16 APR 2019
According to a recent study, UK construction costs are among the most expensive in Europe when calculated in Euros. The post-EU Referendum weakening of Sterling against the Euro will have increased the UK costs in this study.
The Council of European Construction Economists (CEEC) carries out an exercise each year to compare construction costs between countries. BCIS contributes UK costs to the study on behalf of RICS.
Participating members price a standard office block model, developed to allow comparisons of construction costs between the member countries. The model is based on a set of agreed measurements and quantities, which reflect the key materials/structure of a typical office building. The costs include an allowance for external works, preliminaries and contingencies.
CEEC office cost model comparisons are expressed in Euros using exchange rates at the time the study was carried out (June 2018). Exchange rates, particularly Sterling, have been volatile in recent years against the backdrop of the UK's negotiations to exit the EU.
The movement and fluctuation of exchange rates tends to distort how one country's construction costs compare with another's. BCIS has therefore compared the costs directly in the table below. The conversion factors are derived by dividing the costs, in local currencies, by the costs in a single country, also in local currency. The results are building cost exchange rates usually referred to as purchasing power parities (PPP). The PPPs are affected by any differential movement in construction costs between countries but not directly by fluctuations in exchange rates.
A known cost in one country can be expressed in equivalent cost in another country by multiplying by the factors in the rows (or dividing by the factors in the columns).
For example, a project costing €1m in Ireland would cost £950,000 in the UK, €980,000 in Finland, 20,950,000 Koruna in Czech Republic, etc. Similarly, a project costing 1bn Forint in Hungary would cost €350,000 in France, €350,000 in Netherlands, 480,000 Francs in Switzerland, etc.
Over the next five years (to 4Q2023) tender prices are expected to rise 29% according to the BCIS forecast issued on 6 March 2019.
The BCIS Online featured project for April 2019 is the soon to be completed (September 2019) £30m learning and teaching centre, submitted by Faithful & Gould. It is located at Newcastle University’s Science Central development site.