TACKLING COSTS IN THE DIGITAL AGE

INTERNATIONAL CONSTRUCTION COSTS 2018

FOREWORD
The global economy is growing in 2018. Following
a stronger-than-expected 2017, countries around the
world are experiencing an upturn. Rates in excess of
the long-term global average of 3.9 percent per annum
can be expected over the next two to three years.
This robust economic performance will accelerate
the demand for construction around the world.

Huge opportunities will be created, As the global market heats up, a

with the United States, Europe and continued focus on productivity
Asia likely to be notable hotspots and cost reduction is needed.
for construction growth. Equally, With constrained capacity in many
this will place further pressure on markets, the only way to deliver on
construction costs, with certainty global aspirations will be by doing
and value for the money remaining things differently and delivering
high on the agenda for clients more with available resources.
everywhere.
Digital transformation offers
The latest edition of Arcadis’ construction clients everywhere
International Construction Costs a huge opportunity to be smarter
Report details and ranks the and more creative and innovative.
relative cost of construction in Leveraging digital technologies
50 of the world’s leading cities. and data enable collaboration
and integration across pre- and
Last year our theme was
post-contract processes to drive
uncertainty, and we highlighted
efficiency and value. For the client,
how complexity associated with
embracing digital transformation
geopolitical and macroeconomic
provides the opportunity for
events was impacting demand and
a higher-quality end product
cost dynamics around the world.
delivered in a more cost-efficient
We focused on how the associated
and timely manner.
risks can escalate costs and
become a barrier to the successful Arcadis’ work with construction
delivery of project and program clients shows that those who
investment. invest in digital technologies gain a
sustainable competitive advantage.
We emphasized that agility
This factor is likely to become
was an increasingly valuable
more pronounced as economies
capability that enables investors
grow, especially in markets where
and developers to create
demand for construction services
flexible approaches to project
exceeds the supply of skilled labor.
procurement, finance and delivery.
We also highlighted that access
to high-quality data and market
Andrew Beard
knowledge is fundamental, as
markets continued to be buffeted Global Head of Cost
by both unexpected events and and Commercial Management
shifts in the business cycle.

3
 For the most expensive
construction markets in the
world, such as New York, Hong
Kong and London, productivity
challenges are reaching fever pitch.
Severe skills shortages resulting
from stubbornly high levels of
labor dependency, combined
with difficulties in recruiting and
retaining the workforce, are firmly
rooted and act as an inflationary
factor.
Without significant improvement,
the high cost of construction will
continue to act as a drag on overall
global competitiveness.
Some key markets, including
Singapore and Hong Kong, are
making strides in raising the
proportion of pre-manufactured
value in projects, including the use

THE ARCADIS PRODUCTIVITY CHALLENGE

New to the comparison are eight of modular construction.
cities in the United States and
For example, Singapore has
Toronto in Canada. These cities
Aside from exchange rates and demand, the
INTERNATIONAL represent six of the top 10 cities in
the ranking. Australia’s Brisbane differences between the cities in the ranking
made Prefabricated Prefinished
Volumetric Construction

CONSTRUCTION
and Sydney, along with three cities mandatory on nearly half of all
in India, have also been added. are largely due to local management and land sold by the government
for development to increase
specification norms, input cost levels and the
COST COMPARISON
Hong Kong, London, Macau and productivity and lower
Geneva all remain in the top 10,
though they have moved down mix of capital and labor intensity. However, construction costs.
Key technological advances
This year we expanded and reconfigured after being displaced by more
expensive North American cities.
underlying this diverse data, a critical such as robotics will change the
the cities featured in our construction cost Some European cities that were
common theme affecting construction game for construction in many
markets and are close to significant
comparison in order to provide a spread of previously in the top 10, including industries everywhere often is overlooked breakthroughs. However, across
Stockholm, Copenhagen, Frankfurt
key construction markets around the world. and Paris have now fallen and sit in – the challenge of poor productivity. the construction industry, progress
has certainly been slower than in
the top 20.
Productivity challenges afflict construction other industrial sectors around the
The relative strength of the U.S. world. The search is on for how to
dollar is a key factor influencing everywhere, born out of in-situ construction break construction’s barriers to
the positioning of cities in the index methods, unique projects, transactional sustained long-term productivity.
this year. The strong dollar places More balanced workloads are likely
North American cities higher in the commercial models and labor dependency. to be key for improved productivity.
index compared to markets where Few would dispute that
the domestic currency is relatively construction all over the world has
weaker against the greenback. a highly cyclical nature of workload,
Construction demand growth has which cripples the ability to plan
also played a key role. Markets and invest for the long term.
where demand is strong typically
see price inflation, increasing the
costs of construction for clients
and investors.
China’s One Belt, One Road
project, one of the largest overseas
investments ever launched by
a single country, contributes
significantly to global construction
demand, with over $900 billion
of planned projects, from gas
pipelines in Central Asia to high-
speed railways in Indonesia.

4 5
 INTERNATIONAL CONSTRUCTION COST COMPARISON, LOCATION FACTOR INDEX

San Francisco
New York
Hong Kong
Toronto
Boston
Philadelphia
Chicago
London
Macau
Geneva
Copenhagen
Tokyo
Washington DC
Stockholm
Frankfurt
Dallas
DIGITAL VISION For example, reliable order
pipelines are essential if off-
"Digitalization Houston
in construction Paris
Policy makers and clients providing solid site manufacturing is to grow
successfully given the scale of
presents an
opportunity Sydney
commitment and early visibility to their capital investment required. to both help Brussels
improve
construction pipelines would allow the Reliable order pipelines can
also help support investment in productivity
Melbourne
Brisbane
supply chain to plan and make long-term innovative digital technologies. and reduce
cost. Achieving
Rio de Janeiro
investments, including those that could In Sydney, long-term investment this by making Riyadh
in public transport infrastructure processes more Jeddah
boost productivity. to the tune of $75 billion over 10 efficient is the Berlin
years provides an example of such typical example
Singapore
visibility. This enabled Arcadis possibility of
ARCADIS DIGITAL INTEGRATION THROUGHOUT and partners to use cutting-edge digitalization in Sao Paulo
COST LIFE-CYCLE MODEL technology to speed up and construction, Rotterdam
improve the quality of the design but the biggest Amsterdam
process for the construction of the prize will be Dubai
$11.5 - $12.5 billion Sydney Metro for those who
TS Abu Dhabi
ASSE PL
AN
City & Southwest. completely
G reinvent how Seoul
IN N
I
The design team created a
N system that included a customer things are Kiev
FI

fundamentally
G
DE

ESTI avatar to test a range of end-user Madrid

AS

E MA done.”
OS
RE

TIN experiences. These avatars, known

CL Sofia
SE

as Personas, provide human design

TS

Will Waller,
G

Brunei
reference points for the broader Arcadis,
& M RATIO CE

Athens
BEN

Virtual Reality, 3D visualization Head of Futures

O PE
AINTENAN

and immersive digital environment Manila

CHMARKING

DIGITALLY
INTEGRATED modeling that is used for testing Shanghai
design options. Feedback from Beijing
N

this process informed the design,

Lisbon
enabling enhanced customer
Jakarta
PR

O
G G
OP

EX CUR
I outcomes.
N

N
&

EC E M AN TIN Wuhan
ER

P L
UT ENT
S

COST DGE The construction sector remains

ET

ION
AT

& BU Bangkok
G one of the least digitalized. But as
SS
IN

AS A the world enters a welcome phase Ho Chi Minh

SE NG
TS TI of buoyant economic performance, Kuala Lumpur
CR EA
digitalization presents an Mumbai
opportunity to help improve
New Delhi
productivity levels in the industry.
Bengaluru
0 20 40 60 80 100 120 140 160
< Less costly to construct Index Base: London =100 More costly to construct >
6 7
 GLOBAL
Metals largely saw increases in
U.S. DOLLAR MOVEMENT AGAINST GLOBAL CURRENCIES. NOVEMBER 2016 -2017
2017. Aluminum, iron ore and
copper rose 20 percent, 18 percent U.S. Dollar

CONSTRUCTION and 21 percent respectively.

Strong global demand and supply
Ukrainian Hryvnia
U.K. Pound

MARKET TRENDS
Thai Baht
constraints due to curtailing excess
Swiss Franc
capacity by the Chinese authorities Swedish Krona
have been the main factors driving South Korean Won
price inflation for these categories. Singapore Dollar
COMMODITY PRICES A 10 percent fall in iron ore prices Saudi Arabia Riyal
is anticipated in 2018 to be offset Qatar Riyal
Commodities that are key to construction by increases in all base metals Philippine Piso
Malaysian Ringgit
prices, particularly due to supply
activities finished 2017 on a high, with solid tightness. Japanese Yen
Indonesian Rupiah
growth in prices across the board. Generally, Even after robust price rises in 2017, Indian Rupee
Hong Kong Dollar
the rise in commodity prices will feed commodity prices are still cheap
compared to levels seen between Euro
through as a small underlying inflationary 2008 and 2012. The nature of Emirati Dirham
Danish Krone
commodity prices, influenced by a
factor on construction materials costs. range of variable factors, means all
Chinese Yuan Renminbi
Canadian Dollar
these forecasts carry a high degree Bulgarian Lev
Coal rose almost 30 percent in of uncertainty. Evolving supply and Brazilian Real
2017, predominantly due to cuts demand conditions, geopolitical Australian Dollar
in production in China, driven by events and changes in technology -15% -10% -5% 0% 5% 10%
a shift to environmental policy are all key elements that can Index Base: U.S. Dollar = 0%
changes. Energy prices are forecast change rapidly. Government policy SOURCE: XE.COM
to climb by an average of four associated with the phasing out
percent in 2018. Average crude oil of fossil fuels as well as declining
prices rose in 2017. Brent Crude power consumption are just two
rose 20 percent and currently sits examples that could have an CURRENCY The U.S. dollar fell an average
five percent against other global
at about $68/bbl. Global oil prices impact.
are anticipated to average $56/bbl Commodities are dollar-traded, so U.S. dollar exchange rates can be influential currencies in 2017. Low consumer
price inflation and strong economic
in 2018. Coal prices are expected
to retreat to $70/mt in 2018
any buyers with currencies that are
weak against the dollar will feel
on the cost of construction materials. Some performance from other countries
around the world has made the
following a strong 2017, as demand
slows because of environmental
price increases disproportionately, markets are therefore likely to benefit U.S. dollar comparatively less
such as the U.K. in 2016.
initiatives to reduce coal use. from their currency strengthening against attractive. The eurozone saw the
best year in a decade. Even the
the dollar in 2017, increasing their buying pound rallied against the dollar in
2017, after a dreadful performance
power for dollar-denominated goods. This in 2016 following the Brexit vote.
WORLD COMMODITY PRICE INDICES
is a positive opportunity for some markets, Most analysts don’t expect 2018
to be much better for the U.S.
CRUDE OIL, AVERAGE COAL, AUSTRALIAN ALUMINUM IRON ORE, CFR SPOT COPPER such as the U.K., where weak currency dollar. However, it is important
200 to recognize that the greenback
performance in 2016 only added to remains relatively strong overall,
180
materials cost inflation. given its exceptional performance
in 2016.
160
Index Base: 2008 = 100

For overseas investors,

140
construction is cheaper in locations
120 where the local currency has fallen
relative to the currency in which
100 they hold their capital. Dollar-
denominated investors such as
80
those from Hong Kong, the Middle
60 East and Norwegian sovereign
wealth funds have been in a strong
40
position in 2017 due to the dollar’s
20 relative strength, even though
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 returns on existing investments will
likely fall in value from exchange
rate movements.
SOURCE: IMF AND WORLD BANK

8 9
CONSTRUCTION
AROUND THE
WORLD
FORECAST CONSTRUCTION INDUSTRY VALUE, REAL GROWTH 2018. % YEAR ON YEAR CHANGE AMERICAS
United States. The construction
Qatar 1 15%
market in the U.S. is one of the
UAE 2 10.2%
largest in the world, with output
Philippines 3 9.8% reaching over $1.25 trillion last
Vietnam 4 9.6% year and expectations for growth
Indonesia 5 6.8% to $1.4 trillion by 2020. New
India 6 6.1% York, San Francisco and Boston
Sweden 7 5.4% are all particularly hot markets.
Construction output in the U.S.
South Korea 8 5.3%
rose almost five percent in 2017
China 9 5.2% 7
and is expected to rise by up to
The Netherlands 10 5.1% 19
another eight percent in 2018.
10
Thailand 11 5.0% 23 14 16 The private residential sector
Slovakia 12 3.7% 25 13 12 is a bright spot and growth in
28
Czech Republic 13 3.7% 27 1 the infrastructure sector is also
29 1731 34
Belgium 14 3.6% 20 expected to accelerate. However,
8
26 2 President Trump's infrastructure
Saudi Arabia 15 3.5% 24
18 30 plan, which relies heavily on
Poland 16 3.4% 9
private investment supported by
Bulgaria 17 3.4% 4 3 tax credits, and which has not yet
United States 18 3.3% 15 21 been developed in detail, could fall
6
Denmark 19 3.3% 11 short of delivering the $1 trillion
Italy 20 2.2% in promised new investment. It is
also likely to focus on new assets
Hong Kong 21 2.2%
22 5
rather than fixing existing, failing
Singapore 22 2.1%
infrastructure.
United Kingdom 23 2.1%
2.0% Brazil. 2018 heralds an exit from
Spain 24
recession for Brazil and a return to
Germany 25 1.9% 33
growth. The construction sector
Greece 26 1.8% is expected to grow by about one
Switzerland 27 1.8% percent in 2018. An improved
32
Canada 28 1.8% housing market and more buoyant
France 29 1.6% investment activity are expected to
Japan 30 1.5% be the main driving forces – albeit
from low bases. The Brazilian
Romania 31 1.4%
government is also planning an
Australia 32 1.0% infrastructure investment program
Brazil 33 1.0% to stimulate the economy and
-2.4% 34 Ukraine generate jobs.

-3% 0% 3% 6% 9% 12% 15%

SOURCE: BMI
10 11
ASIA AUSTRALIA PACIFIC
China. Construction demand in Australia. The economy grew by 2.8
China is expected to see a good percent in 2017. The construction
growth rate of six percent 2018 sector is forecast to grow by just
and five percent in 2019. This over one percent in 2018, rising to
represents a slowdown in growth three percent by 2020. Australia
compared to previous years. This continues to be an attractive
is predominantly being driven by a market for foreign investment.
gradual withdrawal of government Strong population growth will
financial support in some sectors continue, concentrated mainly in
to support the economic goal of Brisbane, Sydney and Melbourne,
rebalancing China’s economic which will generate demand for
growth from fixed investment to social and economic infrastructure.
consumer demand. China’s One Low interest rates and a weakening
Belt, One Road project is also Australian dollar will continue
contributing significantly to global to fuel private investment.
construction demand, with over China remains a huge source
$900 billion of planned projects of investment in the built asset
– this could divert any spare sectors. Labor costs are rising to the
resources into overseas markets. tune of two to three percent per
annum, driven by skills shortages.
Hong Kong. The construction
market is slowing down and is
partly due to a number of large
infrastructure projects being
completed, such as the Hong Kong-
Zuhai-Macau bridge. However,
there continues to be a good level
of demand of buildings work in the
public and private sector which is
keeping the market buoyant. We
expect growth in construction Malaysia. That said, there is still demonetization policy. The
output to be two percent per a good pipeline of infrastructure attempt to reduce corruption
annum to 2021 with infrastructure projects that support the growth meant that workers without
and residential sectors being the forecast. bank accounts could not be paid
main sources of demand. in cash. This stifled output but
India. India’s construction sector
Singapore. The construction is a key part of the initiative to
will see good growth, expected
industry in Singapore is expected improve transparency and the
to be more than 50 percent over
to see relatively slow growth for overall business environment
the next 10 years. Growth is being
the near future, reflecting its in India. Other policy initiatives
driven by rapid urbanization and
mature high-quality infrastructure around boosting foreign
industrial development. There
provision and the small size of investment, reducing red tape
are significant and fundamental
the market. This contrasts with and cutting transaction costs will
infrastructure needs, particularly
the opportunities in high-value, also all support strong growth
across power, rail and road
long-distance transport and power in construction demand going
sectors to connect rural areas.
transmission projects that are forward.
2017 saw adverse impact from
gaining traction in neighboring Prime Minister Narendra Modi's
markets like Indonesia and

12 13
 PROJECT SPOTLIGHT
MANCHESTER AIRPORT
TRANSFORMATION PROGRAM
Manchester Airport is undergoing a $1.38 billion transformation
program, the largest construction project ever delivered in
England's northwest. Due to the size, it was essential to ensure
that all stakeholders are working to consistent standards and
sharing information in a collaborative way to reduce duplicated
effort and create a single source of project and program data.

A Digital Project Delivery standard operating procedure (SOP),

created by Arcadis as the Managed Services Provider, is enabling
the identification, production, management and delivery of
consistent datasets for project program use; BIM Level Two
Standard and improved collaboration. By working alongside
Manchester Airport Group (MAG) to develop the SOP for asset
integration, Arcadis helped MAG avoid $1.65m in costs from
asset marking and registration and provided a completely
paperless handover. The use of the SOP is enabling MAG to
understand their future asset inventory one year prior to phased
handover, improving their ability to negotiate and employ
operation and maintenance contractors, resulting in a greater
commercial advantage for the business. Within the program is a
bespoke Information Delivery Plan, which reduces the effort of
data creation, including measurement for estimating and costs
management, by extracting that data from its source, using BIM.
The data is used to populate asset databases far in advance of
traditional processes, saving thousands of man hours.

The SOP is meeting its objective to increase value for the

Program and MAG. It is enabling the analysis or accurate and
precise information to reduce duplicated effort and provide
stakeholders with information they require to perform their
role, thus, relieving many collaboration and knowledge sharing
challenges found in a traditional construction environment. All
this to ultimately make Manchester Airport’s transformation a
success for those who work and use the airport.

14 15
 EUROPE be circa two percent in 2018,
commensurate with other major
residential and non-residential
building sectors, which represent
MIDDLE EAST The IMF estimates that the Saudi
economy will grow by 1.6 percent
In 2018, the IMF forecasts
2.8 percent growth, rising to
The European construction European economies. In addition, more than 80 percent of France’s UAE. The UAE construction this year, rising to 2.2 percent 3.1 percent in 2019 and the
industry saw modest aggregated even after the completion of construction industry value. An industry remained flat in 2017 in 2019. This will be largely due government’s 2018 budget shows
growth of two percent in 2016 and Crossrail, the U.K. will still be home uncompetitive labor market could as the country prepared for the to rising oil prices and the Saudi a modest increase of 2.4 percent
2017. Growth is likely to remain to Europe’s largest construction also generally discourage foreign introduction of five percent value government announcing its biggest in spending. Ongoing efforts to
between 2 percent and 2.5 percent projects: the High Speed 2 railway investment into construction added tax (VAT) in January 2018. expansionary budget in history, strengthen relationships outside
per annum to 2021. Investment and the Hinkley Point C nuclear projects. A recent IMF World Economic with heavy investment planned the Gulf Cooperation Council,
in infrastructure drives a large power station. Outlook Update notes that ‘the in infrastructure and housing. Qatar’s global growth ambitions
share of construction activity. The Netherlands. The economy is United Arab Emirates economy This is all part of the Kingdom’s and a relatively diversified
ability of EU partners to sustain Germany. Germany’s current expected to grow by 3.2 percent is expected to recover gradually’ vision to shift dependence away economy should all prompt
infrastructure investment post- account surplus is at a record in 2018. A favorable international in 2018, due to an improving oil from oil revenues and to achieve economic growth. The economic
2019, after the U.K., a top-five high and the labor market is at economy, low interest rates, price and the Dubai government its long-term goals of diversifying sanctions imposed by neighboring
budget contributor, left the bloc, is virtually full employment, both expansive budgetary policy and a announcing a 19.5 percent increase the economy and increasing countries will continue to present
a significant risk to many markets, key indicators of a well-performing persistently strong housing market in 2018 state budget, focused contributions from the private a challenge.
particularly in the East, where economy. However, Germany may are key factors. The unemployment largely on infrastructure spend. sector.
not have invested enough in itself, rate is back below five percent from Existing commitments to deliver
there is a greater dependence
and its journey to a big current a high of eight percent in 2014. In Dubai, the upcoming Expo Outside of the announced fiscal facilities and infrastructure
on EU support. However, the
account surplus means constrained The construction sector is set to 2020 should lead to an increase in budget for 2018, the Saudi required for the 2022 FIFA World
European economy is surpassing
investment in infrastructure and record solid growth of over five construction activity as the Emirate government also plans to invest Cup™ and plans to increase
growth expectations, registering
productive capacity. In addition, percent in 2018, supported by a prepares for the event and the an additional $22 billion on a series liquified natural gas outputs
the highest rate for a decade, and
record high employment and broad range of projects at various legacy delivery of District 2020. of mega-projects including Neom, by 30 percent will see Qatar’s
this is likely to support growth in
an aging workforce threaten to stages of development across the In Abu Dhabi, there’s a continued Red Sea and Qiddiya. These will be construction industry return to
construction activity.
produce future labor shortages transport, energy, residential and focus to accelerate diversification overseen by the Public Investment growth toward the end of 2018.
United Kingdom. The U.K. is that undermine the long-term social infrastructure sectors. Prices and shift dependence away from Fund and should drive increased However, as Lusail City continues
still experiencing uncertainty productive capacity of the in the construction sector have oil revenues. This is providing construction activity within the its expansion, and Qatar’s
following the vote to leave the economy. Construction sector been rising fast, 7.5 percent in 2017, opportunities for the private sector Kingdom and attract established population growth slows, there’s
European Union in June 2016. growth is forecast to be 2.3 percent - with a continuation of this trend to create wealth. international contractors to a risk of oversupply of real estate
‘Brexit’ negotiations are still per annum over the next five years. expected in 2018. the market. assets across multiple sectors.
At present, there is an oversupply Clients may need to consider
ongoing and won’t be concluded France. Future construction Poland. Poland’s construction Qatar. 2017 was not without
of real estate assets across all change of use for existing assets
until October 2018 at the earliest. industry growth is expected to be sector is expected to grow by challenges for Qatar, but the
sectors in parts of Dubai and Abu and the disposal of older assets.
However, despite this, the U.K. relatively flat, likely to average 1.4 over three percent in 2018. The economy weathered these well,
Dhabi, following the completion
has performed exceptionally percent per annum to 2026. The Polish economy is expected to with the IMF reporting real GDP
of several new master planned
well economically, attracting infrastructure sector, especially outpace the European average growth of 3.1 percent in the
developments. This may result in
significant foreign investment transport and power, is set to with annual growth of over three second half of the year. Incentives
a need to consider change of use,
and maintaining sustained levels experience positive expansion, percent anticipated over the next launched in response to the
refurbishment, or the disposal of
of consumption. Construction assisted by continuity from the five years. Residential, commercial diplomatic situation all helped to
older buildings.
output has continued to grow and Macron government regarding and industrial sectors are all likely boost production in the primary
is at a historical peak. Contractors infrastructure policy. But France’s to benefit from increased activity Saudi Arabia. Preparation for sector, while government support
continue to face constraints to stubborn unemployment rates levels supported by economic the introduction of value added led the construction sector to
capacity which has led to sustained will likely prevent a recovery in expansion. tax (VAT) in 2018 and significant remain flat.
cost and price inflation. Growth the demand for housing, leading restructuring of the public sector
in construction is expected to to subdued forecasts for the as part Vision 2030, saw the KSA
construction industry maintain a
slow course in 2017.
16 17
 DISCLAIMER looking statements whether as a
result of new information, future
This report is based on market events or otherwise. You should
perceptions and research carried not take any statements regarding
out by Arcadis, as a design and past trends as a representation
consultancy firm for natural those trends or activities will
and built assets. This document continue in the future. Accordingly,
is intended for educational you should not put undue reliance
purposes only and should not on these statements.
be construed or otherwise relied
upon as investment or financial This document contains data
advice (whether regulated by the obtained from sources believed
Financial Conduct Authority or to be reliable, but such data is
otherwise) or information upon not guaranteed as to its accuracy
which key commercial or corporate and does not purport to be
decisions should be taken. This complete. Please be advised that
document may contain forward- any numbers referenced in this

CONCLUSION: METHODOLOGY
While rising commodity prices looking statements within the document, whether provided
may play a small part, it is a lack meaning of potentially applicable herein or verbally, are subject to
of skilled and agile labor that is The comparative cost assessment securities laws. Forward-looking revision. Arcadis is not responsible
most likely to push up prices and is based on a survey of construction statements are those that predict for updating those figures that
DIGITAL SOLUTIONS FOR HEATED put a squeeze on productivity in costs in 50 locations undertaken or describe future events or have changed. Arcadis accepts no
by Arcadis, covering 13 building liability for loss arising from the use
MARKETS many cities.
types. Costs are representative
trends and that do not relate
solely to historical matters. Actual of the material presented in this
Other industries have responded report. This document should not
of the local specification used to results could and likely will differ,
As the global economy continues to grow, to this challenge by automating
meet market need and function. sometimes materially, from those be relied on in substitution for the
production processes, and
the construction sector in many cities risk they are now embracing digital
The building solutions adopted in
each location are broadly similar.
projected or anticipated. Arcadis exercise of independent judgment.
is not undertaking any obligation
becoming overheated, with costs spiraling technologies such as the Internet
of Things (IoT) to push their
As a result, the cost differential to update or revise any forward-
reported represents differences
ever upwards. productivity even higher.
in specification as well as the cost
All these solutions are open to the of labor and materials, rather
construction industry, and it must than significant differences in
turn to them quickly in order to be building function. Costs in local
able to meet the demand in the currencies have been converted
world’s growing economies. into a common currency for the
comparison, but no account
Almost every single stage of
has been taken of purchase
the construction process can
power parity. High and low-cost
now be digitized; from design to
factors for each building type
prefabricated offsite construction
have been calculated relative to
employing IoT technologies. This
London, where average costs
includes embedded technology
equal 100, using the U.S. dollar
that provides operational data once
as the common currency. The
an asset is built, particularly with
relative costs plotted in the chart
infrastructure such as smart roads.
represent the average high and
All of this technology can generate low-cost factor for each of the 13
data to empower the industry to buildings included in the sample.
be more efficient and productive Construction costs are current
while creating a higher-quality in Q4 2017. Exchange rates are
product best suited to the end current on November 30, 2017.
user’s needs. For example, Arcadis’
work developing digital avatars
to test the design of Sydney
Metro is helping create transport
infrastructure that works for all
travelers.
Investors, clients and end users are
increasingly digitally sophisticated,
and this should lead to them
expecting more digital innovation
from the construction industry.
Now is the time for the supply
chain to respond.

18 19
ABOUT ARCADIS RELATED REPORTS
Arcadis is the leading global Design & Consultancy
firm for natural and built assets. Applying our
deep market sector insights and collective design,
consultancy, engineering, project and management
services we work in partnership with our clients
to deliver exceptional and sustainable outcomes
throughout the lifecycle of their natural and built
assets. We are 27,000 people, active in over 70
countries that generate €3.2 billion in revenues. We
support UN-Habitat with knowledge and expertise to Global Sustainable Infrastructure
improve quality of life in rapidly growing cities around Built Asset Cities Index Investment
the world. Performance Index
Index

CONTACT US
Andrew Beard
Global Leader
Cost & Commercial Management
E andrew.beard@arcadis.com

Will Waller International Sustainable City Investor

Construction Cities Mobility Guide -
Director - Head of Futures London
Costs 2017 Index
E will.waller@arcadis.com

@ArcadisGlobal

Arcadis

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