to be noted, that at the time of this report’s publication, the expectations reflected in these indices are reasonable. However, given the current volatile market conditions and rapid pace at which market conditions have and are continuing to change, these forecasts may be affected and may no longer be valid.
Therefore, the inflation forecasts included in this report should be used only as a guide. Turner & Townsend recommend seeking the advice of a local Turner & Townsend representative or contact prior to the use of these allowances, to ensure they are valid and remain current.
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