Bruce Shaw Handbook 2010

Handbook 2010

A special thanks to all those involved in this years publication. Editorial Team Derry Scully, John Carleton, Michelle Quinn Contributors Willie Aherne, Stephen Ashe, Paul Boylan, Gerard Campbell, Gary Comerford, Steven Cooke, Niall Cox, Niall Harrington, Mark Keane, Paul Kehoe, Tony Kelly, Jamie McDonagh, Saran OByrne, Jack OSullivan, Michael Riordan, Brian Thackaberry, Mark Wearen, Terence Woulfe-Flanagan

Foreword/Welcome

Foreword/WelcomeWelcome to the new look Bruce Shaw Handbook. With the wealth of resources in the Irish construction Industry now looking at locations around the world to display their talents we have changed the content of our handbook to reflect this growing internationalisation of our industry. This year we include a review of the world players and construction output around the world and for the first time we take a closer look at the U.S.A. I hope you find the new sections useful and informative. We have kept the best of the Irish section which is a regular check point for many and always receives good feedback. New services on offer this year from Bruce Shaw include BER assessments , quantum support in legal work, solvency assistance and specialist services on sustainability projects such as wind farms etc. details of which can be found in the handbook and on our web site BRUCESHAW.IE. Id like to take this opportunity to thank all the contributors to this years edition and hope you find the 2010 Handbook as useful as its predecessors.

Bruce Shaw Handbook 2010

1

Section One: Global Construction Market 2010 The Year of the Tiger? Global Construction Output Index of International Construction Costs Top International Contractors Top International Design Firms Global Inflation Overview of Percentage Change in Global Output 2008 Oil Production 2008 Oil Consumption Section Two: Europe Market Review Europe Production Index in the Construction Sector Construction Output Annual Variation Top European Contractors Top European Design Firms Construction Cost New Residential Buildings Index Consumer v Construction Inflation EU Procurement Timescales EU Procurement Thresholds EU Labour Costs and Productivity Currency Movements Euro v Various European Currencies Section Three: Ireland Bruce Shaw Tender Price & Cost Indices SCS Tender Price Index Consumer v Construction Price Inflation Employment in Construction Bruce Shaw Average Irish Construction Costs Basic Hourly Wage Rates Basic Hourly Wage Rate Mechanical & Electrical Top Irish Main Contractors Top Irish Services Sub-Contractors Section Four: United Kingdom Market Review U.K. U.K. Construction Output Resource Cost Index of Non-Housing Building Output by Type of Work (New Build) Contractors Output by Region Top U.K. Contractors Top U.K. Architectural Firms Top U.K. Engineering Firms Euro v Pound Exchange Rates Section Five: Middle East Market Review GCC Countries Active Projects in Gulf Region GCC Key Statistics Outline Construction Cost Comparisons GCC Nations Main Contractors Middle Eastern Design Firms Sustainability GCC Single Currency Update

6 7 7 8 9 10 10 11 11

14 15 15 16 16 17 17 18 18 19 19

22 23 23 23 24 26 26 27 27

30 31 31 32 32 33 34 34 35

38 38 39 40 41 42 43 43

2


Contents

Section Six: United States Market Review U.S. Value of Construction Output Public/Private U.S. Construction Output by Type of Work Annual Construction Cost Index U.S. Regional Building Cost Index Total U.S. Employment in Construction Change in U.S. Employment in Construction U.S. Earnings in Construction Average Earnings of Nonsupervisory Workers in Construction Median Hourly Wages of the Largest Occupations in U.S. Construction Top U.S. Contractors Top U.S. Design Firms Euro v Dollar Exchange Rates Section Seven: Irish Statistics Construction Output Commentary Value of Construction Output Construction Output Gross National Product Public/Private Breakdown Sectoral Breakdown Breakdown of Construction Output Regional Breakdown of Construction Output Sectoral Breakdown of General Contracting Construction Purchasing Managers Index Property Performance Annual Housing Completions New Housing Completions by Type New Housing Completions by Region Society of Chartered Surveyors House Rebuilding Costs Planning Charges Fire Certificate Charges Section Eight: Topical Issues Whole Life Costing in Design Risk Management International Estimating Section Nine: About Bruce Shaw Cost Management Services Project Management Services Consultancy Services Procurement Safety Management Bruce Shaw Senior Personnel Our Clients Office Locations

46 46 47 47 47 48 48 49 49 49 50 51 51

54 54 55 55 55 56 56 57 57 58 58 59 59 59 60 61 61

64 66 68

72 74 75 76 77 78 80


3

Cuisine de France, Grange Castle

SECTION 1

Global Construction Market

2010 The Year of the Tiger?2009 is finally behind us and the international consensus appears to be that GDP will return to growth on a global scale in 2010. The optimists are hoping that at the end of 2010, we will be reflecting that the recent trend in global economics was best represented by a V pattern. Some believe however that we are facing a period of further uncertainty which will see a growth pattern more akin to a W curve with further downturns to come. This uncertainty hinges on a number of key factors including whether or not the international community is capable of implementing real change in the manner in which financial markets and banking are regulated. This is not yet clear and how it develops could well shape growth patterns for the short to medium term. Any recovery is still fragile and reflects the fiscal stimuli many governments have injected into their economies. The boom came to a sudden halt in late 2008 when the U.S. housing bubble burst, inflicting economic distress on financial institutions worldwide. The resulting chaos in the credit markets caused projects around the world to be cancelled or deferred, sending the global construction industry into recession. While the recession has taken its toll on construction markets, many large contractors are being buoyed by infrastructure orders. Civil Engineering is less impacted than building and we are seeing that stimulus packages, especially in the U.S. and the U.K., have started to kick in. Large government financed infrastructure projects have kept the construction industry afloat in many countries. Once the stimulus packages finish, the private sector will hopefully pick up and new work will emerge from growing interest in climate and sustainability issues. The outlook is for little growth in the short term and possibly some further contraction. Figures for the final quarter of 2009 indicate that the recovery has already taken hold with the true tiger economy that is China powering ahead. Experts believe that this is a pattern that will be repeated in the other BRIC countries Brazil and India. Commodities prices which had seen some recovery in 2009 will probably start to rise again in 2010 given the projections of a sustained increase in growth in the BRIC economies in particular, but also in wider global markets. Not surprisingly, local costs in those markets which have suffered the most like Ireland have fallen the most dramatically other markets not so severely affected but still facing a slowdown are only now seeing prices fall as demand slumped towards the end of 2009. The continuous drop in tender levels in Ireland since early 2007 has led to significant changes over the last two years in comparative costs between Ireland and other nations, particularly those benefiting from financial stimuli. Ireland has not benefited from such a stimulus. Because of this and other local factors, it is likely that the extent of the fall in construction costs seen in Ireland will be greater than other developed nations. For many firms diversity is the key. The financial crisis has had its greatest impact on smaller, less capable construction firms. The impact of the worldwide recession is not evenly distributed but rather market oriented. Bruce Shaw is taking advantage of these opportunities in the World market and has experience of working in over 130 cities in 40 countries. The most recent projections for world construction output are shown on the map opposite, alongside our index of International Construction Costs.

Government financed infrastructure projects have kept the construction industry afloat in many countries.

6


SECTION 1 Global Construction Market

Global Construction Output U.S.$4.8 trillionU.S.$bn Sweden/ Norway/ Finland 78 Canada 156 U.S.A. 1163 Europe 1540 Turkey 12.5

Russia 90 Japan 436

Middle East 125 India 81

N. Africa 28 Africa 70 S. America 101 S. Africa 15

China 321

Korea 107

Hong Kong 19

Malaysia 12 Australia 76 New Zealand 14

All figures are based upon 2008 annual output with exchange rates as at October 2009. Source of data: Reading University References: Asia Construct, Euroconstruct and national statistics

Index of International Construction Costs 2009140 120 100 80 60 40 20 0 Spain UK Sweden Romania Hungary Czech Republic Poland Greece Ireland Australia Germany France Japan China UAE USA Italy Switzerland India

Source: Bruce Shaw Partnership Note: Construction costs are subject to many variables which can be related to location (e.g. local legislation, custom and geographic position) and many others which are Client specific (e.g. specification). The ranges stated above are therefore indicative only and any international cost comparison will depend on the identification and quantification of these variables and adequate consideration of project specifics, exchange rates and current market conditions. Bruce Shaw is available to assist Clients working to benchmark costs internationally by ensuring that project specifics and location factors are identified and addressed.


7

Top 20 International Contractors(Based on Total Firm Contracting Revenue) 2009 2 4 6 8 7 5 3 1 Rank 2008 3 1 Firm VINCI, France Revenue $ bn 49.90 34.40 29.30 26.00 24.00 23.30 21.70 27.70 32.40 34.50

4 5 7

2

10 12 14 16 18 17 15 13 11

9

12 11 9

6

8

GRUPO ACS, Spain BECHTEL, U.S.A. FCC, Spain

CHINA COMMUNICATIONS CONST. GROUP, China

CHINA STATE CONST. ENGINEERING CORP., China

HOCHTIEF, Germany

CHINA RAILWAY CONSTRUCTION CORP., China

BOUYGUES, France

CHINA RAILWAY GROUP, China

CHINA METALLURGICAL GROUP, China

10 20 18 14 ** 13 15

STRABAG, Austria

SKANSKA, Sweden

20.60 20.30 19.10

KAJIMA CORP., Japan FLUOR CORP., U.S.A. EIFFAGE, France

SHIMIZU CORP., Japan

19.00 17.90 17.30

OBAYASHI CORP., Japan BILFINGER BERGER, Germany BALFOUR BEATTY, U.K.

20

19

19 17

15.90 15.20

16.50 15.80

(Based on Contracting revenue from Projects Outside Home Country) 2009 2 4 6 8 7 5 3 1 Rank 2008 2 3 1 Firm HOCHTIEF, Germany Revenue $ bn 26.18 15.95

4 6 5 7

SKANSKA, Sweden BECHTEL, U.S.A. SAIPEM, Italy BOUYGUES, France

STRABAG, Austria

VINCI, France

18.49 15.05 13.57 11.67

13.98

10 12 15 17 13 11

9

9 10 13 11 8

BOVIS LEND LEASE, Australia FLUOR CORP., U.S.A. KBR, U.S.A. FCC, Spain

TECHNIP, France

BILFINGER BERGER, Germany

10.70

10.76 9.24 8.53 7.97 7.14 9.14

16 18

20

19

20 16 19

18

14

12

15

ROYAL BAM GROUP, The Netherlands CHINA COMMUNICATIONS CONST. GROUP, China CONSTRUTORA NORBERTO ODEBRECHT, Brazil GRUPO ACS, Spain CONSOLIDATED CONTRACTORS GROUP, Greece BALFOUR BEATTY, U.K.

6.04

5.86 5.47 5.10 5.53

2009 ranking is based on 2008 construction contracting revenue Source: Engineering News Record

8



Top 20 International Design Firms(Based on Total Firm Revenue) 2009 2 4 6 8 7 5 3 1 Rank 2008 4 5 6 7 1 2 Type EAC EAC EC EC E EA JACOBS, U.S.A. Firm Revenue $ bn 5.50 5.22 5.21

AECOM TECHNOLOGY CORP., U.S.A. URS CORP., U.S.A. FLUOR CORP., U.S.A. CH2M HILL, U.S.A AMEC PLC, U.K.

11 10 8 3 9

EAC E

WORLEYPARSONS, Australia

4.29 3.89 3.73 3.18 3.17

10 12 14 16 18 17 15 13 11

9

EC EC E EA EC EC EAC EC E E E E

FUGRO, The Netherlands

THE SHAW GROUP, U.S.A. WS ATKINS, U.K

SNC-LAVALIN INTERNATIONAL, Canada ARCADIS, The Netherlands BECHTEL, U.S.A. KBR, U.S.A. TETRA TECH, U.S.A.

3.06

3.07

16 20 25 21 17

14

12

13

2.69 2.45 2.16 1.57 2.55

2.26

MOTT MACDONALD GROUP, U.K. PARSONS BRINCKERHOFF, U.S.A. ARUP GROUP, U.K.

1.69 1.55

20

19

22

DAR AL-HANDASAH CONSULTANTS, Egypt WSP GROUP, U.K.

1.40

1.46

(Based on revenue from Projects Outside Home Country) 2009 1 2 4 6 8 7 5 3 Rank 2008 1 2 3 7 Type E EC EC EA E E Firm FUGRO, The Netherlands WORLEYPARSONS, Australia FLUOR CORP., U.S.A. AECOM TECHNOLOGY CORP., U.S.A. SNC-LAVALIN INTERNATIONAL, Canada ARCADIS, The Netherlands JACOBS, U.S.A. AMEC PLC, U.K. Revenue $ bn 2.96 2.39 2.08 2.02 1.85 1.78 1.32 1.13 1.95 2.33 2.76

14 4 5

EAC

10 12 14 16 18 17 15 13 11

9

6 10 12 16 20 22 25 23 19 15 11 9 8

EC EC EA

EC

KBR, U.S.A

EC EC E E

FOSTER WHEELER, U.S.A. POYRY, Finland

BECHTEL, U.S.A.

DAR AL-HANDASAH CONSULTANTS, Egypt

1.46

TECNICAS REUNIDAS, Spain MOTT MACDONALD GROUP, U.K.

0.966 0.962 0.892 0.879 0.831 0.813

0.995

E

E E

WSP GROUP, U.K.

ARUP GROUP, U.K.

20

19

EAC

EC

HATCH GROUP, Canada HOCHTIEF, Germany URS CORP., U.S.A.

0.867

2009 ranking is based on revenue for design services performed in 2008. Key to Type of Firm: A - architect; E - engineer; C - contractor Source: Engineering News Record


9

Global Inflation %5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2002 2003 2004 Emerging economies 2005 World 2006 2007 Advanced economies 2008 2009

Note: Graph is based on core inflation Source: International Monetary Fund

Overview of Percentage Change in Global OutputRegion Advanced Economies United States Euro area Germany France Italy Spain Japan United Kingdom Canada Emerging & Developing Economies Africa Central & Eastern Europe Russia China India Middle East Brazil Mexico World outputSource: International Monetary Fund

January, 20102010 (f) 2.7% 1.0% 1.5% 1.4% 1.0% -0.6% 1.7% 1.3% 2.6% 4.3% 2.0% 3.6% 10.0% 7.7% 4.5% 4.7% 4.0% 3.9% 2011 (f) 2.4% 1.6% 1.9% 1.7% 1.3% 0.9% 2.2% 2.7% 3.6% 5.3% 3.7% 3.4% 9.7% 7.8% 4.8% 3.7% 4.7% 4.3%

2008 0.4% 0.6% 1.2% 0.3% -1.0% 0.9% -1.2% 0.5% 0.4% 5.2% 3.1% 5.6% 9.6% 7.3% 5.3% 5.1% 1.3% 3.0%

2009 -2.5% -3.9% -4.8% -2.3% -4.8% -3.6% -5.3% -4.8% -2.6% 1.9% -4.3% -9.0% 8.7% 5.6% 2.2% -0.4% -6.8% -0.8%

10



2008 Oil ProductionRank 1 2 3 4 5 6 7 8 9 10 11 12 Russia United States Iran China Canada Mexico United Arab Emirates Kuwait Venezuela European Union Norway Country Saudi Arabia Barrels/Day 10,780,000 9,790,000 8,514,000 4,174,000 3,973,000 3,350,000 3,186,000 3,046,000 2,741,000 2,643,000 2,538,000 2,466,000 Rank 13 14 15 16 17 18 19 20 21 22 23 24 Brazil Iraq Algeria Nigeria Angola Libya United Kingdom Kazakhstan Qatar Indonesia India Azerbaijan Country Barrels/Day 2,422,000 2,385,000 2,180,000 2,169,000 2,015,000 1,875,000 1,584,000 1,429,000 1,208,000 1,051,000 883,500 875,200

2008 Oil ConsumptionRank 1 2 3 4 5 6 7 8 9 10 11 12 Country United States European Union China Japan India Russia Germany Brazil Saudi Arabia Canada Korea, South Mexico Barrels/Day 19,500,000 14,440,000 7,999,000 4,785,000 2,940,000 2,800,000 2,569,000 2,520,000 2,380,000 2,260,000 2,175,000 2,128,000 Rank 13 14 15 16 17 18 19 20 21 22 23 24 France Iran United Kingdom Italy Indonesia Spain Netherlands Taiwan Australia Thailand Singapore Venezuela Country Barrels/Day 1,986,000 1,755,000 1,710,000 1,639,000 1,564,000 1,562,000 962,900 959,000 953,700 942,000 896,000 760,000

Source: CIA World Factbook


11

Digital Realty Trust, St. Denis, Paris

SECTION 2

Europe

Market Review EuropeDuring 2009, the European construction industry took a deep breath whilst it experienced its worst year in more than a decade. Construction output in the EU fell by as much as 7.7% and for 2010 we expect that a further, although lesser decline, will occur. However, some countries within the EU maintained positive growth for the year, albeit, not to the same degree as previous years, namely, Poland, Czech Republic and Germany whilst Ireland and Spain experienced the greatest decline in output. With the EU economy now emerging from recession and with GDP growth returning to positive figures, our long term view is of a gradual recovery. As a result, it is anticipated that the fall in EU construction industry will be around 2.2% for 2010, with further countries to be added to the list of positive growth in output such as Romania and Slovakia. Lack of credit availability affected private sector development immensely in 2009, in particular the residential sector. With the more developed western markets being worst affected and having a large oversupply of units. Conversely, in Eastern Europe, demand still exists for new units, but increased unemployment, credit availability and affordability has stalled the market and considerable re-adjustment of sales prices is occurring. Smaller, lower risk and more sustainable developments of all types are being given the green light by funding institutions, although the requirements being asked are more stringent than before. From our network of offices throughout Europe, Bruce Shaw have been working on both the Client and funding side to restructure projects of various types and sizes. Government intervention in the construction market has varied from country to country. Government guaranteed mortgages and investment incentives for multi-national companies being just some of the methods used. The European Union Cohesion and Structural funds 2007-2013, which averages approximately 60 Billion investment per year divided amongst the 27 member states, provides good opportunities for work in the Public Sector. Member states have however scaled back their expenditure on capital projects due to the crisis and this action is having an effect on the absorption rate for EU funds which is currently on average 9%. The low absorption rate is being addressed by member states who are looking at alternative means of financing capital projects such as PPPs or concessions and it is worthy to note that public sector civil engineering is the only market segment which has not declined in 2009 and is expected to increase again in 2010. We are currently involved with various government institutions in Europe in relation to PPP projects and EU fund management. Generally the Construction Sentiment Indicator within the EU rose over the last year and the outlook for 2010 is not as gloomy as 2009, although its still far from being positive. It is expected that by 2011, construction output will be back in positive territory and in 2012 the construction sector should outperform GDP growth.

The Construction Sentiment Indicator within the EU rose over the last year and the outlook for 2010 is not as gloomy as 2009.

14


SECTION 2 Europe

Production Index in the Construction Sector 2000 - 2009110

105

100

95

90

04-2006

04-2009

04-2008

04-2004

07-2006

07-2009

04-2002

04-2005

07-2008

04-2003

07-2004

04-2007

10-2000

07-2002

10-2006

01-2006

Euro area, seasonally adjusted series

Trendline

EU27, seasonally adjusted series

Trendline

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. Source: Eurostat

Construction Output Annual VariationCountry

% change compared with the same quarter of the previous year Belgium Q4-08 -8.8% -2.8% -7.2% Q1-09 -5.5% -5.3% Q2-09 -10.7% -16.8% -28.3% -37.8% -11.6% -11.2% -32.4% -4.0% -2.0% -3.1% n/a -9.1% 4.0% 1.6% -9.4% Q3-09 -16.9% -16.7% -28.5% -14.2% -17.8% -8.0% n/a 3.3% 0.8% -6.2%

Ireland Spain Italy Greece

Estonia

Germany

Denmark

Czech Republic

Bulgaria

-6.6% -22.4% -33.7% -19.7% -6.9% -11.4% -9.2% -3.8% 3.0% -2.0% 2.7% -2.1% 4.3% 1.6% 1.3% -4.9% -1.5% -3.8% -2.4%

-10.5% -12.2% -31.3% -11.1% -7.0% n/a

-11.4%

-35.5% -10.9% -12.6% -29.8% -42.8% -4.5% -3.8% 3.3% 1.7% 1.2% 0.8%

-36.9%

France Cyprus

-4.7%

-13.6% -36.8% -49.3% -4.0% -5.4% -7.4% 8.6% 5.3%

Hungary Malta

Luxembourg

Lithuania

Latvia

-48.0% -0.7%

Poland

Austria

Netherlands

-5.6% -4.3% -19.1%

-6.9% 0.4% -15.1% -5.4% -1.3% -3.5%

-0.9% -4.9%

Sweden

Finland

Slovakia

Slovenia

Romania

Portugal

14.6% 14.0% -5.1% 1.7%

-13.8% -16.1% -4.3%

-19.0% -19.0% -12.4% -11.3% 3.5% -8.4%

-24.4% -10.6% -8.5% -2.3% -7.2%

-21.6%

Civil engineering AverageSource: Eurostat

Building Average

EU Average

United Kingdom

-8.0% -8.4% -7.3%

-10.7% -12.8% -1.4%

-13.8%

-4.0%

-12.0% 3.2%

-8.8%

10-2009

01-2009

07-2005

07-2003

07-2007

10-2008

01-2008

10-2004

01-2004

04-2001

10-2002

01-2002

10-2005

01-2005

10-2003

10-2007

01-2003

01-2007

07-2001

10-2001

01-2001

85


15

The Top 15 European Contractors based on Total RevenueRank 2009 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 HOCHTIEF, Germany VINCI, France STRABAG, Austria SKANSKA, Sweden BOUYGUES, France SAIPEM, Italy BILFINGER BERGER, Germany TECHNIP, France FCC, Spain ROYAL BAM GROUP, The Netherlands BALFOUR BEATTY, U.K. CONSILIDATED CONTRACTORS GROUP, Greece GRUPO ACS, Madrid EIFFAGE, France PETROFAC, U.K. 17.92 12.66 10.92 10.30 9.29 7.99 7.36 7.33 5.84 4.89 4.14 3.74 3.49 2.39 2.28 Firm Revenue bn

2009 ranking is based on 2008 construction revenue

The Top 15 European Design Firms based on Total RevenueRank 2009 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 E E EA E E E E EC E E E EC EC E EC AMEC, U.K. FUGRO, The Netherlands WS ATKINS, U.K ARCADIS, The Netherlands MOTT MACDONALD, U.K. ARUP GROUP, U.K. WSP GROUP, U.K. SAIPEM, Italy GRONTMIJ, The Netherlands POYRY, Finland RAMBOLL GRUPPEN, Denmark TECNICAS REUNIDAS, Spain HOCHTIEF, Germany HALCROW GROUP, U.K. EGIS, France 2.18 2.17 1.84 1.74 1.15 1.06 0.96 0.89 0.83 0.83 0.76 0.75 0.62 0.60 0.48 Type Firm Revenue bn.

2009 ranking is based on revenue for design services performed in 2008. Key to Type of Firm: A - architect; E - engineer; EC - engineer-contractor Source: Engineering News Record

16


SECTION 2 Europe

Construction cost New Residential Buildings Index (2005=100)Country Belgium 108.62 Q1-07 Q3-07 110.40 110.07 Q1-08 110.97 111.40 Q3-08 113.80 112.19 Q1-09 112.30 112.14 Q3-09 112.20 107.40 116.30 91.03 N/A 111.58

Spain Italy

Greece

Ireland

Estonia

Germany

Denmark

Czech Republic

109.33e 104.00 121.20 113.85

106.20

112.89e 105.50 125.80 110.93

105.90 128.50 107.47 111.90

113.78e

115.56e 108.80 129.90 116.90 101.20

113.78e 107.00 122.50 97.19

France

108.47e 109.08 145.70 118.18 N/A

110.29e

107.50

109.60 110.76e 110.71 N/A 112.31e

113.69e 115.86 N/A

113.25e

120.46e 118.43e 121.86 N/A

118.68e 116.51e 120.28 127.98 N/A

114.00

118.72e 116.68 N/A

114.40

Latvia

Cyprus

Poland

Austria

Netherlands

Hungary

Luxembourg

Lithuania

165.40 105.71e 107.87 132.51

108.80e 106.47 107.83

105.02e

113.40e 109.77 107.24

107.53e 117.10e 112.20 113.84 109.71 111.30 110.10

139.36

181.80

188.60 109.86e 120.80e 113.47 117.14 143.86

185.00 110.03e 113.26e 116.30 141.50e 114.50 116.70 113.54 115.13

165.70 118.01 N/A

119.69

122.30e

124.70e 112.20e 115.96 115.63 111.53 114.20 112.70 N/A

104.43 104.69 106.50 106.70 107.57 117.39e

109.66 123.48e 108.80 112.59e 125.90e 109.59 112.00 108.90 110.63 109.50

116.40 149.53e 115.60 118.64e 142.20e 114.25 118.16 109.50 115.10 116.20 113.98

Finland

Slovakia

Slovenia

Romania

Portugal

132.63e 112.20

111.24

European Union AverageSource: Eurostat

Norway

Turkey

United Kingdom

Sweden

108.95e 124.50e 108.04 108.30 108.50

114.08e 138.80e 116.07 111.26 111.20

112.70

116.90 119.14e

135.40e 119.67 111.25

101.20e

118.31e

102.00e 137.40e 120.69 111.12e

e=Estimated value

Consumer v Construction Inflation6%

4%

2%

0

-2%

-4%

2007

2008 European Union Average Consumer Inflation

2009 New Residential Const Cost

Source: Eurostat


17

EU Procurement Timescales 2010Prior Indicative Notice (PIN) Publish at least 52 days prior to date contract notice is dispatched to avail of reduced time limits (max. 12 mths) Open Procedures Time Limit for Receipt of Tender If no PIN: not less than 52 days If PIN: General rule minimum time 36 days and in any case not less than 22 days from date contract notice is dispatched Restricted Procedure Time Limit for Receipt of Expressions of Interest Not less than 37 days from date contract notice is dispatched Time Limit for Receipt of Tenders If no PIN: Not less than 40 days If PIN: General rule minimum time 36 days, but in no circumstances less than 22 days from the date invitation to tender is dispatched Accelerated Restricted Procedure Time Limit for Receipt of Expressions of Interest n Not less than 15 days from date contract notice is dispatched Time Limit for Receipt of Tenders n Not less than 10 days from date invitation to tender is dispatched Negotiated Procedure with Prior Publication of a Contract Notice Time Limit for Receipt of Application n Not less than 37 days from date contract notice is dispatched Negotiated Accelerated Procedure with Prior Publication of a Contract Notice Time Limit for Receipt of Application n Not less than 15 days from date contract notice is dispatched Contract Award Notice Time Limit for Receipt of Issue n 48 days from award of contract

EU Procurement Thresholds 2010Works Contract Notice/PIN 4,845,000 Threshold applies to Government Departments and Offices, Local and Regional Authorities and other public bodies. 125,000 Threshold applies to Government Departments and Offices 193,000 Threshold applies to Local and Regional Authorities and public bodies outside the Utilities sector. 4,845,000 For entities in Utilities sectors covered by GPA

Supplies and Services Contract Notice Contract Notice Utilities Works Contracts/Prior Indicative Notice Supplies and Services

387,000 For entities in Utilities sectors covered by GPA

Note: The above thresholds are valid until 31st December 2011. Source: www.etenders.gov.ie

18


SECTION 2 Europe

EU Labour Costs and Productivity 2009Country Austria Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Productivity 83 n/a 45 80 40 81 97 92 59 44 100 75 Hr/Cost Country 18.61 Latvia 17.27 Lithuania 6.68 Luxembourg 28.04 Netherlands 6.63 Poland N/A Portugal 24.58 Romania 18.92 Slovakia 12.09 Slovenia 4.51 Spain 18.18 Sweden 16.94 U.K. Productivity n/a n/a 142 101 38 50 n/a 55 n/a 78 84 82 Hr/Cost 4.54 4.90 19.33 26.11 7.42 9.21 3.01 4.28 12.35 13.75 29.57 21.75

Source: Productivity figures are from OECD for 2008 and based on GDP per hours worked for the whole labour market Hr/Cost data source Eurostat up to 3rd Qtr of 2009, except for: Italy 2nd Qtr; Luxembourg & Netherlands 1st Qtr

Currency Movements Euro v Various European CurrenciesBulgarian lev Croatian kuna Czech koruna Danish krone Estonian kroon Polish zloty Romanian leu Russian Rouble

2010* 2009 2008 2007 2006 2005

1.96 1.96 1.96 1.96 1.96 1.96

7.30 7.34 7.22 7.34 7.32 7.40

26.06 26.44 24.95 27.77 28.34 29.78

7.44 7.45 7.46 7.45 7.46 7.45

15.65 15.65 15.65 15.65 15.65 15.65

4.04 4.33 3.51 3.78 3.90 4.02

4.13 4.24 3.68 3.34 3.53 3.62

41.93 44.14 36.42 35.02 34.11 35.19

* Note: Based on January and February exchange rates Source: European Central Bank


19

Mary Immaculate College

SECTION 3

Ireland

Bruce Shaw Tender Price & Cost Indices 2000 - 2010The Bruce Shaw tender price index, which is shown graphically below, shows that, on average, construction prices fell by 17% during 2009. As the year progressed and as new projects became increasingly scarcer, contractors were forced to bid for projects at ever lower prices, in order to maintain jobs for their key employees. This has led to a situation where by the end of the year, contractors were bidding for work at 15% to 20% below cost. The private sector market is almost stagnant at the moment with an oversupply in most areas and the public sector capital programme has been cut back significantly. As a consequence there is an extreme shortage of new projects coming to the market this year. Competition will therefore remain fierce and we are predicting that tender prices will fall by a further 5%-6% during 2010. This represents an overall fall from the peak in 2007 of over 30% and offers exceptional value for Clients for the few projects that do proceed. However it must be realised that below cost tendering is completely unsustainable in the long term and measures will have to be taken to guard against the inevitable result of company failures. It is important to distinguish between tender prices and construction input costs. The former are subject to market pressures while the latter reflect the actual costs of labour and materials. With the exception of electricians, who obtained an increase following an industrial dispute last year, there have been no increases in construction labour rates since 2008 and none are anticipated during 2010. Material prices are reducing somewhat but by less than the general decline in output since manufacturers costs actually rise as a result of smaller production volumes. Overall we anticipate that input costs will reduce by 3% in 2010 following a 2.5% reduction last year.

On average, construction prices fell by 17% during 2009.

Bruce Shaw Tender Price & Cost Indices 2000 - 2010190 180 170 160 150 140 130 120 110 100

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010 (f)

Average Tender Price

Construction Input Cost

2001 Tender % Cost % 6 9

2002 -2 3

2003 -4 3

2004 4 2

2005 4 3

2006 3 3

2007 0 3

2008 -12 3

2009 2010 (f) -17 -2 -5 -3

Source: Bruce Shaw Partnership

22


SECTION 3 Ireland

SCS Tender Price Index 2000 - 2009155 150 145 140 135 130 125 120 115 110 105 100 1h 00 2h 00 1h 01 2h 01 1h 02 2h 02 1h 03 2h 03 1h 04 2h 04 1h 05 2h 05 1h 06 2h 06 1h 07 2h 07 1h 08 2h 08 1h 09 2h 09

Source: Society of Chartered Surveyors

Consumer v Construction Price Inflation 1997 - 200915 10

5

0

-5

-10

-15

-20

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Construction Price Inflation

Consumer Price Inflation

Source: Central Statistics Office/Bruce Shaw Partnership

Employment in Construction (000s)280 260 240 220 200 180 160 140

Jan-Mar 07

Jul-Sep 07

Jan-Mar 04

Oct-Dec 04

Jan-Mar 05

Oct-Dec 05

Jan-Mar 06

Oct-Dec 06

Oct-Dec 07

Apr-Jun 04

Jul-Sep 04

Apr-Jun 05

Jul-Sep 05

Apr-Jun 06

Jul-Sep 06

Apr-Jun 07

Jan-Mar 08

Apr-Jun 08

Jul-Sep 08

Oct-Dec 08

Jan-Mar 09

Apr-Jun 09

Source: Central Statistics Office

Jul-Sep 09


23

Bruce Shaw Average Irish Construction Costs 2010The average construction costs table is generated using Bruce Shaws Cost Database and sets out typical building construction costs. Our database is the largest construction cost database in Ireland. Average Costs Commercial Offices Suburban Naturally Ventilated Shell & Core Developer Standard Extra for Air Conditioning City Centre Air Conditioned Shell & Core Developer Standard Office Fit Out 95% Open Plan, No Catering 75% Open Plan, Limited Catering 60% Open Plan, Full Catering Corporate HQ Open Plan Work Station High Tech Industrial Shell & Core Developer Standard Residential Estate House (Approx. 100m2) Developer Standard Apartments Individual House Rebuilding Costs Shopping Centres Anchor Unit Unit Shops Mall Retail Fit Out Site Development Business Parks Roads & Primary Services Warehouses Without Offices With 10% Offices Healthcare Acute Hospitals, Average Costs Ward Blocks General Operating Theatres Nursing Homes Accident & Emergency 2,300 1,900 3,400 1,650 2,400 2,650 2,250 6,400 2,400 3,400 per sq.m. per sq.m. per sq.m. per sq.m. per sq.m. 550 650 700 1,000 per sq.m. per sq.m. 150,000 470,000 per hectare 650 800 1,450 1,100 800 1,200 2,550 1,600 per sq.m. per sq.m. per sq.m. per sq.m. 950 1,200 1,200 1,800 per sq.m. per sq.m. 800 700 1,250 1,250 per sq.m. per sq.m. 400 600 800 1,250 950 650 800 1,200 1,600 2,700 per sq.m. per sq.m. per sq.m. per sq.m. each 20-30% 25-35% 20-30% 25-35% 1,450 1,650 2,100 2,350 per sq.m. per sq.m. 20-25% 15-20% 1,100 1,200 150 1,500 1,600 300 per sq.m. per sq.m. per sq.m. 15-20% 10-15% Cost Range M&E

20-25% 25-45%

10-20%

10-20%

see section seven 10-15% 20-25% 25-30% 8-12% 10-15%

10-15% 20-30% 45-60% 20-25% 25-30% 20-25%

24


SECTION 3 Ireland

Average Costs Car Park Surface Multi-Storey Single Level Basement Double Level Basement Education Primary Level (DOE Nov 09) Second Level (DOE Nov 09) Third Level Leisure Hotel Building FF&E Restaurant Cinema Sports Hall Swimming Pool Municipal Fire Station Prison CourthouseNotes Costs are based on January 2010 prices.

Cost Range 1,000 8,500 12,000 16,000 1,350 1,250 17,000 27,000 35,000 per space per space per space per space per sq.m. per sq.m. per sq.m. per sq.m. per sq.m. per sq.m. per sq.m. per sq.m. per sq.m. per sq.m. per sq.m. per sq.m.

M&E -

10-15%

-

-

990* 990* 2,150

20-25% 25-35% 25-35% -

15-20%

1,450 250 1,550 1,200 850 1,950

2,400 650 2,350 2,000 1,300 2,700

20-30% 20-35% 15-25% 10-15%

1,800 1,650 2,400

2,200 2,350 3,050

20-30% 20-30%

Average costs as indicated should not be used for insurance or other property 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 costs only 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.


25

Basic Hourly Wage RatesCraftsman Grade A 1st October 2005 1st April 2006 (3%) 1st October 2006 (2%) 1st July 2007 (2.5%) 1st January 2008 (2.5%) *1st October 2008 (3.5%) *1st April 2009 (2.5%) 16.85 17.36 17.71 18.15 18.60 19.25 19.73 16.34 16.84 17.18 17.61 18.04 18.67 19.13 General Operative Grade B 15.33 15.80 16.12 16.52 16.93 17.52 17.95 Grade C 14.83 15.28 15.58 15.97 16.37 16.94 17.36 Grade D 13.48 13.89 14.17 14.52 14.88 15.40 15.78

* NOTE: The draft pay proposals outlined in the national wage agreement Towards 2016 have not been implemented. Rates of pay at January 2010 remain as 1st January 2008. Source: Registered Agreement for the Construction Industry

Basic Hourly Wage Rate Mechanical & ElectricalMechanical 1st October 2005 1st April 2006 (3%) 1st October 2006 (2%) 1st July 2007 (2.5%) 1st January 2008 (2.5%) *1st October 2008 (3.5%) *1st April 2009 (2.5%)* NOTE: The draft pay proposals outlined in the national wage agreement Towards 2016 have not been implemented. Rates of pay at January 2010 remain as 1st January 2008.

16.85 17.36 17.71 18.15 18.60 19.25 19.73

Electrical 1st April 2004 1st April 2005 1st April 2006 1st April 2007 1st September 2009** 1st January 2010** 18.98 19.72 20.39 21.49 22.03 22.56

** NOTE: These rates were agreed following an industrial dispute during 2009. In December 2009 an enquiry under the Industrial Relations Act recommended that new rules should be drafted for the National Joint Industrial Council for the Electrical Contracting Industry and that the Registered Employment Agreement should be reviewed and updated. Source: MEBSCA/ECA

26


SECTION 3 Ireland

Top Irish Main ContractorsRank 2009 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2008 1 5 2 4 3 6 7 10 8 11 14 15 9 13 12 17 18 16 John Sisk & Son Ltd. BAM Contractors (Formerly Ascon) M. McNamara & Co. Birmayne (Pierse Contracting) Roadbridge Ltd. P.J. Hegarty & Sons Elliott Holdings Ltd SIAC Construction Ltd. P.J. Walls Ltd. Bowen Construction Ltd. Laing ORourke Bennett (Construction) Ltd. J.J. Rhatigan & Co Ltd. G&T Crampton Ltd. John Paul Construction Holdings Ltd. Murnane & OShea Ltd. Coffey Construction Ltd. Cleary & Doyle Ltd. 1,139.65 460.70 457.50 439.35 388.15 344.20 293.40 272.74 246.31 217.60 215.30 186.80 180.56 138.80 135.20 92.05 89.08 81.89 Firm Revenue m

Top Irish Services Sub-ContractorsRank 2009 1 2 3 4 5 6 7 8 9 10 11 12 13 2008 1 3 5 4 9 7 6 8 10 15 12 14 17 Mercury Engineering Group Jones Engineering Ltd. Kirby Group Engineering Ltd. Suir Engineering Ltd. Dornan Engineering Ltd. Winthrop Engineering Ltd. L. Lynch & Co Ltd. Rotary M & E Services (Ireland) Ltd. Designer Group JRE Group Lynskey Engineering Ltd. T. Bourke & Co Ltd. Precision Electric (Ireland) Ltd. 410.69 178.59 90.84 64.30 51.90 51.42 51.21 41.16 40.18 33.96 28.80 28.11 21.37 Firm Revenue m

2009 ranking is based on 2008 construction revenue Source: Individual Companies Auditors/Companies Registration Office


27

Bruce Shaw are delighted to be part of the project team on Primark Bristol which was awarded Store Design of the Year 2009. Bruce Shaw are working with Primark on their continued growth across a number of European countries.

Primark Bristol

SECTION 4

United Kingdom

Market Review U.K.The U.K. construction industry has been badly affected by the general economic downturn, but it appears the U.K. economy is beginning to show some signs of economic recovery albeit slowly. In the last 12 months the Government has implemented further fiscal easing to bring the total asset purchase close to 200 billion in early 2010. This combined with the previous interest rate reduction to its lowest recorded level of 0.5% is an attempt to limit the impact of one of the deepest recessions the U.K. economy has experienced. On a positive, if cautious note, the number of people unemployed in the U.K. fell to 2.46 million in the last quarter of 2009, the first quarterly fall for 18 months, prompting some commentators to suggest that the decline in the labour market has stabilised. Economists have warned however that employment in the construction sector is still falling sharply and will continue for much of 2010, even if the pace of decline is expected to be much slower than in 2009. The Construction Products Association (CPA) in its annual review has reported a fall of more than 12% in construction output covering all sectors in 2009. This represents the largest fall in a single year since the mid 1950s!. Further analysis also shows that in some construction sectors the fall has been much more significant with the commercial and retail areas showing reductions of up to 26% for the year. The outlook for construction output in 2010 is a further decline of up to 3%. The residential market has also suffered with a further fall off in the supply of new build homes in 2009. 2008 was one of the worst years on record for house building. Figures published by the NHBC show the number of homes completed in the U.K. fell from 148,000 in 2008 to 116,000 in 2009. The last quarter of 2009 did however show an increase in house build registrations from the same period in 2008, which is positive news going into 2010. In line with other commentators, we forecast that the downward trend in tender prices will continue in 2010 with prices continuing to fall in the short term following the estimated 7-8% drop in tender price inflation for 2009. Our outlook for 2010 is a further fall of up to 4-5% over the full year. However we could well see a recovery of sorts in the first quarter of 2011 with an expected 1.1% increase to the first quarter of 2012. It is expected to be a slow recovery through which could take until 2014 for the construction industry as a whole to achieve consistent positive growth. One area of positive growth in construction activity has been in infrastructure/PFI investment. The 16 billion Crossrail project for London and the South East is due to start main construction works later in 2010. The new 840 million 2000 bed super-hospital in Glasgow is also due to begin construction later this year, while the 355 million 1300 bed super-hospital facility in Peterborough is due for completion in September 2010. A further 20 billion of public funding has also been earmarked for rail network infrastructure in the coming years. An important focus for the U.K. construction industry is the general election which is due to take place in May 2010. Public spending policy and continued investment will be very much determined by the outcome of the next government.

The downward trend in tender

prices will continue in 2010. Our of up to 4-5% over the full year

outlook for 2010 is a further fall

30


SECTION 4 United Kingdom

U.K. Construction Output bn140

120

100

80

60

40

20

0 1997 1998 1999 2000 2001 2002 2003 2004 New Work 2005 2006 2007 2008

Repair & Maintenance

Source: Construction Statistics Branch, Office for National Statistics.

Resource Cost Index of Non-Housing Building220

200

180

160

140

120

100 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 BSP (f)

Combined Index

Labour & Plant

Materials

Source: Construction Market Intelligence, Department for Business, Innovation and Skills


31

2008 Output by Type of Work (New Build) bnPublic Sector Private Sector

New housing 3.96 Infrastructure 2.70 Industrial 0.11 Education 6.53 Health 2.03 Offices 1.07 Entertainment 1.18 Misc. 1.24

Private Sector




2008 Contractors Output by Region bnNorth East 5.3 Yorkshire & the Humber 10.0 East Midlands 7.8 East of England 23.9 Greater London 19.9 South East 37.3 South West 10.0 West Midlands 9.9 North West 13.1 Wales 4.6 Scotland 10.8


32



Top 20 U.K. ContractorsRank 2009 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 2008 1 2 3 4 8 5 7 6 10 9 13 11 16 12 15 14 25 17 20 18 Balfour Beatty Laing ORourke Carillion Kier Morgan Sindall Bovis Lend Lease Skanska Construction Newarthill Keller Galliford Try Interior Services Group BAM Construct U.K. Vinci Wates Group Costain Bowmer & Kirkland Willmott Dixon Interserve VolkerWessels U.K. Shepherd Building Group 8.93 3.45 2.56 1.65 1.61 1.53 1.48 1.25 1.20 1.15 1.11 1.07 1.02 0.99 0.91 0.89 0.84 0.77 0.72 0.72 Firm Revenue bn

Turnover refers to group total, including joint ventures Firms based in the U.K. have had their international operations included in the figures. Those based overseas, such as Bovis Lend Lease and Vinci, have only had their U.K. subsidiarys activities included. Source: Building Magazine

Four Seasons Hotel, Park Lane, London


33

Top U.K. Architectural Firms2009 2 4 6 8 7 5 3 1 Rank 2008 2 6 8 7 5 3 1 Practice Building Design Partnership Staff 417 271

Capita Symonds Aedas

Foster & Partners

Atkins

278 255 162

20

Nightingale Associates PRP Architects Austin-Smith: Lord

239 145 121 115

10 12 14 16 = 18 = 18 = 20 15 13 11

9

16 47 23 22 21 15 11 17 9

14

13

RMJM

Broadway Malyan Sheppard Robson

Aecom

144 119 106 93

3DReid

Scott Brownrigg Stride Treglown

PM Group/Deverux Architects

104 90 83 83

16 =

Hamiltons Architects Lewis & Hickey

NPS Property Consultants

82 82 81

Fairhursts Design Group

Note: Ranking is based on numbers of Chartered Architectural staff

Top U.K. Engineering Firms2009 2 4 6 8 7 5 3 1 Rank 2008 2 3 7 1 Practice Atkins Staff 2,661 1,760 1,427 1,216 1,207 804 682 1,214 1,357 1,554

9 4 8 5

Halcrow Group Aecom

Scott Wilson Group

Mott MacDonald

Mouchel Group

10 12 14 16 18 17 15 13 11

9

6 12 14 16 15 17 13 11

Arup

Jacobs

WSP Group

Parsons Brinckerhoff White Young Green Grontmij

Waterman Group

Capita Symonds

1,194 747 611

19 24 27 21

20

19

Mace Group Gifford TPS

WA Fairhurst & Partners

Buro Happold

MWH

496 458 383 241

190 176 182

Note: Ranking is based on total numbers of Engineering Staff Source: Building Magazine

34


0.90

0.80

0.66

0.68

0.86

0.64 0.92 0.88 0.84 0.70 0.76 0.74 0.82 0.78 0.72

0.94

0.62 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10

Acute Hospital Enniskillen

Euro v Pound Exchange Rates



35

Al Reem Island, Sector 4, Plots C49 / C50, Abu Dhabi

SECTION 5

Middle East

Market Review GCC CountriesGrowth decelerated across the board in the six member Gulf Cooperation Council (GCC) region (which includes Saudi Arabia, the UAE, Kuwait, Qatar, Oman and Bahrain) in 2009 due to the fluctuations in oil prices and cutbacks in production. However, the price of oil made a strong recovery in 2009 with the price of a barrel nearly doubling, commencing the year at approximately $40 per barrel and ending 2009 at just below $80 per barrel. Through 2009 the GCC countries experienced a sharp contraction in worker remittances, tourism, and foreign direct investment. However, after a slowing to approximately 2.25% percent in 2009, growth in the region is expected to pick up in 2010 but this will depend on the pace of the global recovery. Inflation has subsided, returning to single digits for the region as a whole, a silver lining in what, for most, was a very difficult 2009. 2010 started off in spectacular fashion with the opening of The Burj Khalifa, the worlds tallest building, on January 4th 2010. The development of this half-mile edifice began in September 2004 with an overall development cost reported to be in excess of $1.5 billion dollars. Developed by Emaar Properties and designed by SOM this vertical city holds a number of world records. The UAEs troubles relating to the widely publicised Dubai World debt are unlikely to damage growth elsewhere in the Gulf region as countries such as oil-powered Saudi Arabia are less leveraged than Dubai. Even though many lenders in the region were exposed, financial institutions have broadly proven their resilience to external stresses throughout 2009. It is worth noting that Dubais economy accounts for only 8% of the total GDP of the GCC states. Saudi Arabia and the UAE continue to be the dominant economic forces of the region. Looking at the construction sector, both have seen major activity in recent years and this looks set to continue. Figures published by the Arab Monetary Fund (AMF) in December 2009 proportioned the UAE construction sector to account for around a fifth of the total Gulf construction sectors value of $94.1bn in 2008. An upsurge in public and private investments boosted the UAEs building activity by more than 20% during this period. Saudi Arabia, the largest economy of the region, had dominated construction activity in the previous years. While the global financial downturn in midSeptember of 2008 saw a reduction in this level of activity, the UAE construction sector still remains buoyant. In a recent report, the International Monetary Fund (IMF) estimated the total value of projects planned in the UAE at a staggering $918bn in construction, oil and gas, petrochemicals, real estate, industry and other sectors. The following table illustrates the value of construction output in each of the GCC countries:

Active Projects in Gulf RegionCountry Bahrain Kuwait Oman Quatar Saudi Arabia UAE Nr of Projects 232 160 116 186 847 1,853 Value $ bn 40.2 142.7 38.5 48.2 417.8 661.4

Source: Streamline Marketing Group (November 2009)

Growth in the region is

expected to pick up in 2010.

38


SECTION 5 Middle East

GCC Key StatisticsSubject Descriptor BAHRAIN GDP, current prices GDP per capita, current prices Inflation, average consumer prices Population Current account balance KUWAIT GDP, current prices GDP per capita, current prices Inflation, average consumer prices Population Current account balance OMAN GDP, current prices GDP per capita, current prices Inflation, average consumer prices Population Current account balance QATAR GDP, current prices GDP per capita, current prices Inflation, average consumer prices Population Current account balance SAUDI ARABIA GDP, current prices GDP per capita, current prices Inflation, average consumer prices Population Current account balance UAE GDP, current prices GDP per capita, current prices Inflation, average consumer prices Population Current account balanceNote: Estimated figures Source: International Monetary Fund, World Economic Outlook Database, October 2009

Units U.S. $ Billions U.S. $ Units Annual % change Persons, Millions U.S. $ Billions U.S. $ Billions U.S. $ Units Annual % change Persons, Millions U.S. $ Billions U.S. $ Billions U.S. $ Units Annual % change Persons, Millions U.S. $ Billions U.S. $ Billions U.S. $ Units Annual % change Persons, Millions U.S. $ Billions U.S. $ Billions U.S. $ Units Annual % change Persons, Millions U.S. $ Billions U.S. $ Billions U.S. $ Units Annual % change Persons, Millions U.S. $ Billions

2009 19.4 24,355 3.0 0.795 0.724 114.9 32,491 4.7 3.536 33.74 52.3 18,718 3.3 2.796 -0.239 92.5 75,956 0.0 1.218 9.992 379.5 14,871 4.5 25.519 15.389 228.6 46,584 2.5 4.907 -3.579

2010 21.6 26,598 2.5 0.811 1.344 135.4 37,536 4.4 3.606 47.827 59.7 21,134 3.0 2.823 2.884 128.1 94,783 4.0 1.352 32.436 442.8 16,927 4.0 26.157 50.687 256.2 50,688 3.3 5.054 13.375


39

Outline Construction Cost ComparisonsWith 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 current construction costs:

Regional Building Cost Comparison (USD/m2)Ref. Building Type Parking Podium Car Parking Basement Car Parking 2 Residential Sector Medium Quality Villa Units Medium Quality High Rise High Quality Low Rise Aparts High Quality High Rise 3 Commercial/Office Sector 2/3 Developer Standard/ Investment Offices Low Rise Medium Rise Medium Rise High Rise Owner Occupier Standard Offices Low Rise Medium Rise Medium Rise High Rise 4 Hotel & Leisure/Retail Sector Regional Shopping Centre 2 Budget/3 Star 4 5 Star4

Date : January 2010Manama, Bahrain Riyadh, KSA1

Abu Dhabi, UAE from to Base1

from

to Index

from

to Index 1

1

$630 $720

$770 $880

100 100

$450 $500

$550 $610

71 69

$430 $450

$530 $550

69 63

$1,260

$1,540

100 100

$950 $1,130

$1,160 $1,380 $1,760

75 97 107 106

$810 $950 $900 $1,130

$990 $1,160 $1,100 $1,380

64 81 67 72

$1,170 $1,430 $1,350 $1,650 $1,580 $1,930

100 $1,440

100 $1,670 $2,040

$860 $1,050 $1,350 $1,650

100 100

$900 $1,130

$1,100 $1,380

105 84

$810 $990

$990 $1,210

94 73

$1,130

$1,380

100

$990

$1,210 $1,540

88 80

$950 $1,130

$1,160 $1,380

84 72

$1,580 $1,930

100 $1,260

$1,440 $1,490 $2,570

$1,760 $1,810 $3,140

100

$990

$1,210 $1,760

69 97

$1,220 $1,490 $1,350 $1,650

85 91 84 84

100 $1,440

100 $2,250 $2,750 100 $2,840 $3,470

88 $2,160 $2,640 96 $2,480 $3,030

5 Star Resort 4 5 Health Sector 5 District General Hospital 6 Manufacturing Sector Light Industrial Heavy Industrial

$2,960 $3,610

$3,060 $3,740

100 $2,790 $3,410

91 $2,970 $3,630

97

$590 $790

$720 $970

100 100

$630 $680

$770 $830

107 86

$430 $570

$530 $690

73 72

Notes: Costs subject to site specifics, design and specification They exclude Land Acquisition Costs, External Works Costs & Professional Fees Base Index @ 100 = UAE; Index calculated on average of stated cost range Excl. super high rise (Low/Medium = upto 15; High Rise +15; Super High Rise +45 storeys) 3 Shell & Core Only; with public areas finished 4 Incl. FF+E; Excl. OS+E 5 Excl. Medical Equipment1 2

40



GCC Nations Main ContractorsTabled below is a selected list of major contractors currently working within the GCC region: Company Saudi Oger Limited Saudi Binladin Group Al-Arrab Contracting Company A.A. Turki Group of Cos (ATCO) Al-Ajmi Company Al-Bianli Al Mabani GCC KSA Al-Jaber Group Al-Habtoor Leighton Group Arabtec Construction Al-Shafar General Contracting Al-Meraikhi Group Al-Hamad Contracting Company ACTCO ETA Ascon Larsen & Toubro/ECC Consolidated Contracting Company (CCC) Multiplex Mid Mac Contracting Company Al-Kazem Group Arabian Construction Company China Harbour Engineering Company Jan De Nul Six Construct Bilfinger Berger Royal Bam Carillion Laing ORourke Interserve Samsung Corporation Mushrif Trading & Contracting Co NurolSource: MEED

Country of Origin Saudi Arabia Saudi Arabia Saudi Arabia Saudi Arabia Saudi Arabia Saudi Arabia Saudi Arabia Saudi Arabia UAE UAE UAE UAE UAE UAE UAE UAE India Greece Australia Qatar Qatar Lebanon China Belgium Belgium Germany Netherlands U.K. U.K. U.K. South Korea Kuwait Turkey


41

Middle Eastern Design FirmsTabled below is a selected list of Design Firms currently working within the GCC region: Company Worley Parsons Ahmed Janahi Architects Arab Architects MSCEB Architects Snc-Lavalin International Dar Al-Handasah Consultants Oger International Dorsch Gruppe Kling Consult Technip JGC Corp KEO Khatib & Alami CEG Tecnicas Reuindas Norr Group Arup Atkins Foster & Partners Mott McDonald RMJM WSP Adrian Smith + Gordon Gill Aecom Aedas Fluor Corp. HOK KBR Kling Stubbins NBBJ SOM The Shaw GroupSource: Constructionweekonline/Engineering News Record

Country of Origin Australia Bahrain Bahrain Bahrain Canada Egypt France/Lebanon Germany Germany Italy Japan Kuwait Leabanon Qatar Spain UAE U.K. U.K. U.K. U.K. U.K. U.K. U.S.A. U.S.A. U.S.A. U.S.A. U.S.A. U.S.A. U.S.A. U.S.A. U.S.A. U.S.A.

42



SustainabilityUnlike the Copenhagen Climate Change Conference, the World Future Energy Summit, held shortly after Copenhagen in Abu Dhabi, did seem to revive hopes on mitigating climate change threats. Sustainability is continuing to become more and more prevalent in all aspects of design with Clients becoming more aware of the potential long term benefits of greener buildings. the introduction of Estidama is an initiative at an advanced stage in development by the Urban Planning Council in Abu Dhabi. Estidama (which means sustainability in Arabic) is a building design methodology for constructing and operating buildings and communities more sustainably. The program remains a key aspect of the Plan Abu Dhabi 2030 drive to build the city of Abu Dhabi according to innovative green standards.

GCC Single Currency UpdateOriginally, all six Gulf Cooperation Council countries agreed in 2001 to the monetary union that was expected to be completed within a 10-year timeline. However, at present a single currency for the Gulf is unlikely to be introduced before 2013. Saudi Arabia, Bahrain, Kuwait and Qatar are pressing ahead with plans for the Gulf monetary union, despite the abrupt withdrawal of the UAE in May of 2009. It is still undecided if the Gulf Arab countries will peg their planned single currency to a currency basket or the U.S. dollar alone. With the exception of Kuwait, which dropped its dollar peg in favour of a currency basket in 2007, the other three union members Saudi Arabia, Qatar and Bahrain currently have their currencies pegged to the dollar. Furthermore, the remaining members still need to reach agreement on a number of technical issues and have to meet several convergence criteria. Issues relating to inflation and budget deficits could yet pose further problems in 2010. The following table compares the U.S. Dollar to the individual currencies of the GCC member states:

Country Bahrain Kuwait Oman Qatar Saudi Arabia United Arab Emirates

Currency Bahraini Dinar Kuwaiti Dinar Omani Rial Qatari Riyal Saudi Riyal United Arab Emirates Dirham

Symbol BHD KWD OMR QAR SAR AED

Conversion from $ 1 USD = 0.38 1 USD = 0.29 1 USD = 0.39 1 USD = 3.65 1 USD = 3.75 1 USD = 3.67

Note: Figures are based on January 2010 average.


43

The Stockyard

SECTION 6

United States

2009 Ronnie Norton

Market Review U.S.2009 saw the U.S. Construction Industry in sharp decline. New Construction was down 25% in dollar value. This is on top of declines in 2007 and 2008. New housing construction, while still ongoing, dropped significantly. The recession has impacted on all areas of construction with the largest decline in the Hospitality Sector. 2009 has also seen a continued decline in construction costs and with contractors backlogs at greatly reduced levels the market has seen at cost and below cost tendering. Prices fell slightly in the last three months for gypsum products, flat glass, ready-mix and millwork and increased only marginally for metal components, concrete products and machinery. Overall, U.S. manufacturing production is expanding rapidly, but significant sales gains will not reach construction materials manufacturing until late in 2010. Metal scrap prices had significant increases in December and are continuing to rise. This will most likely lead to increases in steel prices. The national unemployment rate at December was above 10.0 percent which is 2.6 percentage points higher than the same time in December 2008. Construction unemployment climbed to over 20% during the year, its highest level in a decade. On a positive note The American Recovery & Reinvestment Act was passed in late 2009 and the aim of the act is to create new jobs as well as saving existing ones together with investing in long-term economic growth. This $787 billion stimulus package will see the U.S. economy grow. However the problems of high unemployment, tight credit markets and inflationary fears have not yet been fixed and it may be some time before they are. It may be 2011 before any real gains are seen in the sector.

It may be 2011 before any real gains are seen in the sector.

Value of Construction Output Public/Private $bn1400.0

1200.0

1000.0

800.0

600.0

400.0

200.0

0.0

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009 (f)

Total Public Construction

Total Private Construction

Source: U.S. Census Bureau

46


SECTION 6 United States

U.S. Construction by Type of Work $bn, 2009Private SectorResidential 250.7 Commercial 97.1 Health care 34.3 Educational 15.2 Misc. 11.6 Infrastructure 105.2 Manufacturing 65.7

Public SectorResidential 8.2 Commercial 18.9 Health care 9.8 Educational 83.5 Misc. 30.3 Infrastructure 125.9 Manufacturing 41.7

Source: U.S. Census Bureau

Annual Construction Cost Index 2000 - 2009 (1913 = 100)8,600 8,300 8,000 7,700 7,400 7,100 6,800 6,500 6,200 5,900 5,600

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Source: Engineering News Record

U.S. Regional Building Cost Index7,000 6,000

5,000

4,000

3,000

2,000

1,000

0 Atlanta Chicago San Francisco Los Angeles Philadephia Cincinnati New Orleans Birmingham Cleveland Kanas City New York Minneapolis Pittsburgh Baltimore St Louis Denver Seattle Boston Detroit Dallas

Source: Engineering News Record


47

Total U.S. Employment in Construction Dec 1999 - Dec 20097,900 7,700 7,500 7,300 7,100 Employees 000s 6,900 6,700 6,500 6,300 6,100

7,900 7,700 7,500 7,300

7,100 5,900 Employees 000s 6,900 5,700 6,700 5,500 6,500 6,300 6,1001999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 (e)

5,900 5,700 5,500

e = estimate Source: Bureau of Labor Statistics-401999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 (e)

0

-20

Change in U.S. Employment in Construction Jan 2008 - Nov 2009 Seasonally Adjusted in Thousands -80-60

0-100

-20-120

-40-140

-60-160 Feb-08 Mar-08 Apr-08 May-08 Aug-08 Sep-08 Mar-09 Apr-09 May-09 Jan-08 Jun-08 Jul-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09

-80

-100

-120

-140

-160 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09

Source: Bureau of Labor Statistics

48



U.S. Earnings in ConstructionEarnings in construction are higher than the average for all industries (see table below). In 2008, production or nonsupervisory workers in construction averaged $21.87 an hour, or about $842 a week.

Average Earnings of Nonsupervisory Workers in Construction, 2008Industry Total, private industry Construction Construction of buildings Nonresidential building Residential building Heavy and civil engineering construction Utility system construction Highway, street, and bridge construction Other heavy construction Land subdivision Specialty trade contractors Building equipment contractors Building finishing contractors Other specialty trade contractors Building foundation and exterior contractorsSource: Bureau of Labor Statistics

$/Hour 18.08 21.87 21.39 23.1 19.47 22.00 22.31 22.11 21.78 18.73 21.99 23.56 20.87 20.86 20.54

$/Week 608 842 813 914 707 924 941 931 947 702 835 918 783 795 747

Median Hourly Wages of the Largest Occupations in U.S. Construction, May 2008Occupation Buildings $/Hour 37.45 28.49 22.83 21.26 20.48 19.17 17.41 15.41 14.35 Civil Engineering $/Hour 39.87 28.1 21.27 22.85 20.02 19.42 17.13 16.84 14.29

Construction managers First-line supervisors Plumbers & pipefitters Electricians Operating engineers Carpenters Masons & concrete finishers Painters Construction laborersSource: Bureau of Labor Statistics


49

Top 20 U.S. ContractorsRank 2009 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 2008 1 2 3 5 4 6 12 7 8 10 9 11 18 13 14 19 16 22 27 15 The Turner Corp. Bovis Lend Lease Perini Corp. Skanska U.S.A. The Whiting-Turner Contracting Co. Clark Group Hensel Phelps Construction Gilbane Building JE Dunn Construction Group McCarthy Holdings Structure Tone Balfour Beatty Construction Hunt Construction Group Webcor Builders Swinerton M.A. Mortenson Construction Brasfield & Gorrie Suffolk Construction Co. The Flintco Cos. Opus Group 8.93 5.14 5.08 4.04 3.85 3.72 2.94 2.92 2.75 2.61 2.51 2.24 2.13 1.94 1.87 1.85 1.84 1.57 1.56 1.53 Firm Revenue $ bn

Note: Ranked by domestic revenue; 2009 ranking is based on 2008 revenue Source: Engineering News Record

50



Top 20 U.S. Design FirmsRank 2009 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 2008 2 3 1 4 5 6 7 8 10 12 13 9 16 11 15 14 21 18 22 23 EAC EA EAC EC EAC EC EC E EC EC EAC EC EA EC EC EC EC EAP EA E Jacobs Aecom Technology Corp. URS Corp. Fluor Corp. CH2M Hill The Shaw Group Bechtel Tetra Tech KBR AMEC Parsons Brinckerhoff, New York Parsons, Pasadena HDR Foster Wheeler Black & Veatch MWH Global Mustang Engineering Louis Berger Group HNTB Arcadis 5.50 5.22 5.21 4.29 3.73 3.07 2.45 2.26 2.16 1.97 1.57 1.34 1.28 1.23 1.18 1.05 1.01 0.97 0.86 0.85 Type Firm Revenue $ bn

Note: 2009 ranking is based on revenue for design services performed in 2008. Key to Type of Firm: A - architect; E - engineer; C - contractor; P - planner Source: Engineering News Record

Euro v Dollar Exchange Rates1.60 1.55 1.50 1.45 1.40 1.35 1.30 1.25 1.20 1.15 1.10 1.05 Apr-06 Oct-08 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Jul-06 Jan-08 Jul-08 Jan-09 Apr-09 Jul-09 Oct-04 Oct-06 Jan-07 Apr-07 Oct-07 Apr-08 Oct-09 Jan-04 Apr-04 Jan-10 Jul-04 Jul-07 1.00


51

University College Dublin, Science Centre West

SECTION 7

Irish Statistics

Construction Output CommentraySpring of 2010 will see the completion of the few remaining large public sector projects in Ireland the inter-urban motorway network, the Lansdowne Road stadium redevelopment, Terminal 2 in Dublin Airport and the Conference Centre Dublin. Unfortunately there are no major projects in the pipeline to replace these flagship projects and the Public Capital Programme was reduced further in Budget 2010. The private sector market is almost stagnant there is oversupply in the commercial offices, retail and residential sectors, the transfer of loans to NAMA has taken longer than initially expected, foreign direct investment companies have been affected by the global downturn and there is an absence of funding and lack of business confidence generally Arising from this lack of new projects we predict that the output of the industry this year is likely to fall to between 12 and 13 billion and will decline further in 2011 to less than 10 billion. These levels of output will see the industry falling well below its longer term sustainable level of 18 billion.

The output of the industry peaked in 2007 at 38 billion which represented 24% of GNP, largely fuelled by the massive rise in residential development. This was clearly an unsustainable level and a subsequent fall was inevitable. However the extent of the fall is unprecedented and unless some form of Government stimulus is introduced to arrest it at, or close to, its sustainable level of 18 billion (a level last seen in 2000) there will be the unfortunate consequence of a further 100,000 job losses on top of those lost already. Skills necessary to construct major Foreign Direct Investment projects, built up over the last ten years, will also be lost and this will slow overall economic recovery.

Output of the industry this year is likely to fall to between 12 and 13 billion and will decline further in 2011 to less than 10 billion.

Value of Construction Output 2000 - 2011 m40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0

2000

2001

2002

2003

2004

2005

2006

2007

2008

DKM 2009 (f)

BSP 2009 (f)

BSP 2010 (f)

BSP 2011 (f)

DKM / Dept. of Environ. '09 Forecast

Bruce Shaw Forecast

Source: DKM/Department of Environment, Heritage & Local Government/Bruce Shaw Partnership

54


SECTION 7 Irish Statistics

Construction Output 2005 - 20092005 Value of Output at Current Prices (m) Change in Value of Output (%) Value of Output (constant 07 Prices m) Change in Volume of Construction Output % Construction Output as % of GNPSource: DKM/Department of the Environment

2006 37,611 11% 38,278 5% 25%

2007 38,361 2% 38,361 0% 24%

2008 2009 (f) 32,037 -16% 34,399 -10% 21% 19,857 -38% 23,290 -32% 15%

33,778 18% 36,406 14% 25%

Gross National Product (GNP) 2005 - 20092005 GNP at Current Prices (m) % Change in GNP GNP at Constant 07 Prices (m) % Change in GNPSource: CSO

2006 152,529 11% 154,519 6%

2007 161,244 6% 161,243 4%

2008 154,598 -4% 156,761 -3%

2009 Q1-3 98,925 -15% 104,192 -12%

137,188 9% 145,306 6%

Public/Private Breakdown 2005 - 20092005 Public sector new construction output Value of output (constant 2007 prices, m) Change in volume of construction output (%) As % of total construction output 6,893 -2% 19 2005 Private sector new construction output Value of output (constant 2007 prices, m) Change in volume of construction output (%) As % of total construction output 22,899 22% 62 23,970 5% 63 22,866 -5% 60 16,518 -28% 47 6,425 -61% 26 6,865 0% 18 2006 7,575 10% 20 2007 9,260 22% 27 9,321 1% 40 2006 2007 2008 2009 (f)

2008 2009 (f)

Source: DKM/Department of Environment, Heritage & Local Government


55

Sectoral Breakdown (m) 2005 - 2009Sector RESIDENTIAL CONSTRUCTION 2005 m 21,456 1,152 3,637 266 523 73 5,652 1,863 768 159 1,388 365 257 4,800 726 464 371 309 1,869 33,778 2006 m 24,045 876 4,356 380 706 76 6,394 2,083 891 182 1,484 334 307 5,282 782 328 401 379 1,889 37,611 2007 m 22,716 718 4,711 869 1,172 82 7,553 2,417 991 308 1,097 586 367 5,765 900 367 557 503 2,327 38,361 2008 m 16,559 1,242 2,980 1,008 1,083 76 6,389 2,862 1,043 438 1,152 705 415 6,616 845 435 603 591 2,473 32,037 2009(f) m 7,945 735 1,568 245 622 72 3,242 2,666 1,077 619 1,080 568 327 6,338 965 354 467 546 2,333 19,857

NON RESIDENTIAL CONSTRUCTION Industry Commercial Agricultural Tourism Worship Sub Total PRODUCTIVE INFRASTRUCTURE Roads Water Services Airports/Seaports100 Energy

Communications Sub Total SOCIAL60 Education 70 80

Transport 90

Health 50 Other Social Sub Total TOTAL ALL CONSTRUCTION10 0 20 30

Public Buildings 40

Source: DKM/Department of Environment, Heritage & Local Government2005 Residential 2006 2007 Productive Infrastructure 2008 2009 (f)

Breakdown of Construction Output (m) 2005 - 200940,000 35,000 22% 30,000 25,000 20,000 15,000 10,000 5, 000 0 64% 64% 59% 22% 14% 14% 26%

General Contracting

28% 15% 20% 28%

32% 52% 40%

2005

2006 Residential

2007 Productive Infrastructure

2008 General Contracting

2009 (f)

Note: General Contracting = Non Residential + Social Source: DKM/Department of Environment, Heritage & Local Government

56



Regional Breakdown of Construction Output

Dublin as % of Total 2008 2007 2006 2005 2007Dublin 26% Border 13% South-West 13% South-East 12% Mid-East 10% West 10% Mid-West 9% Midland 8%

27% 26% 23% 25% 27% 29% 31% 33% 34%Dublin 27% South-West 14% Border 11% South-East 11%

2004 2003 2002 2001 2000

2008Mid-East 10% West 10% Mid-West 9% Midland 7%

Source: DKM/Department of Environment, Heritage & Local Government

Sectoral Breakdown of General Contracting

Commercial 34% Industrial 14% Tourism 12% Agriculture 11% Education 10% Public Buildings 7% Other Social 7% Health 5% Worship 1%

Commercial 28% Education 17% Industrial 13% Tourism 11% Other Social 10% Public Building 8% Health 6% Agriculture 4% Worship 1%

2008

2009 (f)

Commercial 34%

Commercial 28% Education 17% Industrial 13% Tourism 11% Other Social 10% Public Building 8% Health 6% Agriculture 4% Worship 1%

Industrial 14%

Tourism 12%

Agriculture 11%

Education 10%

Public Buildings 7%

Other Social 7%

Health 5%

Worship 1%

2009 (f) Source: DKM/Department of Environment, Heritage & Local Government


57

Construction Purchasing Managers Index Report June 2000 - February 201070 50 = no change on previous month

60

50

Increasing rate of growth Increasing rate of contraction

40

30

20

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Ulster Bank Construction PMI Total Activity (graphed above) Housing Commercial Civil EngineeringSource: Ulster Bank

Sep-08 32.2 25.5 34.6 35.8

Dec-08 27.4 23.1 25.9 33.7

Mar-09 28.1 26.7 28.3 28.5

Jun-09 36.3 33.4 38.5 30.9

Sep-09 34.2 33.8 34.9 31.3

Dec-09 33.1 32.6 32.3 33.8

Historical Property Performance Total Return % Per Quarter 2003 - 200915

10

5

0

-5

-10

-15

-20

-25 Mar-05 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09

All

Retail

Office

Industrial

Source: IPD/Society of Chartered Surveyors

58



Annual Housing Completions 2000 - 2009Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Social 3,155 4,875 5,763 6,133 5,146 5,559 5,208 6,671 6,801 N/A % 6.3% 9.3% 10.0% 8.9% 6.7% 6.9% 5.6% 8.5% 13.1% N/A Private 46,657 47,727 51,932 62,686 71,808 75,398 88,211 71,356 44,923 N/A % 93.7% 90.7% 90.0% 91.1% 93.3% 93.1% 94.4% 91.5% 86.9% N/A Total 49,812 52,602 57,695 68,819 76,954 80,957 93,419 78,027 51,724 26,820

New Housing Completions by Type 2000 - 2009Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009Note: Totals exclude conversions

House 40,526 41,576 45,657 53,580 60,448 62,522 73,073 58,936 38,513 21,272

% 82.0% 79.6% 79.7% 78.3% 79.0% 77.6% 78.6% 75.9% 75.0% 80.5%

Apartment 8,886 10,626 11,638 14,839 16,106 18,035 19,946 18,691 12,811 5,148

% 18.0% 20.4% 20.3% 21.7% 21.0% 22.4% 21.4% 24.1% 25.0% 19.5%

Total 49,412 52,202 57,295 68,419 76,554 80,557 93,019 77,627 51,324 26,420

New Housing Completions by Region 2008 - 2009Region Dublin Wicklow/Meath/Kildare GREATER DUBLIN AREA Cork Galway Kerry Wexford Mayo Limerick Waterford Balance Total 2008 No. 11,342 4,976 16,318 6,092 2,877 1,961 1,998 1,774 1,937 1,247 17,120 51,324 % 22.1% 9.7% 31.8% 11.9% 5.6% 3.8% 3.9% 3.5% 3.8% 2.4% 33.4% 100.0% 2009 No. 5,288 2,768 8,056 3,306 1,472 866 1,024 1,032 807 635 9,222 26,420 % 20.0% 10.5% 30.5% 12.5% 5.6% 3.3% 3.9% 3.9% 3.1% 2.4% 34.9% 100.0%

Source: Department of the Environment, Heritage & Local Government


59

Society of Chartered Surveyors House Rebuilding Costs per m2 March 2010Bedrooms No. of Typical Size Dublin Area Area Cork Galway Waterford Area Area Limerick Area

Terraced Semi Detached Detached Detached Bungalow

2 3 3 4 4 4

70 m2 95 m2 95 m 118 m 118 m2 2 2

1,932 1,840 1,908 1,748 1,804 1,708

1,474 1,987 1,472 1,320 1,349 1,314

1,494 1,403 1,429 1,327 1,337 1,277

1,434 1,363 1,454 1,301 1,347 1,253

1,491 1,383 1,480 1,279 1,384 1,392

146 m2

Source: Society of Chartered Surveyors

The table is a guideline based on a typical speculative built, estate type house in the Dublin, Cork, Galway, Waterford and Limerick Areas 1. The figures shown in the table are a minimum base cost guide for your house insurance. and any other items not normally included in an estate type house (e.g. fire alarm). 4. House contents such as carpets, curtains, furniture, etc. are not covered by the figures. 5. No allowance has been made for the cost of out-buildings, patios or boundary walls. The figures do however allow for a concrete path around the house, for driveway repairs and regrassing. 6. The figures allow for demolition costs, professional fees incurred in reinstatement and VAT at 13.5% on building costs and 21% on professional fees. 7. The amounts included for professional fees have been calculated to cover the following services: Building Surveyor/Architect and Quantity Surveyor. 8. The costs are based on building rates ruling in March 2010 and do not include for inflation during the duration of the policy and the period between any loss occurring and reinstatement.

2. The figures are based on estate type houses built since the 1960s. They exclude; (a) Properties with more than 2 storeys or with basements or habitable attics (b) One-off houses with special design features or period houses (c) Apartment/residential flats because of split responsibilities for shared areas. The insurance of apartments is covered in the block service charge. Owners should confirm with their management companies/ agents that their apartment block has been valued for insurance purposes, and that the insured value is current. 3. The figures assume a basic quality specification with normal foundations, brick or block walls, concrete tiled roof, concrete ground floor and timber first floor, soft wood flush doors and hardwood double glazed windows, painted plaster to walls, plastered ceilings, standard electrics and central heating. The sum insured should be increased to allow for better than average kitchen fittings, built-in wardrobes, finishes

60



Planning Charges 2010Class of Development Most Building Types New Houses House Alterations Golf Courses Outline Planning Permission Charge 80 or 3.60 per m2 whichever is greater 65 for each dwelling 34 50 per hectare 75% of full planning permission charge Charge 38,000 28,500 125,000

Maximum Scale of Charges for Planning Applications Full Application Most Building Types Outline Application Most Building Types Retention ApplicationSource: Local Planning Authorities

Fire Certificate Charges 2010On the 1 October 2009, sections 5 and 6 of the Building Control Act 2009 came into operation. These new regulations provide more options for applying for a Fire Safety Certificate. These options can be summarised as follows: Option 1 Making a Fire Safety Certificate application as per the status quo. In this case work cannot commence until the Fire Safety Certificate is granted and for 14 days after a commencement notice is served. The local authority fee of 2.90/ m2 up to a maximum of 12,500 still applies. Option 2 A 7 day notice A 7 day notice is a new procedure where an applicant can submit to the local authority their intention to start work in 7 days time. The notice must be accompanied by: (a) A valid Fire Safety Certificate Application (b) An Application form (c) A 7 Day Statutory Declaration Form. This effectively is a declaration that any works carried out before the grant of the fire cert, will comply with the Building Regulations and an undertaking to carry out any modifications required under the grant. The local authority fee increases to 5.80/m2 with a maximum fee of 25,000. Option 3 A revised Fire Safety Certificate Application This option provides a vehicle to revise a previously granted Fire Safety Certificate, where the design has significantly changed or due to a requirement of planning. The procedure and fee scale is the same as the normal route in option 1 Option 4 A Regularisation Fire Safety Certificate Application This type of application applies where works have started or completed, without either a normal Fire Safety Certificate Application or a 7 day notice application. Unlike an application for a design, this will need to confirm that the completed building complies with the Building Regulations. The local authority can also inspect the premises. A statutory declaration is also required stating that the works carried out to date do comply with the Building Regulations and that the applicant will comply with any modifications or conditions on the grant within 4 months. In addition the local authority fee in this case increases to 11.60/m2 up to a maximum of 50,000.

Source: Local Planning Authorities


61

Chartered Accountants Ireland, Headquarters

SECTION 8

Topical Issues

by Willie Aherne and Stephen Ashe

Whole Life Costing in DesignNot only can Whole Life Costing be used as a tool for assessing the total cost commitment of investing in and owning an asset, it can also support decision making in a number of ways including: n Establishing trade-offs between performance, cost, time and quality n Reducing energy use and lengthening a maintenance cycle n Achieving a balance between initial capital costs and future revenue costs n Identifying opportunities for greater cost effectiveness n Assessing alternative options identified for sustainability n Allowing comparisons to be made against other investment options n Identifying and benchmarking actual costs incurred in operating assets To put the importance of Whole Life Costing into perspective, the operating cost of a hospital consumes the equivalent of the capital cost every two to three years. This can continue for 40 years or more. The operating cost of a school can consume the equivalent of the capital cost every four to five years and can remain in service for a century1. The chart overleaf2 illustrates the components of whole life costing and the graph2 illustrates how the ability to optimise cost reduces in time. As can be seen the ability to optimise the Whole Life Cost is greatest at the design stage of the project. In fact 70-80% of the cost of running, maintaining and repairing a building is determined at the design stage. Although Whole Life Costing can be done at any stage of the project, the potential of its effective use is greatest during early design stages.

Bruce Shaws approach to Whole Live Costing considers and optimises the full range of costs which accrue from the construction of an asset right through its anticipated life span. The focus of PPP and PFI on long term operation, risk and the lifecycle replacement of key components make Whole Life Costing a necessity. Whole Life Costing is also becoming a key driver in both public and private sector works. Bruce Shaw help Clients establish the most cost effective investment decision by focusing not only on capital costs but on the total cost of an asset. It is not simply the lowest Whole Life Cost alone (which would compromise quality and availability), but the lowest Whole Life Cost at minimum risk and maximum asset value. In order to do this we undertake a detailed exercise, preferably at initial design stage, which establishes trade-offs on capital, maintenance and operations/occupancy costs. A simple example of this is the choice of floor finish in the design solution. The cheapest finish day one may have the highest Whole Life Cost in net present value terms when cleaning and replacement costs are factored in. Typical areas of expenditure which are included in calculating the whole-life costs are: n Planning n Design n Construction/Acquisition n Operations n Maintenance n Renewal/rehabilitation n Cost of finance n Replacement or disposal With the advent of spiralling energy costs, carbon taxes and the sustainability agenda, the need for a clear, reliable and transparent Whole Life Cost model has become a higher priority for our Clients.

1 2

BSRIA Brierley Stubbs Limited

64


SECTION 8 Topical Issues

Whole Life Costing should be considered by all Clients involved in construction projects. These include: n Public sector clients (Contracting Authorities) n Private sector clients (owners, developers, tenderers) n FM service providers n Fund providers Being a serious player in the PPP/PFI market, Bruce Shaw recognises the importance of

optimising Whole Life Costs when tendering for projects. In many cases the approach to managing costs over the operating period of an asset is the difference between winning and losing major PPP/PFI contracts. Bruce Shaw can produce Whole Life Cost models that incorporate an industry accepted cost structure which is compliant with ISO 15686-5. The bespoke software incorporates BCIS and our own in-house data which allows us to inform decision makers throughout all stages of a project.

Generators of Whole Life Cost Building & Infrastructure AssetsWhole Life Cost

Decommission & Disposal

Capital Investment

Maintain

Operate/Occupancy

Projects/ Realisation

Capital Maintenance

Depreciation

Planned/ Cyclic

Equipment Warranties

Reactive Maintenance

Supply Management

Technical Efficiency

HS&E

Life Cycle Replacement

Minor Projects, Upgrades, Refurbish

Statutory

Discretionary

Asset Protection

Monitoring Driven

Customer Driven

Ability to Optimise Cost100% Percentage of WLC Committed WLC Actual WLC

70-80% Ability to optimise WLC

Design

Construction

FM/Occupancy


65

Risk Managementby Jack OSullivan The preparation of an effective Risk Management Strategy (RMS) outlining the timely identification, quantification and the implementation of risk management procedures is now widely regarded as an essential Project and Cost Management tool and has been successfully implemented by Bruce Shaw on a wide range of Public and Private sector projects, providing clients with greater project control and increased cost certainty. Risk can be defined as the possibility of an uncertain event or condition occurring which, if it occurs, will have a discernable effect on a projects objectives. Dealing with risk should therefore be addressed by both Clients and Contractors in a structured and systematic manner at all stages of project delivery if project objectives are to be met or even exceeded. The aim of a successful RMS is to provide the structured framework for risk identification, analysis and management, through each stage of project delivery to occur. An effective RMS will essentially minimise the impact of risks, maximise opportunities to improve scheme objectives, facilitate long term project planning and enable detailed forecasting of final outturn cost. An efficient RMS should be grounded on timely identification of risks; quantification of risks; risk response planning; and the response and management of strategies adopted for each risk. As RM and Value Management (VM) are linked, a structured approach to RM can lead to better financial opportunities. One of the key criteria for a successful RMS is ensuring that certain procedures are implemented and deliverables produced at the appropriate time during the life cycle of a project. For the Client, the majority of the RM work is typically carried out pre-tender at the projec

Documents

Bruce Shaw Handbook 2010