Comparing construction costs

“With the onset of markets opening and pertinent growth, it is strategically important to optimise space requirements as the working preferences of staff have changed. Success factors will be in providing more collaboration and open spaces and allow for more WFH options.”

Shyam Murugesan, Offshore PMO Lead, Bangalore

It is important to compare construction costs between countries to inform expansion decisions. It can enable productivity comparisons and highlight how diﬀerent practices and tools such as BIM can improve design and delivery. Opportunities to improve the eﬃciency of the construction sector and reduce costs are also opportunities to grow the global economy faster.

Here we look at the advantages and disadvantages of three methods of comparing construction costs using an example building type: Central Business District (CBD) oﬃces – high-rise prestige.

Convert to a single currency such as USD

This is the most common means of comparison, useful for a multinational organisation paying for projects in its home currency.

Advantages

Easy to understand and visualise.
Gives the cost of typical building in each country.

Disadvantages

A change in the exchange rate makes a huge diﬀerence: if a particular currency is strong compared to the base currency, the cost of construction looks expensive.
Is not a reliable indicator of relative costs and eﬃciency of construction between countries.

Location index

The location index provided in this document oﬀers a common base to compare costs of construction across diﬀerent markets. London equals 100 as the initial reference point, with the deviation from 100 determined by the average cost in USD of four diﬀerent building types of construction, specified on page 20.