Preliminaries and margins

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.

Region City Preliminaries Margins
Africa Johannesburg 10.0% 5.0%
Africa Kigali 7.0% 8.0%
Africa Nairobi 6.0% 8.5%
Africa Dar es Salaam 8.0% 6.0%
Africa Kampala 7.0% 5.0%
Asia  Kuala Lumpur  11.0% 15.0%
Asia   Ho Chi Minh City 12.0%  10.0%
Asia  Tokyo  15.0%  6.0%
Asia  Bangalore  9.0%  10.0%
Asia  Hong Kong  12.0% 6.0%
Asia  Jakarta  7.0% 10.0%
Asia  Seoul  12.0% 3.5%
Asia  Singapore  8.0% 5.0%
Asia  Beijing  6.0%  6.0%
Asia  Shanghai  7.0% 5.0%
Australasia Sydney  14.0%  4.5%
Australasia Brisbane  12.0% 4.0%
Australasia Melbourne  12.0%  4.0%
Australasia Perth  11.0%  4.0%
Europe Amsterdam  12.0%  9.0%
Europe London  13.2% 5.8%
Europe UK South  14.0%  5.0%
Europe Istanbul  10.0%  8.0%
Europe UK North  12.9%  4.3%
Europe Dublin  11.0%  6.0%
Europe Munich  11.0%  5.0%
Europe Paris  10.0%  6.0%
Europe Northern Ireland  12.5%  3.0%
Europe UK Central  11.0% 4.3%
Europe Moscow  8.0%  7.0%
Europe Scotland  11.0%  4.0%
Europe Zurich  10.0%  5.0%
Europe Warsaw  6.0%  6.0%
Europe Madrid  5.0%  5.0%
Middle East UAE  12.0%  9.0%
Middle East Doha  13.0%  7.0%
Middle East Muscat  10.0%  4.0%
North America New York City 13.0%  7.0%
North America San Francisco  9.0%  7.0%
North America Toronto  10.0%  6.0%
North America Houston  10.6%  5.0%
North America Seattle  7.0%  4.0%
South America Buenos Aires  15.0%  12.5%
South America Santiago  12.0%  10.0%
South America Bogotá  13.0%  5.0%
South America São Paulo  7.3%  7.4%

 


This content is part of the International construction market survey 2018

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