Welcome to building.co.uk. This site uses cookies. Read our policy.

All the latest updates on building safety reform

Winning work in education & healthcare

Sponsored by Steel For Life

Costing Steelwork is a series from Aecom, BCSA and Steel for Life that provides guidance on costing structural steelwork. This quarter provides a market update and updates the five cost models previously featured in Costing Steelwork

Construction sector sentiment reached near record highs recently, and general business sentiment continued to rise as the UK economy reopened more. Improving construction workload powers this optimism. However, significant supply‑side issues around workforce constraints and materials procurement muddy the waters with the belief that everything is due to higher output levels across all sectors.

Activity is expected to remain busy through to the end of the second half of 2021, as consumer demand returns across a larger number of economic sectors. Business sentiment conditions therefore are likely to remain elevated as a mixture of expected and real improved sales and revenue occur over the remainder of this year.

But real risks remain, of further bumps in the road from the pandemic and a potential return of restrictions in some form should events deteriorate again. What will become clearer is the proportion of the rebound that is from the short-term cyclical spike, and that which is driven from the strength of underlying demand and structural factors propelling economic activity.

After faltering in early 2021, construction output regained its momentum and took another leg up in the second quarter of the year, according to the latest data from the Office for National Statistics (ONS). This helped push new work output back up towards pre-pandemic totals, but the level was still about 5% shy of this milestone. Underscoring the undulating nature of the rebound, all work construction output volume declined for the fourth month in a row with the release of July’s data.

Across the UK, the private housing and infrastructure sectors led the way in output rebounds. Infrastructure workload continued its strong growth trend out of 2020, rising to a level that now clearly surpasses its pre-pandemic levels. Within this sector, electricity, gas, and communications utilities work all recorded strong rates of growth over the two-year period from the start of 2019. In a further sign of construction industry durability, the largest sector by volume – private housing – has now recovered a substantial part of the ground lost during 2020. The commercial and private industrial sectors are still some way off returning to a pre-pandemic level.

Aecom’s composite index for building costs – comprised of materials and labour inputs – increased by 8.5% in the 12 months to Q2 2021. This is a headline figure, aggregating many different materials classifications, and one which masks a wider range of inflation rates for individual items. The largest increases continued to be in metals and timber products, especially those that are imported. A rolling quarter-to-quarter change for the composite index at June 2021 recorded a movement of 2.6%. The month-on-month change at June for materials only was 0.91%, which is equivalent to 11% annualised approximately. This underlines the notably elevated rate of input cost inflation currently.

Labour rates are increasing healthily again, after dipping last year in response to lockdowns and impaired demand for site trades and skills. Year-on-year change of broadly 8% for a collection of site trades is the current headline rate for wage inflation. However, similar to materials classifications, this does not convey the broader range of wage inflation for the different trades that make up the headline figure. Steelwork trades and bricklayers are seeing wage inflation of between 15% and 20% over the year to Q2 2021, although this figure is influenced by the dip in wages at the same time last year. Nevertheless, it highlights the strength of demand for key trades.

An aggregate measure of tender prices increased by 1% in the 12 months to Q2 2021. A denominator calculation effect influences this rate of change as Q2 2020 was the point at which tender prices peaked, according to Aecom analysis. Provisionally, Q3 2021 sees an approximately 4% increase over the year from Q3 2020 to Q3 2021. There is clear momentum now to increase prices in response to better output and demand for construction services, and also to address the acute pressure to recover significantly higher input cost trends over the latter parts of Q1 and Q2 2021. Overwhelmingly, trades that involve metals saw the steepest price rises in the last quarter. Materials input cost inflation is the largest driver of tender price rises but is also pushed higher by labour rate increases.

Not all of the materials cost inflation is being transferred through into tender prices at the moment, because not all of it can be without some impact on companies’ competitive positioning. Price changes will take longer to secure than the quick changes to input costs that were experienced over the first half of the year. Some of the input cost inflation is being absorbed at various stages along the supply chain. But the high cost inflation adds commercial pressure to the supply chain, and is difficult to sustain over an extended period without creating problems for companies’ financial management.

Aecom’s baseline forecast for tender prices are an increase of 4% from Q3 2021 to Q3 2022, and of 4% from Q3 2022 to Q3 2023. Risks are to the upside across the first 12-month period and with upside risks again over the second 12-month forecast period. The baseline forecast scenario sees a continuation of the incomplete economic recovery. Significant inflationary pressures will remain.

Holiday Inn tower, MediaCityUK, Manchester

Cost information is generally derived from a variety of sources, including similar projects, market testing and benchmarking. Due to the mix of source information it is important to establish relevance, which is paramount when comparing buildings in size, form and complexity.

Figure 2 represents the costs associated with the structural framing of a building, with a BCIS location factor of 100 expressed as a cost/m² on GIFA. The range of costs represents variances in the key cost drivers. If a building’s frame cost sits outside these ranges, this should act as a prompt to interrogate the design and determine the contributing factors.

The location of a project is a key factor in price determination, and indices are available to enable the adjustment of cost data across different regions. The variances in these indices, such as the BCIS location factors (figure 3), highlight the existence of different market conditions in different regions.

1. Identify which frame type most closely relates to the project under consideration

2. Select and add the floor type under consideration

3. Add fire protection as required.

For example, for a typical low-rise frame with a composite metal deck floor and 60 minutes’ fire resistance, the overall frame rate (based on the average of each range) would be:

The rates should then be adjusted (if necessary) using the BCIS location factors appropriate to the location of the project.

Steel frame to low-rise building 

Steelwork design based on 55kg/m2

Steel frame to high-rise building 

Steelwork design based on 90kg/m2

Steelwork design based on 110kg/m2

Composite floors, metal decking and lightweight concrete topping

Two-way spanning deck, typical 3m span with concrete topping up to 150mm

Precast concrete composite floor with concrete topping

Hollowcore precast concrete planks with structural concrete topping spanning between primary steel beams

Fire protection to steel columns and beams (60 minutes resistance)

Fire protection to steel columns and beams (90 minutes resistance)

Large-span single-storey building with low eaves (6-8m)

Steelwork design based on 35kg/m2

Large-span single-storey building with high eaves (10-13m)

Steelwork design based on 45kg/m2

Ficep UK Ltd, National Tube Stockholders and Cleveland Steel & Tubes, voestalpine Metsec plc, Wedge Group Galvanizing Ltd

Jack Tighe Ltd, Peddinghaus Corporation

This quarter’s Costing Steelwork provides an update of the five previously featured cost comparisons covering: offices, education, industrial, retail and mixed-use

These five projects were originally part of the Target Zero study conducted by a consortium of organisations including Tata Steel, Aecom, SCI, Cyril Sweett and the BCSA in 2010 to provide guidance on the design and construction of sustainable, low- and zero-carbon buildings in the UK. The cost models for these five projects have been reviewed and updated as part of the Costing Steelwork series. The latest cost models as of Q3 2021 are presented here. 

Below is an update to the offices cost comparison originally published in the Costing Steelwork Offices feature in Building magazine in April 2017.

One Kingdom Street, London, key features

Two structural options for the office building were assessed (as shown in figure 4): 

The full building cost plans for each structural option have been reviewed and updated to provide current costs at Q3 2021. Over the course of the year increased costs have been largely offset by contractors working on reduced or no margin. The costs, which include preliminaries, overheads, profit and a contingency, are summarised in figure 4.

The cost of the steel composite solution is 4% higher than for the post-tensioned concrete flat slab alternative for the frame and upper floors, but 2% lower on a total building basis. The lighter frame and faster erection result in reduced foundations and a shorter programme. The latter is the main reason for the lower cost.

Below is an update to the education cost comparison originally published in the Costing Steelwork Education feature in Building magazine in July 2017.

Christ the King Centre for Learning, Merseyside, key features

Three structural options for the building were assessed (as shown in figure 5), which include:

The full building cost plans for each option have been updated to provide current costs at Q3 2021. The comparative costs highlight the importance of considering total building cost when selecting the structural frame material.

The concrete flat slab option has a lower frame and floor cost compared with the steel composite option, but on a total-building basis, the steel composite option has a lower overall cost of £3,495/m² against £3,524/m². This is because of lower substructure and roof costs, alongside lower preliminaries resulting from the shorter programme.

Below is an update to the industrial cost comparison originally published in the Costing Steelwork Industrial feature in Building magazine in October 2017.

Distribution warehouse in ProLogis Park, Stoke-on-Trent, key features

Three frame options were considered:

The full building cost plans for each option have been updated to provide costs at Q3 2021. The steel portal frame provides optimum build value at £800/m²; glulam is least cost-efficient. This is primarily due to the cost premium for the structural members necessary to provide the required spans, which are otherwise efficiently catered for in the steelwork solution.

With a hybrid, the elements are from different suppliers, which raises the cost. The northlights option is directly comparable with the portal frame in relation to the warehouse and office frame. The variance is in the roof framing as the northlights need more of this. Other additional costs relate to the glazing of the northlights.

Below is an update to the retail cost comparison originally published in the Costing Steelwork retail feature in Building magazine in January 2018.

Three frame options were considered (as shown in figure 7) to establish the optimum solution for the building, as follows:

The full building cost plans for each option have been updated to provide costs at Q3 2021. The steel portal frame provides the optimum build value at £2,909/m², with the glulam option the least cost-efficient. The greater cost is due to the direct comparison of the steel frame solution against the glulam columns and beams/rafters. A significant proportion of the building cost is in the M&E services and fit-out elements, which reduce the impact of the structural changes.

The northlights option is directly comparable with the portal frame in relation to the main supermarket – the variance is in the roof framing as the northlights require more. Additional costs beyond the frame are related to the glazing of the northlights and the overall increase in relative roof area.

Below is an update to the mixed-use cost comparison originally published in the Costing Steelwork mixed-use focus feature in Building magazine in April 2018.

Holiday Inn tower, MediaCityUK, Manchester

The gross internal floor area of the building is 18,625m2. The 67m-high building is rectilinear with approximate dimensions of 74m x 15.3m. 

Three frame options were considered to establish the optimum solution for the building:

The full building cost plans for each option have been updated to provide costs at Q3 2021. The steel frame with composite deck continues to provide the optimum build value, with the overall building cost at £2,981/m².

Options 1 and 2 are arguably more typical for this building type. The base case structure is an unusual solution due to a decision to change the residential accommodation to office floors at a very late stage – time constraints precluded redesign of the tower block, hence the original Slimdek design was constructed.

This Costing Steelwork article produced by Patrick McNamara (director) and Michael Hubbard (associate) of Aecom is available at www.steelconstruction.info.

The data and rates contained in this article have been produced for comparative purposes only and should not be used or relied upon for any other purpose without further discussion with Aecom. Aecom does not owe a duty of care to the reader or accept responsibility for any reliance on the article contents

Committee says £19m payment to Costain-Skanska JV saved project millions more 

Transport committee wants to see cost-benefit analysis on trimmed back Integrated Rail Plan

In contrast to other famous stadium projects, the Olympic Stadium was on time and on budget - how did those involved deliver it?

The 2020s will be the decade when the foundations of the UK’s energy transition to net zero are established. What is involved in this transition, and how are things progressing?

Output is levelling off as the Ukraine war and Chinese covid lockdowns hit confidence. Meanwhile, the same factors are adding inflationary pressures 

The focus of office fit-out is increasingly on using digital systems to optimise the user experience. How best can one realise the opportunities of smart technology?

Site powered by Webvision Cloud