A new framework designed to help the Australian and New Zealand governments reduce risk when investing in critical infrastructure has been released, following the Government’s commitment to significantly invest in major infrastructure projects over the next four years.
The ICMS Coalition, comprising 45 professional bodies including RICS, has launched ICMS, a benchmarking and reporting framework for international cost classification, reporting and comparison.
Government investment in transport infrastructure alone is budgeted at over A$70 billion and A$11 billion respectively through to 2021.
However, without a global standard for costing construction projects, governments and investors have struggled to compare construction project costs with any confidence.
Inconsistent information causes poor cost prediction, impedes investment and, according to McKinsey Global Institute, leads to nine out of ten mega projects running over budget.
In response, a global coalition was set up to develop and implement a standard structure and format to enable greater consistency in the classifying and reporting of capital costs for construction projects, known as the International Construction Measurement Standards (ICMS).
Stephen Albin, Managing Director, RICS Oceania said ICMS provides two major benefits.
“Consistency in cost reporting will allow governments and investors to benchmark projects with confidence. They will know whether cost estimates for major infrastructure projects, like the A$5.3 billion allocated to the new Western Sydney Airport, are good value.
“ICMS will also encourage investment because of greater cost control and reduction in risk associated with cost reporting. Inaccurate cost reporting, especially on large projects, can often lead to disputes and costly resolution,” Mr Albin said.
ICMS is an important achievement that will increase certainty and ultimately enable all built environment stakeholders, including RICS professionals and developers, help attract private funding to major projects.
RICS will begin preparation of a global professional statement in cost prediction, incorporating ICMS, later this year and expects publication in 2019.