3 United States Ireland Middle East Middle
Dublin
New bio-pharma production facility Iowa & Virginia for Amgen Cost management of data centres for Microsoft
Riyadh
Program management for data centres, HQ offices and retail stores for Mobily CONTENTS
1 Global Construction 4 United Kingdom
Developing Markets Offer Business UK Market Review 38 Development Opportunities 6 UK Construction Output 39 15 Largest Construction Markets in 2010 7 Public Sector Output 39 15 Largest Construction Markets in 2020 7 Private Sector Output 39 Construction Output Growth Rates UK Tender Price Index 40 in Developed Countries 9 UK Regional Tender Price Index 40 Construction Output Growth Rates Resource Cost Index of UK non-housing building 41 in Emerging Markets 9 Numbers of Employed & Self Employed in Construction 41 Index of International Construction Costs 9 Standard Hourly Base Rates for Labour 42 Top 20 International Contractors 10 Top UK Main Contractors 42 Top 20 International Design Firms 11 Top UK Architects 43 Global Inflation % 12 Top UK Engineering Firms 43 Overview of Percentage Change in Global Output 12 Bruce Shaw Average UK Construction Costs 44 Oil Production / Consumption Statistics 13 House Building Starts and Completions 46 Average Procurement lead in times 46 2 Europe The UK Housing Market 2012 47 European Market Review 16 2012 Olympics 48 Production Index in the Construction Sector 17 Euro vs Sterling 48 Construction Output - Annual Variation 17 Top 15 European Contractors 18 5 Middle East
Top 15 European Design Firms 18 Middle East Market Review 52 Construction Cost - New Residential Building 19 GCC Hydrocarbon Dependence 52 Consumer Inflation v Construction Inflation 20 GCC Stimulus Packages 52 EU Labour Costs and Productivity 20 Value of Projects by Country 53 EU Procurement Timescales 21 Middle East Commodity Prices 54 EU Procurement Thresholds 21 Prices of Building Materials in Abu Dhabi 54 Currency Movements - Euro vs Various UAE, Bahrain and Qatar in Brief 55 European Currencies 21 Saudi Arabia in Brief 56 Saudi Arabia – Key Budgetary Allocations 56 3 Ireland Saudi Arabia – Housing Requirements by Region 57 Regional Building Cost Comparisons 57 Ireland Market Review 24 Top 10 Infrastructure Projects in the GCC 58 Value of Construction Output 24 Middle Eastern Design Firms 58 Construction Output 24 GCC Nations Main Contractors 59 Gross National Product 24 Construction Purchasing Managers’ Index Report 25 GCC Single Currency Update 59 Historical Property Performance Total Return % 25 Bruce Shaw Tender & Cost Indices 26 6 United States
SCSI Tender Price Index 27 US Market Review 62 Consumer vs Construction Price Inflation 27 Value of Construction Output Public / Private 63 Annual Numbers Employed in Construction 27 US Construction by Type of Work 63 Bruce Shaw Average Irish Construction Costs 28 Annual Construction Cost Index 64 Basic Hourly Wage Rates 30 US Regional Building Cost Index 64 Basic Hourly Wage Rates – Mechanical & Electrical 30 Employment in Construction 64 The Top Irish Main Contractors 31 Change in U.S. Employment in Construction 65 The Top Irish Services Sub-Contractors’ Turnover 31 US Earnings in Construction 65 Annual Housing Completions 33 Top US Contractors 66 New Housing Completions by Type 33 Top U.S. Design Firms 67 SCSI Rebuilding Costs per sq.m 34 Euro vs. Dollar 67 Planning Charges 35 Fire Certificate Charges 35
2 BRUCE SHAW HANDBOOK 2012 CONTENTS 7 Caribbean 10 South East Asia continued
Caribbean Market Review 70 Malaysia Market Review 96 General Statistics for the Caribbean 70 GDP Growth Rate 96 Caribbean Country Review Average Construction Costs 97 Currency Exchange Rates 97 Bahamas 71 Barbados 71 Vietnam Market Review 98 Bermuda 71 GDP Growth Rate 98 Cayman Islands 71 Average Construction Costs 98 Cuba 71 Currency Exchange Rates 99 Curacao 72 Indonesia Market Review 100 Dominican Republic 72 Average Construction Costs 100 Haiti 72 Jamaica 73 Currency Exchange Rates 101 Puerto Rico 73 St Lucia 74 11 China Trinidad & Tobago 74 China Market Review 105 Turks & Caicos Islands 74 China GDP Annual Growth Rate 105 Construction Costs 74 Total Government Investment 106 Average Cost Range 75 Regional Building Cost Comparison 106 Shanghai Tender Price Index. 107 8 India Top 20 Chinese Contractors 108 India Market Review 78 Top 20 Chinese Design Firms 109 Average Construction Costs 78 Currency Exchange Rates 109 Construction Cost Indices 79 Top Infrastructure Companies in India 79 12 Ghana US Dollar vs. Rupee 79 Ghana Market Review 113 Ghana Key Statistics 113 9 Australia & New Zealand GDP forecast 113 Value of Construction Output 114 Australia Market Review 83 Construction Output Growth Rate Forecast 114 Australian Key Statistics 83 Average Construction Costs 114 Australia Inflation Index 115 Value of Construction Output 84 Building Cost Index by Capital City 84 Building Cost Index & Consumer Price Index Comparison 115 Building Cost Index & Consumer Price Comparison 85 Construction Companies Active in Ghana 116 Dwelling Unit Commencements 85 Currency Exchange Rates 116 Average Construction Costs 85 List of Tier 1 Main / Building Contractors 86 Currency Exchange Rates 86 13 Topical Issues New Zealand Energy and Power Generation 120 New Zealand Market Review 87 Financial Robustness of Contractors 122 New Zealand Key Statistics 87 Building Information Modelling (BIM) 124 Value of Construction Output 87 The Changing Shape of Retail 126 Numbers Employed in Construction 88 Challenges for Consultant Project Managers Dwelling Unit Commencements 88 within current market conditions 128 Average Construction Costs 88 List of Tier 1 Main/Building Contractors 89 14 About Bruce Shaw Currency Exchange Rates 89 Bruce Shaw 132 10 South East Asia Cost Management 133 Project Management 137 South East Asia Market Review 93 Consultancy Services 138 Carrying Out Business Throughout the World 93 Health & Safety Consultancy 142 Singapore Market Review 94 Bruce Shaw Corporate & Community Activities 144 Value of Construction Output 94 Bruce Shaw Senior Personnel 146 Average Construction Costs 95 Our Clients 148 Currency Exchange Rates 95
BRUCE SHAW HANDBOOK 2012 3 4 BRUCE SHAW HANDBOOK 2012 GLOBAL CONSTRUCTION 1
BRUCE SHAW HANDBOOK 2012 5 GLOBAL CONSTRUCTION
Developing Markets Offer Business Development Opportunities
Most of us will have heard the maxim which states financial crisis, a return to growth in 2013 will likely that ‘uncertainty is the only certainty there is’. Not so prove too soon for those countries whose public many of us have heard the rest of this quotation from finances are reliant on intervention and troika funds. the great mathematician John Allen Paulos which goes on to state that ‘knowing how to live with Looking beyond Europe, the US market is likely insecurity is the only security’. For construction to see improved conditions and some growth in companies operating in many markets in Europe, 2012 although this will be hampered by ongoing uncertainty and insecurity on a level not seen difficulties for Developers seeking to secure funding since the great wars of the last century are now for their projects and the shrinking of the value the norm and efforts are focused on surviving rather of the fiscal stimulus particularly in relation to than thriving. infrastructure development.
The global construction market is Whilst continued year on year growth is also forecast to grow by up to 5% in 2012 predicted for the Australian construction market, and the rate of increase is likely to fears are being expressed that the significant property outpace that of global GDP over the price rises observed in recent years which have next 10 years. occurred on the back of commodities led economic growth could also be a bubble which will burst soon The trading environment in many economies within with inevitable consequences. Commentators in the Eurozone is defined by austerity and tightening Australia hold opposing views as to what will happen public finances with the fate of the Euro itself being next and what has to be done if anything to cool the less than certain. The duration of this environment market with many of the voices again echoing the can now be measured in years rather than months refrain that this time, it’s different. The Canadian and the impact on construction is plain to see as the market will also continue to grow strongly as it growth trends across Europe in all construction mirrors Australia with a commodities led boom albeit sectors since 2008 have been negative. with less exposure to rising property values .
Analysis of the recent contraction in European The Kingdom of Saudi Arabia and Qatar will continue construction output indicates that the contraction to see strong growth in 2012. The changing politics was not evenly spread. In 2011 for example, we see of a number of the Arab nations such as Egypt and Poland at one extreme experiencing upwards of 12% Libya may also see significant growth as the new growth whilst at the other end, Spain saw their governments seek to recommence stalled projects construction output contract by over 19%. Whilst and to implement social enhancement programmes many European nations have reached the bottom of including the development of housing and their construction cycles hastened no doubt by the educational facilities.
6 BRUCE SHAW HANDBOOK 2012 SECTION 1 GLOBAL CONSTRUCTION
Output in China and India will continue to achieve Demographic trends may also see notable growth in 1 significant growth albeit not in double digits and South American and South East Asian markets albeit it is possible that governments in both countries at lower rates of expansion than those of the BRICs. will take action to cool their markets in the face of (Brazil, Russia, India and China). GLOBAL CONSTRUCTION rapidly increasing construction inflation. China is also The global construction market is forecast to grow facing significant increases in property values and by up to 5% in 2012 and the rate of increase is likely whilst it is being said that what is being referred to to outpace that of global GDP over the next 10 years as China’s Housing Bubble is different than those as the developing economies forge ahead led by observed elsewhere, quick action by the Chinese China and India. Activity in the developed economies government could significantly reduce any risks will also accelerate during the same period led by the posed by such a bubble for the wider economy. US, Australia and Canada. For those European firms One country to watch in 2012 is Russia which is operating in shrinking markets, the only way to thrive expected to see significant market growth as natural will be to seek work in other jurisdictions. Recent gas and oil production increase with a corresponding developments in the construction professional increase in investment, infrastructure and services sector indicate that there is a growing development for upcoming sporting events. recognition of the need to expand global coverage and to diversify in terms of knowledge and skills.
15 Largest Construction Markets in 2010 $ 7.5 trillion Source: Global Construction Perspectives & Oxford Economics
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15 Largest Construction Markets in 2020 $ 12.7 trillion (forecast) Source: Global Construction Perspectives & Oxford Economics
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BRUCE SHAW HANDBOOK 2012 7 GLOBAL CONSTRUCTION
One country to watch in 2012 is Russia which is expected to see significant market growth as natural gas and oil production increase. SECTION 1 GLOBAL CONSTRUCTION
Construction Output Growth Rates in Developed Countries Average % pa Rates of Change
8.0 Source: Global Construction Perspectives and Oxford Economics
2005-2010 2010-2015(f) 2015-2020(f) 1 6.0
4.0 GLOBAL CONSTRUCTION
2.0
0
-2.0
-4.0
-6.0
-8.0
Western Europe Northern America Asia Pacific (Developed)
Construction Output Growth Rates in Emerging Markets Average % pa Rates of Change
12.0 Source: Global Construction Perspectives and Oxford Economics
2005-2010 2010-2015(f) 2015-2020(f) 10.0
8.0
6.0
4.0
2.0
0
Eastern Europe South and Central Asia Pacific Middle East Sub Saharan Africa America (Emerging) and North Africa
Index of International Construction Costs 2011
160 Source: Bruce Shaw
140
120
100
80
60
40
20
0 UK USA UAE Italy India Spain China Japan Czech France Ireland Poland Greece Sweden Hungary Australia Romania Republic Germany Switzerland
BRUCE SHAW HANDBOOK 2012 9 GLOBAL CONSTRUCTION
The Top 20 International Contractors Based on Total Firm Contracting Revenue Source: Engineering News Record Rank Revenue 2011 2010 Firm $ bn
1 1 CHINA RAILWAY CONSTRUCTION CORP., China 76.21 2 2 CHINA RAILWAY GROUP, China 73.01 3 6 CHINA STATE CONST. ENGINEERING CORP., China 48.87 4 3 VINCI, France 45.11 5 5 CHINA COMMUNICATIONS CONST. GROUP, China 40.42 6 4 BOUYGUES, France 30.67 7 8 CHINA METALLURGICAL GROUP CORP., China 29.91 8 7 HOCHTIEF, Germany 28.98 9 10 GRUPO ACS, Spain 20.63 10 9 BECHTEL, U.S.A. 19.71 11 12 LEIGHTON HOLDINGS, Australia 18.51 12 16 EIFFAGE, France 17.73 13 14 FLUOR CORP., U.S.A. 17.19 14 13 FCC, Spain 16.06 15 26 SINOHYDRO CORP., China 15.88 16 15 SKANSKA, Sweden 14.64 17 18 SHIMIZU CORP., Japan 14.40 18 17 KAJIMA CORP., Japan 14.39 19 22 OBAYASHI CORP., Japan 13.68 20 27 SHANGHAI CONSTRUCTION GROUP, China 13.01
2011 ranking is based on 2010 construction contracting revenue.
The Top 20 International Contractors Based on Contracting Revenue from Projects Outside Home Country Source: Engineering News Record Rank Revenue 2011 2010 Firm $ bn
1 1 HOCHTIEF, Germany 27.42 2 2 VINCI, France 16.56 3 4 BECHTEL, U.S.A. 12.50 4 5 BOUYGUES, France 12.43 5 6 SKANSKA, Sweden 11.63 6 7 SAIPEM, Italy 11.60 7 9 FLUOR CORP., U.S.A. 11.57 8 3 STRABAG, Austria 10.87 9 10 TECHNIP, France 7.94 10 11 FCC, Spain 7.46 11 13 CHINA COMMUNICATIONS CONST. GROUP, China 7.13 12 18 GRUPO ACS, Spain 6.56 13 8 BILFINGER BERGER, Germany 6.32 14 12 KBR, U.S.A. 5.86 15 15 CONSTRUTORA NORBERTO ODEBRECHT, Brazil 5.84 16 14 LEND LEASE GROUP, Australia 5.59 17 17 ROYAL BAM GROUP, The Netherlands 5.44 18 19 CONSOLIDATED CONTRACTORS GROUP, Greece 5.26 19 16 BALFOUR BEATTY, U.K. 5.16 20 22 CHINA STATE CONST. ENGINEERING CORP., China 4.87
2011 ranking is based on 2010 construction contracting revenue.
10 BRUCE SHAW HANDBOOK 2012 SECTION 1 GLOBAL CONSTRUCTION
The Top 20 International Design Firms Based on Total Firm Revenue Source: Engineering News Record Rank Revenue 2011 2010 Type of Firm Firm $ bn 1
1 1 EA AECOM TECHNOLOGY CORP., U.S.A. 5.92 2 2 EAC URS CORP., U.S.A. 5.04 GLOBAL CONSTRUCTION 3 3 EAC JACOBS, U.S.A. 4.75 4 6 EC WORLEYPARSONS, Australia 3.65 5 5 EA CH2M HILL, U.S.A 3.60 6 7 E AMEC PLC, U.K. 3.40 7 4 EC FLUOR CORP.,U.S.A 3.13 8 8 E FUGRO, The Netherlands 3.00 9 9 EC SNC-LAVALIN INTERNATIONAL, Canada 2.85 10 10 E ARCADIS, The Netherlands 2.65 11 15 EC M + W GROUP, Germany 2.36 12 13 E TETRA TECH, U.S.A. 2.21 13 12 EC BECHTEL, U.S.A. 2.17 14 11 EA ATKINS, U.K. 2.14 15 14 EC KBR, U.S.A. 2.01 16 17 EA DAR AL-HANDASAH CONSULTANTS, Egypt 1.78 17 72 EC BALFOUR BEATTY, U.K. 1.74 18 22 EC CHINA COMMUNICATIONS CONST. GROUP, China 1.67 19 16 E MOTT MACDONALD GROUP, U.K. 1.62 20 21 EC HYDROCHINA CORP., China 1.53
2011 ranking is based on revenue for design services performed in 2010. Key to Type of Firm: A architect; E engineer; C contractor
The Top 20 International Design Firms Based on Revenue from Projects Outside Home Country Source: Engineering News Record Rank Revenue 2011 2010 Type of Firm Firm $ bn
1 2 EC WORLEYPARSONS, Australia 2.85 2 1 E FUGRO, The Netherlands 2.83 3 3 EA AECOM TECHNOLOGY CORP., U.S.A. 2.63 4 5 E AMEC PLC, U.K. 2.46 5 7 EAC JACOBS, U.S.A. 2.26 6 6 E ARCADIS, The Netherlands 2.12 7 4 EC FLUOR CORP., U.S.A. 2.06 8 9 EA DAR AL-HANDASAH CONSULTANTS, Egypt 1.78 9 10 EC KBR, U.S.A. 1.74 10 8 EC SNC - LAVALIN INTERNATIONAL, Canada 1.67 11 11 EC M + W GROUP, Germany 1.55 12 43 EC BALFOUR BEATTY, U.K. 1.46 13 12 EC TECNICAS REUNIDAS, Spain 1.29 14 13 EC BECHTEL, U.S.A. 1.22 15 14 E MOTT MACDONALD GROUP, U.K. 1.12 16 19 E ARUP GROUP, U.K. 0.96 17 24 EAC URS CORP., U.S.A. 0.94 18 62 E AURECON, Singapore 0.93 19 16 E TECHNIP, France 0.91 20 29 EA ATKINS, U.K. 0.89
2011 ranking is based on revenue for design services performed in 2010. Key to Type of Firm: A architect; E engineer; C contractor
BRUCE SHAW HANDBOOK 2012 11 GLOBAL CONSTRUCTION
Global Inflation 2011 Source: International Monetary Fund / www.global-rates.com
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Overview of Percentage Change in Global Output January 2012 Source: International Monetary Fund 2010 2011 2012(f) 2013(f) Advanced Economies United States 3.0% 1.8% 1.8% 2.2% Euro area 1.9% 1.6% -0.5% 0.8% Germany 3.6% 3.0% 0.3% 1.5% France 1.4% 1.6% 0.2% 1.0% Italy 1.5% 0.4% -2.2% -0.6% Spain -0.1% 0.7% -1.7% -0.3% Japan 4.4% -0.9% 1.7% 1.6% United Kingdom 2.1% 0.9% 0.6% 2.0% Canada 3.2% 2.3% 1.7% 2.0% Emerging & Developing Economies Central & Eastern Europe 4.5% 5.1% 1.1% 2.4% Russia 4.0% 4.1% 3.3% 3.5% Middle East & North Africa 4.3% 3.1% 3.2% 3.6% China 10.4% 9.2% 8.2% 8.8% India 9.9% 7.4% 7.0% 7.3% Brazil 7.5% 2.9% 3.0% 4.0% Mexico 5.4% 4.1% 3.5% 3.5% South Africa 2.9% 3.1% 2.5% 3.4%
World output 5.2% 3.8% 3.3% 3.9%
12 BRUCE SHAW HANDBOOK 2012 SECTION 1 GLOBAL CONSTRUCTION
Oil Production Source: CIA World Fact book Rank Country Barrels / Rank Country Barrels / 2011 2010 Day 2011 2010 Day 1 1 2 Saudi Arabia 10,520,000 13 11 Venezuela 2,375,000 2 1 Russia 10,130,000 14 13 European Union 2,276,000 GLOBAL CONSTRUCTION 3 3 United States 9,688,000 15 14 Norway 2,134,000 4 5 China 4,273,000 16 16 Algeria 2,078,000 5 4 Iran 4,252,000 17 17 Angola 1,988,000 6 6 Canada 3,483,000 18 18 Libya 1,789,000 7 7 Mexico 2,983,000 19 19 Kazakhstan 1,610,000 8 8 United Arab Emirates 2,813,000 20 21 Qatar 1,437,000 9 9 Brazil 2,746,000 21 20 United Kingdom 1,393,000 10 15 Nigeria 2,458,000 22 23 Azerbaijan 1,041,000 11 10 Kuwait 2,450,000 23 22 Indonesia 1,030,000 12 12 Iraq 2,408,000 24 24 India 954,000
Oil Consumption Source: CIA World Fact book Rank Country Barrels / Rank Country Barrels / 2011 2010 Day 2011 2010 Day
1 1 United States 19,150,000 13 13 France 1,861,000 2 2 European Union 13,730,000 14 14 Iran 1,845,000 3 3 China 9,189,000 15 15 United Kingdom 1,622,000 4 4 Japan 4,452,000 16 16 Italy 1,528,000 5 5 India 3,182,000 17 17 Spain 1,441,000 6 6 Russia 2,937,000 18 18 Indonesia 1,292,000 7 7 Brazil 2,654,000 19 23 Singapore 1,080,000 8 9 Saudi Arabia 2,643,000 20 21 Netherlands 1,009,000 9 8 Germany 2,495,000 21 22 Taiwan 1,002,000 10 10 Korea, South 2,251,000 22 20 Thailand 988,000 11 11 Canada 2,209,000 23 19 Australia 960,800 12 12 Mexico 2,073,000 24 24 Venezuela 746,000
Note: 2011 rank is based on based on 2010 production / consumption levels
Staff / pictures
BRUCE SHAW HANDBOOK 2012 13 14 BRUCE SHAW HANDBOOK 2012 EUROPE 2
BRUCE SHAW HANDBOOK 2012 15 EUROPE
European Market Review
Deficit, the second most used word globally in Governmental austerity measures 2011 according to the Global Language Monitor and financing problems in the private and indeed it could be argued that in Europe it sector have resulted in a decrease became the most used word, followed closely by in building construction of 2.2% austerity and sovereign debt. These are not words that bode well for growth in 2012 in Europe. The in the EU27. IMF’s World Economic Outlook clearly states that & Eastern Europe (CEE). The European Commission, “high public deficits and debt, lower potential output, in conjunction with the The European Investment and mounting market tensions are weighing on Bank (EIB), is trying to provide support to member growth in much of advanced Europe”. The impact states in absorbing funds by using financial of the various European governments’ austerity engineering initiatives. These initiatives provide programmes has hit all areas of public expenditure, opportunities for not only member states in fund and in particular capital expenditure programmes. absorption, but also private industry. It is now more In addition, the debt crisis also impacts on the necessary than ever, to seek out positives in the private banking system, and will lead to pressure market place and increase industry sentiment. on bank funding and the possible risk of another The fact is, whilst there are currently only a few, deep credit crunch. Governmental austerity there are in existence, cash rich companies that are measures and financing problems in the private now moving in to the market place, seeking out and sector have resulted in a decrease in building acquiring assets to develop. Whilst the halcyon days construction of 2.2% in the EU27 and a fall in in terms of high fees and profit margins are gone, civil engineering of 0.6% in the EU27. such movement in the construction industry indicates that the economic woes and uncertainty The austerity measures that are being implemented will come to an end, sooner rather than later and that have impacted on the absorption rate of European more such companies will emerge from behind the Commission Cohesion and Structural Funds parapet, the ultimate result being a more sustainable throughout the EU27, however more so in Central and evenly balanced industry.
Primark, Zaandam
16 BRUCE SHAW HANDBOOK 2012 SECTION 2 EUROPE
Production Index in the Construction Sector
115 Source: Eurostat Euro area, seasonally adjusted series Trendline 2 EU27, seasonally adjusted series Trendline 110
105 EUROPE
100
95
90
85
80
75 2005=100 11- 2011 11- 2010 11- 2007 11- 2005 11- 2003 11- 2002 11- 2006 11- 2009 11- 2008 11- 2004 05- 2011 05- 2010 05- 2007 05- 2005 05- 2003 05- 2006 05- 2009 05- 2008 05- 2004
Note: The production in construction index shows the output and activity of the construction sector. It measures changes in the volume of output on a monthly basis. Construction includes building construction and civil engineering.
Construction Output – Annual Variation
% change compared with the same quarter of the previous year Source: Eurostat Total Q4-10 Q1-11 Q2-11 Q3-11 Belgium -3.1 5.4 2.3 1.3 Bulgaria -8.3 -15.9 -13.4 -11.4 Czech Republic -2.5 6.6 -4.9 -9.8 Denmark -0.5 13.9 0.9 4.3 Germany -1.3 34.5 5.2 4.8 Estonia -4.7 34.6 11.5 25.5 Ireland -22.4 -24.0 -21.5 N/A Greece -33.5 -37.3 -35.8 -8.3 Spain -27.5 -36.6 -27.9 5.5 France -5.4 2.8 -0.6 2.0 Italy -1.2 0.5 -2.8 -4.9 Cyprus -11.2 -7.9 -5.8 N/A Latvia -9.6 -15.1 -0.9 19.6 Lithuania 16.2 15.9 16.7 18.4 Luxembourg -4.4 11.4 -1.1 -3.8 Hungary -10.5 -6.6 -9.5 -13.7 Malta 2.0 1.6 0.7 -0.6 Netherlands -6.9 8.0 3.5 3.7 Austria -3.8 -2.5 1.0 -0.6 Poland 11.7 17.9 19.7 15.1 Portugal -9.3 -8.2 -7.7 -10.4 Romania -7.1 -4.9 -4.1 8.0 Slovenia -16.2 -25.3 -31.1 -25.5 Slovakia 1.8 -3.7 -3.3 -3.0 Finland 16.4 16.6 7.9 9.8 Sweden 9.6 7.1 9.3 5.8 United Kingdom 10.7 7.7 3.4 0.5 EU Average -3.8 0.6 -2.2 1.6 Building Average -2.5 1.0 -3.1 1.3 Civil Engineering Average -9.7 -1.8 1.7 2.7
BRUCE SHAW HANDBOOK 2012 17 EUROPE
The Top 15 European Contractors Based on Total Revenue ore niern esRcr Source: Engineering News Record Rank Turnover 2011 2010 Firm € bn
1 1 VINCI, France 34.21 2 2 BOUYGUES, France 23.26 3 3 HOCHTIEF, Germany 21.98 4 4 GRUPO, Spain 15.65 5 8 EIFFAGE, France 13.45 6 6 FCC, Spain 12.18 7 7 SKANSKA, Sweden 11.10 8 5 STRABAG , Austria 9.69 9 9 BALFOUR BEATTY, U.K. 9.40 10 11 SAIPEM, Italy 9.18 11 10 BILFINGER BERGER , Germany 8.18 12 12 ROYAL BAM GROUP, The Netherlands 7.44 13 13 TECHNIP, France 6.12 14 14 SACYR VALLEHERMOSO, Spain 5.27 15 15 FERROVIAL, Spain 4.92
2011 ranking is based on 2010 construction revenue
The Top 15 European Design Firms Based on Total Firm Revenue ore niern esRcr Source: Engineering News Record Rank Revenue 2011 2010 Type of Firm Firm € bn
1 1 E AMEC, U.K. 2.58 2 2 E FUGRO, The Netherlands 2.28 3 3 E ARCADIS, The Netherlands 2.01 4 4 EA WS ATKINS, U.K 1.63 5 – EC BALFOUR BEATTY, U.K. 1.32 6 5 E MOTT MACDONALD GROUP, U.K. 1.23 7 6 E ARUP GROUP , U.K. 1.04 8 7 EC TECNICAS REUNIDAS, Spain 1.02 9 9 E GRONTMIJ , The Netherlands 0.92 10 8 E WSP GROUP, U.K. 0.83 11 11 E RAMBOLL GROUP, Denmark 0.81 12 – EC EGIS, France 0.81 13 – E MOUCHEL, U.K. 0.73 14 14 EC TECHNIP, France 0.70 15 13 E POYRY, Finland 0.69
Note: 2011 ranking is based on revenue for design services performed in 2010. Key to Type of Firm: A architect; E engineer; EC engineer-contractor
18 BRUCE SHAW HANDBOOK 2012 SECTION 2 EUROPE
Construction Cost - New Residential Buildings
Index (2005=100) Source: Eurostat 2009 2010 2011 2 Q1 Q3 Q1 Q3 Q1 Q3 Belgium 112.1 111.6 110.4 111.1 114.3 N/A
Bulgaria N/A 140.8 143.6 139.9 144.1 142.3 EUROPE Czech Republic 112.3 112.2 113.2 113.6 115.3 115.9 Denmark 113.87e 114.0 114.4 115.7 117.6 120.5 Germany 107.0 108.9 110.4 111.7 114.4 115.6 Estonia 122.5 116.3 114.1 115.3 116.1 119.1 Ireland 97.2 91.0 91.9 94.0 91.8 91.1 Greece 114.0 114.4 115.3 116.6 117.5 117.6 Spain 118.68e 118.7 119.4 122.3 125.6 127.0 France 116.51e 116.7 117.9 120.4 123.7 124.9 Italy N/A 111.5 N/A N/A N/A N/A Cyprus 120.3 119.7 122.6 124.4 126.8 N/A Latvia 185.0 161.9 158.4 152.5 162.6 159.8 Lithuania 128.0 118.0 112.9 116.1 114.5 121.0 Luxembourg 110.03e 111.2 111.0 112.0 112.5 N/A Hungary 122.30e 124.7 124.9 123.1 124.0 125.7 Netherlands 113.26e 112.2 112.3 113.2 114.6 115.5 Austria 115.1 116.0 117.5 119.9 121.7 122.4 Poland 116.3 115.6 115.4 115.8 116.1 N/A Portugal 111.2 111.7 112.6 113.8 114.8 115.3 Romania 141.50e 145.8 142.3 148.2 154.7 162.0 Slovenia 114.5 119.7 125.7 126.3 134.0 131.8 Slovakia 116.7 116.9 116.8 116.8 117.5 117.9 Finland 113.5 112.7 113.1 114.6 116.4 118.7 Sweden 118.31e 119.2 120.7 122.6 124.1 125.9 United Kingdom 101.20e 115.0 115.4 115.8 116.1 N/A Turkey 135.40e 137.4 142.3 145.5 154.3 166.7 Norway 119.7 120.7 122.6 124.6 127.2 129.1 European Union Average 111.3 114.0 114.7 116.3 118.3 119.7
Notes: N/A = Not available e = Estimated value
Parklake Plaza, Bucharest
BRUCE SHAW HANDBOOK 2012 19 EUROPE
Consumer Inflation v’s Construction Inflation 2008-2011
5% Source: Eurostat
4%
3%
2%
1%
0%
-1%
-2%
-3%
-4%
2008 2009 2010 2011
European Union Average Consumer Inflation New Residential Construction Cost
EU Labour Costs & Productivity 2011
Country Productivity Cost / Hr Austria 78 €22.98 Cyprus N/A N/A Czech Republic 46 €7.57 Denmark 81 €35.41 Estonia 42 N/A Finland 75 N/A France 91 €27.46 Germany 84 €22.95 Greece 53 €13.21 Hungary 41 €5.38 Ireland 100 €26.15 Italy 69 €21.86 Latvia N/A €5.17 Lithuania N/A €4.86 Luxembourg 118 €20.26 Netherlands 92 €22.10 Poland 39 €6.69 Portugal 50 €8.27 Romania N/A €3.34 Slovakia 53 €6.66 Slovenia 54 €12.86 Spain 74 €17.97 Sweden 78 €33.14 UK 73 €19.40
Source: Productivity figures are from OECD for 2010 and based on GDP per hours worked for the whole labour market. Cost/Hr data source - Eurostat up to 3rd Qtr of 2010, except for: Netherlands 2nd Qtr Cost/Hr is for all construction employment types
20 BRUCE SHAW HANDBOOK 2012 SECTION 2 EUROPE
EU Procurement Timescales 2012
Prior Indicative Notice (PIN) Accelerated Restricted Procedure Source: www.etenders.gov.ie Publish at least 52 days prior to date contract Time Limit for Receipt of Expressions of Interest 2 notice is dispatched to avail of reduced time limits Ŕ/PUMFTTUIBOEBZTGSPNEBUFDPOUSBDUOPUJDF (max. 12 mths). is dispatched EUROPE Open Procedures Time Limit for Receipt of Tenders Time Limit for Receipt of Tender Ŕ/PUMFTTUIBOEBZTGSPNEBUFJOWJUBUJPOUP If no PIN: not less than 52 days tender is dispatched If PIN: General rule minimum time 36 days and in Negotiated Procedure with Prior Publication any case not less than 22 days from date contract of a Contract Notice notice is dispatched Time Limit for Receipt of Application Restricted Procedure Ŕ/PUMFTTUIBOEBZTGSPNEBUFDPOUSBDUOPUJDF Time Limit for Receipt of Expressions of Interest is dispatched Not less than 37 days from date contract notice is Negotiated Accelerated Procedure with Prior dispatched Publication of a Contract Notice Time Limit for Receipt of Tenders Time Limit for Receipt of Application If no PIN: Not less than 40 days Ŕ/PUMFTTUIBOEBZTGSPNEBUFDPOUSBDUOPUJDF If PIN: General rule minimum time 36 days. This may is dispatched be reduced in certain cases but in no circumstances Contract Award Notice less than 22 days from the date invitation to tender Time Limit for Receipt of Issue is dispatched ŔEBZTGSPNBXBSEPGDPOUSBDU
EU Procurement Thresholds 2012 Source: www.etenders.gov.ie Works Contract Notice €5,000,000 Threshold applies to Government Departments and Offices, Local and Regional Authorities and other public bodies.
Supplies and Services Contract Notice €130,000 Threshold applies to Government Departments and Offices Contract Notice €200,000 Threshold applies to Local and Regional Authorities and public bodies outside the Utilities sector.
Utilities Works Contracts / Prior Indicative Notice €5,000,000 For entities in Utilities sectors covered by GPA Supplies and Services €400,000 For entities in Utilities sectors covered by GPA
Note: The above thresholds are valid until 31 December 2013
Currency Movements – Euro v Various European Currencies Source: European Central Bank Bulgarian Croatian Czech Danish Hungarian Polish Romanian Russian Turkish lev kuna koruna krone forint zloty leu rouble lira Year BGN HRK CZK DKK HUF PLN RON RUB TRY
2012* 1.96 7.54 25.72 7.44 314.63 4.47 4.34 40.83 2.40
2011 1.96 7.44 24.59 7.45 279.37 4.12 4.24 40.88 2.34
2010 1.96 7.29 25.28 7.45 275.48 3.99 4.21 40.26 2.00
2009 1.96 7.34 26.43 7.45 280.33 4.33 4.24 44.14 2.16
2008 1.96 7.22 24.95 7.46 251.51 3.51 3.68 36.42 1.91
2007 1.96 7.34 27.77 7.45 251.35 3.78 3.34 35.02 1.79
2006 1.96 7.32 28.34 7.46 264.26 3.90 3.53 34.11 1.81
2005 1.96 5.59 29.78 7.45 248.05 4.02 1.81 26.38 1.68
*Note: Based on January exchange rates
BRUCE SHAW HANDBOOK 2012 21 22 BRUCE SHAW HANDBOOK 2012 IRELAND 3
BRUCE SHAW HANDBOOK 2012 23 IRELAND
Ireland Market Review
The Irish construction industry peaked in 2007 In November 2011 the Government published its with an output of over €38 billion. At 24% of GNP Infrastructure and Capital Investment Framework this was an unsustainable level. Since then the for 2012-2016. This shows a much reduced industry has declined rapidly as shown in the graph expenditure on the public side of €3.94 billion in below. Bruce Shaw predicts that output in 2011 was 2012, reducing to €3.37 billion in 2013 and further approximately €8.5 billion and output in 2012 will reducing to €3.25 billion for the following three fall further to approximately €7 billion. These levels years. There is very little activity on the private side of output represent 7% and 5.5% respectively of of the industry either. Commercial projects have a much reduced GNP. The widely accepted norm been hampered by over-supply, lack of funding and for construction output is 12% to 13% of GNP so delays and uncertainty related to NAMA projects. it is clear that the industry in Ireland has seriously over-corrected. By the end of this year output By the end of this year output in the in the industry will have fallen by 82% from its peak. industry will have fallen by 82% from its peak. Unfortunately, the over-correction in output has lead to the loss of almost 200,000 direct and Looking forward though, there are some glimmers indirect jobs in the sector and inevitably the loss of hope that 2012 will see construction output of many skills which will be needed again when bottom out after 5 years of massive decline. The eventually the industry returns to its more normal reduction in construction prices has been reversed, output levels. The over-correction has also there is renewed investment by the multi-national resulted in contractors and sub-contractors technology and pharmaceutical industries and tendering for the diminishing volumes of work a gradual return of some private sector activity available at prices which are below cost. This is particularly in commercial office fit-outs for both an unsustainable situation for any period of Irish and overseas occupiers. If global financial time and is one of the major reasons for the concerns can be overcome and some confidence high profile failure of both construction and recovered locally hopefully 2013 will see the start consultancy firms. of a slow recovery for the industry.
Value of Construction Output €m 2000-2012 & Local Government / Bruce Shaw Source: DKM / Department of Environment, Heritage €40,000
€35,000
€30,000
€25,000
€20,000
€15,000
€10,000
€5,000
€
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 DKM BS BS BS 2010 2010 2011 2012 DKM / Dept. of Environ. ’10 Forecast Bruce Shaw Forecast (F) (F) (F) (F)
Construction Output 2007-2011 Bruce Shaw Environment / Department of the Source: DKM / 2007 2008 2009 2010 (f) 2011 (f) Value of Output at Current Prices (€m) 38,601 32,593 18,048 11,733 8,500 Change in Value of Output (%) 0% -16% -45% -35% -28% Construction Output as % of GNP 23.7 21.1 13.7 9.2 6.8
Gross National Product (GNP) 2007-2011 ESRI Source: CSO / 2007 2008 2009 2010 2011(f) GNP at Current Prices (€m) 163,413 154,673 132,233 128,207 125,500 % Change in GNP 5.4% -5.3% -14.5% -3.0% -2.1%
24 BRUCE SHAW HANDBOOK 2012 SECTION 3 IRELAND
Construction Purchasing Managers’ Index Report June 2001–January 2012
50 = no change on previous month 70 Source; Ulster Bank 3 Increasing rate of growth
60 IRELAND 50
40
30
Increasing rate of contraction 20 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Ulster Bank Construction PMI Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Jan-12 Total Activity (graphed above) 40.6 46.1 40.5 40.1 49.9 46.4 Housing 45.5 47.0 41.0 36.6 52.3 47.2 Commercial 41.7 47.0 42.3 44 49.8 51.3 Civil Engineering 30.2 43.3 32.8 37.2 42.9 37.7
Historical Property Performance Total Return % 1996–2011
1,000 15 Source; IPD / SCSI % return per quarter
10 800
5
600 0
-5 400
-10
200 -15
Index Value (shaded area) Index Value 0 -20 Dec. 96 Dec. 01 Dec. 06 Dec. 11
All Property Index All Property Retail Office Industrial
BRUCE SHAW HANDBOOK 2012 25 IRELAND
Bruce Shaw Tender & Cost Indices
The first half of 2011 saw Irish construction tender actual costs of labour and materials while the latter prices bottoming out and the Bruce Shaw Tender reflect market trends of supply and demand. Price Index, which is shown graphically below, shows that prices rose in the full year by 2%. Prices are still at Irish construction labour rates, which remained levels not seen since the late 1990’s but it seems that unchanged since January 2008, were reduced by the race to the bottom has halted. Contractors and 7.5% in February 2011 after prolonged negotiations sub-contractors have realised that below cost with the construction trade unions. The prices of tendering is not sustainable in the long run, as some materials are reducing also but by less than evidenced by some well publicised company failures. might be expected since local manufacturers are experiencing smaller production volumes and Looking forward, all sectors of the industry, both imported commodities such as steel and copper public and private, remain very depressed with a reflect global demand. Overall the Bruce Shaw shortage of work in all categories. This will mean that Construction Input Cost Index declined by 2% in prices will remain very competitive but we predict 2011 and we predict that it will fall by a further 1% that they will rise by a further 3% during 2012. In later in 2012 and will then bottom out at that level. years we predict that prices are then likely to increase generally in line with inflation from 2013/14 onwards. The small increase in tender prices coupled For Clients this means that project budgets spanning with the small decrease in construction input a number of years will once more have to allow for costs is shown as a narrowing of the gap between future tender price inflation. the two bars on the graph below and this is to be welcomed as a sign of reality starting to come Contractors and sub-contractors back into the marketplace. However prices have realised that below cost tendering remain very competitive and we reiterate our advice to Clients from last year’s Handbook is not sustainable in the long run… that they should look carefully at the financial strength of contractors and their ability to obtain It is important to distinguish between construction performance guarantee bonds before entering input costs and tender prices. The former reflect the into construction contracts.
Bruce Shaw Tender Price & Cost Indices 2001-2012
190 Source: Bruce Shaw
180
170
160
150
140
130
120
110
100 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012(f)
Average Tender Price Construction Input Cost
Tender % 6 -2 -4 4 4 3 0 -12 -17 -6 2 3 Cost % 9 3 3 2 3 3 3 3 -2 -3 -2 -1
26 BRUCE SHAW HANDBOOK 2012 SECTION 3 IRELAND
SCSI Tender Price Index 2001-2011 Source: Society of Chartered Surveyors Ireland 155 3 150
145
140 IRELAND
135
130
125
120
115
110
105
100 1h 2h 1h 2h 1h 2h 1h 2h 1h 2h 1h 2h 1h 2h 1h 2h 1h 2h 1h 2h 1h 2h 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Consumer v Construction Price Inflation 2001-2011
15% Source: CSO / Bruce Shaw
10%
5%
0%
-5%
-10%
-15%
-20%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011* Construction Price Inflation Consumer Price Inflation *2011 Consumer Price Inflation figure based on Jan 11-Nov 11
Annual Numbers Employed in Construction (000’s)
280 Source: CSO
260
240
220
200
180
160
140
120
100 Jul-Sep 11 Jul-Sep Jul-Sep 10 Jul-Sep Jul-Sep 07 Jul-Sep Jul-Sep 05 Jul-Sep 06 Jul-Sep Jul-Sep 09 Jul-Sep Jul-Sep 08 Jul-Sep 11 Apr-Jun Jan-Mar 11 Jan-Mar Apr-Jun 10 Apr-Jun Apr-Jun 07 Apr-Jun Apr-Jun 05 Apr-Jun Apr-Jun 06 Apr-Jun 09 Apr-Jun Jan-Mar 10 Jan-Mar Apr-Jun 08 Apr-Jun Jan-Mar 07 Jan-Mar Jan-Mar 05 Jan-Mar Jan-Mar 06 Jan-Mar 09 Jan-Mar Jan-Mar 08 Jan-Mar Oct-Dec 10 Oct-Dec Oct-Dec 07 Oct-Dec 05 Oct-Dec Oct-Dec 06 Oct-Dec 09 Oct-Dec Oct-Dec 08 Oct-Dec
BRUCE SHAW HANDBOOK 2012 27 IRELAND
Bruce Shaw Average Irish Construction Costs 2012
The average construction costs table is generated using Bruce Shaw’s Cost Database and sets out typical building construction costs. Our database is the largest construction cost database in Ireland.
Average Costs Cost Range M&E Source: Bruce Shaw Commercial Offices Suburban Naturally Ventilated Shell & Core €1,100 €1,450 per sq.m 10-15% Developer Standard €1,200 €1,550 per sq.m 15-20% Extra for Air Conditioning €150 €300 per sq.m – City Centre Air Conditioned Shell & Core €1,450 €2,050 per sq.m 15-20% Developer Standard €1,600 €2,250 per sq.m 20-25% Office Fit Out 95% Open Plan, No Catering €400 €600 per sq.m 20-30% 75% Open Plan, Limited Catering €600 €800 per sq.m 20-30% 60% Open Plan, Full Catering €800 €1,200 per sq.m 25-35% Corporate HQ €1,250 €1,550 per sq.m 25-35% Open Plan Work Station €950 €2,600 each –
High Tech Industrial Shell & Core €700 €1,250 per sq.m 20-25% Developer Standard €800 €1,250 per sq.m 25-45%
Residential Estate House (Approx. 100 sq.m) €950 €1,200 per sq.m 10-20% Developer Standard Apartments €1,200 €1,750 per sq.m 10-20% Individual House Rebuilding Costs (see page 34)
UCD – Science Centre South
28 BRUCE SHAW HANDBOOK 2012 SECTION 3 IRELAND
3
Average Costs Cost Range M&E Source: Bruce Shaw
Shopping Centres IRELAND Anchor Unit €600 €750 per sq.m 10-15% Unit Shops €800 €1,200 per sq.m 10-15% Mall €1,400 €2,500 per sq.m 20-25% Retail Fit Out €1,100 €1,550 per sq.m 25-30%
Site Development Business Parks Roads & Primary Services €145,000 €455,000 per hectare
Warehouses Without Offices €550 €700 per sq.m 8-12% With 10% Offices €650 €1,000 per sq.m 10-15%
Healthcare Acute Hospitals, Average Costs €2,200 €2,550 per sq.m 20-30% Ward Blocks €1,850 €2,200 per sq.m 20-25% General Operating Theatres €3,300 €6,200 per sq.m 45-60% Nursing Homes €1,600 €2,350 per sq.m 20-25% Accident & Emergency €2,300 €3,300 per sq.m 25-30%
Car Park Surface €1,000 €1,250 per space – Multi-Storey €8,200 €16,500 per space – Single Level Basement €11,750 €26,050 per space – Double Level Basement €15,350 €33,700 per space –
Education Primary Level (DOE Jan 11) €930* per sq.m 10-15% Second Level (DOE Jan 11) €930* per sq.m 15-20% Third Level €1,300 €2,100 per sq.m 20-25%
Leisure Hotel Building €1,400 €2,350 per sq.m 25-35% FF&E €250 €600 per sq.m – Restaurant €1,500 €2,250 per sq.m 25-35% Cinema €1,200 €1,950 per sq.m 20-30% Sports Hall €850 €1,300 per sq.m 10-15% Swimming Pool €1,900 €2,600 per sq.m 20-35%
Municipal Fire Station €1,750 €2,100 per sq.m 15-25% Prison €1,600 €2,300 per sq.m 20-30% Courthouse €2,350 €3,000 per sq.m 20-30%
Note: Costs are based on January 2012 prices.
Average costs as indicated should not be used for insurance valuation purposes. The costs are representative of typical specifications for each type of project. Unique designs or challenging sites may not be within the cost range shown. The rates shown are average construction build only costs and do not include VAT, professional fees or allow for future inflation.
* Basic Building Cost only (incl. VAT). External allowances of 12.5% and abnormal costs should be added.
BRUCE SHAW HANDBOOK 2012 29 IRELAND
Blackrock Clinic
Basic Hourly Wage Rates Construction Industry Source: Registered Agreement for the Craftsman General Operative Grade A Grade B Grade C Grade D 1 October 2005 €16.85 €16.34 €15.33 €14.83 €13.48 1 April 2006 (3%) €17.36 €16.84 €15.80 €15.28 €13.89 1 October 2006 (2%) €17.71 €17.18 €16.12 €15.58 €14.17 1 July 2007 (2.5%) €18.15 €17.61 €16.52 €15.97 €14.52 1 January 2008 (2.5%) €18.60 €18.04 €16.93 €16.37 €14.88 4 February 2011 (-7.5%) €17.21 €16.69 €15.66 €15.14 €13.77
Basic Hourly Wage Rate – Mechanical & Electrical Source: MEBSCA / ECA Mechanical 1st October 2005 €16.85 1st April 2006 (3%) €17.36 1st October 2006 (2%) €17.71 1st July 2007 (2.5%) €18.15 1st January 2008 (2.5%) €18.60 4th February 2011 (-7.5%) €17.21
Electrical 1 April 2004 €18.98 1 April 2005 €19.72 1 April 2006 €20.39 1 April 2007 €21.49 1 September 2009 €22.03 1 January 2010 €22.56
30 BRUCE SHAW HANDBOOK 2012 SECTION 3 IRELAND
The Top Irish Main Contractors
Source: Individual Companies’ Auditors / Companies Registration Office 3 Rank Firm Revenue €m Revenue €m 2011 2010 2010 2011
1 1 JOHN SISK & SON LTD 568.25 420.00* IRELAND 2 2 BAM CONTRACTORS LTD. 270.30 250.00 3 5 WALLS CONSTRUCTION LTD. 169.04 180.00 4 6 P.J. HEGARTY & SONS LTD. 125.00 80.00 5 9 JOHN PAUL CONSTRUCTION LTD. 108.77 71.50 6 3 SIAC CONSTRUCTION LTD. 128.00** 60.00*** 7 13 J.J. RHATIGAN & CO LTD. 44.00 58.00 8 4 ROADBRIDGE LTD. 118.00† 44.00‡ 9 11 BENNETT (CONSTRUCTION) LTD. 50.00 42.30 10 14 COLLEN CONSTRUCTION LTD. 33.12 37.15 11 12 GLENMAN CORPORATION LTD. 27.80 28.50 12 8 G&T CRAMPTON LTD. 21.00 26.46 13 - MDY CONSTRUCTION LTD. 23.44 20.00 14 15 LAING O’ROURKE IRELAND LTD. 25.12 16.10 15 - BRIAN MCCARTHY CONTRACTORS LTD. 14.64 14.00
Notes: * This figure is Irish turnover only. Total worldwide t/o figure for Sisk † This figure is Irish turnover only. Total worldwide t/o figure for in 2011 was €958m Roadbridge in 2010 was €143m ** This figure is Irish turnover only. Total worldwide t/o figure for SIAC ‡ This figure is Irish turnover only. Total worldwide t/o figure for in 2010 was €138m Roadbridge in 2011 was €175m *** This figure is Irish turnover only. Total worldwide t/o figure for SIAC in 2011 was €177m
The Top Irish Services Sub-Contractors Turnover Source: Individual Companies’ Information / Companies Registration Office Rank Firm Revenue €m Revenue €m 2011 2010 2010 2011
1 1 MERCURY ENGINEERING GROUP 204.23 265.00* 2 2 JONES ENGINEERING LTD. 121.36 150.00 3 3 DORNAN ENGINEERING LTD. 71.90 73.90 4 4 KIRBY GROUP ENGINEERING LTD. 57.91 64.84 5 5 SUIR ENGINEERING LTD. 49.85 52.16 6 7 L. LYNCH & CO. LTD. 33.64 46.17 7 6 WINTHROP ENGINEERING LTD. 38.32 37.74 8 8 DESIGNER GROUP 30.90 31.71 9 11 LYNSKEY ENGINEERING LTD. 17.62 23.00 10 12 ROTARY M & E SERVICES (IRELAND) LTD. 16.85 15.80 11 10 PRECISION ELECTRIC (IRELAND) LTD. 20.61 14.81 12 13 T. BOURKE & CO. LTD. 9.03 6.75
* This figure is Irish turnover only. Total worldwide turnover figure for Mercury Engineering Group in 2011 was €535m
BRUCE SHAW HANDBOOK 2012 31 IRELAND
Looking forward, there are some glimmers of hope that 2012 will see construction output bottom out after 5 years of massive decline. SECTION 3 IRELAND
Annual Housing Completions 2001–2011 Heritage & Local Government Source: Department of the Environment, Housing 3 Completions Social % Private % Total 2001 4,875 9.3% 47,727 90.7% 52,602
2002 5,763 10.0% 51,932 90.0% 57,695 IRELAND 2003 6,133 8.9% 62,686 91.1% 68,819 2004 5,146 6.7% 71,808 93.3% 76,954 2005 5,559 6.9% 75,398 93.1% 80,957 2006 5,208 5.6% 88,211 94.4% 93,419 2007 6,671 8.5% 71,356 91.5% 78,027 2008 6,801 13.1% 44,923 86.9% 51,724 2009 5,344 20.2% 21,076 79.8% 26,420 2010 N/A N/A N/A N/A 14,602 2011 N/A N/A N/A N/A 10,480
New Housing Completions by Type 2001–2011
Heritage & Local Government Source: Department of the Environment, Housing Completions House % Apartment % Total 2001 41,576 79.6% 10,626 20.4% 52,202 2002 45,657 79.7% 11,638 20.3% 57,295 2003 53,580 78.3% 14,839 21.7% 68,419 2004 60,448 79.0% 16,106 21.0% 76,554 2005 62,522 77.6% 18,035 22.4% 80,557 2006 73,073 78.6% 19,946 21.4% 93,019 2007 58,936 75.9% 18,691 24.1% 77,627 2008 38,513 75.0% 12,811 25.0% 51,324 2009 21,272 80.5% 5,148 19.5% 26,420 2010 12,514 85.7% 2,088 14.3% 14,602 2011 9,140 87.2% 1,340 12.8% 10,480
BRUCE SHAW HANDBOOK 2012 33 IRELAND
SCSI Rebuilding Costs per sq.m March 2011 Source: SCSI No. of Typical Dublin Cork Galway Waterford Limerick Bedrooms Size Area Area Area Area Area Terraced 2 70 sq.m €1,820 €1,402 €1,375 €1,373 €1,395 3 95 sq.m €1,743 €1,320 €1,295 €1,304 €1,316 Semi Detached 3 95 sq.m €1,759 €1,339 €1,317 €1,314 €1,321 4 118 sq.m €1,738 €1,319 €1,301 €1,291 €1,277 Detached 4 118 sq.m €1,767 €1,338 €1,307 €1,332 €1,332 Detached Bungalow 4 146 sq.m €1,707 €1,314 €1,277 €1,253 €1,350
The table is a guideline based on a typical speculative built, estate type house in the Dublin, Cork, Galway, Waterford and Limerick Areas.
Notes: 1. The figures shown in the table are a minimum base cost guide for 4. House contents such as carpets, curtains, furniture, etc. are not your house insurance. covered by the figures.
2. The figures are based on estate type houses built since the 1960’s. 5. No allowance has been made for the cost of out-buildings, patios They exclude; (a) Properties with more than 2 storeys or with or boundary walls. The figures do however allow for a concrete path basements or habitable attics (b) One-off houses with special design around the house, for driveway repairs and regrassing. features or period houses (c) Apartment / residential flats because of split responsibilities for shared areas. The insurance of apartments is 6. The figures allow for demolition costs, professional fees incurred covered in the block service charge. Owners should confirm with their in reinstatement and VAT at 13.5% on building costs and 21% on management companies / agents that their apartment block has been professional fees.
valued for insurance purposes, and that the insured value is current. 7. The amounts included for professional fees have been calculated 3. The figures assume a basic quality specification with normal to cover the following services: Building Surveyor / Architect and foundations, brick or block walls, concrete tiled roof, concrete ground Quantity Surveyor. floor and timber first floor, softwood flush doors and hardwood double glazed windows, painted plaster to walls, plastered ceilings, 8. The costs are based on building rates ruling in March 2011 and standard electrics and central heating. The sum insured should be do not include for inflation during the duration of the policy and increased to allow for better than average kitchen fittings, built-in the period between any loss occurring and reinstatement. wardrobes, finishes and any other items not normally included in an estate type house (e.g. fire alarm).
St. Vincent’s Private Hospital
Citi Bank, City RDiL Project
34 BRUCE SHAW HANDBOOK 2012 SECTION 3 IRELAND
3 IRELAND
Christchurch Cork, refurbishment and conservation of a listed building
Planning Charges 2012 Source: Local Planning Authorities Class of Development Charge
Most Building Types €80 or €3.60 per sq.m whichever is greater New Houses €65 for each dwelling House Alterations €34 Golf Courses €50 per hectare Outline Planning Permission 75% of full planning permission charge
Maximum Scale of Charges for Planning Applications
Full Application Most Building Types €38,000 Outline Application Most Building Types €28,500 Retention Application €125,000
Fire Certificate Charges 2012 Source: Local Planning Authorities Type of Application Charge
Option 1 Standard Application €2.90 per sq.m up to a maximum of €12,500 Option 2 A Seven Day Notice Application €5.80 per sq.m up to a maximum of €25,000 Option 3 A Revised Fire Safety Certificate Application €2.90 per sq.m up to a maximum of €12,500 Option 4 A Regularisation Fire Safety Certificate Application €11.60/sq.m up to a maximum of €50,000
BRUCE SHAW HANDBOOK 2012 35 36 BRUCE SHAW HANDBOOK 2012 UNITED KINGDOM 4
BRUCE SHAW HANDBOOK 2012 37 UNITED KINGDOM
UK Market Review
After a number of challenging years in the UK continue to absorb the bulk of increased costs before construction industry the prospects for 2012 do not passing them on to Clients in tenders. For Clients indicate any significant improvement in activity. The wishing to commission construction work it continued combination of factors such as the lack of continues to present a great opportunity to secure access to debt finance for development, the lack of very competitive prices. We have seen tender prices mortgage availability for new house purchasers, the largely remaining stagnant in 2011 and believe that lack of grant funding from the HCA for affordable in 2012, they will remain fairly static or increase homes, the UK government’s continued reduction in modestly. However the compound effect of capital spending as well as rising inflation continue to increases in raw materials, a potentially smaller keep the prospect of a sustained recovery subdued. supply chain and wage pressures is generating a belief that tender prices will begin to escalate The south-east and particularly slowly from early 2013. London are enjoying significantly We are continuing to predict that the ongoing more activity. lack of bank financing for development along with stricter lending conditions will constrain The UK Government spending cuts announced in speculative development in the commercial sector late 2010 have begun to make a significant impact and will therefore continue to restrict growth in on the sector during 2011 and will continue to the private sector. do so through 2012. This places more pressure on Despite the negatives above, there are likely to be the private sector to make up the shortfall. After a dip some bright spots. The modest pick-up in housing during 2010 according to the Construction Products starts will enable some parts of the industry to enjoy Association (CPA), the construction sector did increased activity in 2012. In terms of regions, the actually increase its output in 2011 by around 4% south-east and particularly London are enjoying but we expect a smaller growth of 2% to 3% in 2012. significantly more activity while the other UK The CPA has estimated that the value of work in the regions including Northern Ireland are seeing sector will increase from £109bn in 2011 to £112bn little improvement in activity. There is an anticipation in 2012. Since the peak in Q42007, data from the that the optimism that will come from the London Office for National Statistics shows that orders for Olympic Games themselves together with some ‘all new work’ have dipped in between but have legacy projects may stimulate some increased now risen back to 2007 levels while the repairs and construction activity in London and throughout refurbishment sector has experienced a significant the UK. The recovery in the commercial sector, fall. The new work growth is mainly propped up by particularly in London, should continue as a number a recent increase in private housing as well as some of high profile projects have commenced and are significant infrastructure and energy projects. This due to start on site in the coming months. also has led to a modest increase in construction employment. The commencement of the Crossrail on-site works and station upgrades and the HS2 announcement The Consumer Prices Index has now risen to 4.8% will bring some optimism to the Civil Engineering at the end of 2011 but like 2010, we have not seen in sector and while most of the Crossrail projects have 2011 the increases in material costs translating into been awarded, it will be some years until the HS2 equivalently higher tender costs as contractors impact will translate into construction activity.
38 BRUCE SHAW HANDBOOK 2012 SECTION 4 UNITED KINGDOM
4 UNITED KINGDOM
46-48 Grosvenor Gardens
UK Construction Output £bn 2001-2012 Source: National Office for Statistics, Construction Statistics Branch Source: National Office for Statistics,
140
120
100
80
60
40
20
0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 New Work Repair & Maintenance
2010 Public Sector Output £bn 2010 Private Sector Output £bn
New Housing £4.8 Offices £1.0 New Housing £14.3 Offices £6.1 Infrastructure £4.9 Entertainment £1.2 Infrastructure £7.8 Entertainment £4.7 Industrial £0.1 Retail £0.3 Industrial £3.6 Retail £5.6 Education £7.7 Miscellaneous £1.5 Education £2.2 Miscellaneous £2.6 Healthcare £2.4 Healthcare £2.1
BRUCE SHAW HANDBOOK 2012 39 UNITED KINGDOM
UK Tender Price Index 2001-2012 Source: BCIS. Tender Price Indices – National 300
250
200
150
100
50
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012(f)
Tender % 7% 3% 15% 0% 3% 8% -4% -12% -4% 9% 1%
UK Regional Tender Price Index 2011
215 Source: BCIS. Tender Price Indices – Regional
210
205
200
195
190
185
East North Scotland Northern Yorks & North Wales South West East South Greater Anglia West Ireland Humber East East Midlands Midlands West London
Victoria Palace Theatre
40 BRUCE SHAW HANDBOOK 2012 SECTION 4 UNITED KINGDOM
4 UNITED KINGDOM
Resource Cost Index of Non-Housing Building 2001-2012
240 Construction Statistics Branch Source: National Office for Statistics –
220
200
180
160
140
120
100
2001 2002 2003 2004 2005 2006 2007 2008 2009 2011 2012(f)
Combined Index Labour & Plant Materials
The trend of low tender prices and overall increase in materials price is set to continue. A slow rise in steel and reinforcement prices combined with a decrease of 6% in labour costs which is forecast to continue in 2012 may offset the increase on general plant and building material prices.
Number of Employed and Self-Employed in Construction: UK
’000s 2,700 Construction Statistics Branch Source: National Office for Statistics –
2,600
2,500
2,400
2,300
2,200
2,100
2,000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2006 2007 2008 2009 2010 2011
BRUCE SHAW HANDBOOK 2012 41 UNITED KINGDOM
Standard Hourly Base Rates for Labour 2011 Standard Hourly Base Rates for Labour. Source: BCIS. Job Type Base rate Building Craft Operative £13.21 Building Skill Rate 1 £12.59 Building Skill Rate 2 £12.11 Building Skill Rate 3 £11.32 Building Skill Rate 4 £10.68 Building General Operative £9.90 Technical Plumber £19.06 HVAC Senior Craftsman £17.16 Electrical Technician £23.03 Mechanical Technician £23.03
The Top UK Main Contractors Source: Building Magazine Rank Turnover 2011 2010 Firm £ bn
1 1 BALFOUR BEATTY £6.74 2 2 LAING O’ROURKE £3.53 3 3 CARILLION £2.72 4 6 KIER £1.42 5 4 SKANSKA CONSTRUCTION £1.28 6 5 MORGAN SINDALL £1.25 7 7 BOVIS LEND LEASE £1.09 8 12 KELLER £1.07 9 10 COSTAIN £1.02 10 8 BAM CONSTRUCT UK £1.01 11 14 WATES GROUP £0.98 12 11 INTERIOR SERVICES GROUP £0.97 13 45 BOUYGUES GROUP £0.94 14 9 GALLIFORD TRY £0.94 15 20 MACE GROUP £0.85 16 18 WILLMOTT DIXON GROUP £0.78 17 17 INTERSERVE £0.74 18 16 VINCI £0.72 19 21 BAM NUTTALL £0.69 20 13 NEWARTHILL (SIR ROBERT MCALPINE) £0.67
42 BRUCE SHAW HANDBOOK 2012 SECTION 4 UNITED KINGDOM
The Top UK Architects Source: Building Magazine Rank 2011 2010 Firm Staff 4
1 1 BUILDING DESIGN PARTNERSHIP 360 2 2 FOSTER & PARTNERS 315 UNITED KINGDOM 3 3 ATKINS 228 4 4 CAPITA SYMONDS 176 5 5 AEDAS 155 6 15 NPS PROPERTY CONSULTANTS LTD 128 7 8 3DREID 126 8 9= ARCHIAL GROUP PLC 117 9 7 PRP ARCHITECTS 111 10 13 PM GROUP/DEVEREUX ARCHITECTS 90 11 9= NIGHTINGALE ASSOCIATES 87 12 18 STRIDE TREGLOWN LTD 84 13 17 LEWIS & HICKEY LTD 82 14 16 PURCELL MILLER TRITTON LLP 79 15 20 PASCALL & WATSON ARCHITECTS 74 16 22 ALLFORD HALL MONAGHAN MORRIS LTD 66 17 23 FEILDEN CLEGG BRADLEY STUDIOS LLP 66 18 – URS SCOTT WILSON 64 19 31 TP BENNETT 59 20 – AECOM 58
Note: Ranked by number of Chartered Architects registered as of 2011
The Top UK Engineering Firms Source: Building Magazine Rank 2011 2010 Firm Staff
1 1 ATKINS 2,218 2 3 URS SCOTT WILSON 1,893 3 2 MOTT MACDONALD 1,705 4 - JACOBS ENGINEERING UK LTD 1,135 5 4 ARUP GROUP LTD 1,118 6 - AECOM 1,022 7 5 HALCROW GROUP LTD 990 8 7 CAPITA SYMONDS 691 9 8 PARSONS BRINCKERHOFF LTD 686 10 9 WATERMAN GROUP PLC 589 11 6 WSP GROUP PLC 372 12 - RAMBOLL 369 13 10 WHITE YOUNG GREEN GROUP LTD 361 14 11 BURO HAPPOLD LTD 299 15 13 HOARE LEA & PARTNERS 260 16 14 W A FAIRHURST & PARTNERS 220 17 15 MACE 206 18 22 HILSON MORAN 150 19 16= TPS 148 20 21 HURLEYPALMERFLATT 138
Note: Ranked by number of Chartered Engineers registered as of 2011
BRUCE SHAW HANDBOOK 2012 43 UNITED KINGDOM
Bruce Shaw Average UK Construction Costs 2012
Average Costs Cost Range Source: Bruce Shaw Commercial Offices Over 20 storey offices – premium grade facilities and common finishes £2,250 £2,500 per sq.m with lifts, provision for air conditioning, and sprinklers excluding Developer’s CAT A fitout
Over 20 storey offices – “A” grade common finishes with lifts, provision £1,950 £2,250 per sq.m for air conditioning, and sprinklers excluding Developer’s CAT A fitout
Up to 20 storey offices – medium grade facilities and common £1,650 £1,950 per sq.m finishes with lifts, provision for air conditioning and sprinklers excluding Developer’s CAT A fitout
Up to 8 storey offices – medium grade facilities and common finishes £1,200 £1,550 per sq.m with lifts, provision for air conditioning, and sprinklers excluding Developer’s CAT A fitout
Up to 2 storey offices - medium grade facilities and common finishes £800 £1,050 per sq.m with provision for air conditioning, no lift and no sprinklers excluding Developer’s CAT A fitout Developer’s CAT A fitout including raised floors, carpets, ceilings, fan coil £300 £500 per sq.m units with ducts and grilles, lighting and power distribution
Category B fit-out from institutional Category A specification; standard £500 £1,350 per sq.m corporate accommodation; open plan – 15 per cent offices
Category B fit-out from institutional Category A specification; standard £1,000 £2,250 per sq.m corporate accommodation; banking / legal – 50 per cent offices / cellular
Retail Regional shopping complex – high standard including major stores, £1,250 £1,500 per sq.m specialty shops and enclosed malls Suburban supermarkets; excluding fitout £750 £950 per sq.m Retail Park; shell excluding fit-out £850 £1,250 per sq.m Fit out of small food store < 4,500 sq ft £2,000 £2,250 per sq.m Fit out of large store with food and general merchandise < 50,000 sq ft £1,800 £2,150 per sq.m Fit out of large full-range department store < 100,000 sq ft £1,950 £2,750 per sq.m
Residential Single project home up to 250 sq.m – medium standard, double brick £650 £1050 per sq.m with normal site cost for flat site 2 storey townhouse – medium standard £900 £1,250 per sq.m
2 storey townhouse – high standard £1,050 £1,500 per sq.m
3 storey apartments – medium standard £1,050 £1,300 per sq.m
3 storey apartments – high standard, air conditioning £1,350 £1,700 per sq.m
Multi storey apartments – medium standard £1,300 £2,000 per sq.m
Multi storey apartments – high standard, air conditioning £1,750 £2,750 per sq.m
Hotels (New Build excluding FF&E) 2 star – medium standard, minimal F+B / dining facilities, no air conditioning £25,000 £35,000 per key 3 star hotel, restaurant, public areas, comfort cooling, no conferencing £40,000 £50,000 per key 4 star hotel, restaurant, public areas, air conditioning, conferencing £120,000 £150,000 per key 5 star hotel, multiple restaurants, public areas, air conditioning, £300,000 £450,000 per key banqueting, wellness
Super luxury 6 star hotel, multiple, public areas, air conditioning, £500,000 £650,000 per key banqueting, wellness
44 BRUCE SHAW HANDBOOK 2012 SECTION 4 UNITED KINGDOM
Average Costs Cost Range
Source: Bruce Shaw 4 Industrial Up to 10m high warehouse – basic standard, metal clad walls, £400 £550 per sq.m
no sprinklers (up to 5,000 sq.m) UNITED KINGDOM
Up to 10m high warehouse – basic standard, metal clad walls, £400 £500 per sq.m no sprinklers (over 5,000 sq.m)
Up to 10m high warehouse – medium standard, precast walls, £450 £600 per sq.m no sprinklers (up to 5,000 sq.m) Up to 10m high warehouse – medium standard, precast walls, £400 £500 per sq.m no sprinklers (over 5,000 sq.m) Up to 10m warehouse – high standard, precast walls, sprinklers £600 £750 per sq.m (up to 5,000 sq.m)
Up to 10m high warehouse – high standard, precast walls, sprinklers (over £450 £600 per sq.m 5,000 sq.m) Truck hardstand, 175 RC slab, drainage, line marking £100 £150 per sq.m
Car Parking Open bitumen car parking, drainage, line marking (30 sq.m/car) £100 £150 per sq.m Multi storey (above ground), concrete structure, lift, no mechanical £600 £750 per sq.m ventilation, no sprinklers (30 – 35 sq.m/car) Underground, concrete structure, excavation, lifts, mechanical ventilation, £1,100 £1,300 per sq.m sprinklers (35 – 40 sq.m/car)
Data Centre (excludes shell construction, incoming power & fibre upgrades, comms equipment) Tier Level 2 – Fit out of existing shell, fully built (day 1 & 2), technical load £5,000 £8,000 per kilowatt between 1,000-1,500 kW/sq.m (IT load) Tier Level 3 – Fit out of existing shell, fully built (day 1 & 2), technical load £8,000 £11,000 per kilowatt between 1,500-2,000 kW/sq.m (IT load) Tier Level 4 – Fit out of existing shell, fully built (day 1 & 2), technical load £12,000 £16,000 per kilowatt between 1,500-2,000 kW/sq.m (IT load)
Approximate Regional Variance
Region Factor Region Factor Wales 0.96 South East 1.09 Midlands 0.97 London 1.12 East 1.00 Scotland 0.96 South West 0.98 Northern Ireland 0.85 North 0.91
Notes: 1. All costs exclude VAT and professional fees. 2. Costs based on January 2012 prices. 3. Average costs as shown should not be used for insurance valuation purpose. 4. The costs are representative of typical specifications for each type of building and do not account for any site abnormal costs.
BRUCE SHAW HANDBOOK 2012 45 UNITED KINGDOM
House Building Starts and Completions 2001-2011 Source: National Office for Statistics 70,000
60,000
50,000
40,000
30,000
20,000
10,000
0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Housebuilding Starts Housebuilding Completions
Average Procurement Lead-in Times in Weeks Source: National Office for Statistics 0 5 10 15 20 25 30 35
Piling (Rotary)
Piling (Precast)
Concrete Works
Structural Steel Frames
Cladding (Reconstituted Stone)
Cladding (Natural Materials)
Cladding (Metal Panellised)
Cladding (Curtain Walling)
Atrium Roofs
Roof Finishes - Profiled Metal
Façade cleaning equipment
Brickwork
Blockwork
Metal doors
Drylining
Demountable Partitions
General Joinery
Specialist Bespoke Joinery
Raised Floors
Suspended Ceilings
Architectural Metalwork
Decorative Wall Coverings
Internal Stone Floors & Walls
Soft Floor Finishes
Passenger Lifts (Non-standard)
Escalators
Mechanical Packages
Ductwork
Electrical Packages
Controls
Notes: All times based on generic 5 storey 100,000 sq.ft. office block in city. As of July 2011.
46 BRUCE SHAW HANDBOOK 2012 SECTION 4 UNITED KINGDOM
The UK Housing Market 2012
Confidence in the UK housing market is at rock share to 23% since July 2009. It also proposed a 4 bottom and Britain faces a housing shortage of one £400m ‘Get Britain Building Investment Fund’ aimed million homes by 2015 if construction fails to match at tackling stalled sites with an aim of freeing up the ever growing population. public sector land with the capacity to build 100,000 UNITED KINGDOM new homes. Sales activity for housing has hit its lowest level in a decade. The RICS Housing Market Survey shows that In 2011 only 103,000 new homes were built. sales were slightly higher than earlier in the year. New However, projections show that with population NHBC home registrations also fell in 2011 by 0.38% growth, an increase of 232,000 new homes per year and London has found that the number of homes is needed. changing hands is at a third of levels seen during the The Government intends to invest £4.5bn in their property boom. This is despite the fact that London Affordable Homes Programme between 2011 and outperforms other UK regions and is forecast to 2015. Approximately 146 providers will aim to deliver continue to do so during 2012. However, prime sites 80,000 new homes for Affordable Rent and are still scarce. Affordable Home Ownership with the help of The housing market is more buoyant in the south Government funding of £1.8bn. specifically in London, however the current mortgage The Land Registry statistics demonstrate that London market is dictating sales figures. Lenders are reluctant is the only region in England and Wales to show an to lend which limits builders building and buyers increase in its average property price over the last 12 buying. Despite this, house loans have grown since months with a movement of +1.4%. The largest fall of November 2011 and are expected to continue to -5.4% was experienced by the north east. Out of 33 grow in the months before March 2012; when London Boroughs, the City of Westminster showed first-time buyers will not be eligible to exemption the largest annual increase of +7.1% and Havering the from stamp duty. largest decrease of -3.3%.
The Government introduced a Housing Strategy in Despite encouraging housing sales figures towards November 2011 whereby it included a scheme to the end of 2011, the fragile state of the economy and encourage more first-time buyers onto the property instability in the Eurozone means the housing market ladder as these had dropped from 40% of the market faces another tough year ahead.
38 Grosvenor Gardens Mews
BRUCE SHAW HANDBOOK 2012 47 UNITED KINGDOM
2012 Olympics
On 27 July 2012 the world will be watching London area of 1,883,700 sq.ft (175,000 sq.m) it is the largest as the opening ceremony of the 2012 Olympics is urban shopping centre in Europe. launched. This ceremony gives the world an Post Olympics, the Village is to be converted into opportunity to experience the artistic demonstration homes targeted at key workers. Further housing, of Oscar award winning film director Danny Boyle along with shops, restaurants and cafes will provide and his creative team. It also gives our host city and new amenities for the local community, while the the rest of the UK a chance to show off a rich and stadium is to remain an athletic centre. diverse culture. The Olympic Games will run from 27 July until 12 August, and the Paralympic Games It is hoped that the Olympic Games will offer from 29 August to 9 September. our economy the upturn it needs to help bring it out of the recession. It has been predicted that The 500 acre Olympic Park site comprises the main the UK’s prime housing market will surge as the stadium, aquatics centre, smaller stadia and the 2012 Olympics attract new international buyers Athletes Village. Westfield Stratford City sits next door to the country. to the Olympic Park, and with a total retail floor
Primark, Stratford City
Euro v Sterling 2005-2012
0.94 Source: European Central Bank 0.92 0.90 0.88 0.86 0.84 0.82 0.80 0.78 0.76 0.74 0.72 0.70 0.68 0.66 0.64 0.62 Jan- 11 Sep- 11 Jan- 12 Jan- 10 Jan -05 Jan- 07 Sep- 10 Sep- 07 Jan- 06 Jan- 09 Jan- 08 Sep- 05 May- 11 Sep- 06 Sep- 09 Sep- 08 May- 10 May- 07 May- 05 May- 06 May- 09 May- 08
48 BRUCE SHAW HANDBOOK 2012 SECTION 4 UNITED KINGDOM
4 It is hoped that the
Olympic Games will UNITED KINGDOM offer our economy the upturn it needs to help bring it out of the recession. 50 BRUCE SHAW HANDBOOK 2012 MIDDLE EAST 5
BRUCE SHAW HANDBOOK 2012 51 MIDDLE EAST
Middle East Market Review
GDP in the Gulf Cooperation Council (GCC) Macro economic data indicates that construction countries is still largely based upon a hydrocarbon activity in Saudi Arabia grew by 11.6% in 2011 with industry as illustrated in the graph below. inflation estimated to be at 4.5% for 2012. Analysts predict a Saudi Arabian GDP growth forecast of 2.3% In the UAE, the IMF forecasts real GDP to grow in 2012 sustained by high oil prices and production. by 3.8% in 2012 and inflation to rise from a 2011 The GCC region as a whole is projected to average forecast of 2% to 3% in 2012. real GDP of 5% in the next 5 years. Moody’s Rating Agency have reported a projected A number of countries in the GCC have introduced GDP for Bahrain at 3% for 2012, an increase of 1% stimulus packages recently, as set out in the from last year. This increase is reportedly due to the table below. drilling of 200 new oil wells by Tatweer Petroleum over the past 3 years, with a further 3,000 wells The overall value of construction projects in the planned in the next 20 years. region during 2011 is illustrated in the graph opposite.
GCC Hydrocarbon Dependence (% of GDP)
100% Source: National Authorities and Deloitte Analysis
80%
60%
40%
20%
0
Bahrain KSA Kuwait Oman Qatar UAE
Hydrocarbons Public Sector / Social Services Other
GCC Stimulus Packages ore EDIsgt Source: MEED Insight
Package % of Country Amount ($m) GDP Main Package Contents Bahrain 398 1.5 Provide cash transfers of $ 2,660 each to families Kuwait 4,320 2.5 Provide free staple food to citizens for the next 14 months together with cash transfers Oman 825 1.25 Employment for 50,000 Omanis Establishment of monthly unemployment benefit of $390 Saudi Arabia 96,600 16.7 Construct 500,000 housing units, build and expand hospitals Pay a two month salary bonus to state employees Increase public sector minimum wage by 19% Inject capital into specialised credit institutions to facilitate debt write offs and increase mortgage lending, provide affordable housing and extend social insurance and employment benefits Expand indefinitely the 15% inflation allowance for state employees that had been phased in over the past three years UAE 1,820 0.5 Infrastructure stimulus programme focusing on the Northern Emirates 70% increase in pensions for military personnel State subsidies for rice and bread
52 BRUCE SHAW HANDBOOK 2012 SECTION 5 MIDDLE EAST
5 Value of Projects by Country 2011 Shown as a percentage of total: $1,206.3bn Source: MEED Insight MIDDLE EAST
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BRUCE SHAW HANDBOOK 2012 53 MIDDLE EAST
Middle East Commodity Prices Commodity prices were exceptionally volatile In 2012, it is estimated that tender prices will rise during 2011 as indicated in the table below. at a sustainable pace in what are expected to be the busier markets of Saudi Arabia & Qatar. It is expected that the higher commodity prices will push construction material prices up. These Tenders in the UAE and Bahrain look set to remain material price increases will however be softened keen, as contracting companies compete by competitive labour rates and tighter margins aggressively for new work. to acquire work, therefore suppressing construction inflation. It is expected that the higher A shortage of skilled labour in Saudi Arabia and commodity prices will push Qatar coupled with inflationary pressures may construction material prices up. also be factors that push already competitive rates upwards.
Prices of Building Materials in Abu Dhabi Q4 2011 compared to Q4 2010 ore ttsi eteAuDai Source: Statistic Centre Abu Dhabi Percentage change Ref. Commodity Groups Q4 2011 compared to Q4 2010
1 Transport Equipment 30.1% 2 Aggregate & Sand 19.9% 3 Tiles & Marble 13.5% 4 Waterproofing Products 11.8% 5 Steel 11.0% 6 Roofing Materials 6.6% 7 Paints 6.1% 8 Wood 4.8% 9 Diesel no change 10 Concrete -2.8% 11 Power Cables -3.3% 12 uPVC Pipework -4.1% 13 Glass -4.2% 14 Natural Stone -5.9% 15 Blocks -6.4%
54 BRUCE SHAW HANDBOOK 2012 SECTION 5 MIDDLE EAST
5 MIDDLE EAST
Palm Island, UAE
UAE in Brief Bahrain in Brief The UAE construction market remained in recovery As widely reported in the media, Bahrain mode in 2011, continuing on from 2010. experienced political unrest in 2011, this unrest having a notable impact upon construction activity In the emirate of Abu Dhabi the Urban Planning in the country. Council continues to implement its 2030 urban plans encompassing Abu Dhabi city, Al Ain, and the Construction activity in Bahrain dropped by more Western Region, perhaps at a slower pace than than 80% when compared to the previous year. originally envisaged. From our experience, private 2012 however is expected to show some recovery developers have been much less active in Abu in the construction industry. In January this year, Dhabi, resulting in a more measured level of Bahrain’s Housing Ministry awarded the first residential and commercial construction. PPP social housing scheme in the GCC. The US$550m project will provide 4,100 housing units. Dubai has recently approved a five-year plan Reports indicate that the Bahrain government is that will involve the emirate investing AED1bn currently planning a second phase of its PPP (US$272m) on its road network before the end of housing scheme. 2016, supplementing the US$3.6bn of road projects that are currently being built in the emirate. The first Qatar in Brief phase of the plan, which is expected to cost about Qatar is the only country in the GCC to be ranked AED150m, is expected to commence in 2012. in the top 100 ‘Doing Business’ index by the World As Client confidence in the hospitality sector Bank in 2011. The World Cup is only one part of improves, so too does demand for new hotels. This Qatar’s development goals. Its long term plan is has been evidenced by Bruce Shaw who in 2011 the Qatar National Vision 2030. The newly created were successful in securing a 600 bed signature Central Planning Office will oversee the US$60bn hotel project on Palm Island. infrastructure drive towards 2030.
BRUCE SHAW HANDBOOK 2012 55 MIDDLE EAST
Saudi Arabia in Brief Saudi Arabia continues to be the leading economy out a US$400bn infrastructure spending plan. within the GCC. In the table below, a brief summary Private and public developers need to build about is given of the key budgetary allocations for 2012. 275,000 units a year through 2015 to meet the country’s demands for 1.65 million new homes. In the KSA, more than US$48bn worth of Saudi Arabia’s population is expected to reach construction and infrastructure projects were 30 million in 2017, double the figure 30 years ago. awarded during the first three quarters of 2011. Analysis of the Kingdom’s population growth to This represented a 125% increase over the same 2030 also shows the number will hit 36.5 million period in 2010. by the end of the period under review. This Saudi Arabia is facing a massive housing problem represents a near 40% rise compared to 2010. due to rapid population growth and an inflow of workers coming to the Kingdom, which is rolling
Saudi Arabia – Key Budgetary Allocations 2012 Source: MEED Insight Sector/Institution Allocation Value (US $) Education and Manpower 44.5 740 schools in addition to 2,000 schools to be renovated, plus a further 2900 currently under construction
Health and Social Affairs 23.1 17 new hospitals, plus a further 137 hospitals currently under construction plus a number of social centres and welfare offices
Municipality Services 7.8 Intercity roads, intersection and bridges as well as sanitary and other environment related projects
Transportation and Telecommunications 9.4 Includes 4,200 km of roads, along with King Abdullah Jizan Airport, 4 regional airports, port and railroad developments
Water, Agriculture and Infrastructure 15.3 Water desalination plants and infrastructure projects in Jubail and Yanbu sewage networks.
Total Budget 100.1
Mobily Project, Saudi Arabia
56 BRUCE SHAW HANDBOOK 2012 SECTION 5 MIDDLE EAST
Saudi Arabia – Housing Requirements by Region ore:Ntoa eeomn ln akSuiFas ED Sources: National Development Plan; Bank Saudi Fransi / MEED +BXG 5 5BCVL #BIB /BKSBO /PSUIFSO#PSEFST +B[BO )BMM MIDDLE EAST
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Outline Construction Cost Comparisons With offices in the UAE, Bahrain and the Kingdom of Saudi Arabia, Bruce Shaw is successfully working on a large volume of projects within the GCC region. Tabled below is a summary of indicative construction costs.
Regional Building Cost Comparison (USD/sq.m) 2012 Date: January 2012 ore:BueSa Sources: Bruce Shaw Ref. Building Type Abu Dhabi, UAE Manama, Bahrain Riyadh, KSA from to Base* from to Index* from to Index* 1 Parking Podium Car Parking $ 590 $ 720 100 $ 400 $ 480 67 $ 550 $ 650 92 Basement Car Parking $ 670 $ 830 100 $ 550 $ 600 77 $ 650 $ 780 95
2 Residential Sector Medium Quality - Villa Units $ 1,190 $ 1,450 100 $ 840 $ 1,030 71 $ 830 $ 1,020 70 Medium Quality - High Rise $ 1,100 $ 1,350 100 $ 1,000 $ 1,220 91 $ 980 $ 1,200 89 High Quality - Low Rise Aparts $ 1,270 $ 1,550 100 $ 1,270 $ 1,400 95 $ 930 $ 1,130 73 High Quality - High Rise $ 1,490 $ 1,810 100 $ 1,470 $ 1,625 94 $ 1,160 $ 1,420 78
3 Commercial / Office Sector**/*** Developer Standard / Investment Offices Low Rise - Medium Rise $ 810 $ 990 100 $ 800 $ 970 98 $ 830 $ 1,020 103 Medium Rise - High Rise $ 1,270 $ 1,550 100 $ 1,000 $ 1,220 79 $ 1,020 $ 1,250 80 Owner Occupier Standard Offices Low Rise - Medium Rise $ 1,060 $ 1,300 100 $ 870 $ 1,070 82 $ 980 $ 1,200 92 Medium Rise - High Rise $ 1,490 $ 1,810 100 $ 1,110 $ 1,360 75 $ 1,160 $ 1,420 78
4 Hotel & Leisure / Retail Sector Regional Shopping Centre ** $ 1,360 $ 1,650 100 $ 870 $ 1,070 64 $ 1,260 $ 1,540 93 Budget / 3 Star **** $ 1,410 $ 1,700 100 $ 1,270 $ 1,560 91 $ 1,390 $ 1,700 99 5 Star **** $ 2,420 $ 2,950 100 $ 1,990 $ 2,430 82 $ 2,230 $ 2,710 92 5 Star Resort **** $ 2,780 $ 3,400 100 $ 2,510 $ 3,070 90 $ 2,560 $ 3,120 92
5 Health Sector ***** District General Hospital $ 2,880 $ 3,510 100 $ 2,460 $ 3,010 86 $ 3,060 $ 3,730 106
6 Manufacturing Sector Light Industrial $ 550 $ 670 100 $ 560 $ 680 102 $ 450 $ 540 81 Heavy Industrial $ 740 $ 910 100 $ 600 $ 730 81 $ 580 EC$ 710 78
Notes: 1. All subject to site specifics, design and specification. 2. All exclude Land Acquisition Costs, External Works Costs & Professional Fees. * Base Index @ 100 = UAE; Index calculated on average of stated cost range **** Incl. FF+E; Excl. OS+E ** Shell & Core Only; with public areas finished ***** Excl. Medical Equipment *** Excl. super high rise (Low / Medium = upto 15; High Rise +15; Super High Rise +45 storeys)
BRUCE SHAW HANDBOOK 2012 57 MIDDLE EAST
Top 10 Infrastructure Projects in the GCC
Project Ranking Project Country Client Value Status 1 Surface Transport Master UAE Abu Dhabi Dept of Transport $25bn Design Plan 2 Qatar National Rail Qatar QDREIC / Deutsche Bahn / Qatar $25bn Design Scheme Railways Development Company 3 GCC Rail Network Regional Governments of the GCC $16bn Design (GCC) 4 Emirates Railway Project UAE Etihad Rail / Abu Dhabi Dept $11bn Design of Transport 5 National Freight & Oman Supremen Committee for Town $10bn Tender for Consultancy Passenger Railway Planning Contract 6 Kuwait National Railroad Kuwait Ministry of Public Works $10bn Feasibility Study Network 7 Bahrain Rapid Transport Bahrain Ministry of Works and Housing $8.09bn Feasibility Study Network 8 Kuwait Metro System Kuwait Ministry of Public Works $7bn Design 9 Mecca-Medina Railway Saudi Saudi Railways Organisation $6bn Construction Link Arabia 10 Jeddah Light Rail Transit Saudi Makkah Municipality $6bn Concept stage - Tram Arabia
Middle Eastern Design Firms
Tabled below is a selected list of design firms currently working within the GCC region.
KEO HOK ATKINS FOSTERS & PARTNERS ARAB ENGINEERING BUREAU GENSLER DEWAN AECOM MZ ARCHITECTS HENNING LARSON RMJM CH2M HILL BURT HILL / STANTEC BURO HAPPOLD RW ARMSTRONG WSP WOODS BAGOT DSA NORR GROUP BSBG NAGA ARCHITECTS P&T GROUP DWP BROADWAY MALYAN GAJ SOM AEDAS
58 BRUCE SHAW HANDBOOK 2012 SECTION 5 MIDDLE EAST
5 GCC Nations Main Contractors
Tabled below is a selected list of major contractors currently working within the GCC region. MIDDLE EAST
AL ARAB TRADING & CONTRACTING BELHASA SIX CONSTRUCT AL FUTTAIM CARRILION CCC AL HABTOOR LEIGHTON DUTCO BALFOUR BEATTY AL HAMAD CONSTRUCTION & DEVELOPMENT EL SEIF ENGINEERING & CONTRACTING AL JABER KHANSAHEB CIVIL ENGINEERING AL YAMAMA KHOOHEJI CONTRACTORS AL KAZEM GROUP LAING O’ROURKE AL LATIFIA TRADING MIDMAC AL REDWAN CONTRACTING MURRAY & ROBERTS AB V ROCK MUSHRIF TRADING & CONTRACTING AL RAJHI CONTRACTING NESMA & PARTNERS AL SHAFAR GENERAL CONTRACTING SAUDI BIN LADEN GROUP ALEC SAUDI OGER ARABIAN CONSTRUCTION COMPANY SEDAR ARABTEC CONSTRUCTION TEEJAN GROUP ASCON
GCC Single Currency Update The future of the GCC single currency is still uncertain. In November 2011, the IMF said that the costs of having a single currency in the Gulf may outweigh the benefits. Although the majority of GCC citizens support the single currency, the name of the currency has not been agreed amongst the member states. Monetary policy frameworks and a common system of payments & settlements are yet to be put in place. Therefore it is unlikely that a single GCC currency will be active in the immediate future.
The following table compares the US Dollar to the individual currencies of the GCC member states.
Dollar vs. AED / BHD / SAR / KWD / QAR / OMR Source: www.xe.com
Country Currency Symbol Conversion from US $ Bahrain Bahraini Dinar BHD 1 USD = 0.38 United Arab Emirates Emirati Dirham AED 1 USD = 3.67 Saudi Arabia Saudi Riyal SAR 1 USD = 3.75 Kuwait Kuwaiti Dinar KWD 1 USD = 0.28 Qatar Qatari Riyal QAR 1 USD = 3.64 Oman Omani Rial OMR 1 USD = 0.39
Note: Figures are based on January 2012.
BRUCE SHAW HANDBOOK 2012 59 60 BRUCE SHAW HANDBOOK 2012 UNITED STATES 6
BRUCE SHAW HANDBOOK 2012 61 UNITED STATES
US Market Review
The US Construction Market has still to see signs that 32% of construction firms plan to add staff this of recovery from the recession, with projections that year with only 9% reporting a decline. 2012 US construction starts will remain essentially The 2012 Dodge Construction Outlook details the flat. The total dollar value of new starts in 2012 is forecasts for each construction sector, as follows: estimated to be $412 billion – just up from a figure of $410 billion in 2011. This certainly shows that the Ŕ 4JOHMFGBNJMZIPVTJOHJOXJMMJNQSPWF market is stabilizing after the losses of 2009 & 2010 in dollars, corresponding to a 7% increase in the but the backdrop for the construction industry is the number of units to 435,000 (McGraw-Hill weak US economy – which continues to see slow Construction Dodge basis). This is still a low employment growth and diminished funding from amount, as the excess supply of homes due to federal/state governments. Most contractors and foreclosures continues to depress the market. construction economists do not see a return to Ŕ .VMUJGBNJMZIPVTJOHXJMMSJTFJOEPMMBSTBOE healthy markets until 2013 or even 2014. in units, continuing its moderate, upward trend. Ŕ $PNNFSDJBMCVJMEJOHXJMMHSPX8BSFIPVTFT 2012 US construction starts will and hotels will see the largest percentage remain essentially flat. increases, but improvement for offices and stores will be modest. Ŕ 5IFJOTUJUVUJPOBMCVJMEJOHNBSLFUXJMMTMJQBO There are however some encouraging signs of additional 2% in 2012, after falling 15% in 2011. The improvement in the US economy with the US tough fiscal environment for states and localities will unemployment rate reducing to 8.5% at the end continue to dampen school construction, and the of 2011 and continuing a positive change in US uncertain economic environment will limit growth employment for the past 15 months in a row. in healthcare facilities. The cumulative increase over this period has been 2.1 million jobs, with 1.6 million coming in 2011. Ŕ .BOVGBDUVSJOHCVJMEJOHTXJMMJODSFBTF Total construction employment now stands at following the 35% gain in 2011, as the low value of 5,544,000, 46,000 higher than in December 2010 – the U.S. dollar continues to support export growth. an increase of 0.8%. This is however far below its Ŕ 1VCMJDXPSLTDPOTUSVDUJPOXJMMESPQBGVSUIFS peak level of 7,726,000 in April 2006, but continues 5%, after a 16% decline in 2011, due to spending a month’s long trend of slight gains. These gains are cuts and the absence of a multiyear federal projected to continue as a recent survey by the transportation bill for highway and bridge Associated General Contractors of America reported construction.
Tempo 300 East 23rd Street, New York
62 BRUCE SHAW HANDBOOK 2012 SECTION 6 UNITED STATES
Ŕ &MFDUSJDVUJMJUJFTXJMMSFUSFBU GPMMPXJOHB sector construction offsetting the decline in public 6 jump in 2011. sector demand.
These details indicate that there is growing demand The US construction market remains very competitive UNITED STATES in certain private market sectors but continued with 80% of construction firms reporting that they weakness in other key sectors due to the end of expect bid levels to either stagnate or decline this stimulus measures and a decline in demand for year. This comes in a market where material costs are public construction. Overall the market is projected continuing to increase and contractors are to remain stable with the growing demand for private generating less revenue.
Value of Construction Output Public / Private $bn 2001-2011 Source: US Census Bureau 1,200
1,000 800 600
400
200
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Total Public Construction Total Private Construction
US Construction by Type of Work 2011 Source: US Census Bureau Source: US Census Bureau Private Sector $ bn Public Sector $ bn
Residential $236.3 Miscellaneous $10.6 Residential $8.4 Miscellaneous $19.0 Commercial $69.9 Infrastructure $103.6 Commercial $15.0 Infrastructure $116.2 Healthcare $29.4 Manufacturing $34.7 Healthcare $10.5 Water & Waste $42.8 Educational $13.4 Educational $70.6
BRUCE SHAW HANDBOOK 2012 63 UNITED STATES
Annual Construction Cost Index (1913 = 100)
9,200 Source: Engineering News Record
8,900
8,600
8,300
8,000
7,700
7,400
7,100
6,800
6,500
6,200
5,900 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
US Regional Building Cost Index
7,000 Source: Engineering News Record
6,000
5,000
4,000
3,000
2,000
1,000
0
Dallas Seattle Detroit Atlanta Boston Denver St. Louis Chicago New York Baltimore Cleveland Cincinnati Pittsburgh Kansas City Los Angeles Minneapolis Philadelphia New Orleans San Francisco
Employment in Construction 2000-2011
’000s 7,800 Source: Engineering News Record
7,600
7,400
7,200
7,000
6,800
6,600
6,400
6,200
6,000
5,800
5,600
5,400 2011 2001 2010 2007 2005 2003 2002 2006 2009 2004 2008 2000
64 BRUCE SHAW HANDBOOK 2012 SECTION 6 UNITED STATES
Change in US Employment in Construction Jan. ’10-Dec. ’11
Seasonally Adjusted in Thousands 50 6
UNITED STATES 0
-50
-100
-150 Jul- 11 Jul- 10 Jan- 11 10 Apr- Sep- 11 11 Apr- Sep- 10 Nov- 11 May- 11 Feb- 11 Jun- 11 11 Mar- Oct- 11 Nov- 10 May- 10 Jan- 10 Aug- 11 Feb- 10 11 Dec- Jun- 10 10 Mar- Oct- 10 Aug- 10 10 Dec-
US Earnings in Construction 2010 Average earnings of non-supervisory workers in construction, May 2010 Source: BLS Occupational Employment Statistics Industry $ / Hour $ / Week Construction of buildings 21.39 813 Non residential building 23.10 914 Residential building 19.47 707
Heavy and civil engineering construction 22.00 924 Utility system construction 22.31 941 Highway, street, and bridge construction 22.11 931 Other heavy construction 21.78 947 Land subdivision 18.73 702
Speciality trade contractors 21.99 835 Building equipment contractors 23.56 918 Building finishing contractors 20.87 783 Other speciality trade contractors 20.86 795 Building foundation and exterior contractors 20.54 747
BRUCE SHAW HANDBOOK 2012 65 UNITED STATES
US Earnings in Construction 2010 continued Median hourly wages of the largest occupations in US construction, May 2010 Source: BLS Occupational Employment Statistics Occupation Buildings $ / Hour Civil Engineering $ / Hour Construction managers 40.08 40.62 First-line supervisors 28.51 28.41 Plumbers & pipefitters 24.30 21.80 Electricians 22.01 23.10 Operating engineers 21.52 21.15 Carpenters 19.10 20.64 Masons & concrete finishers 18.08 17.17 Painters 15.45 17.45 Construction labourers 14.49 14.68
Top 20 US Contractors Source: Engineering News Record Rank 2011 2010 Firm Revenue $ bn 1 1 THE TURNER CORP. 5.95 2 3 CLARK GROUP 3.75 3 6 THE WHITING-TURNER CONTRACTING CO. 2.78 4 18 PCL CONSTRUCTION ENTERPRISES 2.77 5 5 BALFOUR BEATTY CONSTRUCTION 2.75 6 8 GILBANE BUILDING 2.73 7 2 PERINI CORP. 2.49 8 4 SKANSEA USA 2.34 9 7 BOVIS LEND LEASE 2.32 10 27 KBR 2.28 11 - FLUOR CORP. 2.14 12 9 HENSEL PHELPS CONSTRUCTION 2.06 13 10 MCCARTHY HOLDINGS 2.03 14 12 STRUCTURE TONE 1.83 15 15 M.A. MORTENSON CONSTRUCTION 1.83 16 11 JE DUNN CONSTRUCTION GROUP 1.80 17 16 SUFFOLK CONSTRUCTION CO. 1.67 18 13 HUNT CONSTRUCTION GROUP 1.55 19 14 BRASFIELD & GORRIE 1.50 20 17 MANHATTAN CONSTRUCTION GROUP 1.21
Note: Ranked by domestic revenue; 2011 ranking is based on 2010 revenue
66 BRUCE SHAW HANDBOOK 2012 SECTION 6 UNITED STATES
The Top 20 US Design Firms ore niern esRcr Source: Engineering News Record Rank Revenue 2011 2010 Type of Firm Firm € bn 6
1 1 EA AECOM TECHNOLOGY CORP. 5.92 2 2 EAC URS CORP. 5.04 UNITED STATES 3 3 EAC JACOBS 4.75 4 5 EA CH2M HILL 3.60 5 4 EC FLUOR CORP. 3.13 6 7 EC AMEC 2.46 7 8 E TETRA TECH 2.21 8 6 EC BECHTEL 2.17 9 9 EC KBR 2.01 10 12 EA PARSONS BRINCKERHOFF 1.56 11 11 EA HDR 1.50 12 15 EA ARCADIS 1.36 13 10 EC THE SHAW GROUP 1.21 14 13 EC PARSONS 1.17 15 16 EAP LOUIS BERGER GROUP 1.15 16 14 EC BLACK & VEATCH 1.10 17 19 EA HNTB 1.00 18 17 EC MWH GLOBAL 0.92 19 26 E WORLEYPARSONS GROUP 0.77 20 22 EAC BURNS & McDONNELL 0.68
Note: 2011 ranking is based on revenue for design services performed in 2010. Key to Type of Firm: A architect; E engineer; C contractor; P planner
Exchange Rates: Euro v US Dollar 2006-2012
1.60 Source: European Central Bank
1.55
1.50
1.45
1.40
1.35
1.30
1.25
1.20
1.15
1.10
1.05
1.00 Jul- 10 Jul- 07 11 Apr- Jul- 09 Jul- 06 Jul- 08 Jan- 11 10 Apr- Oct- 11 07 Apr- Jan- 12 Jan- 10 09 Apr- 06 Apr- 08 Apr- Jan- 07 Oct- 10 July- 11 Jan- 09 Jan- 06 Oct- 07 Jan- 08 Oct- 09 Oct- 06 Oct- 08
BRUCE SHAW HANDBOOK 2012 67 68 BRUCE SHAW HANDBOOK 2012 CARIBBEAN 7
BRUCE SHAW HANDBOOK 2012 69 Caribbean Market Review
The Caribbean has a total population of The region continues to offer approximately 40 million and total GDP for the opportunities to overseas consultants, region has remained at around US$250bn in recent construction firms and specialist years. Tourism accounts for 90% of GDP on many subcontractors. of the islands and the industry employs an estimated 1.6 million people. decades now and tourism, financial services, light It is not surprising then that with tourist numbers industry and oil and mineral exploration have taken showing a return to growth in 2010/2011 that there on increasing importance. The greater portion of are currently over 100 new hotel projects being Foreign Direct Investment flows have been to those developed and over 50 of these under construction countries that are rich in natural resources such as in the Caribbean. A number of governments across gold, bauxite, oil petroleum, natural gas and alumina the region have actively sought out investors. and Costa Rica, Dominican Republic and Trinidad Incentives characterised by exemptions on import and Tobago remain the major recipients. FDI duties and reductions in stamp duty on property remains at c.US$75bn annually in recent years most transactions are being offered. Many of the islands of which has come from the USA, China, the EU airports have been improved and expanded in recent with significant Canadian investment in Cuba. years to cater for increased passenger numbers and The region continues to offer opportunities to there has been a push to utilise and exploit those overseas consultants, construction firms and airport capacities. A number of the governments are specialist subcontractors as there is limited looking at proposals for further expansion of airport expertise locally. This would include some of the capacity to cater for the increase in numbers coming other islands not specifically mentioned above from neighbouring growth economies in Central and like Grenada, Antigua, Martinique, Bonaire, St. Kitts, South America. St Vincent and the US and British Virgin Islands. Traditional Caribbean industries and in particular Cuba remains probably the brightest prospect agriculture and the growing of sugar cane in this regard and strong signs of the regime and bananas and associated industries like the becoming more open to development using production of rum have been in decline for some foreign investment.
General Statistics for the Caribbean Source: Caribbean Community (Caricom) Regional Statistics Secretariat Land Area GDP GDP GDP Debt To Country Sq. Km Capital Population Millions Per Capita Growth GDP Ratio Unemployment US$ US$ Bahamas 10,010 Nassau 313,312 7,538 28,700 0.50% 4.50% 7.60%
Barbados 430 Bridgetown 286,705 3,963 21,800 -0.50% 102.10% 10.70% Bermuda 54 Hamilton 68,679 4,500 69,900 -6.20% 25.00% 2.10% CaymenCayman Islands 264 George Town 51,384 2,250 43,800 1.10% 30.00% 13.50% Cuba 109,820 Havana 11,087,330 57,490 9,900 1.50% 34.20% 1.60% Curacao 444 Willemstad 142,180 5,080 15,000 3.50% N/A N/A Dominican Republic 48,320 Santo Domingo 9,956,648 54,912 8,900 7.80% 36.80% 13.30% Haiti* 27,560 Port au Prince 9,717,932 6,632 1,200 -5.10% N/A 40.60% Jamaica 10,831 Kingston 2,868,380 13,690 8,300 -1.10% 126.20% 12.40% Puerto Rico 8,870 San Juan 3,989,133 93,520 16,300 -5.80% 60.70% 12.00% St. Lucia 606 Castries 161,557 985 11,200 0.80% 37.20% 20.00% Trinidad & Tobago 5,128 Port of Spain 1,227,505 20,590 21,200 0.00% 29.80% 6.40% Turks & Caicos 948 Cockburn Town 46,335 860 12,000 4.90% N/A 10.00%
Note: * Despite having benefited from debt relief in 2009 the earthquake in 2010 leaves Haiti totally dependent on outside aid to rebuild its economy. GDP growth for Haiti is expected to expand by 9% in 2011/2012 largely from reconstruction activity and is forecast to be at 6% by 2015.
70 BRUCE SHAW HANDBOOK 2012 SECTION 7 CARIBBEAN
Caribbean Country Review
Bahamas financial services for international business. The 7 The Bahamas is one of the wealthiest Caribbean relocation of a number of large US reinsurance countries with its economy heavily dependant on companies following the 9/11 terrorist attacks and tourism and offshore banking. Tourism and again following Hurricane Katrina contributed to its CARIBBEAN manufacturing accounts for approximately 60% of already established location as an international GDP and directly or indirectly employs half of the business centre. labour force. Steady growth in tourism and a boom High quality luxury tourist facilities are also important in construction of new hotels, resorts and residences to the economy. Following almost ten years of promoted solid growth up to 2007. Recognising the the boom in commercial office and top end decline in tourist numbers the government of the condominium development in Bermuda these Bahamas actively pursued new investment and sectors of the market stalled dramatically in 2009. attracted US$2.50 billion in investment from China Interestingly a number of high end hotel projects for the Baha Mar Cable Beach development with completed in 2011 and there are plans for a St. Regis over 2,000 rooms. Following on from the decline in Hotel in Hamilton. There are a number of large tourist numbers in recent years this development has infrastructure projects underway including work already kick-started significant growth in the on a new causeway replacing the roadway severely recovery of the local economy. damaged by a hurricane. Tender prices continue to Chinese investment has clearly been very important reflect the downturn and are competitive. to the Bahamas and to the economies of a number of the Caribbean island nations in recent years. Cayman Islands No direct taxation on the three Cayman islands Barbados of Grand Cayman, Little Cayman and Cayman Brac The Barbadian economy declined by approximately make them an important offshore financial centre 2% in 2009 and again in 2010 as a result of the global with over 70,000 companies registered and a stock slowdown and reduced tourism numbers although exchange opened in 1997. Tourism still accounts for Barbados enjoys the highest rate of repeat visitors almost 70% of GDP and 75% of overseas currency anywhere in the world. Tourism constitutes earnings with most visitors coming from North approximately 14% of the economy directly and 40% America. There are plans to build a new cruise ship indirectly and employs 25% of the total workforce. terminal area to boost cruise ship arrivals which have The longer term commitment of the Government to fallen below 1.8 million from a high of over 2 million spending on infrastructure development includes the some years ago. expansion of the Grantley Adams international airport terminal, improvements to the road system, housing Cuba projects, water supply and health centres. Barbados As the largest of the islands with a population also benefits as a low tax jurisdiction and is home to of some 11 million Cuba is already a major tourist 3,800 international businesses. destination with increases in tourist numbers of almost 10% year on year since 2007. The gradual and Bruce Shaw have had an office planned continued relaxation of the restrictions on in Barbados for 15 years. US tourists will have an enormous impact on the economy as the Government there also relaxes the restrictions of the last fifty years on both indigenous A relatively slow recovery is evident with a number and international private enterprise. There has already of hotels still at the early design stage on the South been considerable Spanish, Chinese, Canadian and Coast. A number of commercial projects in the Qatari inward investment in tourism projects. The Warrens area are also in prospect with one or two Tourism Ministry has announced a two-year plan to Government projects nearing completion. Bruce build 30 hotels with a total of 10,000 new rooms by Shaw have had an office in Barbados for 15 years and means of joint ventures with companies from Spain have been involved in a number of hotel and luxury and China. The Government has also been providing residence developments in Barbados, Antigua and guarantees and greater security for foreign investors some of the neighbouring islands. by allowing state-owned lands to be developed as golf resorts, hotels and marinas based on 99year Bermuda lease arrangements. The Qatari Diar Real Estate Bermudan residents enjoy the highest average per Company commenced the construction of the capita income in the world at US$70,000 GDP per 200-bed 5-star hotel at Cayo Largo del Sur as a joint person. The economy is primarily structured around venture with the Communist Government which is
BRUCE SHAW HANDBOOK 2012 71 CARIBBEAN
currently a mandatory requirement which is likely Dominican Republic to be relaxed. The Dominican Republic has a population of 10 million with a GDP of US$55 billion, the third largest It is estimated that 85% of the workforce in the in the Caribbean. Despite the global downturn the construction industry are from overseas, mainly from Dominican Republic saw a US$10 billion investment Haiti and the Dominican Republic. The lack of in the tourism sector in 2008 alone and has seen investment in construction over the years has left Cuba tourism numbers increase to almost 4.50 million with a serious shortage of skilled construction labour per year from 4.30 million in 2008. Additional and management expertise which promises significant government spending on infrastructure and water opportunities for overseas construction firms. supply projects is aimed at maintaining repeat visitor numbers. Much of the low cost labour supporting Curacao this steady growth in construction has been from Curacao lies just 40 miles off the coast of Venezuela Haiti on the other side of the island although stated and with the fine natural deep water port of Government policy has been to try and correct this Willemstad the main industries include oil refining, situation to reduce local unemployment. tourism and financial services. It commands one of the highest living standards in the Caribbean and has Haiti a well developed infrastructure. The legacy of the 7.0 magnitude earthquake in January 2010 that killed roughly 300,000 people and Construction costs in Curacao are devastated a huge proportion of the homes, buildings considerably lower than on most and infrastructure of the capital Port au Prince remain of the other Caribbean islands. but there are some hopeful signs two years on. The election of new president Michael Martelly with two-thirds of the vote appears to have stabilised the While not dependent on tourism it is a popular fragile country with its high crime levels on the wane. destination for Dutch tourists and redeveloped its Reinforcing national consensus and promising to airport near Willemstad in 2003 to accommodate speed up the decision-making processes Martelly is increased tourist numbers. There are plans to further working with the international relief agencies and expand the airport to accommodate greater visitor donors to ensure the resources needed to rebuild the numbers. From 2014 it is planned to run suborbital country are well directed. space tourism flights using the Lynx rocketplane The reconstruction of existing combined with the and to launch scientific research missions from construction of new housing projects, schools and a new spaceport. new teaching hospitals are welcome developments Construction costs in Curacao are considerably along with more recent signs of much needed inward lower than on most of the other Caribbean islands. investment in other areas.
Marriott Hotel, Port au Prince
72 BRUCE SHAW HANDBOOK 2012 SECTION 7 CARIBBEAN
7 CARIBBEAN
The construction of the E-power 30-megawatt developments in Jamaican history and will provide up power plant in Port au Prince, mineral exploration, to 2,000 much needed jobs during the construction expansion of the existing manufacturing facilities phase. Following on the completion of the first phase such as Grupo M who currently employ 6,500 Haitian of the new cruise ship terminal in Falmouth early in workers at the Codevi industrial park are some of the 2011 these projects have provided a much needed recent positive developments. boost for the Jamaican construction industry. A new Marriott hotel and a Sandels City hotel are planned Two new hotels are planned for the Petion-Ville to start construction in 2012. Against that positive suburb of Port au Prince with a 105-room Best background expensive concrete and expensive raw Western planned to open later this year. The materials imports and high domestic interest rates announcement of a 173-bed Marriott to open in 2014 have further weakened demand in the housing and was made by former US president Bill Clinton and residential sector. Marriott International president Arne Sorenson said “This hotel is one more signal that Haiti is open for Jamaica’s Urban Development Corporation have business”. been promoting urban regeneration for the Kingston Downtown area and Digicel Jamaica, the mobile The Iron Market was destroyed in the earthquake and phone operator, completed the refurbishment of the rebuilt and restored within 12 months owing to the Coronation market in 2010 and work started on its commitment and generosity of Denis O’Brien. It is new HQ building which is due for completion in mid Bruce Shaw are proud to have assisted 2012. Increases in GCT(VAT) and import duties will in this rebuilding work. increase the cost of construction for investors unless exemptions can be negotiated. once again a bustling centre of local commercial Puerto Rico activity and has been nominated for a Design Award Puerto Rico with a population of 4 million has the of the Year award by the Design Museum. Bruce largest and most dynamic and diversified economy in Shaw are proud to have assisted in this rebuilding the region. It accounts for approximately 30% of the work and look forward to working on the extension region’s GDP. With duty-free access to the US and planned for later this year. tax incentives Puerto Rico has enjoyed inward investment from the US over the last 50 years but Jamaica being linked so closely to the US economy it has seen A new joint venture between the Japanese Marubeni GNP reduce by 2% in 2008, a further 3% in 2009, 2% Corporation, Korea East West Power Company and in 2010 and results for 2011 are likely to show a the Jamaican Public Service Company to develop a levelling off. 480 megawatt power plant in St. Catherine starting shortly, for completion of Phase 1 in 2014 and Phase Major recent projects include the expansion of the 2 in 2016 is one of the largest private sector Luis International airport, the Puerto Rico Convention
BRUCE SHAW HANDBOOK 2012 73 CARIBBEAN
Construction Costs
Centre and the Pan American Port Terminal. There Construction costs in the Caribbean generally are not are also a number of new hotels planned. as low or competitive as might initially be expected by new overseas investors. The strength of some of St. Lucia the labour unions have ensured that labour costs St. Lucia has continued to attract foreign business often remain relatively high despite the recent fall in and investment in its offshore banking and tourism overall demand. Most of the islands import virtually industries. In contrast to many of its neighbours all of their construction materials as small individual visitor numbers increased by over 11% in 2010 with markets cannot support cement, steel or other more than 700,000 arrivals annually increasing closer manufacturing industries. Deforestation in the past to 800,000 in recent years. Tourism is the main to make way for agricultural production also means source of foreign exchange. that timber has to be imported on many of the islands. Import duties and taxes on imports vary The construction industry remains more buoyant significantly from island to island but they are than many of its neighbours but delays in planned universally high by US or European standards. This and much needed road improvements are likely to contributes to construction costs being comparable hold back development. or higher than costs in the nearest US states of Florida and Texas. Exemptions from import duties and local Trinidad & Tobago taxes are very often central to feasibility for Trinidad & Tobago has earned a reputation as an commercial projects. excellent location for investment for international businesses and has enjoyed one of the highest Costs appear to have stabilised during growth rates and per capita income in the region 2011 and are likely to remain stable for including Latin America. This has largely been driven the next few years. by investment in liquefied natural gas, petrochemicals and the steel industry. It is the Caribbean’s largest A period of significant and sustained growth up to producer of oil and gas which make up 40% of GDP 2008 saw substantial increases in construction costs and up to 80% of exports. Not as dependent on followed by a relatively sharp decline from 2008 to tourism or agriculture as most of the other islands 2011. Costs appear to have stabilised during 2011 inward direct investment has continued to support and are likely to remain stable for the next few years. and expand capacity in the energy sector and GDP A natural rebalancing of the market has taken place to growth has continued through 2008 to 2011 at close a certain degree with reduced capacity in the industry to or just below 3%. It is anticipated that it will as many of the bigger international construction continue to outperform the majority of the Caribbean firms withdrew from the Caribbean market with the due to its natural resources. downturn. We expect to see a number of these Continuing the ongoing process of industrialisation overseas contractors and specialist subcontractors the Government is promoting a US$1.40 billion return to the Caribbean and this should bring integrated polypropylene complex to come on increased competition on larger projects. stream in 2012 and another alumina plant for 2013.
Turks & Caicos Islands The economy is based around tourism, offshore financial services, fishing and seafood exports. With its small population of 46,000 the construction industry has traditionally been focussed on high end housing, hotel and tourism related projects.
There are two hospital projects proposed, one on Providentiales and one on Grand Turk with a combined value of approximately US$125m although these have been slow to start. The Governor recently announced plans to award contracts to local construction firms to rebuild specific buildings in Grand Turk using funds from the UK for Hurricane Disaster Recovery arising from the double impact of Tropical Storm Hanna and Hurricane Ike.
74 BRUCE SHAW HANDBOOK 2012 SECTION 7 CARIBBEAN
7 Average Cost Range US$/Sq.m Source: Bruce Shaw
Cayman Dominican CARIBBEAN Barbados Bermuda Islands Cuba Republic Haiti
Regional Index 1 0.94 0.94 0.75 0.90 0.75
Hotels 5 Star, Urban 3,195-4,000 3,000-3,750 3,000-3,750 2,390-2,995 2,870-3,590 2,390-2,995
Hotels 5 Star, Low Rise Resort 3,465-3,950 3,260-4,075 3,260-4,075 2,595-3,240 3,115-3,890 2,595-3,240
Hotel, 3 Star, Urban 2,130-2,575 2,000-2,500 2,000-2,500 1,580-1,970 1,895-2,370 1,580-1,970
Hotel, 3 Star, Low Rise Resort 2,350-2,940 1,740-2,175 1,740-2,175 1,765-2,310 2,125-2,660 1,765-2,310
High End Residential Apartments 3,415-4,260 3,215-4,000 3,215-4,000 2,575-3,220 3,070-3,835 2,575-3,220
Standard Apartments 2,550-3,190 2,415-3,020 2,415-3,020 1,930-2,415 2,300-2,875 1,930-2,415
Low Cost Housing 1,980-2,475 1,870-2,330 1,870-2,330 1,485-1,865 1,780-2,230 1,485-1,865
Low Rise Offices Shell & Core 1,865-2,330 1,760-2,100 1,760-2,100 1,400 -1,750 1,675-2,100 1,400 -1,750 (3 storey)
Low Rise Offices Fitted-Out 2,395-3,000 2,250-2,815 2,250-2,815 1,800-2,250 2,160-2,690 1,800-2,250 (3 storey)
Medium Rise Offices Shell 2,080-2,600 1,955-2,445 1,955-2,445 1,560-1,950 1,870-2,335 1,560-1,950 & Core(4-8 storey)
Medium Rise Offices Fitted-Out 2,625-3,270 2,465-3,069 2,465-3,069 1,965-2,460 2,360-2,950 1,965-2,460 (4-8 storey)
High Rise Offices Shell & Core 2,275 -2,850 2,145-2,675 2,145-2,675 1,705-2,135 2,050-2,560 1,705-2,135 (8-12 storey)
High Rise Offices Fitted-Out (8-12 2,890-3,615 2,715-3,395 2,715-3,395 2,170-2,710 2,600-3,250 2,170-2,710 storey)
High Rise Headquarter Offices 3,170-3,960 2,970-3,710 2,970-3,710 2,375-2,970 2,850-3,565 2,375-2,970
Trinidad Turks Jamaica Puerto Rico St. Lucia & Tobago & Caicos
Regional Index 0.90 0.90 0.90 0.74 1.15
Hotels 5 Star, Urban 2,870-3,590 2,870-3,590 2,870-3,590 2,365-2,955 3,655-4,595
Hotels 5 Star, Low Rise Resort 3,115-3,890 3,115-3,890 3,115-3,890 2,570-3,205 3,985-4,980
Hotel, 3 Star, Urban 1,895-2,370 1,895-2,370 1,895-2,370 1,565-1,955 2,445-3,060
Hotel, 3 Star, Low Rise Resort 2,125-2,660 2,125-2,660 2,125-2,660 1,750-2,185 2,700-3,365
High End Residential Apartments 3,070-3,835 3,070-3,835 3,070-3,835 2,530-3,160 3,925-4,900
Standard Apartments 2,300-2,875 2,300-2,875 2,300-2,875 1,900-2,371 2,945-3,680
Low Cost Housing 1,780-2,230 1,780-2,230 1,780-2,230 1,465-1,830 2,275-2,845
Low Rise Offices Shell & Core 1,675-2,100 1,675-2,100 1,675-2,100 1,380-1,725 2,145-2,680 (3 storey)
Low Rise Offices Fitted-Out 2,160-2,690 2,160-2,690 2,160-2,690 1,770-2,215 2,750-3,445 (3 storey)
Medium Rise Offices Shell 1,870-2,335 1,870-2,335 1,870-2,335 1,540-1,925 2,390-2,985 & Core(4-8 storey)
Medium Rise Offices Fitted-Out 2,360-2,950 2,360-2,950 2,360-2,950 1,940-2,425 3,015-3,765 (4-8 storey)
High Rise Offices Shell & Core 2,050-2,560 2,050-2,560 2,050-2,560 1,685-2,100 2,620-3,270 (8-12 storey)
High Rise Offices Fitted-Out (8-12 2,600-3,250 2,600-3,250 2,600-3,250 2,140-2,675 3,315-4,150 storey)
High Rise Headquarter Offices 2,850-3,565 2,850-3,565 2,850-3,565 2,340-2,930 3,640-4,550
Notes: i All subject to site specifics, design and specification ii All exclude Land Acquisition Costs, External Works Costs & Professional Fees iii Regional variances across the country and from sector to sector
BRUCE SHAW HANDBOOK 2012 75 76 BRUCE SHAW HANDBOOK 2012 INDIA 8
BRUCE SHAW HANDBOOK 2012 77 INDIA
India Market Review
With a population of just over 1.2billion, India is growth of 9% and average inflation of 4%. However, the world’s largest democracy. In the past decade, different officials have revised their expectations for the country has witnessed accelerated economic growth downwards, and for inflation upwards since growth and emerged as a global player with the then. The Chairman of the Prime Minister’s Economic world’s fourth largest economy in purchasing Advisory Council expects growth to measure 8.2% in power parity terms. This growth has been placing FY2011-12, while inflation would drop to around 6.5% huge demands on power supply, roads, railways, by end March 2012. The National Council of Applied ports, transportation systems and water supply Economic Research’s Quarterly Review of the and sanitation. Bottlenecks in both urban and rural Economy July 2011 pegs growth at 8.3% and inflation infrastructure have been eroding the country’s at 7.9% average for FY 2011-12. competitiveness. Construction accounts for nearly 65% of the total Investment in construction accounts investment in infrastructure and is expected to be for nearly 11% of India’s GDP. the biggest beneficiary of the surge in infrastructure investment over the next five years. Investment in The Government of India has increased infrastructure construction accounts for nearly 11% of India’s investments under the Eleventh Five Year Plan. With GDP. €240 billion is likely to be invested in the India’s low taxation base – only some 15–16% of infrastructure sector over the next five to 10 years – GDP is collected as taxes in India compared to in power, roads, bridges, city infrastructure, ports, 25-40% in developed countries, the Government airports, telecommunications, which would provide based its 2011-2012 budget on projections of GDP a huge boost to the construction industry as a whole.
Average Construction Costs Source: Bruce Shaw Cost Range INR From To Unit Commercial Offices City Centre Air Conditioned Shell and Core (Low-Medium Rise) 27,000 30,000 per sq.m Residential Developer Standard Apartments (medium standard) 15,000 18,000 per sq.m Leisure Hotel Building (4/5 Star) 75,000 90,000 per sq.m Retail Shopping Centre 30,000 35,000 per sq.m Healthcare Hospital 35,000 40,000 per sq.m Warehouses Without Offices 10,000 15,000 per sq.m
Notes: i All subject to site specifics, design and specification iii Regional variances across the country and from sector to sector ii All exclude Land Acquisition Costs, External Works Costs & Professional Fees
78 BRUCE SHAW HANDBOOK 2012 SECTION 8 INDIA
8 Construction Cost Indices Buildings 2007=100 Development Council (CIDC) Source: Construction Industry
2008 2009 2010 2011* INDIA Delhi 110.01 113.98 119.29 123.20 Mumbai 110.47 113.21 119.13 122.43 Chennai 110.49 113.46 119.92 123.97 Bangalore 106.99 109.32 117.85 123.63 Kolkata 109.42 112.12 118.63 122.69 Hyderabad 108.44 111.78 118.27 122.73
*2011 November Indices
Top Infrastructure Companies in India
LARSEN & TOUBRO ERA INFRA ENGINEERING LTD PUNJ LLOYD RELIANCE INFRASTRUCTURE JAIPRAKASH ASSOCIATES LTD IRCON LANCO INFRATECH LTD PATEL ENGINEERING NAGARJUNA CONSTRUCTION COMPANY SOMA ENTERPRISES IVRCL INFRASTRUCTURE & PROJECTS LTD J KUMAR INFRA PROJECTS SIMPLEX INFRASTRUCTURES LTD GVK LTD GMR LTD IRB INFRASTRUCTURE DEVELOPERS LTD GAMMON INDIA AHLUWALIA CONTRACTS INDIA LTD HCC SPML INFRA LTD
Exchange Rates US Dollar v Rupee 2006-2012
54 Source: www.xe.com 53 52 51 50 49 48 47 46 45 44 43 42 41 40 39 Jul- 11 Jul- 10 Jul- 07 11 Apr- Jul- 09 Jul- 06 Jul- 08 Jan- 11 10 Apr- Oct- 11 07 Apr- Jan- 12 Jan- 10 09 Apr- 06 Apr- 08 Apr- Jan- 07 Oct- 10 Jan- 09 Jan- 06 Oct- 07 Jan- 08 Oct- 09 Oct- 06 Oct- 08
BRUCE SHAW HANDBOOK 2012 79 80 BRUCE SHAW HANDBOOK 2012 AUSTRALIA & NEW ZEALAND 9
BRUCE SHAW HANDBOOK 2012 81 AUSTRALIA & NEW ZEALAND
The outlook for the construction industry appears positive with expected year on year increases in 2012 and 2013.
The outlook for the construction industry appears positive with expected year on year increases in 2012 and 2013 Source: Australian Bureau of Statistics Source: Australian Bureau of Statistics SECTION 9 AUSTRALIA & NEW ZEALAND
Australia Market Review
The Australian economy continues to grow aftermath of the global financial crisis are nearly all 9 although it did suffer from set backs in early 2011 exhausted. The extent of this stimulus was the third due to some natural disasters. The continued highest amongst OECD countries and the delta in growth has been driven by a number of factors reduced government spending is expected to be AUSTRALIA & NEW ZEALAND including strong investment and exports stemming taken up by the private sector. from the continued mining boom. In addition, The introduction of the new Federal Government’s unemployment and inflation have been maintained carbon tax has resulted in great speculation in the over the last year and remain relatively low at circa construction market. The carbon tax is scheduled 5% and 3% respectively. to be introduced on the 1st July 2012 and for the While the Australian economy remains in a strong first three years will be at a fixed rate of $23/tonne. position, the International Monetary Fund has noted The effect of this new tax is difficult to calculate at some risks which could adversely affect the current this juncture but is expected to filter through the economic position. These potential risks include entire supply chain. global recovery stagnation, Asian growth stumbles The Australian dollar has continued to perform at including the impacting demand for commodities record levels against the US dollar. The strong dollar and also the potential risk emanating from fiscal has allowed for more competitive imports however restraints in the US and the Euro areas. it may be problematic for many exporters as they The Australian construction industry which is an become less competitive. integral part of the overall economy is expected The outlook for the construction industry appears to grow further by circa 5-7% over the next year. positive with expected year on year increases in While the building sector remains relatively 2012 and 2013 in the engineering/infrastructure stagnant, the engineering sector is predicted sector however a more subdued increase is to support this increase. expected for the residential and non-residential The government spending introduced through the sectors. This will be reflected in a continued highly recent stimulus packages (2008) in response to the competitive tender market.
Australian Key Statistics 2009-2011 Source: www.abs.gov.au Units 2009 2010 2011
GDP, current prices U.S. $ Billions 987.1 1238 1507.4 GDP per capita, current prices U.S. $ Units 44,602 55,150 66,984 Inflation, average consumer prices Annual % change 2.1 3 3.1 Population Persons, Millions 22165.5 22541 22817 Current account balance U.S. $ Billions -42.03 -33.02 -32.80 (e)
BRUCE SHAW HANDBOOK 2012 83 AUSTRALIA & NEW ZEALAND
Value of Construction Output (AUD $); Australia
Sector 2008-09 2009-10 2010-11 AUD $m AUD $m AUD $m Source: Australian Bureau of Statistics Building Work Residential Private Sector 44,146 43,854 44,447 Public Sector 894 2,221 2,733 45,040 46,075 47,180
Non-Residential Building Private Sector 25,175 20,677 19,657 Public Sector 7,340 14,225 0 32,515 34,902 34,154
Total Building 77,555 80,977 81,334
Engineering Work Engineering Private Sector 47,149 46,324 54,618 Public Sector 27,426 29,669 29,987 74,575 75,993 84,605
Total Construction 152,130 156,970 165,939
Building Cost Index by Capital City
350 Source: Australian Institute of Quantity Surveyors
300
250
200
150
100 Jul- 11 Jul- 10 Jul- 07 11 Apr- Jul- 05 Jul- 09 Jul- 06 Jul- 08 Jan- 11 10 Apr- Oct- 11 07 Apr- 05 Apr- Jan- 10 09 Apr- 06 Apr- 08 Apr- Jan- 07 Oct- 10 Jan- 05 Jan- 09 Jan- 06 Oct- 07 Jan- 08 Oct- 05 Oct- 09 Oct- 06 Oct- 08 12(f) Apr- Jan- 12(f)
Canberra Brisbane Adelaide Perth AWA Sydney Melbourne
84 BRUCE SHAW HANDBOOK 2012 SECTION 9 AUSTRALIA & NEW ZEALAND
9 Building Cost Index and Consumer Price Index Comparison (June 2011)
230 Source: Australian Institute of Quantity Surveyors AUSTRALIA & NEW ZEALAND
220
210
200
190
180
170
160
150 11 Apr- 10 Apr- 07 Apr- 05 Apr- 09 Apr- 06 Apr- 08 Apr- Aug- 10 10 Dec- Aug- 07 07 Dec- Aug- 05 05 Dec- Aug- 09 Aug- 06 Aug- 08 09 Dec- 06 Dec- 08 Dec- AIQS BCI CPI
Dwelling Unit Commencements Bureau of Statistics Source: Australian Year New Houses New Other Total Residential Buildings Dwelling Units 2008-2009 91,953 38,668 130,621 2009-2010 112,177 52,623 164,800 2010-2011 97,116 59,296 156,412
Average Construction Costs 2012: Australia Sources;DCWC Pty Ltd / Bruce Shaw Cost Range AUD$ From To Unit Commercial Offices City Centre Air Conditioned Shell and Core (Low-Medium Rise) 1,850 2,350 per sq.m Developer Standard (Low-Medium Rise) 2,100 2,600 per sq.m Shell and Core (Medium-High Rise) 2,450 3,000 per sq.m Developer Standard (Medium-High Rise) 3,100 3,950 per sq.m
Residential Developer Standard Apartments (medium standard) 1,950 2,450 per sq.m Developer Standard Apartments (high standard) 2,600 3,500 per sq.m
Leisure Hotel Building (Budget/3 Star) 2,750 3,350 per sq.m Hotel Building (4/5 Star) 4,150 4,950 per sq.m
Education Primary Level (up to 3 stories, no Air Conditioning) 1,450 1,850 per sq.m
Car Park Surface 2,800 3,100 per Space Multi Storey 22,500 27,000 per Space Double Level Basement 27,000 48,000 per Space
Notes: i All subject to site specifics, design and specification iii The above costs are for projects based in Sydney. Regional cost variances occur for projects in Adelaide, Brisbane, Canberra, ii All exclude Land Acquisition Costs, External Works Costs & Melbourne, Hobart & Perth Professional Fees iv Regional variances across the states can vary from -9% to +15%
BRUCE SHAW HANDBOOK 2012 85 AUSTRALIA & NEW ZEALAND
List of Tier 1 Main / Building Contractors: Australia
AW EDWARDS JOHN HOLLAND PTY LTD BAULDERSTONE HORNIBROOK PTY LTD LAING O’ROURKE AUSTRALIA BOVIS LEND LEASE PTY LTD CONSTRUCTION PTY LTD BROOKFIELD MULTIPLEX PTY LTD LEIGHTON CONTRACTORS PTY LTD GROCON PTY LTD ST HILLIERS PTY LTD HANSEN YUNCKEN PTY LTD WATPAC LIMITED HUTCHINSON BUILDERS PTY LTD THIESS PTY LTD
Australian (AUD $) Currency Exchange Rates
1.1 Source: European Central Bank
1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0 Jul- 11 Jul- 10 Jul- 07 Jul- 09 Jul- 08 Jan- 11 Oct- 11 Jan-12 Jan- 10 11 Apr- Jan- 07 Jul- 06 Jan- 09 Jan- 08 10 Apr- 07 Apr- 06 Apr- 09 Apr- 08 Apr- Oct- 10 Jan- 06 Oct- 07 Oct- 06 Oct- 09 Oct- 08 AUD$/USD$ AUD$/EUR€
86 BRUCE SHAW HANDBOOK 2012 SECTION 9 AUSTRALIA & NEW ZEALAND
New Zealand Market Review
New Zealand like many other countries is still financial crisis. The tender market across all regions 9 recovering from the global financial crisis. Overall of New Zealand and throughout each construction business confidence remains low across the sector remains highly competitive and is expected majority of industry sectors which in turn is to continue in a similar vein throughout 2012. AUSTRALIA & NEW ZEALAND hampering the construction industry. The negative The number of resource consents is expected to effects from the global financial crisis have been fall in 2012 however the New Zealand government further exacerbated with the recent natural disasters has indicated the resource consent process requires in the Canterbury Region, the full effect of these an overhaul and streamlining which is expected to disasters is yet to be fully realised. In addition, the encourage future development. New Zealand dollar although performing well against the United States dollar has struggled The tender market across all against the Australian Dollar and recorded a decade regions of New Zealand remains low position in late 2010. The weak currency highly competitive. position against its Trans Tasman neighbour has had an obvious effect on Australian trade, New Zealand’s largest export/import market. The construction outlook for 2012 is expected to be in line with the previous year with continued The construction market like the rest of the greater low growth however the true effect of the natural economy is still recovering from a peak in disaster and subsequent aftershocks may affect 2007/2008 in line with the effects of the global this outlook.
New Zealand Key Statistics 2009-2011 Source: www.stats.govt.nz Units 2009 2010 2011
GDP, current prices U.S. $ Billions 146.13 147.78 154.97 GDP per capita, current prices U.S. $ Units 25,389 26,287 26,725 Inflation, average consumer prices Annual % change 2 4 1.8 Population Persons, Millions 4,346,700 4,396,620 4,436,741 Current account balance U.S. $ Billions -11.3 -3.69 -3.772
Note: Average exchange rate for 2011 used to convert from NZ$ to US$
Value of Construction Output: New Zealand NZ$m 2006-2011
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
2006 2007 2008 2009 2010 2011 Residential Buildings Non-Residential Buildings
BRUCE SHAW HANDBOOK 2012 87 AUSTRALIA & NEW ZEALAND
Numbers Employed in Construction (000’s) 2008-2011
186 Source: www.stats.govt.nz
184
182
180
178
176
174
172
170
168
2008 2009 2010 2011
Dwelling Unit Commencements Source: www.stats.govt.nz Year Apartments Houses Total 2006 3,850 22,664 26,514 2007 2,368 23,366 25,734 2008 2,386 16,682 19,068 2009 1,482 12,717 14,199 2010 947 15,014 15,961 2011 1,093 12,436 13,529
Average Construction Costs 2012: New Zealand Source: Bruce Shaw Cost Range NZ$ From To Unit Commercial Offices City Centre Air Conditioned Shell and Core (Low-Medium Rise) 1,700 1,900 per sq.m Developer Standard (Low-Medium Rise) 2,150 2,450 per sq.m Shell and Core (Medium-High Rise) 2,500 2,800 per sq.m Developer Standard (Medium-High Rise) 3,200 3,800 per sq.m
Residential Developer Standard Apartments (medium standard) 2,400 2,700 per sq.m Developer Standard Apartments (high standard) 2,800 3,300 per sq.m
Leisure Hotel Building (Budget/3 Star) 2,800 3,200 per sq.m Hotel Building (4/5 Star) 4,900 5,300 per sq.m
Education Primary Level (up to 3 stories, no Air Conditioning) 1,800 2,200 per sq.m
Car Park Surface 3,500 5,700 per Space Multi Storey 24,000 26,500 per Space Double Level Basement 31,500 33,250 per Space
i All subject to site specifics, design and specification iii The above costs are for projects based in Auckland. Regional cost variances occur for projects in Waikato / Bay of Plenty, ii All exclude Land Acquisition Costs, External Works Costs & Wellington, Remainder of North Island, Canterbury & Remainder Professional Fees of South Island
; New Zealand
88 BRUCE SHAW HANDBOOK 2012 SECTION 9 AUSTRALIA & NEW ZEALAND
9 List of Tier 1 Main / Building Contractors: New Zealand
FLETCHERS HAWKINS AUSTRALIA & NEW ZEALAND MAINZEAL BROOKEFIELD MULTIPLEX
NDZ$ Exchange Rates 2006-2012: New Zeland
1.0 Source: European Central Bank
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0 Jul- 11 Jul- 10 Jul- 07 Jul- 09 Jul- 08 Jan- 11 Oct- 11 Jan-12 Jan- 10 11 Apr- Jan- 07 Jul- 06 Jan- 09 Jan- 08 10 Apr- 07 Apr- 06 Apr- 09 Apr- 08 Apr- Oct- 10 Jan- 06 Oct- 07 Oct- 06 Oct- 09 Oct- 08 NZD$/AUD$ NZD$/USD$ NZD$/EUR€
BRUCE SHAW HANDBOOK 2012 89 90 BRUCE SHAW HANDBOOK 2012 SOUTH EAST ASIA 10
BRUCE SHAW HANDBOOK 2012 91 SOUTH EAST ASIA
Investing in construction in unfamiliar territories is a daunting prospect. SECTION 10 SOUTH EAST ASIA
South East Asia Market Review
South East Asia is sometimes hard to define. In the 10 context of this commentary, it is taken as countries bordering the South China Sea, particularly
Singapore, Vietnam, Malaysia, and Indonesia. SOUTH EAST ASIA Although these countries are quite different politically and economically, they share a unique blend of low labour costs, freedom of trade, and natural resources, sitting across a gateway between East and West.
Other than Singapore, these are developing countries but all rely quite heavily on exports of goods and services to the West, particularly the Eurozone and North America.
Whilst the latter has seen some growth in the past Investing in construction in unfamiliar territories twelve months, this has not been reflected in the is a daunting prospect. A very informative schedule Eurozone where the sovereign debt crisis has of information on how difficult it is to carry out restrained all but Germany and France. The effect business across the world is published by World of this market contraction has (with the exception Bank Group, and the following extract gives of Indonesia) seen a slow-down in GDP growth food for thought: (UK & USA included for across the region: the global downturn has comparative purposes) dampened growth.
Carrying out Business Thoughout the World Source: World Bank Group Dealing with Ease of Starting Construction Registering Enforcing Resolving Economy Doing Business a Business Permits Property Contracts Insolvency Singapore 1 4 3 14 12 2 USA 4 13 17 16 7 15 UK 7 19 22 68 21 6 Malaysia 18 50 113 59 31 47 Vietnam 98 103 67 47 30 142 Indonesia 129 155 71 99 156 146
BRUCE SHAW HANDBOOK 2012 93 SOUTH EAST ASIA
Singapore Market Review
Singapore has a very free economy, second only SG$28bn, with a further increase in 2011 to to Hong Kong in global stakes, but the economy SG$32bn, boosted by government contracts, is closely controlled by the governing Republic, particularly for infrastructure. Current forecasts balancing global downturn with local initiatives of for 2012 indicate a steep decline to between public spending. Full year GDP growth in 2011 was SG$21bn and SG$27bn. approximately 5%, whilst the forecast for 2012 is Because of the freedom of doing business, much more modest at 2-3%. financial integrity and lack of corruption, Singapore With a population of 5.18m, Singapore commands continues to not only attract inward investment, high GDP (SG$303.7bn in 2010) with manufacturing but also to act as a springboard for businesses the highest sector, delivery 22%, and construction wishing to invest in other South East Asian a more modest 4.5%. The value of construction countries, and there are government incentives output (at a peak in 2008), recovered in 2010 due to do so. This will help smooth out the decline in mainly to private sector investment in hotels/ growth, and perhaps offer a safer way of investing casinos, and strong residential growth to a total of off-shore.
Value of Construction Output: Singapore SG$bn Source: Department of Statistics Singapore
Public Sector Private Sector
94 BRUCE SHAW HANDBOOK 2012 SECTION 10 SOUTH EAST ASIA
10 Average Construction Costs: Singapore Key Rates Current at January 2012 Source: Barton Bruce Shaw Cost Range SGD$ SOUTH EAST ASIA From To Unit Commercial Offices City Centre Air Conditioned Shell and Core (Low-Medium Rise) n/a n/a per sq.m Developer Standard (Low-Medium Rise) 2,500 2,750 per sq.m Shell and Core (Medium-High Rise) n/a n/a per sq.m Developer Standard (Medium- 2,900 3,150 per sq.m High Rise) Residential Developer Standard Apartments 1,950 2,150 per sq.m (medium standard) Developer Standard Apartments 2,450 2,650 per sq.m (high standard) Leisure Hotel Building (Budget/3 Star) 2,850 3,250 per sq.m Hotel Building (4/5 Star) 4,200 5,100 per sq.m Education Primary Level (up to 3 stories, 1,500 1,850 per sq.m no Air conditioning) Car Park Surface n/a n/a per Space Multi Storey 26,000 31,500 per Space Double Level Basement n/a n/a per Space
Notes: i All subject to site specifics, design and specification ii All exclude Land Acquisition Costs, External Works Costs & Professional Fees
SGD $ Currency Exchange Rates Source: www.xe.com 0.85
0.80
0.75
0.70
0.65
0.60
0.55
0.50
0.45
0.40 Jan-11 Jan-12 Jan-10 Jan-07 Jan-06 Jan-09 Jan-08
SGD$/EUR€ SGD$/USD$
BRUCE SHAW HANDBOOK 2012 95 SOUTH EAST ASIA
Malaysia Market Review
Like Singapore, its ex-colonial neighbour to the 2012. The majority of construction opportunities South, Malaysia presents a more mature face to lie in East Malaysia, and the focus of tourism has led the investment and construction markets. With to a rise in opportunities for resort and marina a population of 26.6m and a GDP in excess of construction. US$220bn, exports of electronics, textiles, Its ‘ease of doing business’ ranking is 18 – ahead petroleum, palm oil, and tourism help to maintain a of Germany (19), France (29), and way ahead of robust construction market. Growth in construction Vietnam (98) and Indonesia (129). This is in spite fell from 5.1% in 2010 to 3.4% in 2011; but a figure of the difficulty in obtaining construction permits, up to 7% is forecast for 2012, driven by both large which can slow the pace of projects, whilst red tape infrastructure projects and housing construction. makes starting a business as an inward investment One concern here is the underlying rate of inflation, opportunity a challenge. set to rise from 3.2% in 2011 to 3.5% or more in
Malaysia GDP Growth Rate Percentage Change in Gross Domestic Product
Department of Statistics Malay Source: www.tradingeconomics.com
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
96 BRUCE SHAW HANDBOOK 2012 SECTION 10 SOUTH EAST ASIA
10 SOUTH EAST ASIA
Average Construction Costs: Malaysia Key Rates Current at January 2012 Source: Barton Bruce Shaw Cost Range US $
From To Unit Commercial Offices City Centre Air Conditioned Shell and Core (Low-Medium Rise) n/a n/a per sq.m Developer Standard (Low-Medium Rise) 850 950 per sq.m Shell and Core (Medium-High Rise) n/a n/a per sq.m Developer Standard (Medium- 1,100 1,200 per sq.m High Rise) Residential Developer Standard Apartments 400 500 per sq.m (medium standard) Developer Standard Apartments 600 750 per sq.m (high standard) Leisure Hotel Building (Budget/3 Star) 1,200 1,500 per sq.m Hotel Building (4/5 Star) 2,000 2,300 per sq.m Education Primary Level (up to 3 stories, 300 400 per sq.m no Air conditioning) Car Park Surface N/A N/A per sq.m Multi Storey 350 400 per sq.m Double Level Basement 500 550 per sq.m
Notes: i All subject to site specifics, design and specification ii All exclude Land Acquisition Costs, External Works Costs & Professional Fees
Malaysian Ringgits (MYR) Currency Exchange Rates
0.35 Source: www.xe.com
0.30
0.25
0.20
0.I5
0.10 Jan-11 Jan-12 Jan-10 Jan-07 Jan-06 Jan-09 Jan-08
MYR/EUR€ MYR/USD$
BRUCE SHAW HANDBOOK 2012 97 SOUTH EAST ASIA
Vietnam Market Review
Vietnam is regarded by many as a ‘late starter’ in For the past decade, GDP has grown at an the commercial world. This single party communist astonishing rate, and currently is second only to state has interesting demographics. Within a Singapore in growth rate. Growth is now forecast population of just over 90m, the average age is to slow, due to a combination of factors including 27.8 years, and the average per capita income is less higher commodity prices, devaluation of the than US$1,300 (2011 figures) compared with China Vietnamese Dong, and rising interest rates, to at US$4,250 and Singapore at US$62,100. Within between 6 and 6.3% in 2012 but with inflation two to three years the figure for per capita income levels reaching 8-10%. This slowdown in growth is set to at least double: this will only be achieved will be reflected in the construction industry, with if strict controls on trade and the flow of money Government intervention and investment in key are relaxed, and the ‘difficulty’ of doing business industries (including nuclear) softening the blow. is eased. Currently in the ‘ease of doing business’ Construction costs remain lower than other SE league table Vietnam ranks 98 (Singapore and Asian countries, mainly due to the low cost of Hong Kong fight for first place, China is at 91, employment, which counters the high cost of UK at Number 7). imported raw materials.
Vietnam GDP Growth Rate Percentage Change in Gross Domestic Product
General Statistics Office of Vietnam Source: www.tradingeconomics.com
2 2 2 2 2 2 2 2 2 2 2 2 2
Average Construction Costs: Vietnam Key Rates Current at January 2012 Source: Barton Bruce Shaw Cost Range US $
From To Unit Commercial Offices City Centre Air Conditioned Shell and Core (Low-Medium Rise) n/a n/a per sq.m Developer Standard (Low-Medium Rise) 730 760 per sq.m Shell and Core (Medium-High Rise n/a n/a per sq.m Developer Standard (Medium- 750 850 per sq.m High Rise) Residential Developer Standard Apartments 650 750 per sq.m (medium standard) Developer Standard Apartments (high 800 950 per sq.m standard) Leisure Hotel Building (Budget/3 Star) 1,500 1,800 per sq.m Hotel Building (4/5 Star) 1,850 2,050 per sq.m Education Primary Level (up to 3 stories, no Air 475 500 per sq.m conditioning) Car Park Surface n/a n/a per sq.m Multi Storey 400 450 per sq.m Double Level Basement 650 750 per sq.m
Notes: i All subject to site specifics, design and specification ii All exclude Land Acquisition Costs, External Works Costs & Professional Fees
98 BRUCE SHAW HANDBOOK 2012 SECTION 10 SOUTH EAST ASIA
10 SOUTH EAST ASIA
Vietnamese Dong Currency Exchange Rates
Source: www.xe.com Jan-11 Oct-11 Jan-10 Jan-07 Jan-06 Jan-09 Jan-08 EUR€/VND USD$/VND
BRUCE SHAW HANDBOOK 2012 99 SOUTH EAST ASIA
Indonesia Market Review
Indonesia is the largest country in this review of 2014. Inflation of between 4% and 6% in 2011 is South East Asia, comprising an extensive land mass expected to fall to 3.5% in 2012. The construction stretching from the Indian Ocean to Papua New industry contributed over 10% to the GDP in 2011, Guinea. This landmass is broken into five large areas, but better performance was hampered by plus numerous small islands. In area terms it is inflationary pressures on the price of basic raw roughly 75% of the size of India, supporting a materials, including cement, aggregates population of 239m. The majority of the population reinforcement, and structural steel. Indonesia live in the capital (Jakarta), and commercial centres does not score well in the ‘ease of doing business’ are located on the island of Java. league table, at 129. Notwithstanding this, growth is forecast to continue at a rate of 7.5% pa in 2012, Indonesia has the largest economy in South East attracting major inward investment, particularly Asia, and supports a GDP of US$706bn, which in in respect of large infrastructure projects the face of the same pressures as the other (power generation, railways, manufacturing economies in the area has grown by 6.5% in 2011, industries). and this pace of growth is forecast to continue until
Average Construction Costs: Indonesia Key Rates Current at January 2012 Source: Barton Bruce Shaw Cost Range US $
From To Unit Commercial Offices City Centre Air Conditioned Shell and Core (Low-Medium Rise) n/a n/a per sq.m Developer Standard (Low-Medium Rise) n/a n/a per sq.m Shell and Core (Medium-High Rise) n/a n/a per sq.m Developer Standard (Medium- 750 1,000 per sq.m High Rise) Residential Developer Standard Apartments n/a n/a per sq.m (medium standard) Developer Standard Apartments 800 950 per sq.m (high standard) Leisure Hotel Building (Budget/3 Star) 800 1,000 per sq.m Hotel Building (4/5 Star) 1,000 1,200 per sq.m Education Primary Level (up to 3 stories, 250 300 per sq.m no Air conditioning) Car Park Surface n/a n/a per sq.m Multi Storey n/a n/a per sq.m Double Level Basement n/a n/a per sq.m
Notes: i All subject to site specifics, design and specification ii All exclude Land Acquisition Costs, External Works Costs & Professional Fees
100 BRUCE SHAW HANDBOOK 2012 SECTION 10 SOUTH EAST ASIA
10 Indonesian Rupiah (IDR) Currency Exchange Rates Source: www.xe.com SOUTH EAST ASIA
Jan-11 Oct-11 Jan-10 Jan-07 Jan-06 Jan-09 Jan-08
EUR€/IDR USD$/IDR
BRUCE SHAW HANDBOOK 2012 101 102 BRUCE SHAW HANDBOOK 2012 CHINA 11
BRUCE SHAW HANDBOOK 2012 103 CHINA
China’s growth has been around 10% a year on average over the past two decades, making
Theit outlook the for world’sthe construction industry appears positive with expected year on year increases in 2012 and 2013 second largest economy, after the United States. SECTION 11 CHINA
China Market Review
The Peoples Republic of China (PRC) is the most Bruce Shaw has established itself 11 populous country in the world with more than 1.3 in the market in China in conjunction billion people located in East Asia, with the capital
with our local partner. CHINA in Beijing. China represents approximately 20% of the world’s population, nearly five times more than down from 33% growth in 2010. Many the United States, even though they both have commentators estimate that this may fall by approximately the same geographical area. a further 10% in 2012. In terms of floor area, Bruce Shaw has established itself in the market property construction starts increased 16% to in China in conjunction with our local partner, 1.9 billion square meters in 2011, a growth rate Shanghai First Surveying Co. Ltd. with offices in down sharply from 42% in 2010, according to Shanghai and Chengdu, providing full the National Bureau of Statistics. cost consultancy services to large multi-nationals Whilst China plans to start building seven million including Hewlett Packard and Diageo. public housing units in 2012, this is down from China’s growth has been around 10% a year on 2011’s ten million units, which is due in part to average over the past two decades, making it the the Governments measures to stabilise soaring world’s second largest economy, after the United prices including imposing credit restrictions and States. However, the economic constraints in the an increase in down payments and also as a result US and in particular the Eurozone, has caused of a reduction in investment by developers. a weakening of the export sector and GDP is Annual growth in property investment was 12.3% estimated to grow by 8.8% in 2012 compared in December 2011, which marked a sharp to 9.3% in 2011, according to the Bank of China. slowdown from November’s 20.2%, a worrying China’s investment in real estate development rose signal for a sector which represents some 13% 28% to 6.17 trillion Yuan ($977.67 billion) in 2011, of total economic output.
China GDP Annual Growth Rate 2007-2012
14% Source: National Bureau of Statistics
12%
10%
8%
6%
4%
2%
0% 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
The Gross Domestic Product (GDP) of China The country’s inflation rate has remained reached 47.2 trillion Yuan in 2011, 9.2% higher than persistently high for a long time, and reached 6.5% 2010 calculating at comparable prices, according in July 2011. The CPI downward trend in late 2011 to economic data issued by the National Bureau of came as a great relief, but the annual inflation rate Statistics of China. still reached a high level at 5.4% last year, exceeding the Chinese Government’s control target of 4%. In addition, China’s Consumer Price Index (CPI), a main gauge of inflation, rose 4.1% in December 2011 from the previous year, hitting a 15 month low.
BRUCE SHAW HANDBOOK 2012 105 CHINA
Total Government Investment in Trillion RMB 35 Source: National Bureau of Statistics
30
25
20
15
10
5
0
+BO%FD +BO'FC +BO.BS +BO"QS +BO.BZ +BO+VOF +BO+VMZ +BO"VH +BO4FQU +BO0DU +BO/PW +BO%FD
At the end of September 2011, the ministry’s One such solid indication is the Governments outstanding debt increased to 2.23 trillion Yuan with confirmation that they plan to invest 400 billion its asset-liability ratio standing at 59.6%, according Yuan in railway infrastructure construction in to official data released by the Government. 2012, with an estimated completion of over 6,000 kms of new railway. However, whilst Notwithstanding this debt the economy will be positive, this investment scale registered a slight largely dependent on the Governments willingness decline from the total expenditure of 469 billion to introduce a stimulus package to counteract the Yuan in 2011 and a marked decrease from over weak external demand and economic slowdown 700 billion Yuan in 2010. similar to the stimulus package introduced following the global recession in 2009. This is the first time for the Government to announce a clear goal for the future railway development which plays an important role in the country’s social and economic development.
Regional Building Cost Comparison –January 2012
Outlined below are indicative construction costs for the varying sectors based on tenders received in the regions. Source: Bruce Shaw / Shanghai First Surveying Co. Ltd Shanghai Beijing Hong Kong Ref. Description From To From To From To (US$) (US$) Index (US$) (US$) Index (US$) (US$) Index 1.0 Residential Sector 1.1 Medium Quality – High Rise $600 $850 100 $650 $900 107 $2,000 $2,400 303 1.2 High Quality – High Rise $900 $1,500 100 $950 $1,500 102 $2,200 $2,600 200 2.0 Commercial / Office Sector 2.1 Standard Specification – $850 $1,050 100 $850 $1,050 100 $2,000 $2,400 232 High Rise 2.2 High Specification – High Rise $1,100 $1,500 100 $900 $1,600 96 $2,400 $2,800 200 3.0 Hotel & Leisure / Retail Sector 3.1 Shopping Centre $900 $1,400 100 $1,000 $1,500 109 $2,000 $2,500 196 3.2 Budget/3* Hotel $900 $1,300 100 $1,000 $1,400 109 $2,400 $2,800 236 3.3 4/5* Hotel $1,900 $2,400 100 $2,000 $2,800 112 $3,000 $3,500 151
Notes: Above costs are indicative only based on return tenders received. They include allowances for profit and preliminaries, but exclude land acquisition and external works.
106 BRUCE SHAW HANDBOOK 2012 SECTION 11 CHINA
11 Regional Building Cost Comparison –January 2012 continued
Outlined below are indicative construction costs for the varying sectors based on tenders received in the regions. CHINA Source: Bruce Shaw / Shanghai First Surveying Co. Ltd Chengdu Guangzhou
Ref. Description From To From To (US$) (US$) Index (US$) (US$) Index 1.0 Residential Sector 1.1 Medium Quality – High Rise $350 $550 62 $500 $700 83 1.2 High Quality – High Rise $700 $1,050 73 $800 $1,100 79 2.0 Commercial / Office Sector 2.1 Standard Specification – High Rise $700 $850 82 $750 $950 89 2.2 High Specification – High Rise $900 $1,400 88 $950 $1,450 92 3.0 Hotel & Leisure / Retail Sector 3.1 Shopping Centre $600 $1,000 70 $700 $1,100 78 3.2 Budget/3* Hotel $700 $900 73 $800 $1,100 86 3.3 4/5* Hotel $1,500 $2,100 84 $1,600 $2,300 91
Notes: Above costs are indicative only based on return tenders received. They include allowances for profit and preliminaries, but exclude land acquisition and external works.
Shanghai Tender Price Index. Multistorey Residential Building (2006-2011)
Outlined below is the Tender Price Index for the Shanghai region based on tender returns. The base line index of 100 is taken as of Q1 2001, with a high of 123 in Q3 of 2008, with tender returns as of Q4 2011 down at an index of 118. 130 Source: Shanghai First Surveying Co. Ltd 127 124 121 118 115 112 109 106 103 100 97 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
Suzhou-Creek, Shanghai
BRUCE SHAW HANDBOOK 2012 107 CHINA
Top 20 Chinese Contractors Source: Engineering News Record Revenue Rank Firm $ bn
1 CHINA RAILWAY GROUP LTD. 71.66
2 CHINA RAILWAY CONSTRUCTION CORP. 71.02 3 CHINA STATE CONSTRUCTION ENGINEERING CORP. 48.89 4 CHINA COMMUNICATIONS CONSTRUCTION GROUP 39.64 5 CHINA METALLURGICAL GROUP CORP. 29.92 6 SHANGHAI CONSTRUCTION GROUP 13.01 7 DONGFANG ELECTRIC CORP. 6.68 8 SHANGHAI URBAN CONSTRUCTION (GROUP) CORP. 6.01 9 GUANGSHA CONSTRUCTION GROUP CO. 6.00 10 CHINA PETROLEUM ENGINEERING & CONSTRUCTION CORP. 4.97 11 CHINA NATIONAL MACHINERY INDUSTRY CORP. 4.82 12 ZHEJIANG CONSTRUCTION INVESTMENT GROUP CO. 4.69 13 HUNAN CONSTRUCTION ENGINEERING GROUP CORP. 4.10 14 CHENGDU CONSTRUCTION ENGINEERING CORP. GROUP 3.96 15 ZHONGTIAN CONSTRUCTION GROUP CO. 3.87 16 SICHUAN HUASHI GROUP CORP. 3.72 17 GUANGZHOU CONSTRUCTION ENGINEERING CORP. 3.63 18 YUNNAN CONSTRUCTION ENGINEERING GROUP CO. 3.52 19 SHAANXI CONSTRUCTION ENGINEERING GROUP CORP. 3.49 20 GUANGXI CONSTRUCTION ENGINEERING GROUP CO. 3.38
108 BRUCE SHAW HANDBOOK 2012 SECTION 11 CHINA
11 Top 20 Chinese Design Firms Source: Engineering News Record Revenue Rank Design Firm Name $ bn CHINA
1 HYDROCHINA CORPORATION 1.31 2 CHINA CHENGDA ENGINEERING CO. 0.99 3 CHINA POWER ENGINEERING CONSULTING GROUP CO. 0.89 4 CHINA RAILWAY ERYUAN ENGINEERING GROUP CO. 0.70 5 THE THIRD RAILWAY SURVEY AND DESIGN INSTITUTE GROUP CORPORATION 0.54 6 CHINA RAILWAY SIYUAN SURVEY AND DESIGN GROUP CO. LTD. 0.52 7 CHINA CONSTRUCTION ENGINEERING DESIGN GROUP CORPORATION 0.51 8 CHINA ARCHITECTURE DESIGN & RESEARCH GROUP 0.44 9 SHANGHAI XIAN DAI ARCHITECTURAL DESIGN (GROUP) CO. 0.38 10 CHINA HUANQIU CONTRACTING & ENGINEERING CORPORATION 0.34 11 CHINA PETROLEUM PIPELINE ENGINEERING CORPORATION 0.28 12 CHINA UNITED ENGINEERING CORPORATION 0.26 13 ARCHITECTURAL DESIGN & RESEARCH INSTITUTE OF TONGJI UNIVERSITY 0.25 14 HYDROCHINA CHENGDU ENGINEERING CORPORATION 0.25 15 CHINA NUCLEAR POWER DESIGN COMPANY (SHEN ZHEN) 0.24 16 EAST CHINA INVESTIGATION AND DESIGN INSTITUTE 0.20 17 CCCC HIGHWAY CONSULTANTS CO. 0.20 18 HYDROCHINA XIBEI ENGINEERING CORPORATION 0.20 19 SHANGHAI MUNICIPAL ENGINEERING DESIGN INSTITUTE (GROUP) CO. 0.19 20 CCCC FIRST HIGHWAY CONSULTANTS CO. 0.18
Chinese Yuan Renminbi (CNY) Currency Exchange Rates
0.16 Source: European Central Bank
0.15
0.14
0.13
0.12
0.11
0.10
0.09
0.08 Jul- 11 Jul- 10 Jul- 07 Jul- 09 Jul- 08 Jan- 11 Oct- 11 Jan-12 Jan- 10 11 Apr- Jan- 07 Jul- 06 Jan- 09 Jan- 08 10 Apr- 07 Apr- 06 Apr- 09 Apr- 08 Apr- Oct- 10 Jan- 06 Oct- 07 Oct- 06 Oct- 09 Oct- 08 CNY/EUR€ CNY/USD$
BRUCE SHAW HANDBOOK 2012 109 110 BRUCE SHAW HANDBOOK 2012 GHANA 12
BRUCE SHAW HANDBOOK 2012 111 GHANA
The Republic of Ghana is one of the fastest growing economies in the world.
The outlook for the construction industry appears positive with expected year on year increases in 2012 and 2013 Source: Australian Bureau of Statistics Source: Australian Bureau of Statistics SECTION 12 GHANA
Ghana Market Review
The Republic of Ghana with a population of 24 Construction is expected to represent 12 million and a land area of 238,535 square kilometres over 10% of GDP from 2012 onwards. is one of the fastest growing economies in the world.
There has been a significant growth in real GDP from GHANA Historically, the Construction Sector represented 4% 4% in 2009 to 8% in 2010 and it is expected that circa to 6% of GDP. With a 12% plus growth rate projected 14% real GDP growth will be achieved in 2011. for the sector, construction is expected to represent Inflation, which was previously high in Ghana, has over 10% of GDP from 2012 onwards. These growth stabilised with the Government’s 2011 target of 9% expectations are reflected in Ghana’s 2012 Budget likely to be achieved. which focuses on the provision of key infrastructure, particularly in the areas of: The Industry Sector will record the highest output growth due mainly to the recent commencement of Ŕ &MFDUSJDJUZ 0JMBOE(BT crude oil production. Growth in this sector is Ŕ 8BUFSBOE4BOJUBUJPO expected to exceed 30% in 2011. Other sectors, such Ŕ 3BJMXBZT 3PBET BOE1PSUT BOE as Services and Agriculture, are likely to achieve more Ŕ )FBMUI &EVDBUJPO BOE"HSJDVMUVSF modest growth rates.
Ghana Key Statistics Source: Ghana Statistical Service Unit 2008 2009 2010 GDP at current market prices Million Gh¢ 30,179 36,598 46,232 Million US$ 28,249 25,798 32,319
GDP per capita Gh¢ 1,318 1,563 1,930 US$ 1,234 1,102 1,349 GDP growth rate % 8.4 4.0 7.7 Inflation % 16.5 19.3 10.8 Exchange Rate (Gh¢/US$) Gh¢ per US$ 1.07 1.42 1.43 Current Account Balance Million US$ (5,496) (3,380) (2,962) Population Persons, Millions 22.9 23.4 24.0 Minimum Wage Gh¢ 2.3 2.7 3.1
GDP (US$ billion current prices)
70 Economic Outlook Database Source: International Monetary Fund, World
"DUVBM 'PSFDBTU 60
50
40
30
20
10
0
BRUCE SHAW HANDBOOK 2012 113 GHANA
Value of Construction Output (at constant 2006 prices) Source: Ghana Statistical Service Year Million Gh¢ Million US$ % of GDP 2006 1,016 1,104 6.20%
2007 1,252 1,332 7.20%
2008 1,739 1,625 8.00%
2009 1,902 1,339 6.20%
2010 1,949 1,373 5.90%
Construction Output Growth Rate Forecast (based on constant 2006 prices)
2011 2012 2013 2014 Construction Output Growth Rate 17% 14% 12% 12%
Source: Ghana Statistical Service & Ghana Ministry of Finance and Economic Planning (Sept 2011)
Average Construction Costs 2012: Ghana Key Rates Current at January 2012 Source: Bruce Shaw Cost Range Gh¢ From To Unit Commercial Offices City Centre Air Conditioned 2,400 2,700 per sq.m Shell and Core (Low-Medium Rise) 1,500 1,800 per sq.m Residential Developer Standard Apartments 2,000 2,500 per sq.m (medium standard) Leisure Hotel Building (4/5*) 2,200 2,600 per sq.m Retail Shopping Centre 1,700 2,400 per sq.m Education Third Level 1,900 2,400 per sq.m Healthcare Hospital 3,300 3,900 per sq.m Warehouses Without Offices 1,000 1,300 per sq.m
Notes: i All subject to site specifics, design and specification iii Regional variances occur across the country and from sector ii All exclude Land Acquisition Costs, External Works Costs to sector & Professional Fees iv Gh¢ per €: 2.2
114 BRUCE SHAW HANDBOOK 2012 SECTION 12 GHANA
12 Inflation Index
60% Source: Ghana Statistical Office GHANA
50%
40%
30%
20%
10%
0%
2004 2005 2006 2007 2008 2009 2010
Labour Cement Steel
Building Cost Index & Consumer Price Index Comparison
45% Source: Ghana Statistical Office
40%
35%
30%
25%
20%
15%
10%
5%
0%
2004 2005 2006 2007 2008 2009 2010
CPI BCI
BRUCE SHAW HANDBOOK 2012 115 GHANA
Construction Companies Active in Ghana
Arab Contractors Co. (Osman Ahmed Osman & Co) GKL Ghana Ltd. Ballast Nedam Ghana BV Grinaker-LTA Ltd. Big Aidoo Construction Company Jiangsu Jianda Construction Co., Inc Bilfinger Berger AG Jiangxi Zhongmei Engineering Construction Co. China Int’l Water & Electric Corp. Justmoh Construction Ltd. China Jiangxi Corporation for IETC Kamsad Construction Company Ltd. China Railway Engineering Corporation MSF International China Zhong Hao Ltd. Royal BAM Group NV Consar Ltd. SADE CGTH De Simone Ltd. Solel Boneh International Ltd. Energoprojekt Group Taysec Construction Ltd. PW Group
Exchange Rates Gh¢/US$ 2004-2011
1.80 Source: Bank of Ghana
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00 Dec-11 Dec-10 Dec-07 Dec-05 Dec-06 Dec-09 Dec-04 Dec-08
116 BRUCE SHAW HANDBOOK 2012 SECTION 12 GHANA
12 GHANA
BRUCE SHAW HANDBOOK 2012 117 118 BRUCE SHAW HANDBOOK 2012 TOPICAL ISSUES 13
BRUCE SHAW HANDBOOK 2012 119 TOPICAL ISSUES
Energy and Power Generation by Stephen Ashe
On both a domestic and international front we are faced with major challenges regarding how we source and generate our energy supplies. Globally we have an insatiable requirement for energy and power and with an ageing current capacity and relatively low investment in future generation Government commitments to low carbon emissions power generation is set to take front stage in the coming years.
There is now significant EU and government Ŕ 0XOFST Costs – Transmission and fuel delivery legislation which encourages investment in low facilities (i.e. gas pipeline) carbon energy generation. We note however that Ŕ Finance Charges a substantial part of energy generation will still come from mature technologies (coal, gas & nuclear) Nuclear and it is important that we do not lose sight of the In a nuclear power plant the heat source is one or need to upgrade these facilities and introduce latest more nuclear reactors. The heat is used to generate technologies. steam which drives a steam turbine connected to The main sources of energy are outlined below: a generator which produces electricity. Nuclear Ŕ 'PTTJMT DPBM PJM QFBU power plants typically have high capital costs for building the plant, but low direct fuel costs (with Ŕ /VDMFBS much of the costs of fuel extraction, processing, Ŕ 3FOFXBCMF 8JOE )ZESP 8BWF 5JEBM 4PMBS use and long term storage externalised). Cost Geothermal) estimates also need to take into account plant Ŕ 0UIFS #JP.BTT #JP'VFMBOE8BTUFUPFOFSHZ decommissioning and nuclear waste storage costs. Measures to mitigate carbon emissions may favour the economics of nuclear power but this needs Fossils to be set against the obvious safety concerns. Fossil fuels are fuels formed by natural processes. They contain high percentages of carbon and include Renewable Energy coal, petroleum and gas. It was estimated by the Renewable energy comes from natural resources Energy Information Administration that in 2007 such as wind, wave, sunlight and geothermal. primary sources of energy consisted of petroleum About 16% of global final energy consumption 36.0%, coal 27.4% and natural gas 23.0%, amounting comes from renewables. The share of renewables to an 86.4% share for fossil fuels in primary energy in electricity generation is around 19%, with 16% consumption in the world. As supplies of fossils (in of global electricity coming from hydroelectricity particular oil) have diminished prices have increased. and 3% from new renewables. This is not helped by some countries creating a false impression about the availability of capacity in order Wind to manipulate prices on the wholesale markets. Wind power is growing at the rate of 30% annually, Generation from fossils is still the most economical with a worldwide installed capacity of 194 gigawatts source of power. However as supply diminishes (GW) in 2010, and is widely used in Europe, Asia, and and government legislation changes renewable the United States. The graph on the next page sets energy sources are becoming more and more out the global wind power cumulative capacity. economically viable. As can be seen it has experienced major growth.
Power Stations require a large initial construction Wave and Hydro investment. The costs have several components Energy can be harnessed from water by large scale including: dams (hydroelectric dams) and from the ocean Ŕ -BOE$PTUT taking advantage of tidal flow. Ŕ &OHJOFFSJOH 1SPDVSFNFOUBOE$POTUSVDUJPO (EPC) – This is the cost of the construction Hydroelectricity is the most common form of contract for building the plant. It includes the cost renewable energy accounting for 16% of global of designing the facility, buying the equipment electricity consumption in 2010. The cost of and construction. A large part of the cost is the hydroelectricity is relatively low, making it a actual equipment. competitive source of renewable electricity. Hydroelectricity also has considerably less C02 emissions than fossil fuels.
120 BRUCE SHAW HANDBOOK 2012 SECTION 13 TOPICAL ISSUES
13 Global Wind Power Cumulative Capacity Source: GWEC TOPICAL ISSUES
(MPCBM$VNVMBUJWF$BQBDJUZ (8
Tidal power, also called tidal energy, is a form of At Bruce Shaw we understand the needs of today’s hydropower that converts the energy of tides into power generation sector and have the experience to useful forms of power – mainly electricity. Although meet the challenges. Our specialist service includes: not yet widely used, tidal power has potential for Ŕ 'FBTibility studies and Cost Benefit Analysis future electricity generation. Ŕ 7BMVF&OHJOFFSJOHBOE-JGF$ZDMF$PTUJOH
Ŕ 4USBUFHJDQSPDVSFNFOUBEWJDFBOETUBLFIPMEFS Solar management According to a 2011 projection by the International Ŕ $POUSBDUBEWJDF Energy Agency, solar power generators may produce most of the world’s electricity within 50 years, Ŕ 1SFBOE1PTUDPOUSBDUDPTUDPOUSPM dramatically reducing the emissions of greenhouse Ŕ 1SPKFDU.Bnagement and Risk Management gases that harm the environment. The solar thermal power industry is growing rapidly with 1.2 GW under We have a strong working relationship with a number construction as of April 2009 and another 13.9 GW of clients in the energy sector due to the level of announced globally through 2014. expertise and service we provide. Whether you want to upgrade and enhance existing assets or develop Biomass new projects we are available to join your team. Biomass is plant matter used to generate electricity with steam turbines & gasifiers to produce heat, Some Bruce Shaw projects usually by direct combustion. Examples include Ŕ .BZP1ower – 50 MW Biomass Plant forest residues (such as dead trees, branches and Ŕ )VOUTUPXOŊ.8(BT5VSCJOF tree stumps), yard clippings, wood chips and even Ŕ -BOFTCPSPVHIŊ.81FBU'JSFE1MBOU municipal solid waste. Biomass power plant size is Ŕ 4IBOOPOCSJEHFŊ.81FBU'JSFE1MBOU often driven by biomass availability in close proximity as transport costs of the (bulky) fuel play a key factor Ŕ 4PVUIFSO*SFMBOd – 450 MW Gas Fired CCGT in the plant’s economics. Ŕ &BTU8FTU*OUFSDPOOFDUPS)7%$$BCMF1SPKFDU (Claim Management)
Geothermal Energy Ŕ &4#/FUXPSLT$PSL)BSCPVS$BCMF$POUSBDU Geothermal energy is thermal energy generated and stored in the Earth. Geothermal power requires no fuel (except for pumps), and is therefore immune to fuel cost fluctuations. However, capital costs are significant. Drilling accounts for over half the costs, and exploration of deep resources entails significant risks.
Mayo Power
BRUCE SHAW HANDBOOK 2012 121 TOPICAL ISSUES
Financial Robustness of Contractors by Willie Aherne
Each year, billions are spent on contracts for the procurement of works, services and supplies. Poor contract performance due to deterioration in a contractor’s financial position, or in a worst case insolvency, is increasing. This usually results in a loss of time or money even if bonds are in place. A significant additional hidden cost is the senior management time consumed while managing a difficult contract.
Prevention is better than cure and so it is essential to certain parts of financial statements or directors’ undertake a thorough assessment of a contractor’s reports relating to ongoing concern issues. This is financial robustness before entering into a contract understandable given the prevalence of difficult in the first instance. The comprehensiveness of the trading conditions, lower property values and the assessment should be determined by the value and significant challenges in securing new or complexity of the contract. replacement credit lines from banks.
When assessing the financial robustness of a Cashflow contractor, Bruce Shaw usually starts with a review Strong cashflow is essential in any business. High of the contractor’s financial statements with a projected turnover and profit become irrelevant if particular focus on the following: weak cashflow puts strain on a contractor’s business. The issue is compounded if the Auditor’s Report contractor has insufficient credit lines or has few An unqualified audit opinion provides assurance liquid assets on its balance sheet to carry it that the financial statements of a contractor give through a difficult period. a true and fair view and are representative of the state of its affairs. Qualified audit opinions are Balance Sheet a cause for concern and require careful The balance sheet is a useful indicator of financial consideration. strength. While the quantum and quality of Net It is inherently assumed that a company carries on Assets enable an assessment of worth, the level of its business as a going concern, and will continue unencumbered assets, net current assets and cash to do so in the near future unless there are specific balances provide a measure of liquidity and in turn reasons such as pending insolvency, liquidation or a contractor’s capacity to sustain a difficult trading cessation of trade. period. Bruce Shaw also focuses on liabilities falling due in the near term, particularly bank debt Auditors frequently use an ‘emphasis of matter’ which may need to be refinanced. paragraph within their audit reports to highlight
122 BRUCE SHAW HANDBOOK 2012 SECTION 13 TOPICAL ISSUES
Profit and Loss There will be instances where the assessment 13 The profit and loss account provides useful outlined above should extend to other group information on turnover, the profitability of a companies as a result of parent company guarantees
contractor, performance trends and exceptional or situations where a contractor is exposed to, TOPICAL ISSUES items that have affected its business. or reliant on, the performance of another group company. Other The notes to the accounts sometimes highlight Undertaking assessments in the manner outlined matters which may impact on a contractor’s above should reduce the possibility of making awards business. Examples of this include details of to contractors that may subsequently have difficulties guarantees provided to group companies, performing due to deterioration in their finances. contingent liabilities, pension liabilities, provisions, On larger projects, it is equally important to charges on assets, restrictions on cash balances, continue to monitor a contractor’s financial over reliance on a small number of customers or position post contract award to re-confirm its contracts, etc. The directors’ report or notes to the financial robustness or facilitate early remedial accounts may also provide information regarding action should the need arise. the status of the contractor’s order book.
The financial statements provided by contractors are often outdated and there is a risk that the underlying financial condition of a contractor may have changed substantially since its financial statements were approved. Hence, the financial analysis should include a review of the following where possible:
Management or Interim Accounts These accounts can provide a useful update on its trading performance.
Business Projections While business projections are difficult to verify, they do provide some, albeit limited, assurance on a contractor’s future profitability.
Contractor Declarations Declarations should be sought to confirm that there are no legal, tax or regulatory investigations or proceedings taking place, insurance or other claims pending, unreported contingent liabilities or losses arising, incidences of insurance applications being refused, etc. Details should be sought where such matters do arise.
The following third party sources may provide further information on a contractor’s financial situation:
Source Benefits to the Assessment Process
Companies Registration late filings are sometimes evidence of Office distress
searches provide details of charges on assets
Revenue tax clearance certificates indicate that a contractor’s taxes are in order at the date of issue
Credit Ratings / these provide information on a Banker’s Letter contractor’s credit quality
Performance Bonds / third party evidence confirming availability Insurance provides some, albeit limited, assurance on financial robustness
Media media news clips and articles may identify issues prompting further investigation
BRUCE SHAW HANDBOOK 2012 123 TOPICAL ISSUES
Building Information Modelling (BIM) by Alan Fox
Historically the methodology for the coordination and communication of construction project information was facilitated using standard software packages. Microsoft Excel, Word and 2D computer aided design software packages are still commonly used and are the principal applications in the toolkit of a design team. However there are limitations associated with using these applications which revolve around integration and coordination of data from different sources.
Some issues that can occur include: What is BIM? Ŕ %JTDSFQBODJFTCFUXFFOWBSJPVTDPOTUSVDUJPO BIM is a business process supported by software that documents acts as a single coordinated database. This software is capable of storing the construction information Ŕ "NJOPSDIBOHFUPBOZPOFESBXJOHPSEPDVNFOU for an entire project. At the forefront of the database could necessitate manual adjustment of other is a 3D Model, which is a visual representation of the documents finished project. The building components or objects Ŕ 4PNFDPPSEJOBUJPOJTTVFTNBZOPUCFJEFOUJţFE within the 3D Model carry their own individual until construction commences properties such as geometry, material, quantities etc. The aforementioned issues and associated problems #*.BMTPFYUFOETCFZPOE BEESFTTJOHJTTVFTTVDIBT cost Clients’, Consultants’ and Contractors’ time and cost, project and facilities management and provides money both directly and indirectly. The BIM process a way to work concurrently on most aspects of attempts to alleviate some of these problems by building life cycle processes. improving the general process.
Co-ordinated 2D PLANS Output AND ELEVATIONS Intelligent Input DOOR AND WINDOW Engineers SCHEDULES Architect Consultant CONSTRUCTION Client 3D BIM MODEL DETAILS Quantity Surveyor SPECIFICATIONS Contractor 3D RENDERING AND WALKTHROUGHS
Benefits of BIM Ŕ $IBOHFTDBOCFFBTJMZUSBDLFEBOEQSJDFE Apart from the obvious benefit of possessing a 3D Ŕ $POUSBDUPSTDBOFBTJMZFYUSBDURVBOUJUJFTGPS model of the finished building, there are a number of ordering materials other benefits, which include: Ŕ 4FDUJPOTBOEFMFWBUJPOTPGUIFCVJMEJOHDBOCF In an ideal world, a project will be fully designed generated automatically and coordinated prior to commencing on site and BIM encourages this method of thinking. The graph Ŕ %SBXJOHTGSPNWBSJPVT%FTJHO5FBNTBSFNFSHFE on the next page shows the relationship between into one fully coordinated drawing the traditional design process (3) and the preferred Ŕ "VUPNBUJDJEFOUJţDBUJPOPGDMBTIFTCFUXFFO design process/BIM (4). The BIM method of building components management is more practical and efficient. ny changes made, will automatically be reflected Ŕ " It eliminates many of the uncertainties that in all other documentation sometimes arise in the traditional design process Ŕ $PTU&TUJNBUFTDBOCFQSPEVDFEBDDVSBUFMZ and can effectively reduce the extent of additional and quickly costs and delays.
124 BRUCE SHAW HANDBOOK 2012 SECTION 13 TOPICAL ISSUES
Traditional Versus Preferred Design Process 13 &ŢPSU&ŢFDU TOPICAL ISSUES
5JNF 1% 4% %% $% 13 $" 01
12 34 Ability to impact cost Cost of design changes Traditional design process Preferred design process (BIM) and functional capabilities PD: Pre-design SD: Schematic design DD: Design Development CD Construction documentation PR: Procurement OP: Operation
It is important to note however that as with most Integrated Project Delivery (IPD) software packages, the software is only as good as Integrated Project Delivery (IPD) is a project delivery the information being fed into it. approach that integrates people, systems, business structures and practices into a process that Implications for Quantity Surveyors collaboratively harnesses the talents and insights With the introduction of BIM, the Quantity Surveyor of all participants to optimise project results, increase will need to adapt and understand the BIM process value to the owner, reduce waste, and maximise and the capabilities of the associated software. Bruce efficiency through all phases of design, fabrication, Shaw recognise the importance of BIM and other IT and construction. Team leadership under IPD will Developments and have invested in software such as vary from project to project depending on a number CostX® to ensure we keep our competitive edge and of considerations, such as contractual relationships continue to provide a first class service to our Clients. and the skills of individual team members. The Integrated Project Coordinator (IPC) is primarily BIM allows the user to obtain automatic (BIM a facilitator, and may be a retained third party or predefined) quantities and also measure any 3D one of the team members. In many cases the shapes with CostX®. So unlike, 2D drawings, BIM responsibilities will migrate. For example, the allows both manual takeoff and automatic import main designer may be the IPC during the design of quantities. This data can then be transferred to phases while the main contractor takes on that role Cost Plans or Bills of Quantities. as the project moves into construction. Given Bruce Major advantages of CostX® include: Shaws’ direct relationship with Developers / Clients Ŕ %JSFDUNFBTVSFNFOUGSPNTDBOOFE 1%' $"% and given our expertise in the construction sector, drawings and 3D BIM Bruce Shaw could very easily take the role of IPC in future projects. Ŕ 1PXFSGVMTQSFBETIFFUCBTFEXPSLCPPLTMJWFMJOLFE to the drawings Although BIM is a relatively new technology, its’ Ŕ "CJMJUZUPDPNQBSFESBXJOHTBOEBVUPNBUJDBMMZ prominence is increasing worldwide. According to highlight changes the McGraw Hill Construction Smart Market Research Report published in 2010: “The Business Value of BIM Ŕ &YUSFNFMZFťDJFOUBOEBDDVSBUF in Europe: Getting Building Information Modelling s Ŕ /PSFRVJSFNFOUGPSQBQFSDPQJFTPGESBXJOH to the Bottom Line in the United Kingdom, France BOE(FSNBOZŐ PGUIFJOEVTUSZJOUIF6OJUFE One of the biggest challenges for BIM is States and 36% of Western Europe have adopted BIM. DPMMBCPSBUJPO CFJOHBCMFUPHFUBMMUIFDPOTVMUBOUT In June 2011 the UK government published its BIM contractors, engineers and the architect on a Working Party Strategy – This report announced common platform. Integrated Project Delivery the Government’s intention to require collaborative (IPD) is the best solution. 3D BIM (with all project and asset information, documentation and data being electronic) on all its projects exceeding £5million by 2016.
BRUCE SHAW HANDBOOK 2012 125 TOPICAL ISSUES
The Changing Shape of Retail by Paul Body
The global recession and the advent of new technology are changing the demand for traditional retail space. Over the last 15-20 years (up to the recession) retail expenditure growth was exceptionally strong, driven largely by high rates of borrowing, low inflation/ interest rates and strong house price inflation. The global recession has corrected such unsustainable growth and the forecast for the next 10 years is much lower.
The retail sector is constantly evolving due to tablets and social media platforms creating a changing customer demands and more informed multi-channel shopping experience. A factor purchasing decisions. This is driving many retailers to promoting multi-channel retailing is consumer consolidate their businesses. However this is having tendencies to mix channels during their purchasing a negative input on the smaller retailers who cannot drive with a very particular way of choosing the adapt to these demands and this in turn may bring product they want, how they want it and with on their demise and that of the traditional high a variety of delivery options. street shop. Some retailers have started implementing multi- channel strategies, such as alternative delivery Retail Globalisation options, integrated customer service and aligned Among developed countries, the UK continues to marketing efforts that facilitate both researching lead the world as the most international retail market. and buying across channels. Europe maintains its ability to attract the worlds top retailers, with 60% of the worlds top 250 retailers Multi-channel consumers are spending more having a presence in Europe. Although Europe per visit than those who shop solely or on-line. continues to dominate, emerging economies such as China, Russia and the UAE have gained significant Research shows: ground in the past 12 months. Ŕ PGBMMPOMJOFUSBOTBDUJPOTJOWPMWFETPNF research in store. In the current climate diversifying and finding new areas of growth and profitability are key. Even as sales Ŕ 3FUBJMFSTFOKPZIJHIFSPOMJOFTBMFTJOBSFBTXIFSF through traditional routes of physical stores decline, they have a physical presence. online retail sales have grown. As a matter of process, Ŕ PG6,DPOTVNFSTIBWFBNPCJMFIBOETFU customers collect all sufficient information on of them access the internet through their mobile product features, prices, warranties, availability and device and 19% browse the internet once a week environmental impact and then compare these with or more frequently. competitors’ products, before purchasing. More time is spent researching on the internet about products Social Media Networking they wish to purchase. The rapid evolution of social media networking sites such as Facebook and Twitter have also become Multi-channel important in terms of influence on customer It is an exciting time to expand into new markets behaviour and purchasing, habits that the retail with the influence of globalisation and the harnessing industry needs to pay attention to. In a recent of technology like mobile phones, smart-phones, European Internet users’ survey 46% of users agreed
126 BRUCE SHAW HANDBOOK 2012 SECTION 13 TOPICAL ISSUES
13 TOPICAL ISSUES
that customer ratings and reviews help them decide have purchased, and also view similar options that whether or not to purchase a product or service. are not in stock but can be purchased online and Therefore it is essential for retailers to adopt social delivered to their homes. media marketing practices. Future Outlook In the current climate, diversifying Even though retail sales showed signs of recovery and finding new areas of growth towards the beginning of 2010, there is still and profitability are key. scepticism regarding the retail outlook for the developed countries. Western Europe remains depressed, restrained by markets such as Ireland, Spain and the UK, which continue to face problems Social Retailing such as high government borrowing, household Notwithstanding the above, online shopping can be debt and unemployment. Despite this, global retail EVMMBOEVOJOTQJSJOH IPXFWFSUIFSFBSFPQQPSUVOJUJFT sales growth is expected in terms of volume growth out there which combine technology and interaction with the global retail market expected to return creating an in-store experience that combines social to comparable pre 2008 levels by 2012. networking and shopping. This has come to be known as Social Retailing. The Social Retailing In summary, as Multi-channel shopping is technology uses an in-store three-paneled “magic continuing to take a greater slice of the retail mirror” that can send photos or videos of shoppers spending cake, retailers will be forced to review in outfit options to their friend’s emails, mobiles and their store portfolios. For the majority, a continued social networking sites for instant opinions. The bricks and mortar presence is necessary but technology also allows customers to see what others rationalisation is inevitable.
Traditional vs Online Retail Growth Source: EIU, Datamonitor, IMAP
Traditional Retail Growth Online Retail Growth
BRUCE SHAW HANDBOOK 2012 127 TOPICAL ISSUES
Challenges for Consultant Project Managers within current market conditions by David Wilson
Construction activity in many European countries has remained in a depressed state over the last year. Many potential developments have been postponed due to market uncertainty, lack of funding, and central government cut backs. This has resulted in many Contractors, Sub-Contractors, Suppliers and Consultants being forced to cut costs and overheads, in order to maintain commercial viability in difficult market conditions.
This scenario has led to significant challenges for combined with compressed project time Consultant Project Managers, given that construction constraints that often emanate therefrom. related organisations now need to plan, design, Ŕ 1SPKFDU.BOBHFSTCFJOHDPNNJTTJPOFEMBUFS fabricate, supply, construct and operate construction on in the project cycle, as a means of reducing related projects with fewer and leaner resources Client costs. than before. Ŕ 2VBMJUZDPOUSPMTUBOEBSETESPQQJOHEVFUPB reduction of on-site management, with right Characteristics emerging from these market first time construction being more difficult conditions and corresponding challenges faced by to achieve. Consultant Project Managers include the following: Ŕ 3FEVDFEQSPEVDUJWJUZSVOTCZ4VQQMJFSTEVFUP Ŕ *OBEFRVBUFNBOBHFNFOUSFTPVSDFTXJUIJO%FTJHO decreased demand, resulting in longer lead times Contracting and Supply related organisations. for many materials, specialist goods and Ŕ (SFBUFSJODJEFODFPGPSHBOJTBUJPOTGBJMJOHUP equipment. perform to previous standards, due to knowledge Ŕ -BUFEFMJWFSZPGTQFDJBMJTUHPPETBOENBUFSJBMT and past experience being lost through due to finer tolerances associated with just in redundancies, and/or non-replaced retirements. time fabrication, and logistical problems linked Ŕ *OFťDJFOUEFDJTJPONBLJOHXJUIJOQSPKFDUSFMBUFE to commercial conditions in Europe and organisations. further afield. Ŕ 3FEVDFEGPDVTPOEFMJWFSJOHWBMVFFOHJOFFSFE Ŕ $PNQFUJUJWFUFOEFSMFWFMTJOBNBSLFUXJUISJTJOH design. costs, leading to increased challenges for cost Ŕ -BTUNJOVUFBQQSPWBMTCZ$MJFOUTEVFUPGVOEJOH and program management. constraints, often accentuated by an elongated Ŕ &MPOHBUFEEFTOBHHJOHQFSJPETBOEBTTPDJBUFE chain of approval within lending organisations, inconvenience for Clients and Tenants.
128 BRUCE SHAW HANDBOOK 2012 SECTION 13 TOPICAL ISSUES
13 TOPICAL ISSUES
Given this back-drop, Consultant Project Managers Ŕ 4FMFDUJOHNBUFSJBMTBOETQFDJBMJTUFRVJQNFOUUIBU still need to deliver projects for their Clients within can realistically be procured, designed, fabricated Time, Cost, Quality and Functionality constraints. and delivered within project constraints. Some of the measures adopted by Bruce Shaw in Ŕ 1SFQBSJOHUFOEFSEPDVNFOUBUJPOUIBUTBUJTGBDUPSJMZ managing these changes and associated risks are addresses project risk in order to minimise outlined below: program and cost related issues so easily encountered in this difficult market. Ŕ 1MBDJOHNPSFGPDVTVQPOUIFEFMJWFSZPGSPCVTU management resources within each organisation Ŕ 1MBDJOHNPSFGPDVTPOUIFQSBDUJDBM involved with the project, facilitating effective and implementation and management of Quality efficient decision making. Control Systems on site. Ŕ "MMPDBUJOHBEEJUJPOBMSFTPVSDFTGPSFťDJFOUMZ Successful project management managing the increased risk of remaining snags requires a good understanding between Handover and Project Close Out. of on-going changes within the wider economy and construction industry. Successful project management requires a good understanding of on-going changes within the wider economy and construction industry. Once current Ŕ &ODPVSBHJOHNPSFKPJOFEVQNBOBHFNFOU shifts and trends have been identified, and the project between organisations on a joint venture/ related risks understood, Bruce Shaw’s Project consortia basis, to fill the deficit of suitable Managers are well placed to put in place a strategy managers and span the knowledge and and plan that will enable the project to be experience gaps that have arisen. successfully delivered for the Client. Ŕ 3FJUFSBUJOHUPPVS$MJFOUTUIFCFOFţUTPG With our extensive experience across a wide range appointing Bruce Shaw as Project Managers early of sectors, working in a diverse range of regions and on in the project cycle, given the contribution countries, Bruce Shaw looks forward to successfully we make in relation to project strategy, project managing our Client’s projects throughout the planning, project risk management, and challenging year ahead. co-ordination of third parties, including funders and tenants. Ŕ &OTVSJOHUIBUEFTJHOUFBNTBSFEJTDJQMJOFEBOE resourced to develop value driven solutions for the Client, with these obligations being reinforced at fee tender and pre-appointment stages.
BRUCE SHAW HANDBOOK 2012 129 130 BRUCE SHAW HANDBOOK 2012 ABOUT BRUCE SHAW 14
BRUCE SHAW HANDBOOK 2012 131 ABOUT BRUCE SHAW
Bruce Shaw
Bruce Shaw is an independent international Our dynamic teams have earned a reputation for construction consultancy firm with over 40 year’s managing projects with a range of quality services experience, providing and supporting our clients that consistently delivers on time and on budget. worldwide with the full spectrum of our construction Our priority, through our solution driven approach, services through our Global network of offices. is to help our clients and their teams achieve their During the past year, Bruce Shaw has continued to objectives and realize maximum value from grow, with the opening of offices in Vietnam and with their activities. major expansion into China. We pride ourselves on the quality of our client care Our culture is to continue to build upon and improve approach and this is reflected in the repeat these services throughout our network of offices and commissions we are awarded, which accounts for global resources. 70% of our business.
Our services are internationally accredited to the ISO We are always on hand to support clients with expert 9001 quality standards and 14001 environmental advice and direction in such areas as: standards. Ŕ 1SPDVSFNFOU The Bruce Shaw organisation is structured into a Ŕ )FBMUIBOE4BGFUZ multiplicity of dedicated project service teams with Ŕ 1111'* specific skill sets, which are tailored to the particular requirements of clients globally and project types. Bruce Shaw continues to be at the forefront in These teams include Quantity Surveying / Cost providing expert advice and services to our clients Management, Project Management, Safety throughout all stages of projects. This in turn leads Management, Consultancy and Procurement along to faster project delivery, greater cost efficiency with, Public Private Partnership Consultancy, Supply and maximum value for money from the built asset Chain Consultancy, Legal Technical Support and investment. Insolvency Technical Support.
Bruce Shaw use and invest in the latest technology to achieve superior accuracy, higher quality and faster delivery for our clients. Our specially developed in-house documentation and IT infrastructure is tailored to the specific needs of our clients and has been central to our success, which in turn leads to a faster project delivery, greater cost efficiency and maximum value for money.
Bruce Shaw selects the highest calibre staff for our projects and our teams of professionals are amongst the highest regarded in the industry.
We continue to promote and invest in our ‘Graduate Training Scheme’ which provides practical experience for those wishing to prepare for their final examinations, such as the Assessment of Professional Competence, achieving chartered status to the Royal Institute of Chartered Surveyors (RICS), Society of Chartered Surveyors Ireland (SCSI), Chartered Institute of Purchasing & Supply (CIPS) or M.Sc in Strategic Procurement.
132 BRUCE SHAW HANDBOOK 2012 SECTION 14 ABOUT BRUCE SHAW
Cost Management
1 – Pre-Contract Stage 14
Initial Cost Advice / Feasibility Studies
To obtain the best value for money, the viability of ABOUT BRUCE SHAW each project is carefully examined. Cost must be weighed against aesthetics, quality, space and time, and an acceptable budget agreed. Close collaboration at this stage between the project team members will bring maximum benefits to the client.
Bruce Shaw leads this process and explores all QPTTJCJMJUJFT EFDJTJPOTNBEFBUUIJTDSJUJDBMTUBHF impact on over 70% of overall development costs. The company offers experience across a range of feasibility studies, from high cost urban regeneration schemes to low-rise residential dwellings to luxury hotels.
Budget Estimating & Cost Planning Bruce Shaw establishes the initial budget cost by reference to cost data derived from previous projects and by measurement and pricing of the key elemental quantities. The budget is allocated Whole Life Costing amongst the various building elements to establish Bruce Shaw’s approach to lifecycle costing considers limits within which each element is allowed develop. and optimises the full range of costs which accrue As the scheme progresses, each element is checked from the construction of an asset right through its to ensure it remains within its limit and the overall anticipated life span. Whole life costing is a key driver scheme remains within budget. Our role is to in both public and private sector works and is challenge the design / design choices on behalf considered a necessity in PPP and PFI projects in of the client, to ensure all cost limits are maintained terms of long-term operation, risk and the lifecycle / achieved. replacement of key components. Bruce Shaw helps clients to establish the most Value Engineering cost-effective investment decision by focusing Value engineering is a cost management technique not only on the capital costs but on the total cost that seeks to balance cost, reliability and performance of the asset. This is done by undertaking a detailed of materials with the most appropriate methods of exercise, ideally at initial design stage, to establish construction to achieve maximum value. trade-offs on capital, maintenance and operations/ Bruce Shaw implements the most up-to-date value occupancy costs. engineering techniques during a project’s design As a serious player in the PPP/PFI market, Bruce stages to ensure that the most economically- Shaw can produce whole life cost models that effective solutions are adopted, consistent with the incorporate an industry-accepted cost structure client’s design and operational requirements. which is compliant with ISO 15686-5. Bespoke During the early stages of a project, Bruce Shaw software incorporates BCIS and Bruce Shaw’s own convenes and chairs value engineering workshops, in-house data to inform decision-makers at all designed to ensure that a correct balance between stages of a project. cost and functionality is achieved and adopted by all parties.
BRUCE SHAW HANDBOOK 2012 133 ABOUT BRUCE SHAW
Sample Benchmark Study – Cost per MW Element for Data Centres Source: Bruce Shaw €20,000,000
€15,000,000
€10,000,000
€5,000,000
0
Dublin 1 Dublin 2 Western Western Dublin 3 Dublin 4 Dublin 5 UK (London) Paris Europe 1 Europe 2
Total for Soft Costs Total for Equipment Total for Electrical Total for Mechanical Total for CSA
Benchmarking Risk Assessment By identifying drivers for improving value, cost, time At all stages of the project we will review the relevant and quality, whilst still ensuring the best value is being risks pertaining to that stage of the project. We utilise achieved, benchmarking can play a significant role in Quantitative Risk Assessment (QRA) techniques in informing the decision-making process. assessing these risks. Risks may include construction cost overrun, programme risks, changes in legislation Bruce Shaw has developed one of the largest or unforeseen site difficulties. The results will be bespoke construction cost databases in Europe over presented using the latest “@ Risk” software. This will the past decade. present a combination of possible scenarios utilising It is a central source of live project data and can be a statistical simulation process and ensure informed utilised to produce detailed elemental benchmarking decisions can be made at critical project junctures studies at various stages of construction development (see flow chart on facing page). (see graph above). Advice on Contract / Procurement Procedures In this way, the best possible international standards Bruce Shaw examines all possible contract/ are met and value is achieved at early budget procurement options and advises on the most estimating and cost planning stages. appropriate option for a specific project. Contractual/ tendering options include the traditional method of Cost Benefit Analysis tendering, two-stage tendering, negotiated contracts, Government guidance for the appraisal and management contracts, design and construct management of capital expenditure in the public contracts and construction management contracts. sector requires that all capital expenditure proposals for projects over a defined monetary threshold Bruce Shaw has no allegiance to any particular should be subject to a Cost Benefit Analysis. Bruce forms or methods of procurement and has current Shaw’s in-house team is experienced in preparing experience of all of the major options available. The these reports and in developing a detailed assessment company does not subscribe to a “first past the post” of capital costs, on-going operating costs, direct and philosophy but in attainment of best value. indirect revenues, and the macroeconomic benefits Bruce Shaw advocates identifying, prior to selecting and costs of proceeding with a project. Bruce Shaw a procurement route, the key criteria and drivers for also undertakes post project reviews for clients. a project, which is typically a balance between programme control, the process for achieving cost certainty, equitable risk allocation, maximising off-site fabrication, specialist sub-contractor involvement and contemporary management principles.
134 BRUCE SHAW HANDBOOK 2012 SECTION 14 ABOUT BRUCE SHAW
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45"(&C ŝ*ODPSQPBUFSJTLSFHJTUFSPVUQVUT 6QEBUF3JTL $POTUSVDUJPO 4UFFSJOH$PNNJUUFF.FFUJOH JOUFOEFSEPDVNFOUT 3FHJTUFS ŝ.BOBHFSJTLSFHJTUFS EPDVNFOU ŝ.BOBHFDPOUJOHFODZ QSFQBSBUJPO
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Preparation of Contract Documentation One of the primary post-contract tasks is to Once the most appropriate Procurement Option has financially manage the contractor in accordance been selected, Bruce Shaw prepares the conditions with the terms of the contract and Bruce Shaw’s under which contractors will tender the project strategy is simple - progressive close-out of risk including Preliminaries / General Conditions. We also and ensuring that the Final Account is agreed on provide advice on the adequacy of the levels of a rolling basis with the Contractor, i.e. it is real time. insurance, liquidated damages, dates for completion By creating, at the outset, a strong working etc. Finally we prepare the tender documents relationship with the Contractor, inviting him to including detailed Bills of Quantities, Instructions contribute to the project process, respect and to Tenderers and Forms of Tender. trust will be bred that will lay the foundations for a successful team ethos. 2 – Post-Contract Stage Monthly risk-and-opportunity meetings at which Cost Control during Construction contractor participation is encouraged is part of the Bruce Shaw’s integrated cost management systems Bruce Shaw approach. The risk and opportunity provide the transition whereby its cost planning register is used as a primary post-contract cost systems supported by risk and opportunity and management tool. contingency management are applied to on site cost management and control.
BRUCE SHAW HANDBOOK 2012 135 ABOUT BRUCE SHAW
Valuation of Work Capital Allowances Monthly valuations of work-in-progress are carried The vast majority of businesses incurring capital out in order to make stage payments to the expenditure on the construction of commercial contractor. This includes the physical measurement property can benefit from tax relief in the form of of the work on the site and materials delivered. Cash Capital Allowances, with the most widely available flow projections are provided to indicate the client’s tax allowance being that incurred with expenditure anticipated monthly expenditure throughout the on plant and machinery. construction stage. Bruce Shaw can maximise clients’ capital allowances recovery levels and have valuations agreed by the Change Management relevant tax authorities as efficiently as possible. Central to cost control during the construction stage is the determination to complete the project within Enhanced Capital Allowances (ECAs) of 100% first the original budget. Through accurate record- year tax relief can be claimed by businesses on keeping and good physical control in the field, Bruce specific energy-saving equipment. The value of ECAs Shaw continuously monitors changes and updates in the modern property environment is recognised by cost reports to show the current position to the Bruce Shaw’s Cost Managers as a significant benefit client. to businesses in writing-off the whole cost of their investment against taxable profit. If a cost over-run is projected, evasive action can be taken by making design adjustments to achieve Insurance Valuations cost reductions and so return the project to its Among the services provided by Bruce Shaw is planned budget. building insurance valuations. The company provides support for insurers and loss adjusters who are Settlement of Final Account preparing reconstruction cost appraisals for damaged Bruce Shaw negotiate with the Contractor to sign-off buildings, as well as for property owners’ portfolios. the cost of work as each element is complete. The advantage of this approach to the Client is that there Accurate valuations of rebuilding costs are essential is a rolling Final Account which can be speedily in avoiding over-insurance and in minimising agreed upon project completion with no surprises. exposure to under-insurance. The further advantage to the Contractor is that he is Bruce Shaw’s building insurance valuations service paid in full for changes completed and agreed as the can include property damage assessment, scope of project proceeds. works recommendations, review and re-inspection of Central to cost control during the construction stage claims, risk management, closing assistance and is the determination to complete the project within mediation/arbitration. the original budget. Accurate insurance valuations ensure sufficient cover, minimise premiums, facilitates negotiations with tenants, validates against published benchmark data and provides information for the asset database.
136 BRUCE SHAW HANDBOOK 2012 SECTION 14 ABOUT BRUCE SHAW
Project Management
Bruce Shaw offers a professional, personal and 14 comprehensive Project Management service to all its clients. The company’s policy and natural inclination is to work very closely with clients on a personal level, ABOUT BRUCE SHAW building up a relationship based on trust and openness. This creates a strong working bond, and greatly assists in progressing projects on a daily basis and, in particular, in resolving the many challenges which construction projects generate.
A key element in the success of a project is developing a full understanding of the drivers behind an organisation, and the motivation for the project in hand. Through gaining this understanding, a project can be effectively addressed, to ensure the client’s Re-Engineering Management objectives are not only met, but exceeded. Bruce Shaw has expert experience in assisting organisations who are relocating, expanding, Our team of professional Project Managers are downsizing and re-organising. We advise on amongst the most experienced in the industry, and strategies to ensure seamless transition specific to the have worked on a wide variety of landmark projects constraints and opportunities unique to each project, worldwide. It is this breadth of experience that and manage these strategies to successful enables us to take a fresh and pioneering approach in conclusion. establishing a strategic framework to address the unique requirements of every project, however large Our typical Project Management services include: or small. Ŕ Assist in preparing the Project Brief Throughout a project lifecycle, our project managers Ŕ %FWFMPQQSPKFDUTUSBUFHZ employ a range of bespoke management tools to Ŕ 1SFQBSF1SPKFDU&YFDVUJPO1MBO 1&1 control the project delivery, including: Ŕ %FWFMPQ$POTVMUBOUT#SJFGT Ŕ %FWJTF1SPKFDU1SPHSBNNF Programme / Scheduling Management Ŕ &TUBCMJTI.BOBHFNFOUTUSVDUVSF Very early in a project we will look to establish the key milestones for a project and develop a Master Ŕ $PPSEJOBUFEFTJHOQSPDFTT Programme which underpins the timescales for the Ŕ "QQPJOU$POTVMUBOUT delivery of each phase. Ŕ4FMFDU1SPDVSFNFOU4ZTUFN Ŕ "SSBOHF5FOEFS%PDVNFOUBUJPO Risk Management Ŕ 1BSUJDJQBUFJO$POUSBDUPSTFMFDUJPOBOE We identify all risks which are specific to each project, appointment assess the implications in terms of cost, time and Ŕ 0SHBOJTFDPOUSPMTZTUFNT quality, identify a course of action to mitigate the risk Ŕ .POJUPS1SPHSFTTBHBJOTUQSPHSBNNF and allocate responsibility for resolution. The Risk Register is treated as a “live” document, and Ŕ "SSBOHF.FFUJOHT maintained throughout the project lifecycle. Ŕ "VUIPSJTF1BZNFOUT Ŕ 0SHBOJTFDPNNVOJDBUJPOSFQPSUJOHTZTUFNT Change Management Ŕ Provide total co-ordination We employ a structured, documented Change Ŕ "EESFTTFOWJSPONFOUBMBTQFDUT Management system which allows fully informed Ŕ "SSBOHFQSFDPNNJTTJPOJOHBOEDPNNJTTJPOJOH decisions to be made by the Client in advance of the Ŕ 0SHBOJTFIBOEPWFSBOEPDDVQBUJPO change arising. Ŕ .POJUPSUIFBHSFFNFOUPGUIF'JOBM"DDPVOU Client Decision Management Ŕ 0SHBOJTF.BJOUFOBODF.BOVBMT It is essential to the success of a project that the Ŕ %FWFMPQ.BJOUFOBODF1SPHSBNNF Client is aware of the decisions and approvals which are required of them. We implement a documented system of advising the Client of these issues in advance, and tracking the timely close-out of these decisions and approvals throughout the project.
BRUCE SHAW HANDBOOK 2012 137 ABOUT BRUCE SHAW
Consultancy Services
Bruce Shaw provides a wide range of project Ŕ"EWJDe and guidance on general public support services and independent services ranging procurement issues, including compliance with from financial to investment, including Public Private procurement rules and guidelines: the EC Treaty Partnerships, to legal support and procurement. and E.U. procurement directives, international agreements, national regulations and guidelines
Procurement & Supply Chain Management Ŕ'SFFEPNPG*OGPSNBUJPO"DUSFRVFTUBOESFTQPOTFT Bruce Shaw Procurement and Supply Chain teams Ŕ%SBGUJOHBOENBJOUBJOJOHQSPDVSFNFOUQPMJDJFTBOE have a track record working with clients in both the procedural manuals public and private sector. Ŕ1SPDVSFNFOUPQQPSUVOJUJFTSFWJFXTBOEBVEJUT
An extensive knowledge and understanding of Ŕ3FTPMWing contractual disputes or, if unsuccessful, managing formal resolution process, e.g. property – whether capital expenditure or mediation, arbitration, legal proceedings maintenance and operations – allows Bruce Shaw to provide strategic advice on how to achieve and Ŕ%SBGUJOHOPUJDFTGPSBEWFSUJTJOH QSJPSJOGPSNBUJPO contract and award notices maximise financial efficiencies and improved performance.
We recognise the importance of engaging with Public Procurement Consultancy stakeholders and developing supplier relations to drive value through intelligent procurement and Business needs to be supported by high quality sourcing, while identifying solutions, which combine procurement practices and supplier relationships best practice with security of performance and which deliver best value in terms of quality/price deliver best value. balance, timely delivery, sustainability etc. Public procurement is also subject to mandatory adherence Our key procurement & supply chain management to public procurement rules. These are contained in services include: the “Treaty on the Functioning of the European Ŕ 8IPle life procurement activities Union” (TFEU) and additionally, where contract values exceed EU thresholds, the European Procurement Ŕ 4USBUFHJDTPVSDJOHTPMVUJPOT Directives and National Regulations transpose these Ŕ F1SPcurement directives into national law. Ŕ &OEUPFOEQSPDVSFNFOUBDUJWJUJFT JODMVEJOH tender management, evaluation, recommendation Update on EU Public Procurement and award In late December 2011, the European Commission Ŕ .BSLet intelligence published the text of its proposals for the new Ŕ (MPCBMBOETVTUBJOBCMFQSPDVSFNFOU procurement directives to replace the current Ŕ4VQQMJFSSFMBUJPOTIJQNBOBHFNFOU directives on public and utilities procurements. They have also published the text of a proposal for Ŕ$BQBDJUZBOEDBQBCJMJUZSFWJFXT a directive on the award of concession contracts Ŕ4VQQMZDIBJOBTTFTTNFOUTBOEQSFRVBMJţDBUJPO which is seeking to introduce competition in the Ŕ1FSGPSNBODFNFBTVSFNFOUBOE,1*ōT award of high value contracts in this category.
138 BRUCE SHAW HANDBOOK 2012 SECTION 14 ABOUT BRUCE SHAW
The European Commission hopes that, by the end of Ŕ 4JNQMJţDBtion of information obligations at 14 2012, these proposals will be adopted and that they pre-qualification stage including self-declarations will come into force in Member States by June 2014. on the fulfillment of selection criteria, with only the
successful candidates/tenderer(s) being required ABOUT BRUCE SHAW The background to this initiative was that the UPTVCNJUEPDVNFOUBSZQSPPGPGDPNQMJBODF European Commission considered that the Ŕ -JNited scope for negotiation being introduced to procedures needed to be modernised due to factors improve the quality of an offer, but there would be such as the current economic situation and demands OPPWFSBMMSJHIUUPOFHPUJBUF for procurement to be more environmentally friendly, otion of e-procurement. It is planned focused on social standards and to be more Ŕ 5IFQSPN to achieve full electronic communication in innovative. During 2011, the Commission carried out public procurement within two years of the a consultation process with public procurement JNQMFNFOUBUJPOEFBEMJOFPGUIFBEPQUFEEJSFDUJWF stakeholders to evaluate the impact and effectiveness of current EU procurement and aspects that need to Ŕ 1SPDVSFNFOUUJNFMJNJUTCFJOHTIPSUFOFE be changed. The Commission considered that it was Ŕ "Editional measures being introduced to facilitate important to consult widely with those involved in DSPTTCPSEFSQSPDVSFNFOU day-to-day procurement. The Commission published Ŕ *NQroved access to public procurement for SMEs a green paper in January 2011 (Towards a More through dividing projects into “Lots” and lower Efficient European Procurement Market) which ţOBODJBMDBQBDJUZSFRVJSFNFOUT highlighted a number of areas for possible reform Ŕ "OBUJPOal “oversight” authority being appointed such as simplification of the procedures, particularly which would be in charge of monitoring and for small local and regional governments, easier control of public procurement. It would be able to cross-border bidding, improved access for European provide immediate feedback on the functioning of companies to markets outside the EU, customising the policy and the potential weaknesses in national the rules for services of particular social significance legislation and practice. It would also be used to and introducing better safeguards to prevent reinforce the fight against corruption and favoritism with contracting authorities being obliged to corruption, favoritism etc. transmit the text of concluded contracts, over certain values, to the oversight body, which will Following the consultation process, the changes now have power to scrutinise these contracts. proposed include: Ŕ 4JNQMJţFEQrocedures for regional and local Many of the features of the public procurement contracting authorities whereby they would be proposals will also apply to the utilities directive permitted to publish a general notice for their proposal which will also include changes that only planned procurements for the next year rather apply to the utilities sector. UIBOQVCMJTIJOHJOEJWJEVBMDPOUSBDUOPUJDFT
Ŕ "OFXTQFDJBMQSPDFEVSFGPSUIFEFWFMPQNFOUBOE purchase of new innovative services, goods and works, provided they can be delivered to agreed QFSGPSNBODFMFWFMTBOEDPTUT
Ŕ 5IFDPNQFUJUJWFEJBMPHVFQSPDFEVSFCFJOH improved and no longer being confined to DPNQMFYQSPKFDUTPOMZ
Ŕ 5IFEJTUJODUJPOCFUXFFO1BSU"BOE1BSU#TFSWJDFT CFJOHSFNPWFE
Ŕ "MJNited class of “social services” being introduced with particular rules for contracts in excess of €500,000. Where the contracts are of lower value, Member States would be able to determine the QSPDFEVSBMSVMFTBQQMJDBCMF
BRUCE SHAW HANDBOOK 2012 139 ABOUT BRUCE SHAW
Framework Agreements At Bruce Shaw we provide the expertise, experience Framework Agreements are agreements between and innovation to identify, undertake and deliver such one or more purchasers and providers, which set services as Procurement and Supply Chain out the terms and conditions governing specific Management, Supply Base and Performance contracts to be awarded throughout the term of Management and Business Solutions. the agreement (max.4 years). The Management Services team has a proven record Bruce Shaw’s specialist division advises a wide range of working with clients on both large and small of both public and private clients on the structuring projects, to drive efficiencies through smarter and implementation of appropriate procurement procurement, streamlining and integrating processes structures, including suitable framework agreements. and introducing defined ways of working. The division establishes and manages such Services include: agreements and call-off processes or provides Ŕ 1SPDFTTSFWJFXŊTUBOEBSEJTBUJPOPGQSPDFTTFT professional support, as required. Framework agreements allow for the awarding of individual Ŕ $POUSPMTUBOEBSETŊJNQMFNFOUBUJPOBOE monitoring of control measures contracts in a manner that is quicker and less costly than would be the case with separate procurements. Ŕ -FHBMŊDPSQPSBUFHPWFSOBODF GPSNBMJTBUJPOPG Normal public procurement rules, including contract arrangements European Treaty principles, apply to establishing a Ŕ 4DPQFTPG4FSWJDFŊQSFQBSBUJPOBOENBJOUFOBODF framework agreement. Call-off contract proposals of co-ordinated duties documentation must be evaluated using the award criteria declared Independent Certifier / Technical Adviser at the establishment of the framework. As an independent certifier, Bruce Shaw works as a technical advisor to leading financial institutions PPP / PFI Consultancy seeking due diligence on development proposals Bruce Shaw provides a range of specialist services prior to formal commitment of funding. The to public and private sector clients covering all company’s initial report comprises a review of all facets of PPP/PFI projects, from initial concept and the projected costs and examines various aspects business case development through to final delivery of the project’s viability. and operation. Bruce Shaw’s advisory team highlights risk areas and, For private sector clients, Bruce Shaw provides where appropriate, recommends actions to mitigate bid management support on design, build, finance or remove the impact on the project. and operate/maintain projects, with an extensive scope of works which includes coordinating tender Services provided by Bruce Shaw include: scope submissions through to acting as SPV Manager PGEFWFMPQNFOUBOEUJNFGSBNF DPOUSBDUPSōT and Employer’s Agent. The company also assists NBOBHFNFOUDBQBCJMJUZ TUBUVTPGDPOUSBDU in bringing consortia together and identifying the EPDVNFOUBUJPO QSPDVSFNFOUQSPDFEVSFT right partners for design, construction, facility CVJMEJOHDPTUQSPWJTJPOTBOEBOUJDJQBUFEDBTIŤPX management and equity sponsorship. JOTVSBODFTBOEQSPGFTTJPOBMJOEFNOJUZSFRVJSFNFOUT For public sector clients, Bruce Shaw offers expert and review of construction progress against knowledge of all forms of PPP, assisting them with budgeted cost and schedule. structuring projects and then bringing them to market. The multi-disciplinary nature of Bruce Financial Assessment of Contractors Shaw’s business allows it to fully consider market Bruce Shaw undertakes comprehensive financial trends in construction, finance and consortia analysis of contractors and service providers in the appetite for taking risks. Client support includes construction industry. Our in-house team of preliminary and detailed appraisal of projects and chartered accountants are suitably qualified to value-for-money analysis. review financial statements, credit ratings, financial projections, company filings and other publicly Business Solutions available data. This review process should assist with Bruce Shaw is aware that in today’s competitive determining the adequacy of contractors’ resources marketplace, efficiency is the key for the successful to remain going concerns and fulfil contractual and profitable management of any organisation. obligations. For the public sector, in addition to The first challenge though, comes in identifying undertaking financial reviews, Bruce Shaw can also inefficiencies or where a business can be impoved, prescribe the financial information requirements and followed by the challenge of implementing new criteria for tender pre-qualification processes and the initiatives through smooth transition. subsequent awarding of public contracts.
140 BRUCE SHAW HANDBOOK 2012 SECTION 14 ABOUT BRUCE SHAW
14 ABOUT BRUCE SHAW
Environmental Services / Sustainability Consultancy Bruce Shaw interface with clients and their other Bruce Shaw provides the full spectrum of consultants – legal or advisors – to provide all construction cost consultancy services to clients technical support, information and reports to assist in seeking to develop projects using sustainable the resolution of any dispute. Senior staff members technology solutions and clients delivering have acted as Expert Witnesses by preparing status engineering and construction projects in the reports, as well as strategic, technical and financial renewable energy sector such as wind, hydro, assessments and appraisals. biomass and solar. Insolvency Support / Bond Recovery The company’s approach is based on the provision Drawing on its expertise in cost management, of real-time analytical cost information to inform value engineering and project management, decision-makers at all stages of project delivery. An Bruce Shaw provides technical support on integrated design process that includes sustainability various insolvency cases. and renewable energy solutions at the outset enables Bruce Shaw to provide defined cost advice on the In the case of a construction-related receivership, impact of BREEAM, LEED, CRC, ECAs and others. examinership or liquidation process, Bruce Shaw Specialist teams provide advice on many sustainable explores the opportunities available to maximise energy-efficient technologies and initiatives such as recovery of amounts due through the application biomass boilers, BMS, CHP, RHIs, solar heating and of expert knowledge in construction, contracts, wind turbines, to name a few. Clients availing of remedies, value engineering processes and bonds this service include public and private sector and collateral warranties. organisations across all construction types such In providing specialist support services to insolvency as commercial buildings, energy generation, high professionals and bond providers, Bruce Shaw tech manufacturing, IT and pharmaceuticals. can provide valuations on construction works DPNQMFUFE FWBMVBUFDPOUSBDUDPNQMFUJPOTBOE Dispute Resolution Support UFSNJOBUJPOPQUJPOT SFQMBDFDPOUSBDUPSTBOE Technical support to those involved in legal action TVCDPOUSBDUPST BHSFFţOBMBDDPVOUTUPFTUBCMJTI or Alternative Dispute Resolution forms an integral BNPVOUTEVF EFUFSNJOFQBZNFOUTUPEBUFBOE part of Bruce Shaw’s consultancy services, with BNPVOUTPVUTUBOEJOH BOEBTTFTTVOSFTPMWFE advice on all aspects of dispute resolution such contractor claims and determine the likely recovery. as mediation, conciliation, adjudication, arbitration and full litigation.
For employers, Bruce Shaw provides detailed investigation and analysis of data, transactions, interim valuations, defective works and diverse claims. For contractors, the company assists in the preparation and negotiation of the technical elements of contractual claims and accurate bills of quantities.
BRUCE SHAW HANDBOOK 2012 141 ABOUT BRUCE SHAW
Health & Safety Consultancy
Bruce Shaw’s Health & Safety team specialises As CDM Coordinator (CDMC), our role is to: in providing a range of services in design safety On Appointment management, as well as construction safety Ŕ *OGPSNUIF$MJFOUPGUIFJSSPMFBOEUIFNFBTVSFT management which involves assessing and they must take to comply with CDM Regulations evaluating contractors’ performance on health Ŕ /PUJGZUIF)FBMUIBOE4BGFUZ&YFDVUJWF & safety. Throughout the Project Safety legislation places significant duties and responsibilities on employers, contractors, designers Ŕ 'BDJMJUBUFHPPEDPNNVOJDBUJPOCFUXFFOUIFDMJFOU designers and contractors and clients engaged in construction projects and Bruce Shaw has extensive experience in working Ŕ 1SPWJEFBEWJDFBOEBTTJTUBODFUPUIFDMJFOUUP enable them to comply with their duties with these parties to ensure workplaces are designed and managed with safety in mind. Design Stage Bruce Shaw provides advice and guidance on all Ŕ *EFOUJGZ1SF$POTUSVDUJPO*OGPSNBUJPO aspects of health & safety legislation, design safety Ŕ $PPSEJOBUFaspects of design work co-ordination, safety auditing and compliance. These services extend across a wide range of sectors Tender Stage including retail, commercial, residential, industrial, Ŕ 1SFQBSF1SF$POTUSVDUJPOJOGPSNBUJPOQBDLT healthcare and education. Ŕ 6OEFSUBLFDPNQFUFODFBTTFTTNFOUTPGUIF1SPKFDU Design and Principal Contractor team Services Provided Construction Stage Bruce Shaw services include: Ŕ 3FWJFXUIFTVDDFTTGVM1SJODJQBM$POUSBDUPSōT Ŕ"EWJDFBOEHVJEBODFPOBMMBTQFDUTPGIFBMUI Construction Health and Safety Plan safety legislation Ŕ "EWJTFUIF$MJFOU1SJODJQBM$POUSBDUPSPGUIF Ŕ1SPKFDU4VQFSWJTPS %FTJHO1SPDFTT 14%1 Health and Safety implications of any Ŕ%FTJHO4BGFUZ$PPSEJOBUJPO significant change in design Ŕ$POTUSVDUJPO4BGFUZ.BOBHFNFOU TBGFUZBVEJUJOH Ŕ 1SFQBSFUIF Health and Safety File and compliance Handover Stage Ŕ$%.$PPSEJOBUPS $%.$ Ŋ$%.3FHVMBUJPOT Ŕ $PMMBUFBOESFWJFXUIF)FBMUIBOE4BGFUZ'JMF 2007
Our services can be tailored to suit individual clients Current Trends in Health & Safety in Ireland and project needs, both for one-off projects or through establishing long-term client relationships. While fatalities and serious injuries are down Whether new build construction work, building from previous levels the issues affecting health refurbishment, term services, maintenance or & safety and the implications for everyone involved facilities management, Bruce Shaw work closely and in the construction industry are changing and efficiently with Clients’ management and project need to be watched. The reduction in fatalities teams, liaising with the Health and Safety Executive and serious injuries is to be welcomed with the where necessary. acknowledgement that even one accident is too many.
Our Approach to CDM Co-ordinator in the UK The improvements are not only due to reduced numbers in the industry but also to a collective We act as a key project advisor in respect of CDM and sustained emphasis on improving the safety Co-ordination. We believe that the role is one of management culture or to put it simply, ‘the way compliance and requires an in depth knowledge of we do things around here’. the construction process, careful attention to detail, an ethos of assessment, recording of salient information and the desire to ensure that performance and quality are paramount.
142 BRUCE SHAW HANDBOOK 2012 SECTION 14 ABOUT BRUCE SHAW
Green Energy 14 • Legislation The change to sustainable and new energy sources Clients bring their own, sometimes significant safety issues • Standards in Construction which can only be addressed from a very early stage ABOUT BRUCE SHAW • Best Practice – far earlier than with current requirements. The risks • Reputations are varied and while not new have to be assessed and and Standings Directors & Managers evaluated differently particularly in regard to the identification and procurement of supporting
Project Works • Health & Safety information to be able to make that assessment. Culture Competency in Health & Safety The levels of competency (in health & safety) are and have been for some time on an upward spiral. Safety in design and planning forms the bedrock of Requirements in regard to health & safety as well as effective safety management. In many cases this is individual actions are subject to on-going change. accurate and meaningful information – getting the A knowledge of legislation is rarely sufficient – it is right information to the right people at the right time. the ability to transfer legislative requirement to This is a collective process driven by the Project a particular issue or situation together with the Supervisor (Design Process) (PSDP) together with standard of practice that is key. Risk assessment designers and other parties, remains the cornerstone to this process.
There are a number of key issues to keep an eye on ‘Ghost’ Estates, Empty Sites and Buildings in 2012: Defunct sites and buildings are a case in point Legislation & Responsibilities of trends in health & safety - current issues of this Ireland still possesses one of the most demanding nature demand require their individual assessment legislative frameworks in Europe. While much of the (in regard to their status) under employer led law as safety legislation is EU led there are particular issues well as their status as ‘workplaces’. An understanding and requirements in Ireland which make legislation and clarity of control and responsibility of all and the responsibilities important: workplaces is fundamental to safety in Ireland and Irish legislation, supported by meaningful Ŕ 4BGFUZMFHJTMBUJPOSFMBUJOHUPDPOTUSVDUJPOQSPKFDUT and verifiable safety management systems and is included in a number of pieces of legislation procedures – this is not always a clear cut process which directly affect a range of people including and there are indirect responsibilities which may the client company, designers, contractors and not be fully appreciated. safety professionals Ŕ 5IFSFBSFTJHOJţDBOUJOEJWJEVBMSFTQPOTJCJMJUJFT placed on senior managers in charge of work places out Ŕ .BOZTUBUVUPSZSPMFTBSFDPNCJOFE GPSFYBNQMF employer, design, contractor, landlord etc
Make Appointments Assess Competence Safety Legislation Company Standards
Client Set Requirement Standards H&S Company Influence Safety
Provide Best Practice Information Communications
BRUCE SHAW HANDBOOK 2012 143 ABOUT BRUCE SHAW
Bruce Shaw Corporate and Community Activities
Bruce Shaw strives to be an active and responsible Bruce Shaw also actively encourage our employees contributor to the communities we work in. As such, to participate in various charity events throughout the Bruce Shaw makes corporate contributions to year, these have included: charitable organisations on an ongoing basis. Irish Kidney Association Below are some of the charitable organisations and events that are supported by Bruce Shaw and its employees.
• The Irish Kidney Association
• Focus Ireland
• Over the Wall
• The Children’s Sunshine Home
• The Children’s Fund for Health
• Barnardos
• Flora Marathon In July 2011, Liam Goggin, Senior Surveyor with Bruce Shaw, took part in the 180Km Ring of Kerry • Marie Curie Cancer Care Charity Cycle in aid of the Irish Kidney Association. • MyCharity Ltd. With the generous help of Bruce Shaw Liam and his ‘dometiques’ raised in excess of €5,000 for this • National Maternity Hospital worthy cause. • Niall Mellon Township The Irish Kidney Association provides help and • Orbis Plane Pull support to patients and the families of those going through renal failure, subsequent organ transplant • Preda Foundation and throughout the patient’s life. They also administer • Temple Street Children’s Hospital the National Organ Donor Card Scheme.
• Self Help Africa We would urge all to consider becoming an organ • St. Michael’s House donor and to “Give the Gift of Life”
In addition to charitable donations Bruce Shaw has Movember also provided pro-bono services to worthy charitable During November each year, Movember is organisations; most notably to the ‘Rose Project’ for responsible for the sprouting of moustaches on the building of the new Bwaila Maternity Hospital in thousands of men’s faces in Ireland and around the Malawi. The 100-bed facility is situated in the capital world. Men must start off at the beginning of the Lilongwe and replaced a rundown facility built in month clean shaven and then grow a moustache for 1939. As 30% of expectant mothers in Malawi are the entire month. The aim of which is to raise vital HIV positive, part of the role of the new facility is funds and awareness for men’s health, specifically to prevent the high rate of HIV transmission from prostate cancer. Neil Vaughan our Bruce Shaw mother to child. Bruce Shaw Group Chairman Project Manager Director took part and together Brendan O’Mara was the Project Director for this with the team raised €645. project and continues to be involved in various Rose Project projects on an ongoing basis.
144 BRUCE SHAW HANDBOOK 2012 SECTION 14 ABOUT BRUCE SHAW
White Collar Boxing Event 14 In November 2011, two members of our Dublin staff; Aidan Tuite and Alex O’Donnell participated in a
White Collar Boxing Event for Charity. The lads spent ABOUT BRUCE SHAW two months in intensive training for the fight, and on the night, both were successful in their respective bouts, with O’Donnell recording a ‘Knock-out’. A significant amount of money was raised for a number of charities including; Our Lady’s Hospital for Sick Children in Crumlin, and MS Ireland”. A large Joyce Country Challenge and very vocal contingent from Bruce Shaw attended On the 5th July 2011, Des O’Broin and Tony Kelly on the night to cheer the lads on. of Bruce Shaw took part in the 5th annual Joyce Country Hillwalking Challenge which gave them the opportunity to walk one of Ireland’s hidden gems, the circuit of Lough Nafooey. All monies raised went to the Galway/Mayo Hospice.
Over the Wall Bruce Shaw’s London office staff participated in the London Marathon in April 2011 and Standard Chartered Great City Run in July 2011, raising £5,170 for Over The Wall, a charity that provides residential activity camps for children affected by serious illness. Over the last four years, Bruce Shaw’s London office has raised nearly £15,000 for this amazing charity. In 2012 the London team will participate in the Standard Chartered Great City race again.
BRUCE SHAW HANDBOOK 2012 145 ABOUT BRUCE SHAW
Bruce Shaw Senior Personnel
John Ballance Paul Kehoe [email protected] [email protected]
Paul Body Peter McHale [email protected] [email protected]
Paul Boylan John McIlwaine [email protected] [email protected]
Colm Buckley Andrew Murray [email protected] [email protected]
Gerard Campbell Des O’Broin [email protected] [email protected]
Philip Cleary Saran O’Byrne [email protected] [email protected]
Felix Collins Brendan O’Mara [email protected] [email protected]
Steven Cooke Frank O’Sullivan [email protected] [email protected]
Rennie Dalrymple Chris Patrick [email protected] [email protected]
Patrick D’Arcy Rosni A Rahman [email protected] [email protected]
Richard Fogarty Patrick Ryan [email protected] [email protected]
Niall Greene Derry Scully [email protected] [email protected]
Hainah Haiyon Neil Vaughan [email protected] [email protected]
James Henderson Aidan Walsh [email protected] [email protected]
Richard Joyce David Wilson [email protected] [email protected]
146 BRUCE SHAW HANDBOOK 2012 SECTION 14 ABOUT BRUCE SHAW
Willie Aherne Tony Madden [email protected] [email protected] 14
Stephen Ashe Chris Matthews [email protected] [email protected] ABOUT BRUCE SHAW
Micheál Brosnan Brian McCay [email protected] [email protected]
John Butler Pat McDevitt [email protected] [email protected]
Paul Butler Oliver McGuckin [email protected] [email protected]
Gary Comerford Eamon O’Connor [email protected] [email protected]
Ray Condell Colin Park [email protected] [email protected]
Jonathan Cooke Jasmine Quek [email protected] [email protected]
Niall Cox Michael Riordan [email protected] [email protected]
Aideen Gannon Andy Smyth [email protected] [email protected]
Steve Harper Joanne Surgeon [email protected] [email protected]
Niall Harrington Elizabeth Thomlinson [email protected] [email protected]
Austin Hickey Elaine Ting [email protected] [email protected]
Jenny Johnston Mark Wearen [email protected] [email protected]
Mark Keane Terence Woulfe-Flanagan [email protected] terence.woulfefl[email protected]
Tony Kelly Daniel Wright [email protected] [email protected]
Kevin Kinsella [email protected]
BRUCE SHAW HANDBOOK 2012 147 ABOUT BRUCE SHAW
Our Clients
Abbott International Digital Realty Trust National Asset Management Agency (NAMA) ABN Amro Dublin Airport Authority National Development Finance Agency Albany Properties Durkin Estates National Institute for Bioprocessing Aberdeen Asset Managers Easons Research and Training Al Khozama Management Company Elan National Maternity Hospital Al Sharq Investments Electric Ireland National Roads Authority A&L Goodbody Electronic Data Systems National University of Ireland Allied Irish Bank Ellier Developments Natwest Bank Anderson Group Equity Bank Nissan Aramco Overseas Espirit Northern Bank Arnotts Fluor Novartis Arthur Cox Fujitsu O2 Aryzta AG Four Seasons Hotels Office of Public Works Oger International Amgen Gatwick Airport Limited Park Developments Bahrain Bay Developments Glen Dimplex Group Parkway Properties Bahrain Tourism Company Green Property Company Paul Newman New Homes Ballymore Properties Greencore Pedra Developments Bank of Ireland Grosvenor Pepsi Bank of Scotland Guidant Premier Group WLL Barratt Homes Hampstead Homes Pfizer BD Medical Harcourt Developments Pricewaterhouse Coopers B&Q Hard Rock Café Primark / Penneys Belfast Harbour Commissionaires Hayward Gallery Queens University of Belfast Belfast International Airports NBOS Redrow Homes Bellway Homes Health Services Executive Ritz Carlton BIH Housing Association Hewlett Packard Roads Service Northern Ireland Bloom Developments Hilton Hotels Royal Dublin Society Bord Gáis Eireann Hochtief PPP Solutions Ltd. Royal Sun Alliance Bovis Lendlease Howarth Homes plc Salvation Army Blood Transfusion Services Board Hypo Real Estate Holding AG Santana Residential Park British Land IBM Saudi Arabia Ministry of Education British Museum iGuzzini SPA Saudi Aramco British Telecom ING Real Estate Saudi Oger Ltd. Burger King Institutes of Technology, Ireland Sentry Hospitality ByrneWallace Intel Serco Caelum Developments Investec Bank Shelbourne Senior Living Castlelands Construction Irelandia South Eastern Education & Library Board Castlethorn Construction Irish Aviation Authority St. Luke’s Hospital CB Richard Ellis Irish Prison Service St. Vincent’s Hospital Central Bank & Financial Services Authority Johnson & Johnson Tamouh Investments of Ireland John Lewis Partnership Taylor Wimpey Chase Manhattan JP Morgan Chase The Savoy Group Chartered Accountants Ireland King Abdullaziz City for Science Titanic Quarter Children’s University Hospital and Technology Translink Church Commissioners for England KPMG Treasury Holdings Citibank Krediet Bank Trinity College Dublin City & Country Laganbank Development UCD Communicorp Lambeth College University College Dublin County & City Councils, Ireland Lancer Asset Management Ulster Bank County & City Councils, U.K. Lidl Ulster Rugby Cork University Hospital Mace United House Credit Suisse Macquarie Capital University of Ulster Crest Nicholson Marks & Spencer Victoria Dock Developments Crosbie Properties Mary Immaculate College Victoria Palace Theatre Dalkia Matheson Ormsby Prentice Visa Europe Daunton Soar Mater and Children’s Hospital Ward Homes David Lloyd Leisure McCann Fitzgerald Warner Chilcott Dell Menolly Homes Wates Group Department of Education & Science Ireland Mentor Graphics Westfield Shopping Towns Depfa Bank Merrill Lynch Whitbread Deutsch Bank Merrion Hotel William Ewart Properties De Vere Estates Ministry of Foreign Affairs William Fry Deloitte Microsoft Willis Insurance Diageo Mobily Windsor Motors Digicel Morrison Homes Wyeth Medica
148 BRUCE SHAW HANDBOOK 2012 Bruce Shaw working in 150 cities in over 40 countries.
Office Locations
BAHRAIN DUBLIN SAUDI ARABIA Building No 1468 Kestrel House Akaria, Building 16, Olaya Street P.O. Box 10963 Clanwilliam Place P.O. Box 67718, Riyadh 11517 Manama Dublin 2 Kingdom of Saudia Arabia T +973 17 746 892 T +353 1 661 4711 T +966 (0) 1215 1857 F +973 17 746 893 F +353 1 661 4722 F +966 (0) 1215 1862
BARBADOS INDIA SHANGHAI West Coast Mall B - 278 Ground Floor No. 617 Da Lian Rd. (w) Holestown St. James Chitranjan Park Ming Yao Building Barbados New Delhi - 110019 Shanghai, P.R. China T +1 246 432 7957 T +91 11 26273625 T +86 21 6587 0216 F +1 246 432 7958 F +91 11 26275929 F +86 21 6587 0185
BELFAST LIMERICK SINGAPORE Murray’s Exchange Bruce Shaw House No. 1 Grange Road 1 Linfield Road 6 Hartstonge Street #09 – 02 Orchard Building Belfast BT12 5DR Limerick Singapore 239693 T +44 (0)28 9032 1056 T +353 61 493 515 T +65 6298 5833 F +44 (0)28 9023 0940 F +353 61 493 516 F +65 6294 1609
BUCHAREST LONDON SYDNEY Clopotarii Vechi Street No. 18 Artillery House Level 4 56 Clarence Street Sector 1 Bucuresti 11-19 Artillery Row Sydney, NSW 2000 Romania London, SW1P 1RT Australia T +40 312 294 200 T +44 207 799 1100 T +61 432 368 120 F +40 312 294 210 F +44 207 799 1101 F +61 2 9922 6017
CORK MANCHESTER UNITED ARAB EMIRATES Hanover House Pall Mall Court 5th Floor Corniche Tower South Main Street 61-67 King Street Corniche Road, P.O. Box 7127 Cork Manchester, M2 4PD Abu Dhabi, UAE T +353 21 427 4474 T +44 161 618 1811 T +971 2 627 0088 F +353 21 427 6415 F +44 161 618 1100 F +971 2 627 0087
NEW YORK VIETNAM 275 Madison Avenue Level 6 Melinh Point Tower 6th Floor 2 Ngo Duc Ke St District 1 New York 10016 HCMC Vietnam T +1 212 878 8818 T +84 8 3520 2785 F +1 212 878 8817
PARIS 9 / 11 Allée de l’Arche Paris La Défense 92671 France T +33 1 70 92 37 91 F +33 1 49 97 1700
www.bruceshaw.com