Thursday, July 20, 2017
Slashing infrastructure investment risk, a new global coalition aims to transform construction cost system
Denver, CO USA – The International Construction Measurement Standards (ICMS), a new high-level benchmarking and reporting framework for international cost classification, reporting, and comparison, is launching today. ICMS aims to provide greater global consistency in classifying, defining, measuring, analyzing, and presenting construction costs at a project, regional, state, national, or international level.
Financing buildings and infrastructure projects, such as energy systems, railways, bridges, schools, and hospitals, is often risky because construction costs are categorized and forecasted differently across the globe. Until now, it has been almost impossible to compare international construction costs for projects in a “like-for-like” comparison and know whether the projects are feasible or a good value. The new ICSM standard enables better comparisons that help improve investor confidence and attract more private sector funding.
During a meeting at the International Monetary Fund in June 2015, a group of influential sector players came together and formed the International Construction Measurement Standards (ICMS) Coalition to tackle these problems by establishing the ICMS. Arup, Arcadis, Gardiner and Theobold, Faithful+Gould, Turner & Townsend, and Gleeds are some of the organizations who have publicly announced their support for ICMS by registering as ICMS Partners and committing to its future use.
Construction is a large contributor to national economies. 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 nine out of ten mega projects to run over budget.*
Overall, close to $78 trillion needs to be spent globally between 2014 and 2025** on infrastructure. The ICMS Coalition sees the need to reduce the risk of these projects for public and private sector investors. The World Economic Forum has also called for professional collaboration to standardize cost definitions and classification.***
Download the new International Construction Measurement Standards:
See Lian Ong, Chair of the ICMS Standards Setting Committee and Chair of Commission 10 (Construction Economics and Management) the International Federation of Surveyors, explains, “We are delighted to launch this new standard. With increasing levels of public, private, cross-border financing, and construction investment funds underpinning our pension schemes, it is vital to make sure costs can be assessed in a transparent way. The ICMS framework will improve ways of working and this collaborative project is an example of the global construction profession uniting to improve ways of working for the public interest.”
The new standard synchronizes 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 Standards will help “clarify the costs of projects.”
Different approaches to presenting construction costs can lead to inconsistent methodology, causing significant variations and false cost comparisons. In some countries, there are no standards at all, which creates barriers to FDI. The ICMS Coalition believes that financially constrained governments should be able to access and understand the information needed to make construction investment decisions and attract more private funding to help improve return on investment.
“ICMS will benefit all stakeholders in buildings and facilities, industrial and infrastructure, and energy construction market sectors, including government agencies, owners, investors, designers, and contractors. It will create a common language for construction investment and enabling better benchmarking.
Eos Group is proud to launch Cortex, our upcoming next-generation Big Data benchmarking solution that supports and extends the ICMS standard. Cortex can be tailored to meet our client’s specific needs while conforming to the ICMS guidelines.”
- Nick Papadopoulos, CEO, Eos Group, Inc.
Read what other leading professionals from around the world have to say about ICMS:
“The lack of a uniform approach can lead to confusion and the inability to compare schemes and assets within schemes on a like-for-like basis. ICMS achieves uniformity by standardizing the high level presentation of costs on projects by providing global consistency in classifying, defining, analyzing, and presenting construction costs at a project, regional, state, national, or international level.”
- Simon Longstaffe, Regional Director, Faithful+Gould, UK
“ICMS will contribute towards governments having a common approach for investment for transnational projects.”
- Antonio Paparella, Construction Unit, European Commission
“The world has become a global village and professionals travel from one country to another. Companies also move from one country to another to take different jobs, so it’s important for people involved in construction projects to have standards they are familiar with. In this respect, ICMS will be an excellent tool.”
- Varughese Mathew, Global President of the Indian Institute of Quantity Surveyors
“ICMS will give us a platform that provides clarity and does away with uncertainty. Whether you are a user or service provider, this project is important.”
- TT Cheung, Hong Kong, Chairman of the International Cost Engineering Council
“Arcadis operates in over 40 countries and we have projects in over 70 countries. In the Middle East alone we operate in five countries, so you can imagine that we convert costs between different standards. ICMS as a universal standard approach will solve problems of inconsistency. It will help us deliver better value for money, consistency of approach, and providing meaningful benchmark information.”
- Julie De La Cruz FRICS, Director, Arcadis, Chair and founder of the Philippines Institute of Certified Quantity Surveyors, Chair and founder of Philippine Institute of Built Environment (PIBE)
“It is the duty of professional bodies and associations to lead advances in standards which improve our ability to manage risk. As a new international standard, ICMS provides an enabling framework which promises to inspire our profession and add direct value to the public.”
- Ken Creighton, UK, Chair of the ICMS Coalition and Director of Professional Standards at RICS
To learn more about the ICMS Coalition, be sure to visit their website.
* Bent Flyvbjerg, is a Danish economic geographer. He is Professor of Major Programme Management at Oxford University's Saïd Business School. He estimates that nine out of ten 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 standardized form.
*** “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