Dynamic Construction Location Factors Update

Published September 2023

In our continuous discussions with clients around the world, a topic of frequent interest and priority is the variation between construction cost levels in different locations (location factor). To help our customers understand the fundamentals of location factors, we conducted primary market research and developed a location factor model and methodology that reflect S&P Global macroeconomics, and the country-specific costs needed to develop relative location factors for the construction of petrochemical, chemical and refinery plants. The results and methodology were published in our PEP Report RP204C Location Factor (December 2016). In the 2019 PEP Review 2019-12, Dynamic Construction Location Factors and accompanying Excel model, we included geographical coverage of 12 locations and an enhanced functionality for clients:

• Estimate a 10-year forward view of location factors.
• Set and/or view scenario conditions (e.g., “test” alternate labor and equipment used in the engineering, procurement and construction business models/approaches).
• Input the user’s own time series of macroeconomics and cost data.

In this 2023 PEP Review RW2023-15, we now include geographical coverage of 34 locations:

Any geography can be set to 1.0 as the basis country. Note that the base case shows location factor subcomponents relative to the US Gulf Coast. We have also extended the forward view to 2050.