International Construction Measurement Standards: small businesses

Little and large

8 December 2017

The introduction of the International Construction Measurement Standards signals a new dawn for the small business, as Justin Sullivan explains

The expression 'a rising tide lifts all boats' is often used to suggest that improvements in the general economy will benefit everyone. But it is no less relevant in our business community of quantity surveyors. With most practising in small or micro businesses – I am told more than 80% of member firms are of this size – there is an armada of small boats out there that will all benefit from the rising tide of our standards, in particular the recently introduced International Construction Measurement Standards (ICMS).

The ICMS have been designed to enable transparent and more regulated global comparisons for high-level cost classification. But why is this necessary?

Dumbfounded in Dubai

A couple of years ago, I was sitting in an architect’s office in a sweltering Dubai. Despite being a quantity surveyor myself, I had been asked this time to perform a project monitoring role, having worked for the client for many years both in the UK and overseas. We appointed the local quantity surveyor recommended by the architect as our cost consultant. He was a nice chap, who ran a small business and had worked with the architect many times.

When we all met to receive the long-awaited cost plan, it was immediately apparent that the standard required for such a project was missing. The client was shocked that I pointed this out, especially as I had only looked at the front cover at this stage. But the document was so thin for a project of this size that it could never have contained the level of detail needed for the important and logical next steps, such as value engineering.

A debate ensued about how the cost plan should look, which culminated in the client asking what the global standard for a cost plan was. Both the quantity surveyor and I admitted that there was no such standard, as quantity surveyors require different things around the world. The client was dumbfounded.

It’s good to be in the ICMS

As part of my RICS role as Chair of the Quantity Surveying and Construction Professional Group Board, I have travelled in and outside the UK to speak with members about the standards, with ICMS and the International Property Measurement Standards being at the forefront of their minds; these have either already been implemented and adopted in the workplace, as in the latter case, or will be shortly – the ICMS were launched in Vancouver in July, although adoption rates are not yet known.

There has always been a mixed reception for new standards. I have often heard people ask 'Why do we need yet another RICS standard?' This is normally followed by silence, then the penny drops – 'Wouldn’t it be good if we all started doing the task the same way?' Cost reporting would be conducted in a similar manner, with everyone completing the same steps in a regulated and more sophisticated manner.

Being ‘international’ does not mean being somewhere else – global standards affect everyone

The ICMS were created by a Standard Setting Committee (SSC) comprising chartered surveyors from all over the world and from various business groups. There was no concentration of larger firms among their number – if anything, it was the smaller firms that were more involved. The focus of the SSC was on devising international cost classification standards that would do the job perfectly, rather than simply aiming to keep everybody happy.

Many of the major players in quantity surveying world have said they will support and adopt ICMS. However, does that then give them an advantage over the smaller practices? I don’t think so. The smaller practice by definition has fewer projects, fewer clients and inevitably less in the way of red tape, politics and standardised systems. The smaller practitioner should be able to adapt quicker to a new reporting system, which is basically what ICMS offer.

Setting common standards

At the macro level, research into global cost standards by RICS’ Building Cost Information Service (BCIS) in 2009 noted a lack of common classifications and a complete absence of standards in certain countries, findings borne out by the SSC. More recently various studies, including those from respected bodies such as the McKinsey Global Institute and the World Economic Forum, have noted that potential productivity and efficiency improvements in construction are hampered by the lack of standards in cost management and reporting.

At a governmental level, the need to attract private finance, particularly in infrastructure, is well recorded, and standards that enable transparency, cost prediction and minimising risk for projects are necessary to inform investors’ and governments’ decisions.

Similarly, among businesses, global construction clients and consultancies need to compare costs across sectors. Many clients now have vast programmes of work, and consultants prepare and issue worldwide cost research that would benefit from reference to common standards. The larger players that have agreed to adopt ICMS also have extended supply chains that include micro, small and medium-sized enterprises, where harmonised standards can greatly help the flow and interpretation of construction cost data.

The 'I' in 'international'

Change is always a challenge. The profession should, however, see the opportunity here. Quantity surveyors are the natural data managers in the construction industry and the advent of new technologies such as building information modelling (BIM) will only make this role more important. With increasing global and mobile opportunities, there is scope to unify the financial management of construction across buildings and civil engineering, which can only increase the demand for and status of the profession.

The RICS position

ICMS were developed by a collaborative coalition of global professional bodies. They are not RICS standards as such, although we are a member of that coalition. Since the standards aim to improve the global performance of the profession and unify terminologies, the coalition agreed to make the ICMS free for all, as standards that can be used by all in the industry. RICS intends to issue a user guide for ICMS and follow up with a global professional statement in cost planning and estimating based on ICMS. This planned professional statement will regulate members on a global basis.

At a UK level, the RICS new rules of measurement (NRM) 1 and 3 will also be adapted to incorporate ICMS, though NRM 2 will remain largely unaffected. RICS will support these changes by providing mapping between existing standards and the NRM, and many software vendors are already incorporating ICMS into their products. BCIS is also reviewing new products associated with ICMS and the impact the new standards will have on their existing data. As such a global data hierarchy will be created for the cost management profession, linking data at an overarching benchmarking level with more granular national, measurement systems.

Applicability and adoption

Those who are heavily involved in ICMS suggest that it will take several years, as a ballpark figure, to achieve widespread adoption of the standards. However, many leading cost consultancies and clients have already begun to use ICMS and formally declared their support including Arcadis, Arup, Gleeds, RLB and Turner and Townsend. Many SMEs and micro businesses are part of the extended supply chains connected with large practices, and therefore adoption and understanding of ICMS is a natural progression for a professional in an organisation of any size.

Software vendors are also beginning to incorporate ICMS into their products. As BIM and technology continue to progress and affect quantity surveyors, standards are necessary to refine and analyse the increasing amounts of data.

While many of the larger cost consultancy firms can see the immediate benefits in using and reporting with ICMS, it will in time be of considerable use to SMEs and micro-businesses that are also part of the same construction industry or surveying profession. Published project cost data based on the ICMS classification will be available to firms of all sizes, which will then be able to report and advise their clients more accurately in a commonly formatted manner.

This will serve to instil greater confidence in the client organisation which should bring benefits to the smaller firm, following the trickle-down principle. ICMS will be mandatory for members once they are incorporated into the RICS professional statement, which we plan to publish next year. The complete text of ICMS will appear in that statement – accordingly, firms of all sizes will soon need to know what ICMS all mean and how they work, and I suggest that you become an early adopter and get ahead of others. I believe that ICMS are good news for all cost consultancy firms, large or small – so why not adopt them sooner rather than later?

Acknowledgements

Thanks to Alan Muse, Global Director of Built Environment Professional Groups at RICS and Steven Thompson, Associate Director of Built Environment at RICS, for their assistance in supplementing and collating this standards information.

Justin Sullivan is Chair of the RICS Quantity Surveying and Construction Professional Group Board and a member of RICS’ Governing Council

Further information

Download a complete “International Construction Measurement Standards: small businesses” PDF