Cost update Q2 2018

Cost update index image

Material and labour prices are continuing to rise, but global economic uncertainty may affect the numbers in future

01 / Key changes

Building cost index

A composite measure of building costs increased by 4.9% over the previous 12 months. Materials costs remained a significant driver of cost inflation to the overall index, likely driven by the fall in sterling against the euro and the dollar, which introduced inflationary pressures from the subsequent higher cost of imported materials and components, particularly with dollar-priced commodities. Labour costs also continued to rise steadily over the second quarter as contractors report difficulty in recruiting skilled labour, particularly carpenters and bricklayers. 

Mechanical cost index

Aecom’s mechanical cost index shows the rate of annual change slowed to 4.4% in the second quarter of 2018. Labour and materials maintained steady increases, but some inflationary pressures appear to be easing.

Electrical cost index

Aecom’s electrical cost index increased by 2.7% over the year. This marks an increase in the rate of change, likely stemming from a significant pick-up in global metals commodity prices experienced through the first half of 2018.

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