New high level International Construction Measurement Standards (ICMS), launched in July 2017, will revolutionise the global industry by improving cost prediction in infrastructure projects.
Construction is a global industry but the way project costs are measured varies enormously which makes decision-making risky and creates barriers to investment.
Until now, it has been almost impossible for governments and investors to compare construction costs like with like. It is hard for them to know if public infrastructure projects are good value and this can waste money.
ICMS will create a consistent method for presenting costs, aligning national standards with one universal framework for defining, analysing, classifying and presenting construction costs.
ICMS will benefit all stakeholders with an interest in buildings and civil engineering construction, including governments, developers, owners, occupiers, managers and investors by creating a common language for construction investment and enabling better benchmarking.
ICMS has been developed and implemented by a growing international coalition of 46 leading standards organisations, representing professionals across the multi-trillion dollar construction sector.
NZIQS has been a member of the ICMS Board of Trustees since the coalition started in 2015. NZIQS supports the move towards greater global consistency of standards. Barry Calvert, NZIQS president says: “(quote to come)”
Commercial organisations, governments and academic bodies are announcing their intention to implement ICMS by registering as ICMS “Partners”. Among leading organisations publicly announcing their support are major organisations including Turner & Townsend, Faithful+Gould, Arup, G20 Global Infrastructure Hub, EY and Arcadis. See full list of coalition partners here.
Exactal, NZIQS Platinum Partner, has also become a coalition partner to ensure that their product range is well prepared for these standards, which will be of great benefit to their global customer base.
· High level cost classification
· Buildings and civil engineering
· Definitions, inclusions and exclusions
· Four level taxonomy
· Key cost drivers
NZIQS ICMS Press Release
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The new standard harmonises cost, classification and benchmarking definitions to enhance comparability and consistency of capital projects. A report by McKinsey Global Institute, ‘Reinventing Construction: A route to higher productivity’ (Feb 2017), finds that the International Construction Measurement Standard ‘will help clarify the costs of projects.’
Construction is a large contributor to national economies and to keep cities functioning, governments worldwide need to spend vast sums of public money on essential infrastructure. Inconsistent information causes poor cost prediction which impedes investment and can cause 9 out of 10 mega projects to run over budget.*
* Bent Flyvbjerg, is a Danish economic geographer. He is Professor of Major Programme Management at Oxford University's Saïd Business School. He has estimated that 9 out of 10 mega projects (infrastructure developments over US$ 1 billion) go over budget. http://www.mckinsey.com/industries/capital-projects-and-infrastructure/our-insights/megaprojects-the-good-the-bad-and-the-better. ‘Reference-class forecasting’ is cited as a solution for this issue. An alternative name for this is construction cost prediction and cost benchmarking which is central to the benefits of the new International Construction Measurement Standards which will help provide the right data in the right standardised form.
Overall, close to $78 trillion needs to be spent globally between 2014 and 2025** on infrastructure and the ICMS Coalition saw the need to de-risk these projects for public and private sector investors.
** Oxford Economics and PwC, research: http://press.pwc.com/News-releases/infrastructure-spending-to-more-than-double-to-9-trillion-annually-by-2025/s/e4ea4334-fdfc-4504-9273-c2e545faeb8e
The World Economic Forum has also called for professional collaboration to standardize cost definitions and classification.***
*** ‘Shaping the Future of Construction’ report, World Economic Forum and Boston Consulting Group, page 40, February 2016: http://www3.weforum.org/docs/WEF_Shaping_the_Future_of_Construction_full_report__.pdf