Preliminaries and margins are two other drivers of overall construction costs.
Preliminary costs are affected by job complexity, so in busy cities such as London, New York and Tokyo you would expect to see higher preliminaries. The logistics of setting up in tight spaces, managing traffic, working with small lay-down areas, and complex building regulations mean a larger proportion of costs need to be set aside for preliminary costs. There will also be other local factors that will influence the cost. The average preliminaries globally in 2018 were 10.3 percent and ranged from 15 percent in Tokyo and Buenos Aires, to 5 percent in Madrid.
Several factors will impact on margins, including the condition of the market, the risk associated with the project and the contractual arrangements. The business cultures within markets will also have an influence.
The figures quoted are derived from typical projects and do not equate to the margins found within company accounts, as they will not reflect, for example, the impact of projects where significant losses have been made.
Margins can be expected to fluctuate quite markedly over time. The average margin globally in 2018 was 6.4 percent, but margins ranged between 15 percent in Kuala Lumpur to 3 percent in Northern Ireland. In broad terms, changes within a given market over a short period are one indicator to take into account when assessing market activity and cost pressures.
|Africa||Dar es Salaam||8.0%||6.0%|
|Asia||Ho Chi Minh City||12.0%||10.0%|
|North America||New York City||13.0%||7.0%|
|North America||San Francisco||9.0%||7.0%|
|South America||Buenos Aires||15.0%||12.5%|
|South America||São Paulo||7.3%||7.4%|
This content is part of the International construction market survey 2018