International Construction Costs 2024

International Construction Costs 2024
Race for capacity

Foreword Market Overview ICC Index HSB Cost Index Winner takes all Five point review Construction Methodology 2 International Construction Costs 2024
framework around the world
Foreword
Our 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 opportunities and challenges arising from the acceleration of
industrial reshoring and friendshoring.
In our market commentary, we In our market insight section, This highlights the importance As global construction markets
emphasize that despite the socio- Winner takes all, we share insights of construction productivity recover in 2024, the Arcadis view
economic and political upheaval on the challenges clients face in as an enabler of investment is that there is no turning back,
in 2023, the construction markets delivering projects amid massive and the potential barrier of and that future construction
experienced relative calm as investment in the technology local cost premiums. inflation trends will continue to rise
demand eased and supply chains sector. Meeting planned Day 1 due to market pressure and the
returned to equilibrium. 2024 is completion dates is a top priority Maintaining high productivity levels pursuit of better buildings. While
likely to mark the bottom of the for clients, but the scale, speed in conventional building is crucial as some clients may seize timing
market in many parts of the world. and complexity of these programs economic growth remains low, and opportunities to advance projects
increase their risk exposure. Existing finance costs increase. Productivity before recovery, the industry’s
A notable trend in 2023 was the supply chains and delivery models will be key to viability. Data confirms collective focus should be on
rapid acceleration of investment in require review to adequately that low-carbon performance designing and delivering projects
technology assets, driven by AI’s protect multibillion investments. specifications contribute to cost for resource-constrained markets.
demand for high-end processors growth in excess of background The race for capacity will continue
and the rapid expansion of data Over the past two years, housing inflation. While these buildings to place a premium on productivity-
Erik Blokhuis centers. The pace and scale of development and essential will perform better over their life led design, procurement and
programs being delivered in infrastructure have been battered cycle and have much less impact construction to address ongoing
Global Sales and Business Northern Europe, the Nordics, the by high inflation and costly on the planet, to build them, they affordability challenges.
Development Officer, Places UK and the US has the potential borrowing. Weak construction must stack up financially. Initial
to disrupt local construction markets have affected the housing construction cost remains a crucial
markets as demand for labor, and — perhaps most acutely hurdle, even as investment horizons
materials and power crowds — low-carbon sectors, causing extend further into the future.
out other development work. delays and cancelations of mega-
A race for capacity has begun. investments in offshore wind
Explosive growth in these markets parks and battery plants. Even
means that even established essential net-zero investments face
players have to reassess their affordability challenges despite the
location planning, delivery urgent need for energy transition.
strategies and supply chains.
Market overview
Less news is better news: a look back at 2023
2023 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.
The good news is that the scourge China targeting stronger growth Ultimately ‘less news’ characterized
of high inflation has mostly been of over 5% in 2024 and beyond, 2023. In contrast, 2024, the year
eliminated. Only a few markets recovery in the world’s largest of elections with over half of
saw double-digit inflation in 2023, construction market is likely to the world’s population going to
while over 25 cities recorded price coincide with a cyclical upturn in the polls in over 60 countries,
increases of over 5%. In contrast, Western markets. promises a much bumpier ride.
the US and the UK experienced For construction businesses, the
modest price hikes of 2-3%, while Although 2023 will be seen as a immediate impact could be an
some markets, notably China and, year for stabilization in retrospect, interruption to business as usual,
for the second consecutive year, the disruptions were always in the as public procurements are held
Netherlands, saw falling prices. background. Conflicts in Ukraine up by election processes and
and the Middle East, major climate spending priorities are challenged.
China’s relatively weak GDP growth change events, and the earthquake Looking ahead, freshly elected
of 5.2% in 2023 contributed to in Turkey and Syria contributed governments can be expected to
lower-than-expected global to a chaotic year. Fortunately, bring a whole new set of priorities,
Kayleigh Owen inflation, which helped to moderate interruptions to global trade with implications for workload and
construction price increases. Energy through the Panama and Suez long-term strategy.
Head of Cost and Commercial prices and metals markets held Canals were limited due to a slump
Management steady as the Chinese real estate in trade volumes.
market continued to misfire. With
How expensive is it to build in your city?

How to use the ICC Index The ICC index is primarily intended It is worth noting that certain In the ICC 2024 report, we
to compare costs for complete cost aspects, such as location- introduce a highly serviced building
Discover our data insights into global buildings. The data in the index can specific works and utilities construction cost index (HSB index).
be used to estimate the expenses provider costs, should not be
construction costs, including our associated with delivering a solely calculated using ICC data. The high technology construction
annual comparative cost study of specific building function across This is because the scope of work cost index provides a high-level
100 global cities, and regional cost different geographies using existing can vary between sites, requiring indication of cost differentials in
benchmark data. estimates based on initial designs. select key locations. Guidance
comparison data across EMEA, APAC However, ICC-derived ratios can on how to use the index is
and the Americas; data insights into When comparing costs using be used to adjust the rates. included in the report.
the ICC index, it is important to
construction-specific price inflation; consider other factors such as The ICC data is not suitable for
and an additional construction cost currency, specification differentials, cost adjustments in highly serviced
index on highly serviced buildings site constraints and location- buildings such as data centers.
specific requirements. The ICC It can only be used to estimate
for assets such as data centers and data is presented as a range, the costs of the building shell
manufacturing facilities. and values can be chosen from and basic services installation.
within that range to account Adjustments to the factor used
for differences between the may be necessary if the base
base and target buildings. building is particularly complex.
International Construction Cost Index 2024 ICC data should be applied as a ratio | Target location index/Base location index = adjustment factor
Average Location Index

01 London 223
02 Geneva 218
03 Zurich 201
04 Munich 200
05 New York City 197
06 San Francisco 192
07 Philadelphia 182
08 Copenhagen 181
09 Hong Kong 180
10 Bristol 180
11 Macau 178
12 Manchester 176
13 Boston 174
14 Birmingham 173
15 Edinburgh 169
16 Cardiff 167
17 Seattle 167
18 Glasgow 166
19 Dublin 163
20 Los Angeles 161
21 Las Vegas 157
22 Chicago 156
23 Oslo 155
24 Washington DC 154
25 Berlin 153
26 Vienna 149
27 Singapore 146
28 Belfast 145
29 Denver 145
30 Christchurch 142
31 Stockholm 140
32 Nice 140
33 Tokyo 137
34 Detroit 137
35 Paris 137
36 Toronto 136
37 Frankfurt 134
38 Brussels 134
39 Vancouver 133
40 Luxembourg 133
41 Marseille 133
42 Lyon 133
43 Miami 132
44 Helsinki 132
45 Phoenix 131
46 Auckland 131
47 Calgary 129
48 Sydney 128
49 Montreal 122
50 Dallas 120
51 Brisbane 119
52 Riyadh 119
53 Houston 117
54 Melbourne 117
55 Abu Dhabi 114
56 Rome 112
57 Milan 112
58 Bratislava 111
59 Sao Paulo 108
60 Dubai 107
61 Rio de Janeiro 106
62 Perth 104
63 Seoul 104
64 Warsaw 100
65 Amsterdam 100
66 Budapest 97
67 Adelaide 95
68 Zagreb 93
69 Krakow 90
70 Mexico City 89
71 Athens 89
72 Prague 89
73 Istanbul 89
74 Belgrade 88
75 Lisbon 88
76 Sofia 88
77 Riga 87
78 Barcelona 84
79 Bucharest 83
80 Bogota 80
81 Santiago 78
82 Madrid 77
83 Manila 63
84 Jakarta 54
85 Beijing 53
86 Shanghai 51
87 Bangkok 51
88 Shenzhen 47
89 Guangzhou 47
90 Wuhan 44
91 Ho Chi Minh 43
92 Chengdu 42
93 Mumbai 41
94 Delhi 39
95 Johannesburg 38
96 Bengaluru 37
97 Nairobi 37
98 Kuala Lumpur 36
99 Lagos 32
100 Buenos Aires 25
0 50 100 150 200 250 300

< Less costly to construct Index base: Amsterdam 100 More costly to construct >
See methodology for basis of assessment.
Regional International Cost Comparison 2024
ASIA-PACIFIC EMEA AMERICAS

09 Hong Kong 180
11 Macau 178
27 Singapore 146
30 Christchurch 142
33 Tokyo 137
46 Auckland 131
48 Sydney 128
51 Brisbane 119
54 Melbourne 117
62 Perth 104
63 Seoul 104
67 Adelaide 95
83 Manila 63
84 Jakarta 54
85 Beijing 53
86 Shanghai 51
87 Bangkok 51
88 Shenzhen 47
89 Guangzhou 47
90 Wuhan 44
91 Ho Chi Minh 43
92 Chengdu 42
93 Mumbai 41
94 Delhi 39
96 Bengaluru 37
98 Kuala Lumpur 36
0 50 100 150 200 250 300
International Construction Cost Comparison Decile Cities
Index base: Amsterdam 100

10 Bristol 180
20 Los Angeles 161
30 Christchurch 142
40 Luxembourg 133
50 Dallas 120
60 Dubai 107
70 Mexico City 89
80 Bogota 80
90 Wuhan 44
100 Buenos Aires 25
0 50 100 150 200 250
< Less costly to construct More costly to construct >
This 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 cities
Indicative construction inflation ASIA-PACIFIC EMEA
for key locations 2023 and 2024 Change 2023 v 2022 2024 v 2023 Change 2023 v 2022 2024 v 2023
% % % %
Arcadis estimates for construction tender price Auckland 5 to 6 3.5 to 4.5 Abu Dhabi 3 to 4 2 to 3
inflation for the 12-months prior to the 4th Beijing -2 to -3 1.5 to 2.5 Amsterdam 0 to -1 3 to 4
quarter of the stated year. Costs are for building Brisbane 6.5 to 7.5 7 to 8 Athens 3.5 to 4.5 2 to 3
construction only and do not necessarily apply to Dehli 5 to 6 6 to 8 Berlin 6 to 7 4 to 6
either volume housebuilding or infrastructure. Hong Kong 3 to 4 1.5 to 2.5 Dublin 4 to 5 3 to 4
Jakarta 4 to 5 4 to 5 London 2 to 3 1 to 2
Kuala Lumpur 3 to 4 3 to 4 Madrid 2.5 to 3.5 2.5 to 3.5
The table provides data on The decrease in prices observed in Singapore 2 to 3 0 to 3 Paris 2.5 to 3.5 2.5 to 3.5
construction-specific price inflation Beijing and Amsterdam in 2023 can Sydney 5.5 to 6.5 4.5 to 5.5 Prague 0 to 1 2 to 3
for both 2023 and 2024. This be attributed to localized market
Tokyo 3 to 4 2 to 4 Rome 2 to 3 2 to 3
inflation reflets the changes in issues that we anticipate will be
construction prices paid by clients, resolved in 2024. Vienna 4 to 5 3 to 4
rather than the input costs paid by Warsaw 10 to 12 5 to 8
As construction markets continue
contractors and the supply chain.
to recover beyond 2025, it is
In 2024, inflation is forecast to expected that inflation will align
continue to fall substantially in with long-term trends, which are
most construction markets. The typically higher than consumer AMERICAS
main exception is the United States, price inflation.
Change 2023 v 2022 2024 v 2023
where the pace of price increases
fell quickly in 2023, and where the % %
Faster price growth
rate of inflation is expected to pick- Boston 2 to 3 3 to 4
up a little faster in 2024. The table Chicago 0.5 to 1.5 1 to 2
Stable and slowing price growth
highlights that many countries
Dallas 3 to 4 3.5 to 4.5
experienced above-trend inflation in
2023, which posed challenges to the Falling prices Mexico City 6 to 8 4 to 6
viability of many projects. Miami 2.5 to 3.5 3 to 4
New York 1.5 to 2.5 2 to 3
Phoenix 2.5 to 3.5 3 to 4
Rio De Janeiro 5 to 7 4 to 6
San Francisco 2.5 to 3.5 3 to 4
Seattle 5 to 6 5.5 to 6.5
Toronto 0.5 to 1.5 3 to 4
Vancouver 2 to 3 3 to 4
Index insights
For 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 the 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 necessary 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 continue to in 2022. In the Netherlands,

be the most expensive locations markets remain stagnant, with
to build in, with London narrowly Amsterdam — our datum location
taking the top spot in 2024. — falling to the 65th rank.
Although levels of inflation were
moderate in the UK, specification Local inflation emerges as the
enhancements related to building primary factor driving changes in
safety, sustainability and client the ICC 2024 index rankings, with
expectations pushed prices up very little movement driven by
further than most other locations. currency fluctuation. There are two
Bristol, a regional city in the UK, exceptions in – UK cities, where
enters the top 10 for the first time. the index values were boosted by
Munich, experiencing double-digit around 2% due to currency effects.
price growth, moves up the rankings In contrast, despite experiencing
to claim the 4th position, surpassing inflation rates above 5%, Australian
New York and San Francisco. cities fall down the rankings due to
a weaker Australian dollar. Notably,
German cities continue to face cities like Istanbul, Lagos and
high inflation due to capacity Buenos Aires witness high inflation
constraints, even as the housing but their rankings are offset by the
market crashed. Philadelphia also depreciation of their local currency
climbs higher in the top 10, with against the US dollar. For instance,
inflation exceeding 5%, which is the Argentine peso loses three-
significantly higher than in most quarters of its value against the US
other US cities. Inflation in the dollar as inflation exceeds 200%.
US typically fell to 2-4% after
hitting double-digit increases
Highly serviced building construction cost index and insights

Our 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 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.
Highly serviced building construction cost comparison 2024

Index: Amsterdam = 100
London 114
Boston 113
Zurich 113
Copenhagen 112
Munich 112
San Franciso 111
Manchester 108
Oslo 108
Dublin 104
Hong Kong 104
Washington DC 104
Berlin 103
Helsinki 103
Stockholm 101
Tokyo 101
Amsterdam 100
Brussels 100
Frankfurt 100
Paris 100
Phoenix 99
Singapore 98
Auckland 97
Madrid 97
Milan 97
Sydney 97
Riyadh 94
Dubai 92
Warsaw 90
Shanghai 75
Mumbai 70
50 60 70 80 90 100 110 120 130
The HSB index should also not be High-cost locations from the main
used to adjust costs for location ICC are found at the top of the
specific external works and utilities rankings including London and San
provider costs. Ratios derived from Francisco. Cost levels in Amsterdam
the main ICC could potentially be are higher relative to many
used to adjust the rates used. European locations. This reflects
Amsterdam’s status as a major data
The HSB index range is narrow center cluster as well as the effect
compared to the main ICC. This of continuing inflation affecting
partly reflects the application of high technology projects in the
global specification standards for Netherlands, even as other sectors The index can also only be used
some highly serviced buildings have seen deflation in response to a to adjust costs for projects with a
including data centers, meaning slowdown in work. similar technical function, such as
that there is less scope for local comparable levels of plant diversity
variation. The high proportion of The HSB cost index should be specified for resilience.
the value of building services plant applied with extra care. It should
and equipment also results in a only be applied to buildings with Costs of installations within tenant/
narrow cost range as the cost of a high proportion of high-value serviced areas and costs of external
these elements varies less between service installations and should be services including power supply will
country to country than in-situ used to calculate building costs need to be assessed on a project-
construction works. of the fully serviced shell only. specific basis.
No going back – inflationary

cycle forecast to return
There are increasing hopes that contribute to an improved return on
a ‘soft landing’ will occur in 2024, investment. Control of construction
paving the way to lower borrowing costs will also play a critical role, but
costs and stronger growth. Both the the window of opportunity for low
International Monetary Fund (IMF) inflation will not stay open for long.
and Organization for Economic Co-
operation and Development (OECD) One of the challenges that will
have called 2024 as the bottom of follow a soft landing is that growth
the current cycle, albeit the pace will occur against a background of
of recovery into 2025 is expected historically low unemployment and
to be weak. Despite reduced ‘sticky’ core inflation. Furthermore,
expectations, interest rate cuts of accelerated investment cycles
between 75 and 100 basis points are associated with energy transition,
currently anticipated across Europe, network investment and real estate
US and UK for 2024. This will be decarbonization can be expected
positive for sectors sensitive to to coincide with a recovery in
interest rates, including technology, cyclical building sectors such
commercial property and housing. as housing. As a result, current
benign market conditions are
However, there will be no return unlikely to continue beyond
There is still a risk of policy and With industry capacity already
to ultra-low funding costs, and 2024. Markets that are expected
market failure during 2024. A delay at risk in many markets because
viability hurdles will need to reset to see accelerating inflation in
in lifting base rates could trigger of insolvency and constraints
at a permanently higher level. 2024 include China, the Nordics,
an unexpected downturn. Existing on available finance, clients
Shorter overall development South East Asia and the US.
conflicts could escalate, and the can play a role in stabilizing the
programs, faster construction and
outcomes of multiple elections market by bringing forward new
permanently lower land prices will
could result in changes to the investment. However, they will
settled order. A loss of confidence need to remain alert and prepared
would set back the construction to carry risk as the impacts
recovery given the importance of post-pandemic disruption
of housing and commercial continue to affect the industry.
development to future growth.
Winner takes all

Meeting the demands of complex,
end-date critical construction programs
Assuring the delivery of Exponential growth places consequences for clients that
fast complex programs certainty of delivery at risk have huge investments riding
Our sector feature in the ICC Mega-programs share many on right first time, on program
report focuses on the explosion characteristics including scale, delivery. At best, the program
in demand for end-date critical speed and extreme technical will be stressful and suboptimal.
projects including data centers, complexity. For clients, the most At worst, delivery dates will slip
gigafactories and wafer fabs. New important by far is certainty of with consequences for return on
clients, new technologies and day 1 completion. This is driven investment and reputation.
new business models are all being mostly by consequential business
developed ‘in flight’ even as multi- risk, but project teams also face Against this challenging
billion-dollar programs are built. challenges in accommodating background, our analysis focuses
the latest technologies on fast- on three areas for client attention:
We look at how the fundamentals moving, complex programs. • Pressures on industry
of fast complex programs create capacity and capability
challenges for design, procurement To assure certainty of delivery, • The compounding effects
Martijn Karrenbeld and construction capabilities. We clients should focus on how of scale on risk exposure
Global Market Sector Director, also examine how these programs programs are configured to secure
introduce new risks and demand both capability and capacity in • The need for a rethink
Industrial Manufacturing
fresh perspectives including line with the end date. Failing on enterprise models
the need to embrace change. to do so could have significant
CASE STUDY
Wafer fab
A semiconductor manufacturer is developing
new production capacity in response to explosive
growth in demand and political support for
reshoring investments.
The manufacturer’s response to growing competition for contractor

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 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 scale 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.
Capability and On high technology programs, premium costs will be incurred to secure
capacity and to deliver at scale, but other pressures will also stretch the
capacity: capability of the client team and the program team:
• First-of-a-kind innovation. accommodated within the
stretched to Many projects will involve the disciplines of cost and program
integration of processes and certainty. The program
the limit. technologies that have little culture must embrace change,
or no precedent. Uncertainties understanding and managing
Most construction clients are associated with the selection the full implications in real time.
accustomed to compromise; and and specification of these • Program complexity.
construction, an industry with technologies might affect Complexity multiplies the
value engineering at its heart, permitting, as well as design scale of scheduling and
sometimes delivers suboptimal and execution. Ideally the shell sequencing problems. Much
results. By contrast, for time- should be designed outwards of the complexity is related
critical mega-programs, there from the process at its core. to interdependences across
is no room for compromise.
• Start-up mindset – building the the program, such as those
Across multiple dimensions,
enterprise. Some clients will between utilities hook-ups and
the capabilities of delivery teams
face the challenge of building equipment design. Gateway
will be stretched well beyond
their organization parallel to reviews, comprehensive interface
the norm.
developing the technology and management and so on will all
delivering a capex program. deal with complexity risks.
The program team’s scope extends
Key issues around leadership, • Right first time quality.
across the full range of activity
organizational design, clear and Meeting strict specifications
from initial site selection to final
effective decision making, and and deadlines requires
handover and day 1 production.
stakeholder management will specialized skills in quality
It is better thought of as an
be resolved in-flight, even as the control and commissioning
enterprise, comprising the client,
project is being taken forward.
and its full range of internal • Optimism bias. Optimism bias
stakeholders together with the • Volume of work and rate of is the tendency for clients to
delivery team of consultants, spend. Construction also faces underestimate the cost and
designers, general contractors scaling problems related to time implications of complex
(GCs), specialist contractors installation complexity, interface undertakings including the
and equipment suppliers. management and coordination, consequences of change. This
and ability to respond to change. is countered by a holistic view
• Accommodation of change. of the program, by early impact
Change is endemic and must assessment and access to
be embraced while being granular program and cost data.
CASE STUDY
Gigafactory
The client’s R&D team was finalizing the battery
manufacturing process in parallel with the
building and utilities design. 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 problematic, largely due to process specification
changes and early commissioning requirements. The project’s 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 learned 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 employer’s requirements
in communicating the full scope of design and
construction requirements including 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.
Compounding
scale and risk:
an increasingly
challenging
program
environment
As highlighted, complex
programs are being delivered
in an increasingly challenging
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 Risks can be magnified by Greater transparency and
trade-offs when resolving risks like cultural differences within global, teamwork, better coordination
these will become more and more virtual teams and by suboptimal using Responsible, Accountable,
important. The ability to model stakeholder and change Consulted, Informed (RACI) and
program dependencies, model risk management. A greater focus enhanced interface management
scenarios and plan for low-pain on program-wide culture and enabled through digital platforms
change will be increasingly valuable. communication will enable detailed will help mitigate risks that have
construction and assembly-related grown due to a combination of
information to be shared with all market pressure and technical
stakeholders, including equipment complexity.
suppliers.
CASE STUDY
High technology
process plant
Change, risk management and
organizational transparency
This case study considers the risks emerging

with a process plant being developed by a start-
up organization. The program involved new
technology that was still under development.
Necessary changes delayed permitting and
as a result, the program’s process had to be
accelerated. This included early procurement of
enabling works.
Lessons learned from these challenges include:
The resulting contractual arrangements eliminated commercial pressure • The importance of the early establishment of project culture,
and further delayed the development of detailed design proposals to communication and commercial strategy to embrace the
meet the technical specification. When change did occur, much of the ‘known unknown’ of anticipated change requirements.
cost was incurred by the client rather than held by the supply chain.
• The scale of cost premiums that can result from steps
required to maintain progress toward the end date and
Although client-side risk exposure increased, no additional
the benefits of early sequence optimization.
steps were taken to invest in assurance activity. This reflected
a high level of optimism bias within the client team. As the • The value that external parties can bring in terms of
impact of open risks crystalized, further cultural issues became broader risk perspectives and enhanced assurance.
apparent that increased pressure on the delivery team.
Is a new
enterprise model
needed for
fast 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. There are a number of implications for mega-program clients, including:
But demand for resources will • Growing competition A pre-emptive review of
come from other sectors too, for contractors resulting commercial arrangements is a
including large-scale investment in a ‘seller’s market’ good way to start to mitigate this
in power and water networks as risk, covering issues including:
• Scale constraints related
part of climate change strategy. In
to the capacity of specialist
reality, too many mega-programs • Resourcing the team – focusing
contractors such as clean rooms
are running in parallel, placing on end-date delivery
unprecedented pressure on an • Too many programs
pursuing too few major • Contract model – single
industry that is configured to
contractors where contract vs. package model
deliver multi-million rather than
multi-billion-dollar contracts. alternatives may be needed • Assurance vs. certainty –
• Levels of risk transfer will does risk transfer represent
For the bigger firms, there will exceed the capacity of GC the best value compared
be no shortage of workload and balance sheets where different to risk management?
plenty of opportunity to diversify risk transfer models are needed
geographically and by sector. Clients gain much certainty from
For clients delivering end date- Clearly current delivery models are working with familiar contracts
critical programs, this could under pressure. As the programs’ and settled project teams. In
present a problem across many pace accelerates, there is an any market there are a finite
markets. Contractors will want increasing risk that critical points number of ‘A teams’ and as
the projects as an opportunity of failure will emerge, either with competition for resources grows,
but won’t necessarily be willing respect to attracting capacity or clients will need to adapt to the
to shoulder all the risk. agreeing to an acceptable contract. dynamics of a seller’s market.
CASE STUDY
Data center
Adapting to supply constraint and new
market opportunities
A 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 contractor 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 those used under the construction Lessons learned from these challenges include:
management procurement model are being considered. Benefits • The importance of the client’s in-house capability that enables
include the elimination of layers of cost and ability to access local supply package-based approaches to be adopted.
chains in new markets. Challenges include the design of the package • The continuing need to ensure that all capabilities are resourced
management layer including requirements for new capabilities within across the team and that new integration issues are addressed.
the client organization.
• The client’s recognition that, although the proposed model should
deliver better value, it involves further risk and resource transfer to
the client to secure these outcomes.
Race for capacity

As 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
longer be accepted in a capacity
constrained market. Programs may
also become more complex and
the need to effectively manage
Such circumstances are a great But incremental improvement
global, multicultural teams will
prompt for clients to consider if is possible and beneficial. By
become more acute, for start-ups
their enterprise model for end- considering the key issues set out
and for industry champions alike.
date critical delivery remains in this paper and by applying the
optimum. Can it be improved? Arcadis five-point review framework
Does it work in all locations? Are (overleaf) as an assessment
there new sources of risk that tool, we believe that clients can
are not directly addressed? give themselves and their teams
greater confidence that they
Many clients have well-established can deliver to plan – and win.
ways of working on projects that
are aligned to their wider business
environment. Change is difficult
to introduce, particularly when
programs are running so hot.
Assuring the delivery

For a group of clients who are
focused above all on meeting a
contracted end date, the prognosis
is that current delivery models
of fast, complex might need change – to improve

internal stakeholder management,
to attract more capacity, to better
programs – five-point
engage with the capabilities of a
global supply chain or simply to
ensure that risks are covered when
problems arise through better
review framework
use of data, insight and decision-
making. We have brought together
our experience derived from
multiple high technology programs
Edel Christie to develop a series of key prompts.
Chief Growth Officer
The framework is market,
technology, and contract
agnostic, but takes its cues from
How this framework the experience of our teams and
will help our insights into how markets
In the ICC 2024 report, we have around the world are evolving
Clarity of purpose Client’s role Protecting the Enabling effective Assured decision highlighted that the technology and how clients are responding
Is the project What task must the end date change making and advanced manufacture sector to these changes. These prompts
organization fit client undertake to Is the Day 1 objective Can the team anticipate Is the right data is one of the few global markets will help clients consider a range
for purpose ensure success? driving the program? and facilitate low- available to support that has seen rapid growth in the of opportunities to on complex
pain change? assured delivery past 1-2 years. Even as market programs, even as the market for
• Scale-up in response • Focus on leadership, • Outcome thinking - conditions stabilize in other sectors, delivery evolves at a rapid pace.
to the level of team culture, define what Day 1 is • Develop a ready-for- • Use live data and the specific dynamics of the mega-
innovation and size stakeholders and identify the critical change culture - keep integrated models program segment will combine to
of the task and money milesdtone and the it clear and simple to break down silos create further challenges for clients Click here to speak to an
• Build-in resilience to • Own the scale end-date sequence • Prioritise assurance • Invest in data and in a fight to be first – in securing Arcadis expert for more
deal with setbacks challenge and • Model program over certainty - secure controls to increase consents, in contracting supply information on how we
• Assure the maturity equip the team interdependencies to an economic balance levels of confidence chain capacity and in delivering can help you implement
and resilience of the to manage it prepare for disruption of risk transfer to market. the framework
• Avoid paralysis by
client organization • Engage fully in the • Respond to the • Understand and analysis - trust the
including leadership management of risk implications of transparently report direction of travel as
- including ownership missed dates accross the consequences well as the detail
where need the program of change
Construction
around the world
NORTH AMERICA
USA Recent data from the Associated

General Contractors of America
Investment in infrastructure
is being driven by federal and
(AGC) showed total annual state initiatives. For example,
Federal and state interventions
construction spending in the US the $45bn Rebuild Illinois bill will
appear to have had highly positive
reached $2.1 trillion in January provide the state Department
impacts on some sectors of the
2024, in current prices, almost
“While inflation continues
country’s construction market of Transportation with over
12% higher than a year earlier . $20bn to fix roads, viaducts and to moderate in 2024,
which offset a slump in others. uncertainty caused by the
The construction market is strong bridges. In California, the 2028
in certain sectors, ranging from Olympics in Los Angeles is acting US Presidential election
The US economy expanded
2.5% in 2023, up from the 1.9%
industrial and infrastructure to as a catalyst for infrastructure and global events in
technology and life sciences. development in the region Ukraine and Israel will
recorded in 2022. The OECD is
The CHIPS and Science Act, for including transport networks. continue to influence the
currently forecasting annual GDP
example, has contributed to a
growth of 2.1% for 2024. Interest market in the year ahead.”
doubling of construction spend on However, the commercial,
rates are currently at a 23-year
factories in 2023 compared to 2022, hospitality and retail sectors David Hudd
high of 5.25-5.5% but are likely
totalling nearly $200 billion. The have slumped, with commercial National Discipline Leader,
to fall by several increments in
computer and electronics segment being the slowest to show Cost & Commercial
2024, as inflation falls towards
has been the key sector driving this signs of recovery. In Chicago, Management
the Fed’s 2% target by mid-year.
manufacturing construction boom, for example, office values have
accounting for 64% of that spend. fallen dramatically. An uptick
is not expected due to high
interest rates and high levels of Mega projects continue to be
post-pandemic home working. disruptive to the ‘local’ contracting
community in terms of their impact
With a different approach to on availability of local skilled labor,
regulation, the United States affecting for example the cost and
remains behind Europe with availability of electrical trades in
regard to low carbon building. the vicinity of data center projects.
Aspirations are often reduced Maintaining workforce engagement
as part of value engineering and continuity has been a
and projects are therefore often particular challenge in 2023 as
delivered with a less ambitious the extent of large-scale industrial
set of sustainability measures. investment has ramped up.
CANADA In construction markets, high

rise residential is particularly
see a contractor appointed to
Canada’s largest infrastructure
challenged; downward movement project – the addition of
High interest rates coupled with
in both the cost of borrowing 1,000km of new rail track to
inflation dampened Canada’s
and construction costs, which is provide high speed rail services
construction market through
anticipated later in 2024, is required between Quebec City, Montreal,
2023 but there are a few bright
“Overall, the construction to turn the tide materially. The Ottawa, and Toronto. Transit
spots on the horizon in 2024.
housing shortfall is acute across investment projects continue to
market in Canada is
most of the country. Federal emerge across the country.
one of opportunity with While GDP rose by 1.1% in 2023 –
immigration policies are fuelling
some sectors requiring the third consecutive year of growth
population growth and associated Continued on-shoring and just-in-
a bit more caution – it was the slowest pace since 2016
consumer demand. The federal time delivery is driving industrial
and aligns with more traditional
and patience, notably growth levels after a few years of
government unveiled a new C$6 facility demand. The industrial
residential. Looking significant rises. Slow growth is
bn Canada Housing Infrastructure segment will be boosted by plans
ahead, the availability and Fund, in recognition of the critical from US chemical firm Dow to build
forecast for 2024 as interest rates
capacity of skilled labor to infrastructure required to address a US$6.5bn net zero petrochemical
at near cyclical highs curb investor
the country’s housing shortage. plant in Alberta, with construction
participate in construction sentiment, suggesting caution
Continued population growth is starting this year. Building on
projects will be a growing and tempered expectations.
also driving demand for healthcare the C$7 billion VW project which
constraint.” and education related projects. commenced in 2023, various other
auto manufacturers are considering
Audrey Jacob Investment in infrastructure is expansions; reports suggest that
Business Area Director, Places expanding, while workloads for Honda may build a US$13.8bn
industrial and manufacturing are electric vehicle plant in Ontario.
resilient. Summer 2024 should
The situation was most strongly Infrastructure and industrial

felt in the residential sector, with represent the best hope for growth
housing completions expected in 2024. Giga factories, semi-
to fall from 295,000 in 2022 to conductor plants and large data
242,000 in 2023, according to centres continue to be developed
EUROPE housing association trade body and built, with projects including
GdW. The numbers are likely to a major battery plant for ACC in
NETHERLANDS New construction across all sectors

is likely to be under pressure in
Urban regeneration projects around
these stations are also planned. GERMANY be lower still in 2024, given that
the volume of residential building
Kaiserslautern, the FRA7 data
centre in Frankfurt and a wafer-fab
2024, with new residential and Fundamental measures associated permits declined by 27% to 260,100 plant in Magdeburg. Meanwhile
The Dutch construction sector Times have been tough in the
non-residential activity forecast to with net zero targets have been in the last 12 months – the lowest power transmission projects from
has faced a slump in workload due German construction market,
decline by 10%. standard in the Netherlands for level since 2012. In an effort to North to South Germany will aid
to pollution regulation. A slowing particularly in financially sensitive
several years, so their impact on boost the housing construction the country’s energy transition.
economy will place a lid on the pace sectors like commercial and housing,
In housing, supply-side issues price levels is presently minimal. market and the stock of affordable Infrastructure contractors will also
of recovery in 2024. but opportunities in industrial and
such as a shortage of land and in homes, the German government be kept busy by government plans
infrastructure still exist.
particular legal delays relating to last year suspended the tightening to spend €40 billion by 2027 to
A slow-down in global trade led
nutrient neutrality will continue of new building efficiency rules improve the country’s rail network,
to meagre annual GDP growth of The German economy contracted
to limit delivery during 2024. The initially planned for 2025. including the new U5 metro line
0.1% in the Netherlands in 2023, by 0.3% in 2023 as high inflation,
number of new home permits in Hamburg.
down from 4.3% in 2022 during the rising interest rates and weakening
declined to 56,000 in 2023, from a Elsewhere, reports show a
Covid-19 recovery. Latest forecasts international trade all took
peak of 75,800 in 2021. rising level of insolvencies in the
suggest growth is likely to remain their toll. The OECD is currently
commercial real estate sector, with
flat at 0.3% in 2024, rising to 1% forecasting annual GDP growth
In Amsterdam, budget constraints “Events of the past couple failures like major developer Signa
in 2025. of 0.3% for 2024 and 1.1% in 2025.
delayed investments in the metro of years have shown how at the end of 2023 suggesting that
Construction is a key part of the
as well as a new bridge over the Ij – the bottom in this segment has
Total construction production insight into the risks, costs German economy, accounting for
the city’s waterfront. Meanwhile in not yet been reached. Clients are
grew by just 1.5% in 2023, with and cost developments of about 6% of GDP and employing 2.6
refurbishing offices, rather than “Any growth is likely to be
Rotterdam, 2023 saw the viability
the highest growth in the civil construction projects are million people. However, 2023 saw
of new high-rise residential towers building new. Contractors are seen in the infrastructure
engineering sector, where a essential to continue to the sector enter a deep recession,
impacted by increasing costs expecting conditions to remain and mega-scale industrial
sharp increase in investments with builders facing a perfect storm
and affordability levels. Looking keep them affordable extremely challenging over the sectors, where demand
relating to the energy transition of rising interest rates, increasingly
boosted activity. This was offset
forward, Rotterdam has a major and feasible.” expensive materials and a very tight
coming 12 months, with both PMI
for labour and materials
programme to replace or maintain and Ifo surveys showing about half
by a 7% contraction in new
Ted Peek labour market.
of firms anticipating a decrease in
will remain high”
bridges, tunnels and docklands,
housing construction.
plus new stations and station Senior Consultant, Cost & Data activity in 2024.
Poul Syratt
upgrades along the ‘de Oude Lijn’. Management
Senior Quantity Surveyor
Tight fiscal conditions will see Future spending on transport

increasing pressure on the public was thrown into chaos by the
purse in 2024 and beyond, with real- cancellation of later phases
terms cuts in government capital of the HS2 rail programme in
investment currently projected until 2023. Some of the funds will
2029. Tighter budgets will require be redistributed across a wider
FRANCE The French construction sector is
resilient, and latest INSEE surveys
From a net zero perspective,
there is an increasing focus on UK a greater need for collaboration range of programmes. City
highlight a ‘stable’ business climate improving energy performance with the private sector to Authorities including Manchester
The French construction market The UK’s public sector spending drive forward investment and have benefitted from the
for the construction sector. This can within buildings. In housing,
stabilised in 2023 but the outlook spree is slowing down, taking regeneration in towns and cities. extension of regional transport
largely be explained by continued this is guided by the décret
for 2024 is uncertain, especially pressure off an overheated funding for a further 5 years to
investment in major public tertiaire, which targets a 40%
now that investment in the construction sector. Whilst optimism as measured 2032, totalling £8.8 billion.
transport infrastructure projects reduction in energy consumption
Olympics is coming to a close by the construction PMI has
that provide many contractors by 2030. within buildings. The UK’s growth trajectory is weak. improved, the legacy of a weak
with a steady future pipeline of
Data from INSEE showed the GDP grew by just 0.1% in 2023 order book from 2023 will
work. There are some bright spots
French economy grew by 0.9% and Bank of England forecasts for delay recovery until late 2024
in the commercial sector too,
in 2023 – a significant slowdown 2024 and 2025 are only 0.25% and before the positive sentiment is
including demand for data centres.
after increases of 2.5% in 2022 0.75%, respectively. Interest rates realised. The infrastructure sector
and 6.4% in 2021. Latest OECD reached a 15-year high of 5.25% looks set to offer the greatest
However, even with demand
projections indicate GDP growth in August 2023, and are expected future opportunity, particularly
cooling, delivery could still
will ease further to 0.8% in 2024, to start falling in summer 2024. investment in networks including
be impacted by a shortage “2023 was a year of partial “Our research shows that
recovering to 1.2% in 2025. energy transition projects and a
of construction workers, with market stability, boosted certainty and commitment
Viability challenges have continued large-scale, £96 billion planned
79% of responses to a Jan
Higher interest rates and elevated by a fall in inflation from to affect projects, even as inflation investment in the regulated water to major infrastructure
2024 construction survey
inflation continued to act as a drag a peaks in 2022. However, has fallen. New regulations sector. In both sectors, capacity across the North will
saying they were experiencing
on housing and commercial activity the continued war in focused on low carbon emissions constraints will contribute to build investor confidence,
recruiting problems.
in 2023. Inflation is expected to Ukraine and the recent and improved building safety also higher inflation and may impact resulting in a tangible
drop from a high of 5.7% in 2023 created uncertainty and added to the ability to deliver all projects
to 2.7% in 2024. However, market
situation in the Middle East project costs. Uncertainty could
increase in the scale and
means that there is still and programmes in the period. pace of regeneration
conditions will take some time to continue in 2024, given local,
improve, with the latest PMI update likely to be uncertainty in mayoral and national elections across Northern cities
showing a sharp and accelerated the market in 2024” are due in the coming months. and towns. Importantly,
fall in construction new orders for these benefits can be
sectors sensitive to cost of finance. Hassen Naifer unlocked years before the
Senior Cost Manager, Places
infrastructure becomes
operational.”
Richard Jones
Northern Cities Executive
IRELAND The housing crisis is a huge problem

in Ireland and 2023 saw 32,700
centre segment is also slowing, but
due to lack of grid capacity rather
new dwelling completions, an than weak demand. Work arounds
Although Ireland’s multinational
increase of 10% on 2022, at levels include on-site energy generation
trade caught a cold in 2023,
not seen since the Celtic Tiger era. or direct connections to offshore
the domestic market continued
State intervention was needed to wind farms. Demand remains
to grow, with the government
“Divergent sector maintain output in the face of a strong in the industrial and logistics
able to continue investing in
weak for sale market. The public sectors as vacancy rates for modern
dynamics has seen much needed public housing.
sector accounted for 40-50% space remains at all-time lows.
shortages in some of the completion total in 2023.
construction sectors like Ireland experienced a 3.6%
High levels of public investment It is difficult to directly attribute
housing, being filled by contraction in real GDP growth
is likely to continue in 2024 as inflation of building costs to
in 2023, impacted by a large
capacity created in the correction in export earnings
house sales remain weak and as the introduction of net zero
decline of others, such as from the vitally important
PRS investors continue to face building standards, with inflation
commercial. A stabilisation viability challenges. Institutional in 2023 in Ireland more directly
pharmaceutical sector. By contrast,
of energy and materials investors are instead focusing linked to a shortage of skilled
domestic demand including
on social or student housing. labour, rising labour costs, and
prices and inflation rates in investment grew by 0.5%. Total
growth for 2024 is forecast to supply chain concerns linked
2024 are likely to be offset Commercial markets suffer from with overseas conflicts.
by anticipated labour price be 2.4% according to the OECD,
oversupply. The Dublin office
rising to 2.9% in 2025, as price
increases and continued vacancy rate was 17% in 2023, and
pressures subside. Annual inflation
high demand in the in 2023 averaged 5.2% but is
195,000 sq m of new space is in
market.” projected to ease to 2.2% in 2024
the pipeline, with only 25% pre-
let. The previously booming data
in line with the wider market.
Fintan Kenny
Commercial Director
BELGIUM For example, inflation and

higher finance costs led to a
On the upside, a further increase in
public investment in infrastructure SPAIN
13% reduction in the number of is expected this year as municipal
Belgium’s construction sector Spain’s construction market saw
building permits issued in the investment ticks up ahead of
remained resilient in 2023 as healthy output figures towards the
first ten months of 2023. This local elections in 2024. This is to
demand for new work kept rising end of the year and as interest rates
slowdown will particularly affect be welcomed as the country’s
ahead of the wider economy. fall in 2024, the hope is that more
the residential sector in 2024. roads and railways, for example, projects will pass the viability test.
The Belgian economy expanded are outdated and in need of major It followed year-on-year monthly
In the renovation market, which refurbishment in the years ahead. rises of 8.7% and 7.4% in October
by 1.5% in 2023, boosted by a Recent data indicates that the
accounts for almost 60% of total and November, respectively. The
rebound in corporate investment. Spanish economy is showing
building production, high energy growth was despite the viability of
GDP growth is forecast to reach resilience, in contrast to the
prices had encouraged many some projects being impacted last
1.4% in 2024 and 1.5% in 2025. sharp slowdown experienced
households to improve the energy year, as higher interest rates had
Inflation fell to 2.3% in 2023 in other eurozone countries.
efficiency of their homes. But as a knock-on effect on debt-funded “Market dynamics of high
as the energy price impact Spain’s economy grew by 2.5%
energy prices have come down, investors and on land valuations,
eased, although the removal of in 2023, a notable slowdown interest rates and higher
so that momentum is forecast to forcing some to halt or delay
government measures to dampen compared to the 5.8% growth than average inflation in
price increases could see inflation
ease in 2024 as payback periods “There is some uncertainty seen in 2022, but much better schemes until metrics improved.
lengthen. Industry capacity in the Belgian market at 2023 led to project viability
bounce back to 3.5% in 2024. than the near -zero growth seen
will also be reduced by a record present, but with outdated There is still evidence of clients being questioned and
by many European peers.
The Belgian construction sector
number of bankruptcies in the
infrastructure putting taking forward schemes in the projects being put on hold.
sector in 2023, albeit a large data centre and giga factory space, But the strong desire for
grew by 1.9% in 2023, slightly pressure on political Business investment was boosted
proportion of these firms (22%) with such projects boosted by a real estate development
faster than the wider economy. funding decisions, new by investment in net zero and
are under three years old and significant cooling of construction
This was due to pent-up post
contract formats are being digitalisation activity and the in Madrid and Barcelona
have fewer than four employees. costs over the past year. October
pandemic demand. However, continued rollout of the EU’s meant that overall, growth
momentum is falling, and indicators
investigated as a way of Next Generation recovery funds. figures from the National Bank of
moving schemes from Spain showed construction costs was neutral across Spain.
point to a slow-down in 2024. Latest Eurostat data suggests This trend will replicate in
drawing board to site.” Spain saw a 5.6% increase in were 0.6% lower than a year earlier.
construction production in
2024, boosted by a surge
Ann Van Melkebeek December 2023 compared to The surge in internal sustainability in hospitality projects and
Senior Cost Leader the same month in 2022. targets from a few years ago has activity picking up in other
now levelled off and become cities such as Valencia,
expected by many clients, with Malaga and Seville. ”
objectives around high BREEAM
certification levels and WELL
Emilio Garcia
accreditations becoming the norm.
Head of Cost Management
China’s policymakers are trying to projects with funding approved in

cope with entrenched deflation, the previous few years. Meanwhile,
record-low levels of foreign direct the performance of the private
investment and a meltdown in sector will depend on the pace
ASIA PACIFIC In terms of sub-sector activity, data
centres and industrial projects have MAINLAND the property sector by focusing
on high-end manufacturing
of recovery of the property
market. This could be boosted by
AUSTRALIA been key standouts in Australia
in terms of performance. Looking
CHINA AND and infrastructure investment. recent announcements that the
Indeed, construction output of government will scrap additional
Australia’s pipeline of work is strong
across nearly all states, driven
forward, Australia has a significant
pipeline of work across nearly
HONG KONG mainland China saw growth of stamp duties on transactions
5.8% in 2023, primarily driven imposed in the last decade and
by public sector plans favouring all states - heavily skewed by the “2023 saw rising Infrastructure and industrial work by transport infrastructure and that the Hong Kong Monetary
social and transport infrastructure, public sector and focusing on were the mainstays of China’s
insolvencies and industrial projects. However, real Authority (HKMA) will raise the
together with requirements for social infrastructure and transport, construction sector in 2023 as
in addition to work on the 2032
diminishing capacity fuel estate investment declined by 9.6% maximum amount homebuyers
the 2032 Olympic and Paralympic the turmoil surrounding the real and new-build real estate activity and investors can borrow.
Olympics and Paralympics in further construction cost
Games in Queensland. estate market continued. There decreased by 20.4%, impacted by
Queensland. However, capacity escalation and, while this were signs of recovery in Hong a property market debt crisis and
Australia’s economy grew at an has fallen, with construction has not been at the peak Kong, and this could be further bankruptcies of a number of China’s
annual rate of 1.5%, according to insolvencies now well above the of 2022, it has continued boosted by the public housing and major real estate developers.
latest Reserve Bank of Australia long-term trend, leaving questions to damage and reduce public works sectors in accordance
forecasts, with headwinds such about how the strong forward the margins for project with the Chief Executive’s 2023 As the Chinese economy is
as high inflation and sharply workload pipeline can be delivered. Policy Address and Hong Kong
viability. 2024 presents going through transformation,
higher interest rates leading the construction industry Major Transport Infrastructure new drivers are emerging to
to a sharp decline in real There is growing movement Development Blueprint, which
with an opportunity to shape China’s growth path. “Levels of construction
household disposable income. towards low carbon design and aim to alleviate the housing and
reset and work together Among these, green transition, activity in the public sector
construction, but in practice, these transportation problems. urban renewal, and industrial
Viability issues took hold in the projects have only reached the to strengthen and will be maintained by the
upgrading are creating many new
construction sector in 2023 as feasibility and planning stages improve our approach China’s economy officially saw opportunities as efforts to meet Hong Kong Government’s
rising construction costs put so far. In NSW, the newly-elected to project delivery. growth of 5.2% in 2023, boosted efforts to increase public
targets in China’s decarbonisation
pressure on project bottom lines, Minns government is doubling by government support measures housing supply and their
road map get underway.
leading to many schemes being down on commitments to net zero Matthew Mackey to help the ailing property market, investment pledges
delayed or cancelled. In the by 2050 and providing significant Business Leader, Cost which typically accounts for The level of construction activity for development in the
face of difficult markets, clients investment into stimulating private & Commercial more than a quarter of economic in Hong Kong showed signs of Northern Metropolis.
looked at alternative methods sector participation into renewable activity. Officials set an ambitious recovery in 2023, with the overall However, private sector
of construction, such as DfMA. energy – a trend which is likely 2024 GDP growth target of 5% in gross value of works performed
Often it was more productive to to continue into 2024. It is also March. Hong Kong saw real GDP seeing an increase across both
activity will remain subject
focus on delivering cost certainty leveraging infrastructure projects growth of 3.2% in 2023, following to the pace of recovery in
the private and public sectors.
rather than trying to engineer a to densify city development, with a contraction of 3.7% in 2022, the property market.”
In the year ahead, the level of
lower cost in a rising market. a growth in housing around new as increases in inbound tourism construction activity in the public
metro stations in Sydney likely to and private consumption both Lysander Lam
sector will still be supported by
be a key feature in the next couple saw an uptick. Current forecasts Director, Quantity Surveying
of years. Meanwhile, in Brisbane, suggest growth of 3% in the
infrastructure activity will ramp up Hong Kong economy in 2024.
as Olympic deadlines edge nearer.
Methodology Acknowledgements
We would like to thank the following organisations for their support
in providing data for the 2024 ICC report.
The Arcadis International Construction Cost Index covers 100 cities. The index is based on a survey of
Athens – SPS Property Valuation Services, [email protected]
construction 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.
Bangkok – Mentabuild Limited, [email protected]
We collect indicative cost ranges The data was collected in Costs covered in the index Bengaluru, Mumbai and New Delhi - Arkind LS Private Limited,
for each building function for each the first quarter of 2024. exclude land, demolitions, [email protected]
city. The low and high range costs Costs used to calculate the external works and services and
for each building type are converted index are based on buildings risk allowances. This means that Ho Chi Minh - DLS Consultant Company Limited,
into US Dollars (USD). They are delivered to local specification major sources of variability are [email protected]
normalized and indexed against standards, meeting both removed from the index. Similarly,
the cost range for equivalent functional requirements and we exclude costs of professional Jakarta - PT Lantera Sejahtera Indonesia, [email protected]
buildings in Amsterdam, where quality expectations. As a fees and local sales taxes.
Amsterdam = 100. We calculate result, the index compares the Kuala Lumpur - JUBM Group, [email protected]
an index range for each city relative costs of delivering the The index does not take into
comprising the low and high values same building functions in a account purchasing power parity. Lagos, Nairobi - Q Associates, Danjuma Waniko,
for each of the 20 building types. city, it also reflects the different The construction cost data used [email protected]
levels of quality expectation in the index is current as of 1st
reflected in a specification. quarter 2024. The exchange rates Prague, Belgrade and other East European cities - Grinity s.r.o.,
used to calculate the index were Mirek Vaško, [email protected]
current on 13th February 2024.
Singapore - Asia Infrastructure Solutions Singapore Pte. Ltd.,
[email protected]
About Arcadis
Arcadis is the world’s 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
experts, 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 revenues.
www.arcadis.com
Contact
Erik Blokhuis Ali Marcotte
Global Sales and Business Global Market Sector Director, Technology
Development Officer, Places
[email protected]
[email protected]
Kayleigh Owen Simon Rawlinson

Head of Cost and Commercial Management Head of Strategic Research and Insight
[email protected] [email protected]
Martijn Kerrenbeld Ian Goodridge

Global Market Sector Director, Market Intelligence Lead
Industrial Manufacturing
[email protected]
[email protected]
Arcadis. Improving quality of life Connect with us @ArcadisGlobal Arcadis @ArcadisGlobal @ArcadisGlobal

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International Construction Costs 2024

Race for capacity

How expensive is it to build in your city?

Average Location Index

0 50 100 150 200 250 300

ASIA-PACIFIC EMEA AMERICAS

Average Location Index

0 50 100 150 200 250 300

Index base: Amsterdam 100

20 Los Angeles 161

100 Buenos Aires 25

0 50 100 150 200 250

< Less costly to construct More costly to construct >

A significant development in the ICC 2024 report is the introduction of a

London and Geneva continue to in 2022. In the Netherlands,

Highly serviced building construction cost index and insights

Highly serviced building construction cost comparison 2024

50 60 70 80 90 100 110 120 130

No going back – inflationary

Winner takes all

The manufacturer’s response to growing competition for contractor

Although the investment mitigated some risks around workforce

The case study illustrates issues including:

Led by a GC focused on maintaining pace toward the end date, the

Lessons learned from these challenges include:

Many of the major risks affecting

This case study considers the risks emerging

A data center developer has a large-scale, serial

The established model relies on a general contractor delivering a lump

Race for capacity

Resources will become harder

Assuring the delivery

of fast, complex might need change – to improve

USA Recent data from the Associated

CANADA In construction markets, high

The situation was most strongly Infrastructure and industrial

NETHERLANDS New construction across all sectors

Tight fiscal conditions will see Future spending on transport

IRELAND The housing crisis is a huge problem

BELGIUM For example, inflation and

China’s policymakers are trying to projects with funding approved in

Kayleigh Owen Simon Rawlinson

Martijn Kerrenbeld Ian Goodridge

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