1、International Construction Costs 2024Race for capacityOur International Construction Costs(ICC)2024 report,titled Race for capacity,is published at a pivotal moment in the recovery of the global construction sector.With the post-pandemic bounce-back still affecting markets,there are additional oppor

2、tunities and challenges arising from the acceleration of industrial reshoring and friendshoring.ForewordErik BlokhuisGlobal Sales and Business Development Officer,PlacesIn our market commentary,we emphasize that despite the socio-economic and political upheaval in 2023,the construction markets exper

3、ienced relative calm as demand eased and supply chains returned to equilibrium.2024 is likely to mark the bottom of the market in many parts of the world.A notable trend in 2023 was the rapid acceleration of investment in technology assets,driven by AIs demand for high-end processors and the rapid e

4、xpansion of data centers.The pace and scale of programs being delivered in Northern Europe,the Nordics,the UK and the US has the potential to disrupt local construction markets as demand for labor,materials and power crowds out other development work.A race for capacity has begun.Explosive growth in

5、 these markets means that even established players have to reassess their location planning,delivery strategies and supply chains.In our market insight section,Winner takes all,we share insights on the challenges clients face in delivering projects amid massive investment in the technology sector.Me

6、eting planned Day 1 completion dates is a top priority for clients,but the scale,speed and complexity of these programs increase their risk exposure.Existing supply chains and delivery models require review to adequately protect multibillion investments.Over the past two years,housing development an

7、d essential infrastructure have been battered by high inflation and costly borrowing.Weak construction markets have affected the housing and perhaps most acutely low-carbon sectors,causing delays and cancelations of mega-investments in offshore wind parks and battery plants.Even essential net-zero i

8、nvestments face affordability challenges despite the urgent need for energy transition.This highlights the importance of construction productivity as an enabler of investment and the potential barrier of local cost premiums.Maintaining high productivity levels in conventional building is crucial as

9、economic growth remains low,and finance costs increase.Productivity will be key to viability.Data confirms that low-carbon performance specifications contribute to cost growth in excess of background inflation.While these buildings will perform better over their life cycle and have much less impact

10、on the planet,to build them,they must stack up financially.Initial construction cost remains a crucial hurdle,even as investment horizons extend further into the future.As global construction markets recover in 2024,the Arcadis view is that there is no turning back,and that future construction infla

11、tion trends will continue to rise due to market pressure and the pursuit of better buildings.While some clients may seize timing opportunities to advance projects before recovery,the industrys collective focus should be on designing and delivering projects for resource-constrained markets.The race f

12、or capacity will continue to place a premium on productivity-led design,procurement and construction to address ongoing affordability challenges.International Construction Costs 20242HSB Cost IndexICC IndexForewordFive point reviewframeworkMethodologyConstruction around the worldMarket OverviewWinne

13、r takes allLess news is better news:a look back at 20232023 was a difficult year across the world,with high borrowing costs and weak demand for housing undercutting the positive impact of infrastructure investment in many markets.Tight monetary policy resulted in weak growth rates in most ICC cities

14、.Market overviewThe good news is that the scourge of high inflation has mostly been eliminated.Only a few markets saw double-digit inflation in 2023,while over 25 cities recorded price increases of over 5%.In contrast,the US and the UK experienced modest price hikes of 2-3%,while some markets,notabl

15、y China and,for the second consecutive year,the Netherlands,saw falling prices.Chinas relatively weak GDP growth of 5.2%in 2023 contributed to lower-than-expected global inflation,which helped to moderate construction price increases.Energy prices and metals markets held steady as the Chinese real e

16、state market continued to misfire.With China targeting stronger growth of over 5%in 2024 and beyond,recovery in the worlds largest construction market is likely to coincide with a cyclical upturn in Western markets.Although 2023 will be seen as a year for stabilization in retrospect,disruptions were

17、 always in the background.Conflicts in Ukraine and the Middle East,major climate change events,and the earthquake in Turkey and Syria contributed to a chaotic year.Fortunately,interruptions to global trade through the Panama and Suez Canals were limited due to a slump in trade volumes.Ultimately les

18、s news characterized 2023.In contrast,2024,the year of elections with over half of the worlds population going to the polls in over 60 countries,promises a much bumpier ride.For construction businesses,the immediate impact could be an interruption to business as usual,as public procurements are held

19、 up by election processes and spending priorities are challenged.Looking ahead,freshly elected governments can be expected to bring a whole new set of priorities,with implications for workload and long-term strategy.Kayleigh OwenHead of Cost and Commercial ManagementInternational Construction Costs

20、20243International Construction Costs 20243HSB Cost IndexICC IndexForewordFive point reviewframeworkMethodologyConstruction around the worldMarket OverviewWinner takes all0500300Index base:Amsterdam 100 See methodology for basis of assessment.253236373738394578808384

21、8788888889898989909395974923706539821218223Average Location IndexBuenos AiresLagosKuala LumpurNairobiBengaluruJohannesburgDe

22、lhiMumbaiChengduHo Chi MinhWuhanGuangzhouShenzhenBangkokShanghaiBeijingJakartaManilaMadridSantiagoBogotaBucharestBarcelonaRigaSofiaLisbonBelgradeIstanbulPragueAthensMexico CityKrakowZagrebAdelaideBudapestAmsterdamWarsawSeoulPerthRio de JaneiroDubaiSao PauloBratislavaMilanRomeAbu DhabiMelbourneHousto

23、nRiyadhBrisbaneDallasMontrealSydneyCalgaryAucklandPhoenixHelsinkiMiamiLyonMarseilleLuxembourgVancouverBrusselsFrankfurtTorontoParisDetroitTokyoNiceStockholmChristchurchDenverBelfastSingaporeViennaBerlinWashington DCOsloChicagoLas VegasLos AngelesDublinGlasgowSeattleCardifEdinburghBirminghamBostonMan

24、chesterMacauBristolHong KongCopenhagenPhiladelphiaSan FranciscoNew York CityMunichZurichGenevaLondon959493929858483828757473727656463626555453525454443424353433323252423222009080706050403020

25、1International Construction Cost Index 2024How expensive is it to build in your city?How to use the ICC IndexDiscover our data insights into global construction costs,including our annual comparative cost study of 100 global cities,and regional cost comparison data across EMEA,APAC and the Americas;

26、data insights into construction-specific price inflation;and an additional construction cost index on highly serviced buildings for assets such as data centers and manufacturing facilities.The ICC index is primarily intended to compare costs for complete buildings.The data in the index can be used t

27、o estimate the expenses associated with delivering a specific building function across different geographies using existing benchmark data.When comparing costs using the ICC index,it is important to consider other factors such as currency,specification differentials,site constraints and location-spe

28、cific requirements.The ICC data is presented as a range,and values can be chosen from within that range to account for differences between the base and target buildings.It is worth noting that certain cost aspects,such as location-specific works and utilities provider costs,should not be solely calc

29、ulated using ICC data.This is because the scope of work can vary between sites,requiring estimates based on initial designs.However,ICC-derived ratios can be used to adjust the rates.The ICC data is not suitable for cost adjustments in highly serviced buildings such as data centers.It can only be us

30、ed to estimate the costs of the building shell and basic services installation.Adjustments to the factor used may be necessary if the base building is particularly complex.ICC data should be applied as a ratio|Target location index/Base location index=adjustment factorIn the ICC 2024 report,we intro

31、duce a highly serviced building construction cost index(HSB index).The high technology construction cost index provides a high-level indication of cost differentials in select key locations.Guidance on how to use the index is included in the report.International Construction Costs 20244HSB Cost Inde

32、xICC IndexForewordFive point reviewframeworkMethodologyConstruction around the worldMarket OverviewWinner takes allRegional International Cost Comparison 2024Kuala LumpurBengaluruDelhiMumbaiChengduHo Chi MinhWuhanGuangzhouShenzhenBangkokShanghaiBeijingJakartaManilaAdelaideSeoulPerthMelbourneBrisbane

33、SydneyAucklandTokyoChristchurchSingaporeMacauHong Kong363739459203000Index base:Amsterdam 100 See methodology for basis of assessment.989694939298584836763625451109Average Location IndexASIA-PACIFICEMEAAMERICASIn

34、ternational Construction Cost Comparison Decile CitiesThis chart summarises the ICC data by presenting data for 10 international cities representing the decile points of the 100 city dataset.The analysis highlights the geographical distribution of higher and lower costing citiesIndex base:Amsterdam

35、100 See methodology for basis of assessment.0500Buenos AiresWuhanBogotaMexico CityDubaiDallasLuxembourgChristchurchLos AngelesBristol50403020071180Average Location IndexIndicative construction inflation for key locations 2023 and 2024Arcadis estimates for

36、construction tender price inflation for the 12-months prior to the 4th quarter of the stated year.Costs are for building construction only and do not necessarily apply to either volume housebuilding or infrastructure.The table provides data on construction-specific price inflation for both 2023 and

37、2024.This inflation reflets the changes in construction prices paid by clients,rather than the input costs paid by contractors and the supply chain.In 2024,inflation is forecast to continue to fall substantially in most construction markets.The main exception is the United States,where the pace of p

38、rice increases fell quickly in 2023,and where the rate of inflation is expected to pick-up a little faster in 2024.The table highlights that many countries experienced above-trend inflation in 2023,which posed challenges to the viability of many projects.The decrease in prices observed in Beijing an

39、d Amsterdam in 2023 can be attributed to localized market issues that we anticipate will be resolved in 2024.As construction markets continue to recover beyond 2025,it is expected that inflation will align with long-term trends,which are typically higher than consumer price inflation.ASIA-PACIFICCha

40、nge 2023 v 2022 2024 v 2023%Auckland 5 to 6 3.5 to 4.5Beijing-2 to-3 1.5 to 2.5Brisbane 6.5 to 7.5 7 to 8Dehli 5 to 6 6 to 8Hong Kong 3 to 4 1.5 to 2.5Jakarta 4 to 5 4 to 5Kuala Lumpur 3 to 4 3 to 4Singapore 2 to 3 0 to 3Sydney 5.5 to 6.5 4.5 to 5.5Tokyo 3 to 4 2 to 4EMEAChange 2023 v 2022 2024 v 20

41、23%Abu Dhabi 3 to 4 2 to 3Amsterdam 0 to-1 3 to 4Athens 3.5 to 4.5 2 to 3Berlin 6 to 7 4 to 6Dublin 4 to 5 3 to 4London 2 to 3 1 to 2Madrid 2.5 to 3.5 2.5 to 3.5Paris 2.5 to 3.5 2.5 to 3.5Prague 0 to 1 2 to 3Rome 2 to 3 2 to 3Vienna 4 to 5 3 to 4Warsaw 10 to 12 5 to 8AMERICASChange 2023 v 2022 2024

42、v 2023%Boston 2 to 3 3 to 4Chicago 0.5 to 1.5 1 to 2Dallas 3 to 4 3.5 to 4.5Mexico City 6 to 8 4 to 6Miami 2.5 to 3.5 3 to 4New York 1.5 to 2.5 2 to 3Phoenix 2.5 to 3.5 3 to 4Rio De Janeiro 5 to 7 4 to 6San Francisco 2.5 to 3.5 3 to 4Seattle 5 to 6 5.5 to 6.5Toronto 0.5 to 1.5 3 to 4Vancouver 2 to 3

43、 3 to 4Faster price growthStable and slowing price growthFalling pricesIndex insightsFor 2024,we have retained our coverage of 100 key cities in locations across the globe and thank our partners for their contributions,acknowledged in the report.A significant development in the ICC 2024 report is th

44、e introduction of a highly serviced building construction cost index(HSB index).This index has been specifically created for clients involved in the construction of complex buildings with advanced technology components,such as data centers,gigafactories and wafer fabs.This additional index is necess

45、ary because the costs of these specialized buildings do not vary to the same degree as our core ICC index.The HSB cost index is derived from a combination of modeled and project-derived data.For more details,please refer to the high technology construction cost index section.London and Geneva contin

46、ue to be the most expensive locations to build in,with London narrowly taking the top spot in 2024.Although levels of inflation were moderate in the UK,specification enhancements related to building safety,sustainability and client expectations pushed prices up further than most other locations.Bris

47、tol,a regional city in the UK,enters the top 10 for the first time.Munich,experiencing double-digit price growth,moves up the rankings to claim the 4th position,surpassing New York and San Francisco.German cities continue to face high inflation due to capacity constraints,even as the housing market

48、crashed.Philadelphia also climbs higher in the top 10,with inflation exceeding 5%,which is significantly higher than in most other US cities.Inflation in the US typically fell to 2-4%after hitting double-digit increases in 2022.In the Netherlands,markets remain stagnant,with Amsterdam our datum loca

49、tion falling to the 65th rank.Local inflation emerges as the primary factor driving changes in the ICC 2024 index rankings,with very little movement driven by currency fluctuation.There are two exceptions in UK cities,where the index values were boosted by around 2%due to currency effects.In contras

50、t,despite experiencing inflation rates above 5%,Australian cities fall down the rankings due to a weaker Australian dollar.Notably,cities like Istanbul,Lagos and Buenos Aires witness high inflation but their rankings are offset by the depreciation of their local currency against the US dollar.For in

51、stance,the Argentine peso loses three-quarters of its value against the US dollar as inflation exceeds 200%.International Construction Costs 20248International Construction Costs 20248HSB Cost IndexICC IndexForewordFive point reviewframeworkMethodologyConstruction around the worldMarket OverviewWinn

52、er takes allInternational Construction Costs 20249Highly serviced building construction cost index and insightsOur definition of a highly serviced building is one that features building services plant and systems within the completed building shell that exceed at least 50%of total project value.All

53、client fit-out such as data halls,production equipment and associated utilities are excluded from the scope of the factor.The most representative building type covered by the HSB index is a data center.The HSB index should also not be used to adjust costs for location specific external works and uti

54、lities provider costs.Ratios derived from the main ICC could potentially be used to adjust the rates used.The HSB index range is narrow compared to the main ICC.This partly reflects the application of global specification standards for some highly serviced buildings including data centers,meaning th

55、at there is less scope for local variation.The high proportion of the value of building services plant and equipment also results in a narrow cost range as the cost of these elements varies less between country to country than in-situ construction works.50607080900MumbaiShanghaiWarsawDuba

56、iRiyadhSydneyMilanMadridAucklandSingaporePhoenixParisFrankfurtBrusselsAmsterdamTokyoStockholmHelsinkiBerlinWashington DCHong KongDublinOsloManchesterSan FrancisoMunichCopenhagenZurichBostonLondon70759092949797979798990382113113114Average Location IndexInde

57、x base:Amsterdam 100 See methodology for basis of assessment.Highly serviced building construction cost comparison 2024Index:Amsterdam=100High-cost locations from the main ICC are found at the top of the rankings including London and San Francisco.Cost levels in Amsterdam are higher relative to many

58、 European locations.This reflects Amsterdams status as a major data center cluster as well as the effect of continuing inflation affecting high technology projects in the Netherlands,even as other sectors have seen deflation in response to a slowdown in work.The HSB cost index should be applied with

59、 extra care.It should only be applied to buildings with a high proportion of high-value service installations and should be used to calculate building costs of the fully serviced shell only.The index can also only be used to adjust costs for projects with a similar technical function,such as compara

60、ble levels of plant diversity specified for resilience.Costs of installations within tenant/serviced areas and costs of external services including power supply will need to be assessed on a project-specific basis.HSB Cost IndexICC IndexForewordFive point reviewframeworkMethodologyConstruction aroun

61、d the worldMarket OverviewWinner takes allNo going back inflationary cycle forecast to returnThere are increasing hopes that a soft landing will occur in 2024,paving the way to lower borrowing costs and stronger growth.Both the International Monetary Fund(IMF)and Organization for Economic Co-operati

62、on and Development(OECD)have called 2024 as the bottom of the current cycle,albeit the pace of recovery into 2025 is expected to be weak.Despite reduced expectations,interest rate cuts of between 75 and 100 basis points are currently anticipated across Europe,US and UK for 2024.This will be positive

63、 for sectors sensitive to interest rates,including technology,commercial property and housing.However,there will be no return to ultra-low funding costs,and viability hurdles will need to reset at a permanently higher level.Shorter overall development programs,faster construction and permanently low

64、er land prices will contribute to an improved return on investment.Control of construction costs will also play a critical role,but the window of opportunity for low inflation will not stay open for long.One of the challenges that will follow a soft landing is that growth will occur against a backgr

65、ound of historically low unemployment and sticky core inflation.Furthermore,accelerated investment cycles associated with energy transition,network investment and real estate decarbonization can be expected to coincide with a recovery in cyclical building sectors such as housing.As a result,current

66、benign market conditions are unlikely to continue beyond 2024.Markets that are expected to see accelerating inflation in 2024 include China,the Nordics,South East Asia and the US.There is still a risk of policy and market failure during 2024.A delay in lifting base rates could trigger an unexpected

67、downturn.Existing conflicts could escalate,and the outcomes of multiple elections could result in changes to the settled order.A loss of confidence would set back the construction recovery given the importance of housing and commercial development to future growth.With industry capacity already at r

68、isk in many markets because of insolvency and constraints on available finance,clients can play a role in stabilizing the market by bringing forward new investment.However,they will need to remain alert and prepared to carry risk as the impacts of post-pandemic disruption continue to affect the indu

69、stry.10International Construction Costs 2024HSB Cost IndexICC IndexForewordFive point reviewframeworkMethodologyConstruction around the worldMarket OverviewWinner takes allWinner takes allMeeting the demands of complex,end-date critical construction programsAssuring the delivery of fast complex prog

70、ramsOur sector feature in the ICC report focuses on the explosion in demand for end-date critical projects including data centers,gigafactories and wafer fabs.New clients,new technologies and new business models are all being developed in flight even as multi-billion-dollar programs are built.We loo

71、k at how the fundamentals of fast complex programs create challenges for design,procurement and construction capabilities.We also examine how these programs introduce new risks and demand fresh perspectives including the need to embrace change.Exponential growth places certainty of delivery at riskM

72、ega-programs share many characteristics including scale,speed and extreme technical complexity.For clients,the most important by far is certainty of day 1 completion.This is driven mostly by consequential business risk,but project teams also face challenges in accommodating the latest technologies o

73、n fast-moving,complex programs.To assure certainty of delivery,clients should focus on how programs are configured to secure both capability and capacity in line with the end date.Failing to do so could have significant consequences for clients that have huge investments riding on right first time,o

74、n program delivery.At best,the program will be stressful and suboptimal.At worst,delivery dates will slip with consequences for return on investment and reputation.Against this challenging background,our analysis focuses on three areas for client attention:Pressures on industry capacity and capabili

75、ty The compounding effects of scale on risk exposure The need for a rethink on enterprise modelsMartijn Karrenbeld Global Market Sector Director,Industrial ManufacturingInternational Construction Costs 202411International Construction Costs 202411HSB Cost IndexICC IndexForewordFive point reviewframe

76、workMethodologyConstruction around the worldMarket OverviewWinner takes allWafer fabA semiconductor manufacturer is developing new production capacity in response to explosive growth in demand and political support for reshoring investments.The manufacturers response to growing competition for contr

77、actor resource is a strategic focus on the readiness of the supply chain particularly regionally-based specialist contractors.This includes an early-staged appointment model providing sufficient certainty to enable contractors to invest in workforce development.Although the investment mitigated some

78、 risks around workforce availability,problems were still experienced,including competition between package contractors for common skill groups associated with management,supervision and commissioning.The case study illustrates issues including:Even with forward planning and investment,the sheer scal

79、e of mega-programs will create their own weather associated with resource availability.Early contracting with key suppliers to build capacity will potentially influence the commercial model particularly on the lower tiers.CASE STUDYInternational Construction Costs 202412International Construction Co

80、sts 202412HSB Cost IndexICC IndexForewordFive point reviewframeworkMethodologyConstruction around the worldMarket OverviewWinner takes allCapability and capacity:stretched to the limit.Most construction clients are accustomed to compromise;and construction,an industry with value engineering at its h

81、eart,sometimes delivers suboptimal results.By contrast,for time-critical mega-programs,there is no room for compromise.Across multiple dimensions,the capabilities of delivery teams will be stretched well beyond the norm.The program teams scope extends across the full range of activity from initial s

82、ite selection to final handover and day 1 production.It is better thought of as an enterprise,comprising the client,and its full range of internal stakeholders together with the delivery team of consultants,designers,general contractors(GCs),specialist contractors and equipment suppliers.On high tec

83、hnology programs,premium costs will be incurred to secure capacity and to deliver at scale,but other pressures will also stretch the capability of the client team and the program team:First-of-a-kind innovation.Many projects will involve the integration of processes and technologies that have little

84、 or no precedent.Uncertainties associated with the selection and specification of these technologies might affect permitting,as well as design and execution.Ideally the shell should be designed outwards from the process at its core.Start-up mindset building the enterprise.Some clients will face the

85、challenge of building their organization parallel to developing the technology and delivering a capex program.Key issues around leadership,organizational design,clear and effective decision making,and stakeholder management will be resolved in-flight,even as the project is being taken forward.Volume

86、 of work and rate of spend.Construction also faces scaling problems related to installation complexity,interface management and coordination,and ability to respond to change.Accommodation of change.Change is endemic and must be embraced while being accommodated within the disciplines of cost and pro

87、gram certainty.The program culture must embrace change,understanding and managing the full implications in real time.Program complexity.Complexity multiplies the scale of scheduling and sequencing problems.Much of the complexity is related to interdependences across the program,such as those between

88、 utilities hook-ups and equipment design.Gateway reviews,comprehensive interface management and so on will all deal with complexity risks.Right first time quality.Meeting strict specifications and deadlines requires specialized skills in quality control and commissioning Optimism bias.Optimism bias

89、is the tendency for clients to underestimate the cost and time implications of complex undertakings including the consequences of change.This is countered by a holistic view of the program,by early impact assessment and access to granular program and cost data.International Construction Costs 202413

90、International Construction Costs 202413HSB Cost IndexICC IndexForewordFive point reviewframeworkMethodologyConstruction around the worldMarket OverviewWinner takes allGigafactoryThe clients R&D team was finalizing the battery manufacturing process in parallel with the building and utilities desi

91、gn.The maturity level of the process systems requirements was not always understood,creating integration issues for the shell delivery team.Led by a GC focused on maintaining pace toward the end date,the shell team delivered against the initial design.Ultimately,progress of the MEP utilities was pro

92、blematic,largely due to process specification changes and early commissioning requirements.The projects later phases,including the phased handover of clean spaces,were better coordinated based on the full understanding of the requirements of the equipment suppliers and the program demands.Lessons le

93、arned from these challenges include:The importance of appointing a delivery team that appreciates the program constraints and can balance delivery at scale and ability to change.The key role of the employers requirements in communicating the full scope of design and construction requirements includi

94、ng equipment.The value of embedding the operational understanding of day 1 into the initial design,controls and commissioning strategies.Securing internal support from the R&D team to expedite process-related decision making.CASE STUDYInternational Construction Costs 202414International Construc

95、tion Costs 202414HSB Cost IndexICC IndexForewordFive point reviewframeworkMethodologyConstruction around the worldMarket OverviewWinner takes allCompounding scale and risk:an increasingly challenging program environmentAs highlighted,complex programs are being delivered in an increasingly challengin

96、g marketplace.Inevitably,as more large-scale,end-date critical programs are brought to market,delivery risks will grow.Many of the major risks affecting these programs are well understood,such as the interface management between shell systems,long lead-in equipment and tenant spaces.Managing trade-o

97、ffs when resolving risks like these will become more and more important.The ability to model program dependencies,model risk scenarios and plan for low-pain change will be increasingly valuable.Risks can be magnified by cultural differences within global,virtual teams and by suboptimal stakeholder a

98、nd change management.A greater focus on program-wide culture and communication will enable detailed construction and assembly-related information to be shared with all stakeholders,including equipment suppliers.Greater transparency and teamwork,better coordination using Responsible,Accountable,Consu

99、lted,Informed(RACI)and enhanced interface management enabled through digital platforms will help mitigate risks that have grown due to a combination of market pressure and technical complexity.International Construction Costs 202415International Construction Costs 202415HSB Cost IndexICC IndexForewo

100、rdFive point reviewframeworkMethodologyConstruction around the worldMarket OverviewWinner takes allHigh technology process plant Change,risk management and organizational transparencyThis case study considers the risks emerging with a process plant being developed by a start-up organization.The prog

101、ram involved new technology that was still under development.Necessary changes delayed permitting and as a result,the programs process had to be accelerated.This included early procurement of enabling works.The resulting contractual arrangements eliminated commercial pressure and further delayed the

102、 development of detailed design proposals to meet the technical specification.When change did occur,much of the cost was incurred by the client rather than held by the supply chain.Although client-side risk exposure increased,no additional steps were taken to invest in assurance activity.This reflec

103、ted a high level of optimism bias within the client team.As the impact of open risks crystalized,further cultural issues became apparent that increased pressure on the delivery team.CASE STUDYLessons learned from these challenges include:The importance of the early establishment of project culture,c

104、ommunication and commercial strategy to embrace the known unknown of anticipated change requirements.The scale of cost premiums that can result from steps required to maintain progress toward the end date and the benefits of early sequence optimization.The value that external parties can bring in te

105、rms of broader risk perspectives and enhanced assurance.International Construction Costs 202416International Construction Costs 202416HSB Cost IndexICC IndexForewordFive point reviewframeworkMethodologyConstruction around the worldMarket OverviewWinner takes allIs a new enterprise model needed for f

106、ast complex programs?As more capital is directed toward AI,life sciences and advanced manufacture,competition for construction partners that can deliver the desired combination of capability and financial firepower will grow in intensity.But demand for resources will come from other sectors too,incl

107、uding large-scale investment in power and water networks as part of climate change strategy.In reality,too many mega-programs are running in parallel,placing unprecedented pressure on an industry that is configured to deliver multi-million rather than multi-billion-dollar contracts.For the bigger fi

108、rms,there will be no shortage of workload and plenty of opportunity to diversify geographically and by sector.For clients delivering end date-critical programs,this could present a problem across many markets.Contractors will want the projects as an opportunity but wont necessarily be willing to sho

109、ulder all the risk.There are a number of implications for mega-program clients,including:Growing competition for contractors resulting in a sellers market Scale constraints related to the capacity of specialist contractors such as clean rooms Too many programs pursuing too few major contractors wher

110、e alternatives may be needed Levels of risk transfer will exceed the capacity of GC balance sheets where different risk transfer models are neededClearly current delivery models are under pressure.As the programs pace accelerates,there is an increasing risk that critical points of failure will emerg

111、e,either with respect to attracting capacity or agreeing to an acceptable contract.A pre-emptive review of commercial arrangements is a good way to start to mitigate this risk,covering issues including:Resourcing the team focusing on end-date delivery Contract model single contract vs.package model

112、Assurance vs.certainty does risk transfer represent the best value compared to risk management?Clients gain much certainty from working with familiar contracts and settled project teams.In any market there are a finite number of A teams and as competition for resources grows,clients will need to ada

113、pt to the dynamics of a sellers market.International Construction Costs 202417International Construction Costs 202417HSB Cost IndexICC IndexForewordFive point reviewframeworkMethodologyConstruction around the worldMarket OverviewWinner takes allData centerAdapting to supply constraint and new market

114、 opportunitiesA data center developer has a large-scale,serial program of data center development.However,rapid expansion plans have triggered a review of the procurement model.The established model relies on a general contractor delivering a lump sum contract,directly employing the specialist contr

115、actor supply chain.The client directly procures long lead-in equipment.The risk premium cost paid by the client post-Covid has increased significantly,the balance between cost and value delivered by the GC model deteriorated and the client is reviewing available options.Package-based models like tho

116、se used under the construction management procurement model are being considered.Benefits include the elimination of layers of cost and ability to access local supply chains in new markets.Challenges include the design of the package management layer including requirements for new capabilities withi

117、n the client organization.CASE STUDYLessons learned from these challenges include:The importance of the clients in-house capability that enables package-based approaches to be adopted.The continuing need to ensure that all capabilities are resourced across the team and that new integration issues ar

118、e addressed.The clients recognition that,although the proposed model should deliver better value,it involves further risk and resource transfer to the client to secure these outcomes.International Construction Costs 202418International Construction Costs 202418HSB Cost IndexICC IndexForewordFive poi

119、nt reviewframeworkMethodologyConstruction around the worldMarket OverviewWinner takes allRace for capacityAs the number of mega-programs being brought forward increases,challenges for clients will also grow.Resources will become harder to secure and commercial deals that worked in the past might no

120、longer be accepted in a capacity constrained market.Programs may also become more complex and the need to effectively manage global,multicultural teams will become more acute,for start-ups and for industry champions alike.Such circumstances are a great prompt for clients to consider if their enterpr

121、ise model for end-date critical delivery remains optimum.Can it be improved?Does it work in all locations?Are there new sources of risk that are not directly addressed?Many clients have well-established ways of working on projects that are aligned to their wider business environment.Change is diffic

122、ult to introduce,particularly when programs are running so hot.But incremental improvement is possible and beneficial.By considering the key issues set out in this paper and by applying the Arcadis five-point review framework(overleaf)as an assessment tool,we believe that clients can give themselves

123、 and their teams greater confidence that they can deliver to plan and win.International Construction Costs 202419International Construction Costs 202419HSB Cost IndexICC IndexForewordFive point reviewframeworkMethodologyConstruction around the worldMarket OverviewWinner takes allAssuring the deliver

124、y of fast,complex programs five-point review frameworkHow this framework will helpIn the ICC 2024 report,we have highlighted that the technology and advanced manufacture sector is one of the few global markets that has seen rapid growth in the past 1-2 years.Even as market conditions stabilize in ot

125、her sectors,the specific dynamics of the mega-program segment will combine to create further challenges for clients in a fight to be first in securing consents,in contracting supply chain capacity and in delivering to market.For a group of clients who are focused above all on meeting a contracted en

126、d date,the prognosis is that current delivery models might need change to improve internal stakeholder management,to attract more capacity,to better engage with the capabilities of a global supply chain or simply to ensure that risks are covered when problems arise through better use of data,insight

127、 and decision-making.We have brought together our experience derived from multiple high technology programs to develop a series of key prompts.The framework is market,technology,and contract agnostic,but takes its cues from the experience of our teams and our insights into how markets around the wor

128、ld are evolving and how clients are responding to these changes.These prompts will help clients consider a range of opportunities to on complex programs,even as the market for delivery evolves at a rapid pace.Clarity of purposeIs the project organization fit for purpose Scale-up in response to the l

129、evel of innovation and size of the task Build-in resilience to deal with setbacks Assure the maturity and resilience of the client organization including leadershipEdel ChristieChief Growth OfficerProtecting the end dateIs the Day 1 objective driving the program?Outcome thinking-define what Day 1 is

130、 and identify the critical milesdtone and the end-date sequence Model program interdependencies to prepare for disruption Respond to the implications of missed dates accross the programClients roleWhat task must the client undertake to ensure success?Focus on leadership,team culture,stakeholders and

131、 money Own the scale challenge and equip the team to manage it Engage fully in the management of risk-including ownership where needEnabling effective changeCan the team anticipate and facilitate low-pain change?Develop a ready-for-change culture-keep it clear and simple Prioritise assurance over ce

132、rtainty-secure an economic balance of risk transfer Understand and transparently report the consequences of changeAssured decision makingIs the right data available to support assured delivery Use live data and integrated models to break down silos Invest in data and controls to increase levels of c

133、onfidence Avoid paralysis by analysis-trust the direction of travel as well as the detailInternational Construction Costs 202420International Construction Costs 202420HSB Cost IndexICC IndexForewordFive point review frameworkMethodologyConstruction around the worldMarket OverviewWinner takes allClic

134、k here to speak to an Arcadis expert for more information on how we can help you implement the frameworkNORTH AMERICA“While inflation continues to moderate in 2024,uncertainty caused by the US Presidential election and global events in Ukraine and Israel will continue to influence the market in the

135、year ahead.”David Hudd National Discipline Leader,Cost&Commercial ManagementUSAFederal and state interventions appear to have had highly positive impacts on some sectors of the countrys construction market which offset a slump in others.The US economy expanded 2.5%in 2023,up from the 1.9%recorde

136、d in 2022.The OECD is currently forecasting annual GDP growth of 2.1%for 2024.Interest rates are currently at a 23-year high of 5.25-5.5%but are likely to fall by several increments in 2024,as inflation falls towards the Feds 2%target by mid-year.Recent data from the Associated General Contractors o

137、f America(AGC)showed total annual construction spending in the US reached$2.1 trillion in January 2024,in current prices,almost 12%higher than a year earlier.The construction market is strong in certain sectors,ranging from industrial and infrastructure to technology and life sciences.The CHIPS and

138、Science Act,for example,has contributed to a doubling of construction spend on factories in 2023 compared to 2022,totalling nearly$200 billion.The computer and electronics segment has been the key sector driving this manufacturing construction boom,accounting for 64%of that spend.Investment in infra

139、structure is being driven by federal and state initiatives.For example,the$45bn Rebuild Illinois bill will provide the state Department of Transportation with over$20bn to fix roads,viaducts and bridges.In California,the 2028 Olympics in Los Angeles is acting as a catalyst for infrastructure develop

140、ment in the region including transport networks.However,the commercial,hospitality and retail sectors have slumped,with commercial being the slowest to show signs of recovery.In Chicago,for example,office values have fallen dramatically.An uptick is not expected due to high interest rates and high l

141、evels of post-pandemic home working.With a different approach to regulation,the United States remains behind Europe with regard to low carbon building.Aspirations are often reduced as part of value engineering and projects are therefore often delivered with a less ambitious set of sustainability mea

142、sures.Mega projects continue to be disruptive to the local contracting community in terms of their impact on availability of local skilled labor,affecting for example the cost and availability of electrical trades in the vicinity of data center projects.Maintaining workforce engagement and continuit

143、y has been a particular challenge in 2023 as the extent of large-scale industrial investment has ramped up.Construction around the worldInternational Construction Costs 202421HSB Cost IndexICC IndexForewordFive point review frameworkMethodologyConstruction around the worldMarket OverviewWinner takes

144、 allCANADAHigh interest rates coupled with inflation dampened Canadas construction market through 2023 but there are a few bright spots on the horizon in 2024.While GDP rose by 1.1%in 2023 the third consecutive year of growth it was the slowest pace since 2016 and aligns with more traditional growth

145、 levels after a few years of significant rises.Slow growth is forecast for 2024 as interest rates at near cyclical highs curb investor sentiment,suggesting caution and tempered expectations.In construction markets,high rise residential is particularly challenged;downward movement in both the cost of

146、 borrowing and construction costs,which is anticipated later in 2024,is required to turn the tide materially.The housing shortfall is acute across most of the country.Federal immigration policies are fuelling population growth and associated consumer demand.The federal government unveiled a new C$6

147、bn Canada Housing Infrastructure Fund,in recognition of the critical infrastructure required to address the countrys housing shortage.Continued population growth is also driving demand for healthcare and education related projects.Investment in infrastructure is expanding,while workloads for industr

148、ial and manufacturing are resilient.Summer 2024 should see a contractor appointed to Canadas largest infrastructure project the addition of 1,000km of new rail track to provide high speed rail services between Quebec City,Montreal,Ottawa,and Toronto.Transit investment projects continue to emerge acr

149、oss the country.Continued on-shoring and just-in-time delivery is driving industrial facility demand.The industrial segment will be boosted by plans from US chemical firm Dow to build a US$6.5bn net zero petrochemical plant in Alberta,with construction starting this year.Building on the C$7 billion

150、VW project which commenced in 2023,various other auto manufacturers are considering expansions;reports suggest that Honda may build a US$13.8bn electric vehicle plant in Ontario.“Overall,the construction market in Canada is one of opportunity with some sectors requiring a bit more caution and patien

151、ce,notably residential.Looking ahead,the availability and capacity of skilled labor to participate in construction projects will be a growing constraint.”Audrey Jacob Business Area Director,PlacesInternational Construction Costs 202422HSB Cost IndexICC IndexForewordFive point review frameworkMethodo

152、logyConstruction around the worldMarket OverviewWinner takes allEUROPENETHERLANDSThe Dutch construction sector has faced a slump in workload due to pollution regulation.A slowing economy will place a lid on the pace of recovery in 2024.A slow-down in global trade led to meagre annual GDP growth of 0

153、.1%in the Netherlands in 2023,down from 4.3%in 2022 during the Covid-19 recovery.Latest forecasts suggest growth is likely to remain flat at 0.3%in 2024,rising to 1%in 2025.Total construction production grew by just 1.5%in 2023,with the highest growth in the civil engineering sector,where a sharp in

154、crease in investments relating to the energy transition boosted activity.This was offset by a 7%contraction in new housing construction.New construction across all sectors is likely to be under pressure in 2024,with new residential and non-residential activity forecast to decline by 10%.In housing,s

155、upply-side issues such as a shortage of land and in particular legal delays relating to nutrient neutrality will continue to limit delivery during 2024.The number of new home permits declined to 56,000 in 2023,from a peak of 75,800 in 2021.In Amsterdam,budget constraints delayed investments in the m

156、etro as well as a new bridge over the Ij the citys waterfront.Meanwhile in Rotterdam,2023 saw the viability of new high-rise residential towers impacted by increasing costs and affordability levels.Looking forward,Rotterdam has a major programme to replace or maintain bridges,tunnels and docklands,p

157、lus new stations and station upgrades along the de Oude Lijn.Urban regeneration projects around these stations are also planned.Fundamental measures associated with net zero targets have been standard in the Netherlands for several years,so their impact on price levels is presently minimal.GERMANYTi

158、mes have been tough in the German construction market,particularly in financially sensitive sectors like commercial and housing,but opportunities in industrial and infrastructure still exist.The German economy contracted by 0.3%in 2023 as high inflation,rising interest rates and weakening internatio

159、nal trade all took their toll.The OECD is currently forecasting annual GDP growth of 0.3%for 2024 and 1.1%in 2025.Construction is a key part of the German economy,accounting for about 6%of GDP and employing 2.6 million people.However,2023 saw the sector enter a deep recession,with builders facing a

160、perfect storm of rising interest rates,increasingly expensive materials and a very tight labour market.The situation was most strongly felt in the residential sector,with housing completions expected to fall from 295,000 in 2022 to 242,000 in 2023,according to housing association trade body GdW.The

161、numbers are likely to be lower still in 2024,given that the volume of residential building permits declined by 27%to 260,100 in the last 12 months the lowest level since 2012.In an effort to boost the housing construction market and the stock of affordable homes,the German government last year suspe

162、nded the tightening of new building efficiency rules initially planned for 2025.Elsewhere,reports show a rising level of insolvencies in the commercial real estate sector,with failures like major developer Signa at the end of 2023 suggesting that the bottom in this segment has not yet been reached.C

163、lients are refurbishing offices,rather than building new.Contractors are expecting conditions to remain extremely challenging over the coming 12 months,with both PMI and Ifo surveys showing about half of firms anticipating a decrease in activity in 2024.“Events of the past couple of years have shown

164、 how insight into the risks,costs and cost developments of construction projects are essential to continue to keep them affordable and feasible.”Ted Peek Senior Consultant,Cost&Data Management“Any growth is likely to be seen in the infrastructure and mega-scale industrial sectors,where demand fo

165、r labour and materials will remain high”Poul Syratt Senior Quantity SurveyorInfrastructure and industrial represent the best hope for growth in 2024.Giga factories,semi-conductor plants and large data centres continue to be developed and built,with projects including a major battery plant for ACC in

166、 Kaiserslautern,the FRA7 data centre in Frankfurt and a wafer-fab plant in Magdeburg.Meanwhile power transmission projects from North to South Germany will aid the countrys energy transition.Infrastructure contractors will also be kept busy by government plans to spend 40 billion by 2027 to improve

167、the countrys rail network,including the new U5 metro line in Hamburg.International Construction Costs 202423HSB Cost IndexICC IndexForewordFive point review frameworkMethodologyConstruction around the worldMarket OverviewWinner takes allFRANCEThe French construction market stabilised in 2023 but the

168、 outlook for 2024 is uncertain,especially now that investment in the Olympics is coming to a closeData from INSEE showed the French economy grew by 0.9%in 2023 a significant slowdown after increases of 2.5%in 2022 and 6.4%in 2021.Latest OECD projections indicate GDP growth will ease further to 0.8%i

169、n 2024,recovering to 1.2%in 2025.Higher interest rates and elevated inflation continued to act as a drag on housing and commercial activity in 2023.Inflation is expected to drop from a high of 5.7%in 2023 to 2.7%in 2024.However,market conditions will take some time to improve,with the latest PMI upd

170、ate showing a sharp and accelerated fall in construction new orders for sectors sensitive to cost of finance.The French construction sector is resilient,and latest INSEE surveys highlight a stable business climate for the construction sector.This can largely be explained by continued investment in m

171、ajor public transport infrastructure projects that provide many contractors with a steady future pipeline of work.There are some bright spots in the commercial sector too,including demand for data centres.However,even with demand cooling,delivery could still be impacted by a shortage of construction

172、 workers,with 79%of responses to a Jan 2024 construction survey saying they were experiencing recruiting problems.From a net zero perspective,there is an increasing focus on improving energy performance within buildings.In housing,this is guided by the dcret tertiaire,which targets a 40%reduction in

173、 energy consumption by 2030.within buildings.UKThe UKs public sector spending spree is slowing down,taking pressure off an overheated construction sector.The UKs growth trajectory is weak.GDP grew by just 0.1%in 2023 and Bank of England forecasts for 2024 and 2025 are only 0.25%and 0.75%,respectivel

174、y.Interest rates reached a 15-year high of 5.25%in August 2023,and are expected to start falling in summer 2024.Viability challenges have continued to affect projects,even as inflation has fallen.New regulations focused on low carbon emissions and improved building safety also created uncertainty an

175、d added to project costs.Uncertainty could continue in 2024,given local,mayoral and national elections are due in the coming months.Tight fiscal conditions will see increasing pressure on the public purse in 2024 and beyond,with real-terms cuts in government capital investment currently projected un

176、til 2029.Tighter budgets will require a greater need for collaboration with the private sector to drive forward investment and regeneration in towns and cities.Whilst optimism as measured by the construction PMI has improved,the legacy of a weak order book from 2023 will delay recovery until late 20

177、24 before the positive sentiment is realised.The infrastructure sector looks set to offer the greatest future opportunity,particularly investment in networks including energy transition projects and a large-scale,96 billion planned investment in the regulated water sector.In both sectors,capacity co

178、nstraints will contribute to higher inflation and may impact the ability to deliver all projects and programmes in the period.“Our research shows that certainty and commitment to major infrastructure across the North will build investor confidence,resulting in a tangible increase in the scale and pa

179、ce of regeneration across Northern cities and towns.Importantly,these benefits can be unlocked years before the infrastructure becomes operational.”Richard Jones Northern Cities ExecutiveFuture spending on transport was thrown into chaos by the cancellation of later phases of the HS2 rail programme

180、in 2023.Some of the funds will be redistributed across a wider range of programmes.City Authorities including Manchester have benefitted from the extension of regional transport funding for a further 5 years to 2032,totalling 8.8 billion.“2023 was a year of partial market stability,boosted by a fall

181、 in inflation from a peaks in 2022.However,the continued war in Ukraine and the recent situation in the Middle East means that there is still likely to be uncertainty in the market in 2024”Hassen Naifer Senior Cost Manager,PlacesInternational Construction Costs 202424HSB Cost IndexICC IndexForewordF

182、ive point review frameworkMethodologyConstruction around the worldMarket OverviewWinner takes allIRELANDAlthough Irelands multinational trade caught a cold in 2023,the domestic market continued to grow,with the government able to continue investing in much needed public housing.Ireland experienced a

183、 3.6%contraction in real GDP growth in 2023,impacted by a large correction in export earnings from the vitally important pharmaceutical sector.By contrast,domestic demand including investment grew by 0.5%.Total growth for 2024 is forecast to be 2.4%according to the OECD,rising to 2.9%in 2025,as pric

184、e pressures subside.Annual inflation in 2023 averaged 5.2%but is projected to ease to 2.2%in 2024 in line with the wider market.The housing crisis is a huge problem in Ireland and 2023 saw 32,700 new dwelling completions,an increase of 10%on 2022,at levels not seen since the Celtic Tiger era.State i

185、ntervention was needed to maintain output in the face of a weak for sale market.The public sector accounted for 40-50%of the completion total in 2023.High levels of public investment is likely to continue in 2024 as house sales remain weak and as PRS investors continue to face viability challenges.I

186、nstitutional investors are instead focusing on social or student housing.Commercial markets suffer from oversupply.The Dublin office vacancy rate was 17%in 2023,and 195,000 sq m of new space is in the pipeline,with only 25%pre-let.The previously booming data centre segment is also slowing,but due to

187、 lack of grid capacity rather than weak demand.Work arounds include on-site energy generation or direct connections to offshore wind farms.Demand remains strong in the industrial and logistics sectors as vacancy rates for modern space remains at all-time lows.It is difficult to directly attribute in

188、flation of building costs to the introduction of net zero building standards,with inflation in 2023 in Ireland more directly linked to a shortage of skilled labour,rising labour costs,and supply chain concerns linked with overseas conflicts.“Divergent sector dynamics has seen shortages in some const

189、ruction sectors like housing,being filled by capacity created in the decline of others,such as commercial.A stabilisation of energy and materials prices and inflation rates in 2024 are likely to be offset by anticipated labour price increases and continued high demand in the market.”Fintan Kenny Com

190、mercial DirectorInternational Construction Costs 202425HSB Cost IndexICC IndexForewordFive point review frameworkMethodologyConstruction around the worldMarket OverviewWinner takes allBELGIUMBelgiums construction sector remained resilient in 2023 as demand for new work kept rising ahead of the wider

191、 economy.The Belgian economy expanded by 1.5%in 2023,boosted by a rebound in corporate investment.GDP growth is forecast to reach 1.4%in 2024 and 1.5%in 2025.Inflation fell to 2.3%in 2023 as the energy price impact eased,although the removal of government measures to dampen price increases could see

192、 inflation bounce back to 3.5%in 2024.The Belgian construction sector grew by 1.9%in 2023,slightly faster than the wider economy.This was due to pent-up post pandemic demand.However,momentum is falling,and indicators point to a slow-down in 2024.For example,inflation and higher finance costs led to

193、a 13%reduction in the number of building permits issued in the first ten months of 2023.This slowdown will particularly affect the residential sector in 2024.In the renovation market,which accounts for almost 60%of total building production,high energy prices had encouraged many households to improv

194、e the energy efficiency of their homes.But as energy prices have come down,so that momentum is forecast to ease in 2024 as payback periods lengthen.Industry capacity will also be reduced by a record number of bankruptcies in the sector in 2023,albeit a large proportion of these firms(22%)are under t

195、hree years old and have fewer than four employees.On the upside,a further increase in public investment in infrastructure is expected this year as municipal investment ticks up ahead of local elections in 2024.This is to be welcomed as the countrys roads and railways,for example,are outdated and in

196、need of major refurbishment in the years ahead.SPAINSpains construction market saw healthy output figures towards the end of the year and as interest rates fall in 2024,the hope is that more projects will pass the viability test.Recent data indicates that the Spanish economy is showing resilience,in

197、 contrast to the sharp slowdown experienced in other eurozone countries.Spains economy grew by 2.5%in 2023,a notable slowdown compared to the 5.8%growth seen in 2022,but much better than the near-zero growth seen by many European peers.Business investment was boosted by investment in net zero and di

198、gitalisation activity and the continued rollout of the EUs Next Generation recovery funds.Latest Eurostat data suggests Spain saw a 5.6%increase in construction production in December 2023 compared to the same month in 2022.“There is some uncertainty in the Belgian market at present,but with outdate

199、d infrastructure putting pressure on political funding decisions,new contract formats are being investigated as a way of moving schemes from drawing board to site.”Ann Van Melkebeek Senior Cost Leader“Market dynamics of high interest rates and higher than average inflation in 2023 led to project via

200、bility being questioned and projects being put on hold.But the strong desire for real estate development in Madrid and Barcelona meant that overall,growth was neutral across Spain.This trend will replicate in 2024,boosted by a surge in hospitality projects and activity picking up in other cities suc

201、h as Valencia,Malaga and Seville.”Emilio Garcia Head of Cost ManagementIt followed year-on-year monthly rises of 8.7%and 7.4%in October and November,respectively.The growth was despite the viability of some projects being impacted last year,as higher interest rates had a knock-on effect on debt-fund

202、ed investors and on land valuations,forcing some to halt or delay schemes until metrics improved.There is still evidence of clients taking forward schemes in the data centre and giga factory space,with such projects boosted by a significant cooling of construction costs over the past year.October fi

203、gures from the National Bank of Spain showed construction costs were 0.6%lower than a year earlier.The surge in internal sustainability targets from a few years ago has now levelled off and become expected by many clients,with objectives around high BREEAM certification levels and WELL accreditation

204、s becoming the norm.International Construction Costs 202426HSB Cost IndexICC IndexForewordFive point review frameworkMethodologyConstruction around the worldMarket OverviewWinner takes allAUSTRALIAAustralias pipeline of work is strong across nearly all states,driven by public sector plans favouring

205、social and transport infrastructure,together with requirements for the 2032 Olympic and Paralympic Games in Queensland.Australias economy grew at an annual rate of 1.5%,according to latest Reserve Bank of Australia forecasts,with headwinds such as high inflation and sharply higher interest rates lea

206、ding to a sharp decline in real household disposable income.Viability issues took hold in the construction sector in 2023 as rising construction costs put pressure on project bottom lines,leading to many schemes being delayed or cancelled.In the face of difficult markets,clients looked at alternativ

207、e methods of construction,such as DfMA.Often it was more productive to focus on delivering cost certainty rather than trying to engineer a lower cost in a rising market.In terms of sub-sector activity,data centres and industrial projects have been key standouts in Australia in terms of performance.L

208、ooking forward,Australia has a significant pipeline of work across nearly all states-heavily skewed by the public sector and focusing on social infrastructure and transport,in addition to work on the 2032 Olympics and Paralympics in Queensland.However,capacity has fallen,with construction insolvenci

209、es now well above the long-term trend,leaving questions about how the strong forward workload pipeline can be delivered.There is growing movement towards low carbon design and construction,but in practice,these projects have only reached the feasibility and planning stages so far.In NSW,the newly-el

210、ected Minns government is doubling down on commitments to net zero by 2050 and providing significant investment into stimulating private sector participation into renewable energy a trend which is likely to continue into 2024.It is also leveraging infrastructure projects to densify city development,

211、with a growth in housing around new metro stations in Sydney likely to be a key feature in the next couple of years.Meanwhile,in Brisbane,infrastructure activity will ramp up as Olympic deadlines edge nearer.MAINLAND CHINA AND HONG KONGInfrastructure and industrial work were the mainstays of Chinas

212、construction sector in 2023 as the turmoil surrounding the real estate market continued.There were signs of recovery in Hong Kong,and this could be further boosted by the public housing and public works sectors in accordance with the Chief Executives 2023 Policy Address and Hong Kong Major Transport

213、 Infrastructure Development Blueprint,which aim to alleviate the housing and transportation problems.Chinas economy officially saw growth of 5.2%in 2023,boosted by government support measures to help the ailing property market,which typically accounts for more than a quarter of economic activity.Off

214、icials set an ambitious 2024 GDP growth target of 5%in March.Hong Kong saw real GDP growth of 3.2%in 2023,following a contraction of 3.7%in 2022,as increases in inbound tourism and private consumption both saw an uptick.Current forecasts suggest growth of 3%in the Hong Kong economy in 2024.Chinas po

215、licymakers are trying to cope with entrenched deflation,record-low levels of foreign direct investment and a meltdown in the property sector by focusing on high-end manufacturing and infrastructure investment.Indeed,construction output of mainland China saw growth of 5.8%in 2023,primarily driven by

216、transport infrastructure and industrial projects.However,real estate investment declined by 9.6%and new-build real estate activity decreased by 20.4%,impacted by a property market debt crisis and bankruptcies of a number of Chinas major real estate developers.As the Chinese economy is going through

217、transformation,new drivers are emerging to shape Chinas growth path.Among these,green transition,urban renewal,and industrial upgrading are creating many new opportunities as efforts to meet targets in Chinas decarbonisation road map get underway.The level of construction activity in Hong Kong showe

218、d signs of recovery in 2023,with the overall gross value of works performed seeing an increase across both the private and public sectors.In the year ahead,the level of construction activity in the public sector will still be supported by projects with funding approved in the previous few years.Mean

219、while,the performance of the private sector will depend on the pace of recovery of the property market.This could be boosted by recent announcements that the government will scrap additional stamp duties on transactions imposed in the last decade and that the Hong Kong Monetary Authority(HKMA)will r

220、aise the maximum amount homebuyers and investors can borrow.ASIA PACIFIC“2023 saw rising insolvencies and diminishing capacity fuel further construction cost escalation and,while this has not been at the peak of 2022,it has continued to damage and reduce the margins for project viability.2024 presen

221、ts the construction industry with an opportunity to reset and work together to strengthen and improve our approach to project delivery.Matthew Mackey Business Leader,Cost&Commercial“Levels of construction activity in the public sector will be maintained by the Hong Kong Governments efforts to in

222、crease public housing supply and their investment pledges for development in the Northern Metropolis.However,private sector activity will remain subject to the pace of recovery in the property market.”Lysander Lam Director,Quantity SurveyingInternational Construction Costs 202427HSB Cost IndexICC In

223、dexForewordFive point review frameworkMethodologyConstruction around the worldMarket OverviewWinner takes allWe collect indicative cost ranges for each building function for each city.The low and high range costs for each building type are converted into US Dollars(USD).They are normalized and index

224、ed against the cost range for equivalent buildings in Amsterdam,where Amsterdam=100.We calculate an index range for each city comprising the low and high values for each of the 20 building types.The Arcadis International Construction Cost Index covers 100 cities.The index is based on a survey of con

225、struction costs which covers 20 building functions.This data is supplemented by a review of market conditions in each city combined with the professional judgement of a global network of experts.MethodologyThe data was collected in the first quarter of 2024.Costs used to calculate the index are base

226、d on buildings delivered to local specification standards,meeting both functional requirements and quality expectations.As a result,the index compares the relative costs of delivering the same building functions in a city,it also reflects the different levels of quality expectation reflected in a sp

227、ecification.Acknowledgements We would like to thank the following organisations for their support in providing data for the 2024 ICC report.Athens SPS Property Valuation Services, Bangkok Mentabuild Limited,Bengaluru,Mumbai and New Delhi-Arkind LS Private Limited, Ho Chi Minh-DLS Consultant Company

228、Limited,VN-DLS Jakarta-PT Lantera Sejahtera Indonesia,info.jktlsi.id Kuala Lumpur-JUBM Group,infojubm.my Lagos,Nairobi-Q Associates,Danjuma Waniko, Prague,Belgrade and other East European cities-Grinity s.r.o.,Mirek Vako,Singapore-Asia Infrastructure Solutions Singapore Pte.Ltd.,info- Costs covered

229、in the index exclude land,demolitions,external works and services and risk allowances.This means that major sources of variability are removed from the index.Similarly,we exclude costs of professional fees and local sales taxes.The index does not take into account purchasing power parity.The constru

230、ction cost data used in the index is current as of 1st quarter 2024.The exchange rates used to calculate the index were current on 13th February 2024.28International Construction Costs 2024HSB Cost IndexICC IndexForewordFive point review frameworkMethodologyConstruction around the worldMarket Overvi

231、ewWinner takes allContactIan GoodridgeMarket Intelligence LAli MarcotteGlobal Market Sector Director,TErik BlokhuisGlobal Sales and Business Development Officer,PKayleigh OwenHead of Cost and Commercial MSimon Rawlinson Head of Strategic Research and IMartijn KerrenbeldGlobal Market Sector Director,

232、Industrial MAbout ArcadisArcadis is the worlds leading company delivering data-driven sustainable design,engineering,and consultancy solutions for natural and built assets.We are more than 36,000 architects,data analysts,designers,engineers,project planners,water management and sustainability expert

233、s,all driven by our passion for improving quality of life.As part of our commitment to accelerating a planet positive future,we work with our clients to make sustainable project choices,combining digital and human innovation,and embracing future-focused skills across the environment,energy and water,buildings,transport,and infrastructure sectors.We operate in over 30 countries,and in 2023 reported 5.0 billion in gross Arcadis.Improving quality of lifeConnect with usArcadisArcadisGlobalArcadisGlobalArcadisGlobal