03 Apr 2017
Construction might be a global industry, but the way costs are reported varies enormously. Roger Flanagan FRICS, Professor of construction management at the University of Reading and Tolis Chatzisymeon CEO of cost-estimating software developer Nomitech, answer our questions about how international standards will address many problems facing the profession.
What problem are the International Construction Measurement Standards trying to solve?
TC: Like many other industries, construction is now a globalised business. While the profession is becoming more international, the way it measures costs is often still determined by the markets in which work is carried out. Such inconsistency in standards breeds misunderstanding and uncertainty. The International Construction Measurement Standards Coalition (ICMS) Coalition is seeking to remedy this.
RF: The ICMS Coalition is an umbrella group of more than 40 professional bodies that includes RICS, which has been working together to develop a new international construction measurement standard (ICMS), a draft version of which is currently undergoing its final consultation before publication.
You can contribute to the international standards movement by telling us what you think about the draft standard.
How difficult is it to operate globally when the standards used in different markets are inconsistent?
TC: We started our business 10 years ago, but now we have customers from all over the world, including several multinational companies. Although our primary market is the UK, 65%-70% of our operations are around the world, and we are getting more and more work abroad. Our estimating software supports multiple codings which we get through our local representatives and partners, but having one global system, will make our global operations and go-to new markets faster and smoother.
Also trying to get international work for our existing customers can be difficult because there are different standards. People trying to invest in a foreign country don’t know how their money will be spent.
How important is it to have professional advice and the right data to support services in various markets?
RF: It’s hugely important. If we could reduce construction costs by 3%, you could probably build 200 new schools in the UK. There is huge room for improvement and a recent report by McKinsey Global Institute ‘Reinventing Construction: A route to higher productivity’ (Feb 2017) states that the International Construction Measurement Standards ‘will help clarify the costs of projects.’
TC: At a very basic level, better and more consistent cost classification will help us improve data by reducing risk in the global construction industry. That can only be a good thing.
How will inconsistencies in reporting costs hinder the widespread adoption of an open platform such as BIM?
RF: It is anticipated that BIM will be developed to embody ICMS requirements on classification of construction cost. BIM would help introduce an international standard for data classification for construction and cost benchmarking.
ICMS provides the BIM software vendors the parameters that the profession wishes to use in terms of the analysis of costs. As such, BIM software that complies with the requirements of ICMS will be advantageous to both the vendors and users.
How will a project like ICMS lead to a more standardized approach?
RF: We report construction costs in very different ways, ICMS is about trying to bring some consistency. If I am building social housing in Hong Kong, I am interested to know what social housing construction costs are in Sao Paulo, or Seoul. I use the comparison of financial reporting, which the accountancy profession has very carefully tried to shape to global standards. This is an attempt to bring a similar discipline to the way we report and record construction cost information.
TC: We explain that ICMS is not a detailed method of measuring construction works. Instead, it is a high level benchmarking and reporting framework for international cost classification, reporting and comparison. For the first time at a global collaborative level, ICMS will introduce a standard structure and format that will lead to greater consistency in classifying and reporting of capital costs for construction projects.
The deadline for comments on the second and final stage of the ICMS consultation ends on 1 May. Please take some time to comment on the standard (and log one hour of CPD).
Part of this interview was originally featured in Modus magazine, November 2016
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