Preliminary and margin trends

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Preliminaries and margins are two other drivers of overall construction costs. Margins are a blend of main contractors and suppliers.

Preliminary costs are affected by job complexity, so busy cities such as London, New York, São Paulo and Tokyo have higher preliminaries. The logistics of setting up in tight spaces, managing traffic, working with small lay-down areas, and complex building regulation mean a larger proportion of costs need to be set aside for preliminary costs.

In recent years, Middle Eastern countries had some of the highest margins in our survey, in part due to the increased risk of operating in these regions. The fall in the price of oil, however, pushed margins down in the region as the construction market slows and companies are reducing prices in order to win work.

10.8 %
average preliminaries globally
5.9 %
average margin globally
High preliminary costs are found in complex markets where construction is difficult and set-up costs are correspondingly high. Falling margins, meanwhile, are often found in cooling markets.

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