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International construction measurement standards 2nd edition

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ICMS: Global Consistency in Presenting

Construction and Other Life Cycle Costs

2nd edition

ICMS Coalition

ICMS: Global Consistency in Presenting

Construction and Other Life Cycle Costs

2nd edition, September 2019

ICMS Coalition

Cover image: Chongqing, China. Photo by Yu Wei via Unsplash

Welcome to ICMS, 2nd edition

Life cycle costs (LCC) play a pivotal role in the financial management of construction projects around the world. As a part of the whole life cost (WLC), they allow critical decisions to be made about the importance of capital and longer-term costs that ultimately affect asset performance, longevity, disaster resilience and sustainability. It is for this reason that the ICMS Coalition has revised and extended the scope of International Construction Measurement Standards (ICMS) to incorporate this broader cost classification. This new edition supersedes the first edition of ICMS (July 2017) although this second edition can still be used solely for capital cost reporting.

Since its inception, the driving principle behind ICMS has been that consistent practice in presenting construction costs globally will bring significant benefits to construction cost management. As such ICMS aim to provide global consistency in classifying, defining, measuring, recording, analysing, presenting and comparing entire life cycle costs of construction projects at regional, state, national or international level. ICMS are a high-level cost classification system. The globalisation of the construction business has only increased the need to make this meaningful comparative analysis between countries, not least by international organisations such as the World Bank Group, the International Monetary Fund, various regional development banks, non-governmental organisations and the United Nations.

Since their introduction to the market in 2017, ICMS have already been adopted by a number of high- profile bodies seeking to benchmark project costs internationally. To date this includes large public sector project sponsors, global cost consultancies, constructors, and other construction sector stakeholders (for a list of business support partners visit icms-coalition/).

ICMS have been created through a transparent, detailed and inclusive standards-setting process. The second edition has followed the same development method as the first. A second independent Standards Setting Committee (the SSC) was formed, including experts in life cycle costing as well as some of the experts who developed the first edition. The SSC worked virtually and met twice, once in Dubai and once in London.

It is accepted that standards-setting is a continuous and dynamic process. The SSC will be listening carefully to the global construction cost management community to ensure necessary updates are captured for continued improvement.

Many key stakeholders are being engaged in the process of implementation. A list of ICMS-supporting partners is shown on the ICMS Coalition website (icms-coalition/) – these organisations are committed to the adoption of ICMS.

For further information on ICMS, please visit the Coalition website.

On behalf of the ICMS Coalition Trustees:

Ken Creighton – (Royal Institution of Chartered Surveyors) – Chair

Craig Bye – (Canadian Institute of Quantity Surveyors) – Vice Chair

Julie de la Cruz – (Philippine Institute of Certified Quantity Surveyors) – General Secretary.

ICMS Coalition

The Coalition is a non-governmental, not-for-profit professional coalition. A wide range of professional organisations are represented in the Coalition and the SSC. They were generous in providing their national standards, which again provided the basis for the early deliberations of the SSC. The Coalition originally formed on 17 June 2015 at the International Monetary Fund in Washington DC, USA. The Coalition aims to bring about consistency in construction project cost reporting standards internationally through the development and adoption of ICMS.

The Coalition members for the second edition are:

Africa Association of Quantity Surveyors (AAQS)

Association for the Advancement of Cost Engineering International (AACE)

Association of Cost Engineers (ACostE)

Association of South African Quantity Surveyors (ASAQS)

Australian Institute of Quantity Surveyors (AIQS)

Brazilian Institute of Cost Engineers (IBEC)

Building Surveyors Institute of Japan (BSIJ)

Canadian Association of Consulting Quantity Surveyors (CACQS)

Canadian Institute of Quantity Surveyors (CIQS)

Chartered Institute of Building (CIOB)

Chartered Institution of Civil Engineering Surveyors (ICES)

China Electricity Council (CEC)

China Engineering Cost Association (CECA)

Commonwealth Association of Surveying and Land Economy (CASLE)

Conseil Européen des Economistes de la Construction (CEEC)

Consejo General de la Arquitectura Técnica de España (CGATE)

Dutch Association of Quantity Surveyors (NVBK)

European Federation of Engineering Consultancy Associations (EFCA)

Fédération Internationale des Géomètres (FIG)

Fiji Institute of Quantity Surveyors (FIQS)

Ghana Institution of Surveyors (GhIS)

ICMS Standards Setting Committee

The Standards Setting Committee (SSC) comprises experts selected by the Coalition and representing a wide range of professional construction organisations in the built environment. The SSC acts independently from the Coalition and its members.

The SSC members and co-authors of ICMS, 1st edition (July 2017) are:

Ong See-Lian (Malaysia) Chairman Alan Muse (UK) Vice-Chairman Gerard O’Sullivan (Republic of Ireland) Executive Secretary

Alexander Aronsohn (UK) Dainna Baharuddin (Malaysia) Tolis Chatzisymeon (Greece) William Damot (Philippines) Ruya Fadason (Nigeria) Roger Flanagan (UK) Mark Gardin (Canada) Malcolm Horner (UK) Roy Howes (Canada) Guo Jing Juan (China) Philip Larson (USA) Patrick Manu (Ghana) Charles Mitchell (Republic of Ireland) Sinimol Noushad (UAE) Antonio Paparella (Belgium) David Picken (Australia) Anil Sawhney (India) Peter Schwanethal (UK) Koji Tanaka (Japan) Tang Ki-Cheung (Hong Kong).

In January 2018, the SSC started drafting the second edition to incorporate other life cycle costs. Experts in life cycle costing, therefore, joined the SSC.

The SSC members and co-authors of the second edition are:

Ong See-Lian (Malaysia) Chairman Alan Muse (UK) Vice-Chairman Gerard O’Sullivan (Republic of Ireland) Executive Secretary

Alexander Aronsohn (UK) Dainna Baharuddin (Malaysia) Tolis Chatzisymeon (Greece) Ruya Fadason (Nigeria) Andrew Green (UK) Malcolm Horner (UK) Roy Howes (Canada) Francis Leung (Hong Kong) Patrick Manu (Ghana) Brian McBurney (Canada) Charles Mitchell (Republic of Ireland) Sinimol Noushad (UAE) Antonio Paparella (Belgium) David Picken (Australia) Anil Sawhney (USA) Koji Tanaka (Japan) Tang Ki-Cheung (Hong Kong) Luizviminda Villacan (Philippines).

ICMS are high-level standards. The transparent and inclusive standards-setting process described has resulted in full analysis and appreciation of standards and practices in many more countries than those directly represented by SSC members. ICMS are not a hybrid of those standards but do introduce some concepts that may be new to some markets. Markets that do not have established standards are, however, encouraged to adopt ICMS. Markets that do have established local standards should adopt ICMS to compare cost data prepared using different standards from different markets on a consistent, like-for- like basis. The aim is not to replace existing local standards, but to provide an internationally accepted reporting framework into which data generated locally can be mapped and analysed for comparison. In time, it is expected that ICMS will become the primary basis for both global and local construction cost reporting.

In drafting ICMS, the SSC has been conscious of the need for compatibility with other established or emerging standards. It has aimed to strike a balance between the need to be compatible with different standards and the need for flexibility to accommodate detailed cost classification systems that exist across the world.

Thus, the types of Project are generally compatible with the United Nations International Standard Industrial Classification of all Economic Activities. The Cost Sub-Groups are generally compatible with the elements in ISO 12006-2:2015, Building construction – Organization of information about construction works – Part 2: Framework for classification and can be adapted to be compatible with most other cost classification systems. The Cost Groups and Cost Sub-Groups for Life Cycle Costs are generally compatible with ISO 15686-5:2017 Buildings and constructed assets – Service life planning – Part 5: Life-cycle costing.

In addition, it has been recognised that a work breakdown structure (WBS) approach to cost reporting is widely used around the world, particularly in civil engineering projects. Therefore, examples of mapping to and from various national standards and WBS are included on the Coalition website (https://icms- coalition/).

As the use of Building Information Modelling (BIM) becomes more widespread, the link between BIM and ICMS takes greater importance. ICMS may be used as the cost breakdown structure in BIM-based cost management practice.

Part 4 provides definitions of terms commonly used throughout the Standards. Definitions specific to particular types of Projects are provided in Appendices A to E.

1 Aims

ICMS aim to provide global consistency in classifying, defining, measuring, recording, analysing and presenting entire construction and other life cycle costs at a project, regional, state, national or international level. ICMS allow:

construction and other life cycle costs to be consistently and transparently benchmarked (comparative benchmarking)
the causes of differences in life cycle costs between projects to be identified (option appraisal)
properly informed decisions on the design and location of construction projects to be made at the best value for money (investment decision making) and
data to be used with confidence for construction project financing and investment, decision-making, and related purposes (certainty).

1 Use of the Standards

The second edition of ICMS can be used to present Acquisition Costs, Construction Costs, Renewal Costs, Operation Costs, Maintenance Costs, and End of Life Costs using the template provided in Appendix G. Those interested in simply presenting the Construction Costs can use the templates entitled ‘Construction Costs only’.

Wherever a cost report has been prepared in compliance with ICMS, this should be stated in the report.

ICMS can be used to classify, define, measure, record, analyse, present, and compare historical, current and future construction and other life cycle costs of new build and Major Adaptation programmes and projects. This can be applied throughout the various stages of construction and/or after completion of construction through to the end of life or a shorter Period of Analysis.

Applications include, but are not limited to:

global investment decisions
international, national, regional or state cost comparisons
feasibility studies and development appraisals
project work including cost planning and control, cost analysis, cost modelling and the procurement and analysis of tenders
dispute resolution work
reinstatement costs for insurance, and
valuation of assets and liabilities.

Process flow charts set out the comprehensive steps for the use of the Standards and are provided in Appendix F.

The cost report should make clear precisely what costs have been included or excluded, to avoid confusion or omissions in comparing alternative project options and to inform decision making. The most appropriate available data sources should be used. These may be in the public domain or not, but the origin should be recorded.

Figure 2 presents the overall taxonomy used in the second edition of ICMS. The taxonomy consists of four levels with Level 1 through Level 3 being mandatory while Level 4 is discretionary.

Figure 2: ICMS Framework including Level 1 Projects and Sub-Projects

2 Hierarchical Levels

Figure 3 shows the hierarchical links between the four levels of the ICMS taxonomy, from the highest to the lowest level of detail.

Figure 3: ICMS Hierarchy

The description of each level in Figure 3 is as follows.

Project and Sub-Project (Level 1)

ICMS classify Projects according to their essence and principal purpose. The Projects shown in the framework are not exhaustive and will be further developed in future editions of the Standards. Projects have been assigned the following codes:

Table 1: ICMS Projects with their corresponding codes

Buildings 08. Pipelines
Roads, runways and motorways 09. Wells and boreholes
Railways 10. Power-generating plants
Bridges 11. Chemical plants
Tunnels 12. Refineries
Waste water treatment works 13. Dams and reservoirs
Water treatment works 14. Mines and quarries

When a Project is too large or complex to be described by a single set of Project Attributes and Values, it is to be subdivided for cost reporting into Sub-Projects, each described by a single set of Project Attributes and Values. A Project can have multiple Sub-Projects. It is also possible to use a combination of Sub- Projects within a Project to report a collection of Projects under the names of ‘programme’ or ‘portfolio’.

Cost Categories and Cost Groups (Levels 2 and 3)

The Cost Categories at Level 2 and Cost Groups at Level 3, as defined in Table 2, are mandatory and standardised for all Projects to enable high-level comparison between different Projects and Sub-Projects.

Cost Code

Description

Cost Categories (Level 2) AC CC RC, OC, MC and EC Cost Groups (Level 3)

Substructure

Scope: All the load bearing work underground or underwater up to and including the following (including related earthwork, lateral support beyond site formation, and non-load bearing components and services and equipment forming an integral part of composite or prefabricated load bearing work) and as illustrated in Part 4:

for buildings: lowest floor slabs, and basement sides and bottom including related waterproofing and insulation
for roads, runways and motorways: sub-base to pavements
for railways: sub-base to rail track structures
for bridges: pile caps, footings, bases nearest ground level or water level if constructed in water
for tunnels: external faces of structural tunnel linings
for tanks and the like underground: external faces of tanks
for tanks and the like above ground: bases supporting tanks
for pipelines underground: beds and surrounds to underground pipes
for pipelines above ground: bases to structures supporting pipes
for wells and boreholes: bases to structures supporting well heads
for dams and reservoirs: seepage ditch, drainage layer/blanket, drain channels, foundation, base, footings, cut-off wall, heel and toe
for mines and quarries: underground mines: bases to structures supporting shaft headgear; open pits: bases to structures; processes: bases to structures, tanks, and bases to major process equipment.

Structure

Scope: All the load bearing work, including non-load bearing components and services and equipment forming an integral part of composite or prefabricated load bearing work, excluding those included in Substructure and Architectural works | Non-structural works. 04. Architectural works | Non-structural works

Scope: All architectural and non-load bearing work excluding services, equipment, and surface and underground drainage.

Cost Code

Description

Cost Categories (Level 2) AC CC RC, OC, MC and EC Cost Groups (Level 3)

Services and equipment

Scope: All fixed services and equipment required [to put the completed project into use for Construction Costs | to sustain the use after completion of construction for Renewal and Maintenance Costs], whether they are mechanical, hydraulic, plumbing, fire-fighting, transport, communication, security, electrical or electronic, excluding external surface and underground drainage. 06. Surface and underground drainage

Scope: All underground or external surface drainage systems excluding those inside basement or underground construction. 07. External and ancillary works

Scope: All work outside the external face of buildings or beyond the construction entity required to fulfil the primary function of the Project and not included in other Cost Groups. 08. Preliminaries | Constructors’ site overheads | general requirements

Scope: Constructors’ site management, temporary site facilities, site services, and expenses, not directly related to a particular Cost Group, but commonly required to be shared by all Cost Groups. 09. Risk Allowances

Scope: As defined in section 4 but related to [Construction | Renewal | Maintenance] Costs and not included in other Cost Groups. 10. Taxes and Levies

Scope: As defined in section 4 and not included in other Cost Groups. 11. Work and utilities off-site

Scope: All payments to government authorities or public utility companies to connect | keep connected public work and utilities to the site, or services diversions, to enable the Project, including related risk allowances, taxes and levies. 12. Post-completion loose furniture, fittings and equipment

Scope: Those provided for the Project to perform its function close to or after completion of construction, including related risk allowances, taxes and levies. 13. Construction | Renewal | Maintenance-related consultancies and supervision

Scope: Fees and charges payable to Service Providers not engaged by the Constructors, including related risk allowances, taxes and levies.

Cost Code

Description

Cost Categories (Level 2) AC CC RC, OC, MC and EC Cost Groups (Level 3)

Demolition, reclamation and salvage

Scope: Demolition of the constructed asset at end of life or period of interest, and landfill and recycling or disposal. 04. Reinstatement

Scope: Dealing with dilapidations, measures to comply with other contractual obligations to return the constructed asset to a required standard of repair. 05. Constructors’ site overheads | general requirements

Scope: As defined in Part 4 but related to End of Life Costs and not included in other Cost Groups. 07. Taxes and Levies

Scope: As defined in Part 4 but related to End of Life Costs.

Cost Sub-Groups (Level 4)

The costs of components of a Project or Sub-Project under each Cost Group serving a specific function or common purpose are grouped into one Cost Sub-Group, such that the costs of alternatives serving the same function can be compared, evaluated and selected. Cost Sub-Groups are chosen irrespective of their design, specification, materials or construction.

ICMS do not mandate the classification of the Cost Sub-Groups (Level 4), but the following appendices provide examples of what might be included:

Appendix A – Acquisition Costs Sub-Groups
Appendix B – Construction | Renewal | Maintenance Costs Sub-Groups: Buildings
Appendix C – Construction | Renewal | Maintenance Costs Sub-Groups: Civil Engineering Works
Appendix D – Operation Costs Sub-Groups
Appendix E – End of Life Costs Sub-Groups.

Users of ICMS may adopt a Cost Sub-Group classification based on trades, work breakdown structure or work results according to their local practice.

Cost Codes

Cost Codes are a unique identifier for digital purposes. They have been assigned to the ICMS hierarchy down to Level 4. However, since the classification of the Cost Sub-Groups at Level 4 is not mandatory, these Cost Codes may be suitably adjusted.

Note: Costs should, as far as practicable, be stated in their payment currencies. When it is necessary to carry out a currency conversion, the exchange rates or conversion factors used and the applicable dates should be stated.

2 Project Attributes and Values

To enable consistent and concise evaluation and comparison between different Projects or different design schemes, ICMS provide a set of Project Attributes and Values in Part 3 describing the principal characteristics of each Project or Sub-Project.

2 Life Cycle Cost Considerations

Setting the scope of the Life Cycle Costs

Life Cycle Costing (LCC) is an economic evaluation method that takes account of all relevant costs over a time horizon (Period of Analysis). Presentation of life cycle costs should make clear the scope of those costs included or excluded (as defined in the Cost Categories and Cost Group tables) and the relevant level of costs for the LCC purpose, as well as dealing with the time value of money.

LCC may be reported at a lesser level of detail than the underlying analysis. For example, the detailed cost analysis may be at Level 4 Cost Sub-Groups, whereas reporting may be at Constructed Asset Level 1 Project or Sub-Project Costs or Level 2 Cost Categories or Level 3 Cost Groups.

LCC may be part of a wider economic project evaluation that considers the whole life costs (including non-construction costs such as finance, business income from sales and disposals, occupancy costs and externalities).

Expected asset life

The design life of the Constructed Asset is a key performance requirement and should be defined in the project brief. The estimated expected service life of the Constructed Asset should be at least as long as the design life.

Renewals of Constructed Assets during the expected service life should be included in the life cycle cost’s Period of Analysis, as well as any associated end of life or handback obligations.

Time value of money

The initial Construction Costs reported should be the forecast or actual final costs to complete the construction of the Project. Forecast costs should include an adjustment for price level fluctuations until the completion of the Project using published market indices and an agreed Base Date.

The rest of the LCC should be the forecast costs after the completion of construction until the end of life or a shorter Period of Analysis (e. one to ten years). This should be defined in the project scope, discounted to a Common Date not earlier than the completion of construction and made using Discount

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