An international coalition of more than 40 groups from six continents is creating a new system for measuring construction costs that aims to reduce investment barriers caused by differences in professional standards.
"For the first time, we have every single professional body in this space saying we believe in this project and we have signed a declaration to create and adopt this standard," said Ken Creighton, chair of the International Construction Measurement Standards (ICMS) coalition. "It will involve change, but having consistency is so important in our shared marketplace. The reality is that we have one international marketplace and it is incumbent upon our profession to take a consistent approach."
Quantity surveyors and other cost consultants measure the value of a construction investment from design concept to project completion in the private and public sectors. However, Creighton said the methods used to measure the cost of construction projects vary between geographic regions and countries around the world.
As a result, it is difficult to compare the construction cost of any type of infrastructure project between countries due to differences in standards and a lack of consistency in the way costs are calculated, classified and reported. These differences increase investment risk in construction by reducing project transparency.
In response to this problem, the ICMS coalition was established by 46 organizations who represent quantity surveyors, building surveyors, engineers, engineering consultants and architects. These professional organizations of cost consultants are located on six continents, including Europe, Africa, Asia, Australia/Oceania, North America and South America.
In addition to being the ICMS coalition chair, Creighton is also the director of professional standards for the Royal Institution of Chartered Surveyors (RICS). He said the RICS has used its own data to find there can be a 28 per cent variance in the cost of a construction project depending on where it's being undertaken.
To put this problem in perspective, Creighton noted a recently released report by Oxford Economics entitled Global Construction 2030. The report forecasts the volume of global construction output will grow by 85 per cent to $15.5 trillion by 2030. China, the U.S. and India will lead the way in construction output accounting for 57 per cent of all global growth.
Another report by the McKinsey Global Institute estimated it would require $57 trillion in infrastructure investment between 2013 and 2030 to keep pace with projected global growth of Gross Domestic Product. Over the 18 years before 2013, $36 trillion was spent on infrastructure investment.
Creighton said if it is assumed the estimate of $57 trillion in global infrastructure investment between 2013 and 2030 is out by 28 per cent, there could be a loss of about $16 trillion in world investment resources.
For this reason, the ICMS coalition is taking a radical approach to develop a global system for calculating the construction cost of building and civil engineering projects. This approach involves the separation of politics from the technical merit of standards setting.
"Every organization that has come into the coalition has already made the decision that we are going to change," said Creighton. "Nobody is lobbying the standards committee to do it one specific way. We are starting from scratch and creating our own intellectual property."
The ICMS coalition has established an independent Standards Setting Committee (SSC) made up of 27 technical experts with experience across all markets and sectors. The SSC is familiar with the various standards that are currently being used around the world.
"They have been given the task to work independently, which means they are not representing an organization, geography, country, market or sector," said Creighton. "Based on their own experience, we have asked them to work for what they think is best for the whole world marketplace."
The public consultation process to develop and implement a common standard for construction cost measurement was launched in November 2016.
All stakeholders were invited to make comments on the draft standard until Jan. 13, 2017. Creighton said a final draft of the ICMS coalition will be available by August 2017.
The ICMS coalition was established at an International Monetary Fund event in Washington D.C. in 2015 by non-profit organizations representing professionals in about 140 countries.
The Washington meeting represented a landmark moment for construction, project management, cost engineering and quantity surveying sectors as a whole, said Creighton. This was the first time these professions came together in this way to develop unifying standards.
The coalition aims to create international standards that will harmonize cost, classification and measurement definitions in order to improve comparability, consistency, statistics and benchmarking of capital projects. The benefits of achieving this standard are: more effective global cost comparisons; better investment and funding decisions; improved cost prediction and management; and consistent accounting.