According to a recent study, UK construction costs are among the most expensive in Europe when calculated in Euros
The post-referendum weakening of the Sterling against the Euro will have increased the UK costs in this study compared with previous years.
The Council of European Construction Economists (CEEC*) carries out an exercise each year to compare construction costs between countries. The Building Cost Information Service (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 main materials/structure of a typical office building. The costs include an allowance for external works and contingencies.
Full details of the model and a breakdown of the costs over the previous seven years are available on the CEEC website.
CEEC Office Cost Model comparisons are expressed in Euros using exchange rates at the time the study was carried out (June 2017). Exchange rates, particularly the pound, have been volatile in recent months against the backdrop of the UK’s Brexit negotiations.
The movement and fluctuation of exchange rates tend to distort how one country’s construction costs compare with another. 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 £920,000 in the UK, €990,000 in Finland, 18,240,000 Koruna in Czech Republic, etc. Similarly, a project costing 100,000,000 Florint in Hungary would cost €370,000 in France, €350,000 in Netherlands, 530,000 Francs in Switzerland, etc.
Purchasing Power Parities for construction works based on the CEEC office cost model June 2017
The UK costs are based on the BCIS Schedule of Rates.
*Conseil European des Economistes de la Construction (CEEC) was formed nearly 40 years ago by the coming together of representatives of various national institutions representing the field of construction economics in their own countries, with the aim of promoting the profession at a European level. RICS was a founding member of CEEC and BCIS provides technical input to projects and standards.