黑洞社区

Business sentiment surveys are holding at or around long-run averages for the respective data series. Recent rebounds have further improved some of the indices in response to the ending of lockdown, combined with a vaccine rollout programme. Expectations of improved business conditions in 2021 are high, with most sectors forecasting better sales and revenue outcomes this year. Still, everything is relative, and 鈥渂etter鈥� sales and revenue compared with 2020 are certainly more likely for many firms, given the substantial disruption to a range of economic sectors.

Confidence and sentiment do not always translate to hard economic data. Although there have been improvements here, there is some way to go before a recovery can be declared. The second wave of the pandemic in the UK, and its accompanying lockdowns, interrupted the improving economic activity across the final months of 2020. The UK鈥檚 GDP yearly growth rate was -7.3% at Q4 2020, which is marginally higher than the Q3 rate of change but still negative over the yearly period.

Construction sector sentiment posted similarly strong rebounds over Q1 2021. This improved sentiment reflects the relatively strong return of activity. Construction output rallied through the second half of 2020, as more sites either reopened or improved productivity against the backdrop of covid-19 restrictions. Construction output grew by 1.6% between January and February 2021. However, on a quarter-to-quarter measurement, output fell slightly, by approximately 1%. The yearly change for total construction output shows that the industry in February 2021 was still more than 4% smaller than in February 2020. Following data revisions, 2020 annual construction growth has been revised down 1.5 percentage points to an annual decline of 14.0%. This is now the largest decline in annual growth since annual records began in 1997. Looking ahead, new orders data in Q4 2020 slipped again after posting a modest improvement over the 12 months to Q3 2020.

黑洞社区 cost inflation continues across almost all materials classifications. Aecom鈥檚 composite index for building costs 鈥� comprised of materials and labour inputs 鈥� increased by 3.1% in the 12 months to Q1 2021. The cost index continued to move higher from the combination of higher international logistics costs, non-tariff barriers introduced as a result of Brexit, and on-going demand from sound industry workload and activity. The quarterly movement from Q4 2020 to Q1 2021 saw an increase of 1.3%, which would equate to a larger annualised rate of change greater than 5%. Elevated input cost inflation can be expected throughout 2021, as the current mix of supply and demand factors continue.

Aggregate wage levels are nominally rising as lockdown ends, the economy reopens, and more construction activity picks up. But this aggregate measure shows that wage levels are 3%-4% shy of those seen immediately prior to the pandemic. Despite the strong sentiment indicated for the sector, wages data belies this somewhat, alluding to the gap that construction output has yet to make up before it returns to pre-pandemic levels.

A number of metals commodities continued rising in price up until March this year. Further, a significant pick-up in the yearly rate of change was recorded for structural steelwork in the first two months of 2021, as post-pandemic global demand propelled prices higher. For the months of January and February 2021, price rises of approximately 25% were recorded over the 12 months from their respective points in 2020. Global metals prices saw significant increases too. However, more recent price movements for these metals have not marked any defining trend 鈥� rather, they are moving sideways within a range.

Up until the start of 2021, and following their typical correlation, global metals prices moved in sync with the US dollar. Since the early part of 2021, though, this relationship moved out of sync, propelled by other market factors that more strongly influenced the trend of dollar-priced commodities such as copper and steel. Demand for underlying inputs to the steel-making process 鈥� scrap in the case of steel reinforcement 鈥� higher demand for finished steel products, and global supply constraints have contributed to this above-average rate of change in the short term.

The correlation between the US dollar and dollar-priced commodities will move back into sync in the future. US economic conditions strongly influence the strength or weakness of the US dollar, and recent evidence that US consumer price inflation is not increasing as quickly as forecast last year has undermined some of the recent support for the US dollar. If the dollar continues to weaken over the near term, this is likely to underpin the current inflationary drivers for steel prices over the next quarter.

An aggregate measure of tender prices declined marginally in the 12 months to Q1 2021. After a slowing of tender price inflation in 2020, and some deflationary trends seen in parts of the supply chain, pricing is maintaining a steady course at the moment. There is still some capacity in the pipeline which is allowing for continued competition where some trades are offering keener prices. Ordinarily, with the combination of present input cost strength and reasonable current activity levels, tender prices should plot an inflationary course through 2021. Expectations of higher future workload also adds pressure to this mix. But any mismatch between expectations for new orders and the reality further into 2021 will squeeze existing commercial dynamics for supply chain firms.

Figure 1: Tender price inflation, Aecom Tender Price Index, 2015=100

					Forecast*
Quarter	2017	2018	2019	2020	2021	2022	2023
1	110.9	113.2	117.9	120.4	119.0	123.7	127.5
2	111.3	113.6	118.3	121.0	121.0	124.6	128.5
3	112.2	115.4	119.3	119.1	122.0	125.5	129.5
4	112.6	117.3	120.0	119.0	122.8	126.5	130.5

Sourcing cost information

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/m虏 on GIFA. The range of costs represents variances in the key cost drivers. If a building鈥檚 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.

To use the tables:

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鈥� fire resistance, the overall frame rate (based on the average of each range) would be:

 拢124.00 + 拢82.00 + 拢18.50 = 拢224.50

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

Figure 2: Indicative cost ranges based on gross internal floor area

TYPE	Base index 100 (拢/m2)	Notes
Frames
Steel frame to low-rise building	123-136	Steelwork design based on 55kg/m2
Steel frame to high-rise building	188-212	Steelwork design based on 90kg/m2
Complex steel frame	212-251	Steelwork design based on 110kg/m2
Floors
Composite floors, metal decking and lightweight concrete topping	64-100	Two-way spanning deck, typical 3m span with concrete topping up to 150mm
Precast concrete composite floor with concrete topping	108-152	Hollowcore precast concrete planks with structural concrete topping spanning between primary steel beams
Fire protection
Fire protection to steel columns and beams (60 minutes resistance)	15-22	Factory applied intumescent coating
Fire protection to steel columns and beams (90 minutes resistance)	18-30	Factory applied intumescent coating
Portal frames
Large-span single-storey building with low eaves (6-8m)	83-108	Steelwork design based on 35kg/m2
Large-span single-storey building with high eaves (10-13m)	95-130	Steelwork design based on 45kg/m2

Figure 3: BCIS location factors, as at Q2 2021

Location	BCIS Index	Location	BCIS Index
Central London	128	Nottingham	104
Manchester	100	Glasgow	93
Birmingham	96	Newcastle	92
Liverpool	95	Cardiff	94
Leeds	93	Dublin	103*

*Aecom index

 

Steel For Life sponsors

Headline

Gold

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

Silver 

Jack Tighe Ltd, Peddinghaus Corporation

Cost comparison updates

This quarter鈥檚 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 Q2 2021 are presented here. 

Costing steelwork: offices update

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

One Kingdom Street, London, key features

• 10 storeys, with two levels of basement
• Typical clear spans of 12m x 10.5m 
• Three cores 鈥� one main core with open atrium, scenic atrium bridges and lifts
• Plant at roof level

Cost comparison

Two structural options for the office building were assessed (as shown in figure 5): 

• Base case 鈥� a steel frame, comprising fabricated cellular steel beams supporting a lightweight concrete slab on a profiled steel deck
• Option 1 鈥� 350mm-thick post-tensioned concrete flat slab with a 650mm x 1,050mm perimeter beam.

The full building cost plans for each structural option have been reviewed and updated to provide current costs at Q2 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 7% lower than that for the post-tensioned concrete flat slab alternative for the frame and upper floors, and 5% lower on a total building basis.

Figure 4: Key costs 拢/m虏 (GIFA), for City of London office building

Elements	Steel composite	Post-tensioned concrete flat slab
Substructure	91	96
Frame and upper floors	450	480
Total building	2,671	2,815

Costing steelwork: education update

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

Christ the King Centre for Learning, Merseyside, key features

• Three storeys, with no basement levels
• Typical clear spans of 9m x 9m
• 591m² sports hall (with glulam frame), 770m² activity area and atrium
• Plant at roof level 

Cost comparison

Three structural options for the building were assessed (as shown in figure 6), which include:

• Base case 鈥� steel frame, 250mm hollowcore precast concrete planks with 75mm structural screed
• Option 1 鈥� in situ 350mm reinforced concrete flat slab with 400mm x 400mm columns
• Option 2 鈥� steel frame, 130mm concrete topping on structural metal deck.

The full building cost plans for each option have been updated to provide current costs at Q2 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 marginally 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 拢3,178/m² against 拢3,204/m². This is because of lower substructure and roof costs, alongside lower preliminaries resulting from the shorter programme.

Figure 5: Key costs 拢/m虏 (GIFA), for Merseyside secondary school

Elements	Steel + precast hollow-core planks	In situ concrete flat slab	Steel composite
Frame and upper floors	300	257	272
Total building	3,234	3,204	3,178

Costing steelwork: industrial update

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

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

• Warehouse: four-span, steel portal frame, with a net internal floor area of 34,000m²
• Office: 1,400m², two-storey office wing with a braced steel frame with columns

Cost comparison

Three frame options were considered:

• Base option 鈥� a steel portal frame with a simple roof solution
• Option 1 鈥� a hybrid option: precast concrete column and glulam beams with timber rafters
• Option 2 鈥� a steel portal frame with a northlight roof solution.

The full building cost plans for each option have been updated to provide costs at Q2 2021. The steel portal frame provides optimum build value at 拢695/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. Other additional costs relate to the glazing of the northlights.

Figure 6: Key costs 拢/m² (GIFA), for Stoke-on-Trent distribution warehouse

Elements	Steel portal frame	Glulam beams + purlins + concrete columns	Steel portal frame + north-lights
Warehouse	73	146	84
Office	135	176	133
Total frame	774	148	90
Total building	695	780	747

Costing steelwork: retail update

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

Asda food store, Stockton-on-Tees,

key features

• Total floor area of 9,393m²
• Retail area based on 12m x 12m structural grid

Cost comparison

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

• Base option 鈥� a steel portal frame on 

CFA piles

• Option 1 鈥� glulam timber rafters and columns on CFA piles
• Option 2 鈥� a steel portal frame with a northlight roof solution on driven steel piles.

The full building cost plans for each option have been updated to provide costs at Q2 2021. The steel portal frame provides the optimum build value at 拢2,645/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 鈥� 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.

Figure 7: Key costs 拢/m² (GIFA), for Stockton-on-Tees food store

Elements	Steel portal frame	Glulam timber rafters + columns	Steel portal frame + north-lights
Structural unit cost	147	180	166
Total building unit cost	2,645	2,685	2,655

Costing steelwork: mixed-use update

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

Holiday Inn tower, MediaCityUK, Manchester

• 17-storey tower 
• 7,153m² of open-plan office space on five floors (floors two to six)
• 9,265m² of hotel space on eight floors (floors eight to 15)

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. 

Cost comparison

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

• Base option 鈥� steel frame with Slimdek floors
• Option 1 鈥� concrete flat slab
• Option 2 鈥� composite deck on cellular beams (offices) and UCs used as beams (hotel).

The full building cost plans for each option have been updated to provide costs at Q2 2021. The steel frame with composite deck continues to provide the optimum build value, with the overall building cost at 拢2,615/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 鈥� time constraints precluded redesign of the tower block, hence the original Slimdek design was constructed.

Figure 8: Key costs 拢/m² (GIFA), for hotel/office building in Manchester

Elements	Steel frame with  Slimdek	Concrete flat slab	Composite deck on cellular beams (offices) and UCs used as beams (hotel)
Structural unit cost	528	442	361
Total building unit cost	2,826	2,721	2,615

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

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