The five crucial steps to superior global cost benchmarking

Will Myles (wrmyles.ch@gmail.com), 3 years ago in Thought leadership

In recent posts, we have explored the difficulties faced by decision-makers around the availability and reliability of comparable cost data for built assets.

Global cost benchmarking is now possible with the international standard for cost reporting (ICMS) at the heart of ICMSCosts’s services, but certain steps need to be taken to ensure a robust benchmarking process. We look at the five major steps in benchmarking and how we have addressed these at ICMSCosts.

Defining the assets correctly – every asset can be described using a combination of attributes: function, nature, design, complexity, site conditions, procurement factors, etc. However, these are often not recorded with the cost information, rendering true asset comparisons difficult. Yet this information is critical and generally known as part of an asset management system. Therefore, when ICMSCosts acquires data, every effort is made to ensure these attributes are collected, accurate and significant enough to improve the asset’s cost metrics.
Comparing the right assets – when assets are described consistently using ICMS, the professional can be more confident in finding similar assets when selecting a basket for benchmarking. ICMSCosts gives professionals the discretion to make their own judgement when defining the correct comparison group, including whether to include tendered or actual completed costs, specific locations and/or limited reporting periods.
Getting the quantities correct – how assets are common-sized for comparisons depends on the asset type, and it’s common to use space (for real estate, roads or bridges), length (for roads, railways or pipelines), or capacity (for production assets such as power generation, water treatment or processing plants). However, space is prone to uncertainty – depending on which standard is applied, it could make a difference of more than 25%. ICMS has the benefit of referencing other international standards, such as IPMS for building sizing, and ICMSCosts applies this information where possible.
Including the right costs – there may be consensus on the core of the cost benchmark (structure and sub-structure at a minimum), but when considering architectural works, services and equipment, these might be excluded if someone else picked up the tab (e.g. the tenant). How about demolition, site preparation and external works? Some or all of these may be in the benchmark costs. What about taxes, advisors, off-site work, contractor charges and risk allowances? ICMS lets you see what is in and what is not. ICMSCosts’s data product enhances this and hosts up to 388 unique cost categories in a hierarchy that makes grouping and headline figures easy to understand.
Rebasing the costs correctly – lastly, to make meaningful comparisons, cost adjustments must allow for cost inflation over time and for location factors (adjusting for the different costs of construction between places). ICMSCosts has placed significant emphasis on this area in developing our platform.

By adopting ICMS, we limit the use of ‘open data’ fields, which are an anathema to benchmarking. Yes, every project is unique, but time and again, we see attributes adjusted beyond the point of comparability with other assets. Open data fields can be useful, but it’s important that consistent standards are applied. Not only does this aid data management but it provides a great starting point to deliver a fully localised platform, which is essential for an international community of cost managers, surveyors, valuers, financial planners and insurers.

For a platform to be trusted, there should be transparency over the source of data and indices available so that the professional can make the best judgement. ICMSCosts’s platform does this at every step.

ICMSCosts is creating a global, independent database of asset lifecycle costs for real estate and infrastructure, using ICMS. We will support client organisations with real data from real projects, enabling better decision-making and, ultimately, saving taxpayers or shareholders money.

If you would like to know more about ICMSCosts and how we can enable better access to better data, drop us a note at info@icmscosts.com.