Best Practice Commercial Delivery in Infrastructure
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Best Practice Commercial Delivery in Infrastructure
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Contents 1.0 Introduction..................................................................................................... 4 1.1
What is infrastructure?..................................................................................... 4
1.2
RICS in Infrastructure......................................................................................... 4
2.0 Standards and guidance.......................................................................... 6 2.1
RICS Standards/Guidance and Major Infrastructure Project Delivery......6
2.2
International Construction Measurement Standards (ICMS)......................6
2.3
Existing guidance relevant to Infrastructure Professionals........................7
2.4
New RICS guidance for Infrastructure Professionals....................................8
2.5
Whole Life Costing/Lifecycle costing............................................................. 10
3.0 Thought leadership, research and policy.....................................11 3.1
Sustainable supply chains in rail – Industry Insight papers...................... 11
3.2
RICS Infrastructure Research.......................................................................... 11
3.3
RICS Policy and Government Influencing....................................................... 13
3.4
RICS Futures – Infrastructure.......................................................................... 13
3.5
Asset Management – publishing partnership with ICE................................14
3.6
Free infrastructure contracts helpline............................................................14
4.0 Qualification and training......................................................................15 4.1
Built Infrastructure pathway..........................................................................15
4.2 Training................................................................................................................15
5.0 Products..........................................................................................................16 5.1
Isurv infrastructure channel...........................................................................16
5.2
RICS Conferences and events.........................................................................16
5.3
RICS Data Services and Products..................................................................16
6.0 Dispute Resolution and Avoidance...................................................17 7.0 Future Direction and Next Steps.......................................................18
Authors Robert Mallett rmallett@rics.org Ed Tooth etooth@rics.org
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1.0 Introduction 1.1 What is Infrastructure? Infrastructure is an essential part of every modern, well developed socio-economic system and constitutes the nation’s capital assets in the form of environmental defence, roads, ports, railways, airports, power generation, material extraction and the means for people, information and material to travel efficiently. This transportation of people, goods, commodities, water, energy and information relies exclusively on well planned, effectively costed, soundly constructed and properly maintained infrastructure systems.
1.2 RICS in Infrastructure As a long standing, globally recognised organisation which accredits professionals working in the land, property and construction industries, RICS can make a crucial contribution to programme delivery in the infrastructure sector. With global spending on infrastructure set to reach ÂŁ41 trillion ($57 trillion) between now and 2030, and with the world population set to grow to 9 billion by 2050, RICS expertise in commercial and business management will prove crucial in delivering much needed new projects on time and to budget.
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Principally, RICS is well placed to support infrastructure professionals working as commercial and business management within this sector. In infrastructure delivery terms the type of commercial and business management expertise that RICS professionals can provide serves to add value to major projects by driving down costs, mitigating risks and ensuring efficient project delivery. This document sets out the role that RICS will play both in the commercial management of infrastructure projects, and in other areas where the Institution can facilitate delivery and asset management in the post project construction phase. It will present the range of expertise that RICS professionals operating within the infrastructure industry deploy on a daily basis, and demonstrates the ways in which Institutional activity supports them through the development of standards, the publication of industry guidance materials, professional development, education and training. This document aims to establish: i) The key mechanisms by which RICS can help deliver major infrastructure projects on time and to budget; ii) The development of these mechanisms going forward.
“Commercial managers should develop the economic business case and ensure the benefits described are realised. I believe there is a void in the infrastructure sector, one that RICS can fill. I see commercial managers owning the realisation of outcomes with far greater recognition, driving value early in the lifecycle of a programme rather than attending the door of an empty stable.� Martin Rowark FRICS The Nichols Group and Chair of the RICS Infrastructure Forum and Steering Group
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2.0 Standards and guidance
2.1 RICS Standards/Guidance and Major Infrastructure Project Delivery New programmes of International Standards developed with global partners, such as the International Construction Measurement Standards (ICMS), are designed to deliver value for money and increase transparency across markets, and adoption of them will be of considerable benefit for all RICS professionals working in the infrastructure sector as an effective project cost management tool. The new standards will, in turn, be underpinned by official Institutional publications in the form of RICS professional statements, guidance notes and insight papers. These, together with new education and training programmes developed in collaboration with industry and the academic sector, are currently under preparation which, under the newly created banner of the ‘Commercial Management of Infrastructure’, will, in due course, cover all of the commercial/business dimensions of programme delivery in any geographical location globally.
“A common or unifying language for the cost planning of infrastructure is key to benchmarking, the analysis of cost drivers and the pursuit of efficiencies and value for money. RICS, supported by informed clients, is well placed to develop and deploy such a language.” Stephen Blakey FRICS Network Rail
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2.2 International Construction Measurement Standards (ICMS) As part of its ongoing commitment to reducing infrastructure construction costs and delivering best value, RICS is playing a key role in the development of construction measurement standards globally. The ICMS Coalition, of which RICS is a member, will develop and implement the new standards, and is a growing body of 30 professional and non-profit organisations. International Construction Measurement Standards refer to the ways in which construction project costs are calculated, classified and reported, and determine what is to be included in the ‘cost’ and what will be excluded. The standards, therefore, do not cover units of measurement (£, $, € etc) but ‘line items’ such as labour, land purchase, design, materials, client costs and so on. Given the propensity for major infrastructure projects to often widely exceed their original forecast budget, the ICMS constitute an important mechanism for safeguarding against over spend on future infrastructure programmes. Knowledge of what will, and what will not, be included in the cost of any major project will prove vital in: • Developing a full understanding how a specific project compares with other projects within or outside that market; • Accurately assessing value-for-money; • Assessing and benchmarking the ‘footprint’ of a construction project; • Reporting national and international construction statistics.
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The objectives of ICMS are to establish a global standard for assessing project costs, reaching a clear definition of what is to be included in this cost and engendering global consistency in the application of the standard. In organisational terms it will be comprised of three focus groups: • ICMS 1: Will agree higher level cost centres and definitions for infrastructure. • ICMS 2: To define construction cost and harmonise building elemental headings and definitions at a project (management) level. • A drafting group. Similarly, the Institution is also developing global standards for related areas such as property measurement (International Property Measurement Standards), as well as working with an international coalition that is developing a recognised international standard of ethics (International Ethics Standards) and International Land Measurement Standards.
Among the key areas of relevance covered by the ‘Black Book’ guidance suite are the following:
i) Life Cycle Costing This guidance provides a life cycle costing and whole life costing service for both new construction works, and for the refurbishment of existing assets.
ii) Commercial Management of Construction Establishes the role of a commercial manager and sets out the commercial management functions they should perform in order to secure the commercial and financial success of a construction project or of any other business.
iii) Final Account Procedures This guidance note summarises what a final account is and how they are used to establish a final adjustment to the contract price.
iv) Management of Risk
2.3 Existing related RICS standards and guidance
Risk is a key feature of the infrastructure delivery landscape, and effective risk management is an essential feature of Commercial Management.
The RICS ‘Black Book’, a comprehensive portfolio of technical guidance for Construction and Quantity Surveying professionals, acts as a best practice standard for the industry. Not only does it constitute a development tool prepared by industry professionals for those wishing to embark on formal APC training, but also acts as a guideline for the more experienced practitioner. Therefore, the ‘Black Book’ standards, once adapted for the infrastructure sector, act as a further mechanism for the successful, cost planned delivery of assets and their subsequent maintenance.
v) Cost reporting This guidance note sets out the principles of cost reporting from the perspective of the quantity surveyor (commercial manager) to the client during construction. This guidance note explains the purpose of cost reporting, the factors affecting outturn cost and explores the different formats and types of cost report.
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vi) Appropriate Contract Selection Examines the various types of construction contract that are available for use in the UK. It also discusses the factors to consider when choosing the most appropriate construction contract for a particular project.
vii) Cost Analysis and Benchmarking This guidance provides a summary of the purpose and process of both cost analysis and construction project benchmarking.
viii) Developing a Construction Procurement Strategy and Selecting an Appropriate Route Discusses construction procurement routes and the development of a procurement strategy. The guidance aims to help professionals choose an appropriate route, setting out their advantages and disadvantages.
ix) Conflict Avoidance and Dispute Resolution in Construction Summarises what is meant by conflict avoidance and dispute resolution, identifying the key issues that all surveyors should understand in respect of these distinct and substantive areas.
x) BIM for Cost Managers: Requirements from the BIM Model Acts as a reference source of cost managers when BIM has been implemented in the life cycle of a project. It offers an awareness of BIM with recommendations for good practice when producing measurement outputs.
xi) Lessons Learned Focuses on the most commonly occurring reasons for project failure and offers practical solutions in the context of applying lessons learned from past experience.
xii) Stakeholder Engagement Sets out the principles underpinning effective stakeholder engagement and provides industry professionals with practical guidance through a series of ‘real world’ case studies. Jointly commissioned with the Association for Project Management.
xiii) Value Engineering This draft guidance note introduces the concepts of value engineering and value management in relation to construction and infrastructure projects and the role of professionals.
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2.4 New RICS standards and guidance for infrastructure professionals The key areas in which the Institution is currently working with its membership and the newly formed RICS Infrastructure Steering Group to develop its portfolio of dedicated infrastructure focused published guidance are as follows:
i) The Informed Infrastructure Client Given the scale and significant expense involved with delivering major programmes of infrastructure such as railways, highways, airports and so on it is vital that the ‘client’ – the body responsible for delivering the project – recognises and adopts best practice in all of its delivery activities. RICS considers a client to be ‘informed’ when: • it understands its capability and capacity and also where it is lacking in relation to the task it faces; • it is effective in gaining and using knowledge to make informed decisions; • it is efficient at organising itself for the task; and • it designs and retains a sufficient degree of flexibility to be able to adapt to the demands of the project.
ii) The Role of the Commercial Manager in Infrastructure The Commercial Management of infrastructure has at its core the commercial stewardship of the entire project from inception to delivery, and sets out the role of the commercial manager as guardian of the project business case. The core skills of RICS Quantity Surveying professionals, namely cost planning, cost control and contract administration are crucial in delivering value to the client and their organisation.
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RICS regards Commercial Management has the ability to anticipate, influence and demonstrate to clients what programmes and projects should cost, will cost, did cost and why, where: • Should cost: is the ability to provide credible advice and assessments of outturn cost ranges during business planning and procurement phases; • Will cost: is the ability to provide incrementally honed assessments and active commercial stewardship to influence and predict the outturn costs during delivery; • Did cost: the validation of outturn costs relative to scope, client behaviours, suppliers performance and entitlement; • Why: is evidenced through informed analysis of data and benchmarking that illustrates cost drivers and value for money opportunities.
“The commercial manager role has developed on the back of major projects requiring commercial leadership skills – this role perhaps better reflects the role of today’s QS.” Jim McCluskey FRICS Vinci Construction
iii) The role of the commercial manager II digital systems and technology Senior figures in the UK infrastructure industry view the commercial management of systems and IT as a major area for RICS to develop in terms of programme delivery. At present it is felt that cost planning on major projects is being driven by physical delivery rather than by the digital delivery that lies behind the projects themselves. Therefore, the Institution has begun to explore and develop the skill sets required for digital commercial management, which will be of significant benefit to the industry which is in need of this particular specialism along with the realisation of project business benefits and the acquisition of them.
iv) Driving commercial performance on major projects and programmes. To deliver the government’s pipeline of infrastructure projects successfully the infrastructure construction industry will need to capitalise on the increasingly large amounts of data available to it, in order to continuously measure and improve commercial performance in way that helps the client and their organisation. RICS believes that greater levels of commercial competency, and greatly improved levels of collaborative engagement between all project stakeholders, are an essential prerequisite if the industry is to enable projects to generate best value in the current infrastructure market. This can be achieved by: • Establishing an objective commercial performance measurement framework that will enable more targeted sharing of knowledge and data, through distinguishing those projects and programmes which are achieving solid commercial outcomes, as well as the leading edge management practices which are delivering these outcomes; • The infrastructure industry needs a common measurement framework to effectively and objectively benchmark commercial performance across the industry, and to track performance against the UK government’s Construction 2025 target of a 33% reduction in the cost of delivering and operating assets. • Providing the commercial managers with objective, qualitative and quantitative performance data that will assist the profession to continue to add significant value in the delivery of assets, as well as to grow influence with regards to asset operations, attracting investment, and facilitating commercial performance improvement across the industry.
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2.5 Whole Life Costs (WLC) / Life Cycle Costs (LCC) Life Cycle Costing is an important tool for the delivery of Value for Money during the lifetime of an infrastructure asset. It is used as a tool in assessing the cost performance of the initial construction work, but it is also aimed at providing choices where alternative means of achieving a client’s objectives differ not simply in their initial costs, but also in terms of subsequent operational costs. RICS makes a distinction between LCC and Whole Life Costing in that the latter has, by definition a broader scope, and can include costs and incomes associated with the provision of construction works that are not included in the client’s costs. Typically, the total Life Cycle Cost can be regarded as a single sum which represents both the sum of capital cost and future cash flows, and in its most simple form answers the following questions: 1. What will need to be done? 2. When? 3. How much will this cost? Life Cycle Costing, RICS’s recently published Guidance, identifies the following key advantages for infrastructure clients making use of this form of asset management: • LCC allows for use in future predictions and benchmarking. LCC encourages analysis of business needs and then the communicating of these to the project team; • It permits the costs of ownership of alternative options to be evaluated over their whole life; • the total cost of ownership/occupation is optimised by balancing initial capital and running costs; • it enables the analysis of risks and costs of loss of functional performance due to failure or maintenance; • LCC promotes realistic budgeting for operation, maintenance and repair; • LCC encourages discussion and recording of decisions about the durability of materials and components at the outset of the project; • LCC makes it more probable that the best value for money solution is adopted; • LCC provides data on actual performance and operation compared with predicted performance. Notably option appraisal using LCC is a specific requirement for public sector organisation and guidance, for instance notably HM Treasury – The Green Book: Appraisal and Evaluation in Central Government. In addition, many private sector organisations equally place store on taking LCC into account.
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3.0 Thought leadership, research and policy 3.1 Sustainable supply chains in Rail – Industry Insight papers RICS has engaged directly with the UK rail infrastructure sector in an extensive programme of research and engagement focused on achieving greater supply chain integration and sustainability across major rail projects. Stemming from broad ranging roundtable discussions representing each key area of the rail supply chain held over 2015/16, the project is now centred on six work streams each looking in depth at specific thematic areas:
i) Work stream 1: BIM and Engineering Data Chaired by Simon Longstaffe, Head of Cost Estimating at HS2, work stream 1 is looking into ways in which more effective use of industry data can facilitate better, more integrated supply chain practices.
ii) Work stream 2: SME Engagement Stephen Blakey (Commercial Projects Director at Network Rail) heads a team looking into ways in which better engagement between Client, Contractor and SME can lead to greater innovation, better value and a more equitable transfer of risk between supply chain tiers.
iii) Work stream 3: Skills and Training Neil Robertson (Chair of NSA) leads a team examining the levels of upskilling required in order to improve the existing supply chain market model.
iv) Work stream 4: Whole Life Value Andy Green of Faithful and Gould and his team will look at how whole life asset management of rail infrastructure assets can deliver better value through improved supply chain practices.
v) Work stream 5: Procurement TfL’s Emma-Kate Ryan will be looking at how the procurement process can be better executed in a more sustainable supply chain environment.
vi) Work stream 6: Leadership Richard Graham of CH2M Hill will chair a panel of experts examining the part effective leadership will play in driving ahead cultural change within UK rail supply chains.
The project work streams are composed of key representatives from the supply chain industry – Client, Tier 1 Contractor, SME and Subject Matter Expert – and each team is scheduled to produce and publish an RICS Insight Paper. The published papers will then be presented at especially convened discussion events, where their recommendations will be discussed by key figures from the infrastructure sector. The Institution intends to deploy the intellectual capital generated from this project into Guidance Notes and industry training programmes.
3.2 RICS Infrastructure Research RICS Research and Global Policy is responsible for the commissioning and delivery of high level, international research across the land, real-estate, construction and infrastructure sectors. Its aim is to produce published reports which subsequently inform and promote RICS standards and the Institution’s business strategy, providing valuable insights to members and stakeholders. The RICS approach to research benefits professionals working in the infrastructure sector and the wider public by filling key knowledge gaps on current and emerging global issues. Research that the Institution generates in turn helps deliver its corporate objectives in terms of: • Securing market recognition of RICS infrastructure standards in the world’s main economic and policy formulation centres; • Promoting the professional development – by providing cutting edge training and knowledge; • Growing the profession in strategically important markets and particularly the emerging economies. Recent research publications dealing with key infrastructure focused questions include:
i) The Future of Private Finance Initiative and Public Private Partnership (2011) Authored by a joint team from the University of Ulster and the University of Aberdeen this report examines how private financing is playing an increasingly central role in financing, designing, developing and operating essential infrastructure. As more governments come to appreciate the direct correlation between infrastructure provision and greater economic competitiveness, so too do the ever present budgetary constraints facing them make private investment an increasingly attractive option. The Public Private Partnership (PPP) has proven instrumental in the evolution of partnership based infrastructure delivery, and this report is designed to inform and guide Institutional members and key stakeholder groupings on the opportunities and challenges of PPPs.
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ii) The Global Infrastructure Challenge: The Role of PPP in a New Financial and Economic Paradigm (2013) This report looks in detail at the challenges facing infrastructure investment across five key PPP markets, namely Australia, Canada, India, the United Kingdom and the United States. It looks at the impact of the recent global financial crisis, and the subsequent contraction in risk appetite and capacity on the part of banking institutions – the conventional financers of infrastructure projects. The PPP model is founded on achieving Value for Money (VfM) at a time of ongoing financial constraints, and is likely to play a pivotal role in the global provision of infrastructure.
iii) The Practice of Stakeholder Engagement in Infrastructure Projects: A comparative study of two major projects in Australia and the UK (2016) The considerable level of interest that the public demonstrate for major infrastructure projects requires rigorous scrutiny of project performance in a social context. This report suggests that the way in which such projects are perceived of by the wider public depends extensively on community participation, and on the communication of relevant information in the planning and development phase of a given project. Globally there exist many examples of otherwise important and vital infrastructure projects being viewed as ‘failures’ due to a lack of appropriate levels of public support for them. What these experiences have demonstrated is a clear need for the objective integration of the wider community and the effective communication across the issues associated with the project development. By making use of Social Network Analysis (SNA) this report looks at how two large infrastructure tunnelling projects – the East West Link project (Melbourne, Australia) and Crossrail (London) – communicated their project’s strategic intents, and how these matched public needs and expectations, and with widely differing outcomes.
iv) A Comparative Study of Construction Cost and Commercial Management Services in the UK and China (2016) Economic cooperation between the UK and the Chinese economic power house is continuing to evolve
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and develop, and accordingly it is of vital importance that both countries arrive at an understanding of their mutual economic systems and processes. In terms of the two construction sectors these systems and processes exhibit significant differences, and the object of this report is to demonstrate the clear need for a better understanding of construction cost and commercial management (CCCM) processes across the respective markets. The UK and British Commonwealth’s well established market driven model contrasts with a Chinese sector that is gradually transitioning from communist quota based system to a more market oriented one. This report maps the UK’s cost and commercial management systems to Chinese Engineering Cost Systems, and establishes a CCCM framework that will permit surveying practices to penetrate the rapidly growing Chinese construction market.
(v) The Hub and the Place: An International Study of the Processes and Stimulants of Large Transport Hubs (2016) This recently published report looks in detail at the major issues facing infrastructure project delivery by assessing three case studies of rail transport hubs, their immediate environment as well as related urban development in the UK, China and India. Plans for such major transport hubs, as well as the development of their surrounding urban expanses, are becoming increasingly prevalent in the contemporary world given that infrastructure is a physical result of investment in economic competitiveness. The resulting construction generated growth that stems from such projects can drive social development and change, and create sustainable long term growth, all of which is vital to societal stability.
“Infrastructure hubs act as strong economic stimulants, generating a ripple effect which creates a wider sense of economic place.” Amanda Clack FRICS RICS President, 2016/17
Further research “Enhancing Private Investment in Infrastructure projects”, authored by Martin Haran from The University of Ulster, is planned for March 2017. The research covers a robust and credible evidence base facilitating ‘applied understanding’ of barriers to investment in infrastructure projects within developed and emerging infrastructure markets, namely Canada, China, Singapore, UK and US.
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3.3 RICS Policy and Government Influencing IInfrastructure is the backbone of a prosperous economy and its continued development is essential for the UK to maintain its global competitive edge. RICS is of the view that continued infrastructure investment is essential to drive social change, create jobs, allow the growth of business, improve the environment and create a better world in which to live. British infrastructure is in a state of deterioration and in need of investment. If the government wants to attract private infrastructure investment across the whole of the UK, it must set out clear and deliverable infrastructure policies that appeal to long-term investors. The first step should be to reach consensus across parliamentary parties to prioritise projects, thereby signalling a clear commitment to completion even where there is a change in government. This would certainly provide confidence to investors and facilitate economic growth. The creation of the Infrastructure and Project Authority (IPA), a merger between Infrastructure UK (HM Treasury) and the Major Project Authority (Cabinet Office), brings together expertise in infrastructure and the financing, delivery and assurance of major projects as a single unit. RICS members, as property professionals, can add value to the IPA’s objectives, as they are integral throughout the whole life cycle of infrastructure projects. RICS has continued to engage and work with bodies set up by government, such as the National Infrastructure Commission (NIC), to identify future infrastructure needs and highlight potential challenges to delivery. The RICS, through the expertise of its members, is in a unique positon to contribute to discussions around the built environment. The RICS is in the process of updating its policy position on infrastructure, with increased emphasis on financing. We will be looking at the current landscape across the UK and how it compares globally, highlight infrastructure needs across all the sectors, discuss what the government can do to facilitate and encourage infrastructure investment, analyse the impacts of Brexit on infrastructure, and assess what institutional financing options are available. We will then set out how the RICS professional standards and expertise can help encourage infrastructure investment, both in the UK and globally. RICS will be producing a policy paper on the subject of “Barriers to private institutional investment in infrastructure”. The paper will assess the UK infrastructure landscape and look at several sectors including road, rail, energy and housing. Key topics to be explored will be government intervention (PFI/PPP, guarantees and state aid) as well as financing organisations (Pension Funds, Banks and other Institutional investors). The paper is due to be published in September/October 2016.
3.4 The Future of Infrastructure – RICS Futures The RICS Futures report “Our Changing World” establishes that some $57 trillion will be spent globally on the infrastructure needed to sustain the world’s growing population to 2030. When we consider this against a backdrop of climate change, economic growth in emerging markets, technological change and changing social preferences, the way in which infrastructure is delivered will invariably change significantly within this fourteen year time frame. There is great innovation and potential for disruption across many key infrastructure segments. Some of these innovations include: • Energy: distributed energy networks, battery storage, carbon capture; • Mobility: hyperloop concept, self-driving cars or even rocket transport; • Cities: internet of things, prefabricated and 3D printing construction; • Efficiency, productivity and sustainability across all dimensions are going to be critical to our industry’s success in meeting society’s need. Through the next stage of its Future Programme the RICS will explore these issues to understand trends and expectations in a number of key areas: • Funding and Governance – How will PPPs evolve? What are investors looking for in projects? What locations will have the major activity in the period to 2030? • Operation of major assets – What is changing in the operation of major assets? What else do we need to measure in the future? e.g. embodied carbon, user satisfaction. Who owns the Carbon Footprint? How do we get Life Cycle Costing into decision making? • Disruption and innovation – What big changes in the delivery of infrastructure? How will new innovation change infrastructure needs? What innovation is changing the nature of construction? How will digital and physical approaches combine? • People and skills – What are the new skills needed to deliver future infrastructure? What role can RICS play in supporting infrastructure professionals? What are the key training, career development and business opportunities associated with infrastructure?
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RICS Futures will seek to engage governments, investors, innovators and experts from a wide range of built environment professions as well as clients/end users to understand and anticipate the changes in infrastructure. Our goal will be to gain insight during 2016 and share findings in 2017.
3.5 Asset management – publishing partnership with ICE The Institution of Civil Engineers (ICE) and RICS have launched a publishing partnership that will see closer future editorial collaboration between the two institutions in the infrastructure arena. To launch the partnership RICS produced two in depth research papers published in the March 2016 edition of ICE’s Infrastructure Asset Management Journal edited by Krisen Moodley of the School of Engineering, University of Leeds. The papers, authored by Richard Graham and Vas Vernikos (with Ilias Krystallis, Sam El-Jouzi and Peter Burchill), stem from a major research enquiry from the rail infrastructure industry into supply chain integration and sustainability across major projects. Richard Graham’s article considers the importance of, and conditions for, a vibrant supply chain within UK rail infrastructure, and explores issues that underpin supply chain innovation and sustainable growth within the supplier base. Graham’s paper goes on to conclude that major clients and indeed the UK economy gain through the adoption of sustainable supply chain practices, and that the exemplar of the 2012 Olympics has generated a greater awareness of the importance of efficient delivery and supply chain innovation. Given the financial constraints that continue to impact upon infrastructure development pipelines nationally and internationally, Graham’s paper contains much valuable food for thought.
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The need for Owner Operators to exercise greater financial prudence in the management of sustainable assets in an economically uncertain world is the core theme of the second article. Vas Vernikos et al set out the importance of BIM technology to what they term ‘future proofing’, namely ‘a proactive planning and project management initiative employed for those mitigating risks found in Asset Management.’ As they suggest, BIM will help with the process of generating and managing component data within an integrated data base throughout the design-build-operate lifecycle of an infrastructure asset. The UK government, for one, has identified such use of BIM technology as a key mechanism for the effective lifecycle management of assets, and this paper demonstrates the practical value of this very clearly using case study evidence.
3.6 Free infrastructure contracts helpline Pinsent Masons and RICS have re-launched a free legal helpline service that covers all standard UK and international forms of infrastructure and construction contracts. Experts at the construction and engineering law firm are available for a 30-minute telephone consultation to RICS members who have a legal query on any infrastructure or construction related issue. Whatever the circumstances, Pinsent Masons will be able to field an expert to supply advice, or a second opinion, to assist RICS professionals in reaching an early, costeffective resolution or support them in deciding on the appropriate strategy.
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4.0 Infrastructure Focused Education and Training 4.1 Qualification RICS professionals utilise industry agreed and government endorsed professional standards, guidance and qualifications to help the public and private sectors deliver projects on time and on budget. RICS qualifications offer; • Status – an RICS qualification demands respect from clients and shows you work to the highest professional standards. • Recognition – an RICS qualification provides public and client confidence and drives demand for your services. • Market advantage – by working to RICS standards you have a clear competitive advantage over other professionals.
• Infrastructure technology
• Cost analysis
• Systems engineering
• Tendering
• Materials science
• Cost control
• Cost planning
• Time control.
• Procurement
Candidates will be assessed on relevant experience and a final assessment. Infrastructure professionals can also enrol onto other RICS Built Environment pathways such as the Quantity Surveying or Project Management.
4.2 Training RICS has consulted widely with the infrastructure industry in order to ascertain its training needs, and is at present scoping training requirements in the following areas: • Commercial Management of Infrastructure Certificate: a 3/6 month distance learning course that will develop the skills needed to fill the projected skills gap in this area; • Pre-contract and post-contract management: distance learning courses of three months duration for each; • Sector specific training for roads, rail and utilities: offering technical support for clients operating in these areas;
• Knowledge – RICS provides a range of practice standards and guidance to help develop your career.
• DRS and collaborative behaviours in supply chains: course to be launched at the end of 2016.
• Network – RICS connects you to other professionals and our qualification is recognised across the entire construction and infrastructure sector.
• RICS will be offering training on a wide range of topics, from helping APC candidates in qualifying for RICS membership, right through to technical skills for all stages of infrastructure and specific support for the key sectors of road, rail and utilities.
RICS has developed its Built Infrastructure APC Pathway as the qualification route for those wishing to work on the delivery of global infrastructure projects. It covers general project and cost management of programme delivery from inception to post-completion, and offers a broad number of competencies ranging from project finance to building information modelling management and asset management. The Pathway aims to combine project with cost management competencies so as to reflect global requirements in the delivery of infrastructure, and candidates are encouraged to specialise in one of the following areas: • Transport: including road, rail, aviation and ports • Energy: including utilities, renewable sources and nuclear • Petrochemicals • Oil and gas • Mining and resources.
• Bespoke training to be delivered through a range of convenient formats, including face-to-face and blended, which can be delivered in-house to suit business needs. RICS also offer a range of distance learning certificates covering key knowledge and principles on a given subject, as well as web classes and e-learning for specific technical skills. • All courses are delivered by industry experts with in-depth knowledge of the subject at hand, offering practical training and encouraging stimulating discussion which can be applied in day-to-day work.
“Within the industry the RICS carries weight, it is seen as a standard. We are seeking suppliers that recognise that they need to be committed to skills, training and apprenticeships.” Mark Ollerton Commercial Director, Highways England
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5.0 Products
5.3 RICS Data Services and Products
5.1 isurv infrastructure
RICS Infrastructure Information Service (IIS)
isurv, the Institution’s existing subscription-based information portal, provides online access to information supporting all the core discipline areas in surveying. It delivers a wide range of content including commentary from subject experts, case studies and case law, research, document templates and links to guidance. The portal caters for a broad spectrum of audiences including clients, consultants, contractors, legal firms, management consultancies, government bodies, local authorities and universities. It will be expanded significantly in 2017 with the launch of a new infrastructure channel, developed closely in line with market needs. The new infrastructure channel will provide over 120 different sections with authors recruited from a range of infrastructure organisations, including major clients, consultants and contractors.
The service includes: • Indices to help manage project cost at the estimation stage and when predicting th e impact of inflation on infrastructure projects and programmes • Quarterly financial reports and forecasts aiding strategic decisions • Independent benchmarking data to compare against internal project estimates • An online price book, in collaboration with ICE, which will speed up the creation of costings and allows validation of common items. This is due to be published in September/October 2016.
RICS Major Project Inflation Service
isurv infrastructure will provide practical, authoritative and relevant content, supporting all the major lifecycle stages of infrastructure projects from technical requirements and outline planning to cost planning and management, planning and consents, programme and project management, risk and value management, asset management, procurement, contract management, environment and sustainability, taxation and dispute resolution.
With capacity concerns becoming an issue for major projects, the risk of rising costs can put extra strain on already tight budgets. A clearer understanding of these risks will allow project owners and contractors to mitigate rising costs. This service can help predict outturn costs and identify key cost drivers.
5.2 RICS Conferences and events
In addition to our standard service, RICS offers bespoke solutions to help manage long term projects by analysing the project content and helping to build specific forecasts.
RICS will be running several infrastructure focused events and conferences over the course of 2016 and 2017. The major flagship “Commercial Management in Infrastructure” conference held in London in April 2016 will be further evolved for 2017 – with a view to producing additional regional summits in Manchester and Birmingham. Local RICS regional offices will also be hosting events for Commercial Managers across the UK covering topical industry themes such as collaboration, risk mitigation, technology, data, supply chain management, skills, procurement, dispute avoidance and BIM.
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IIS provides a range of tools to help organisations in the infrastructure sector to manage inflation, predict cost trends for long term contracts and benchmark project costs.
RICS in Infrastructure
RICS Data Services
BCIS Price adjustment formulae indices (PAFI) BCIS PAFI provides a comprehensive, detailed and easy to use method of measuring cost movement for building and civil engineering. They are widely used in the construction and infrastructure sector to help fairly allocate risk between the client and sub-contractors. The new series 4 covers civil engineering, specialist engineering and highways maintenance.
rics.org/infrastructure
6.0 Dispute Resolution and Avoidance Services RICS Dispute Resolution Service (DRS) is the world’s largest provider of alternative dispute resolution services to the property and construction industries, appointing around 7,000 dispute resolvers per year. Alternative dispute resolution is often cheaper and quicker than taking a case to court. Other benefits of ADR are its ability to help organisations to preserve commercial relationships and avoid reputational damage. DRS provides clients with access to highly trained and assessed adjudicators, arbitrators, dispute board members, expert witnesses, independent experts, and mediators, who are drawn from a wide range of professions, including surveyors, lawyers and engineers. Appointments can be sourced directly by parties or independently appointed by DRS. DRS can design and deliver bespoke conflict avoidance and dispute resolution services for individual organisations, which are tailored to meet their particular needs and challenges.
Conflict Avoidance Panel One recent example of DRS innovation is the Conflict Avoidance Panel (CAP) procedure, which has been designed by DRS in conjunction with Transport for London and its project delivery partners. CAP is an ADR service designed to enhance a collaborative working culture by encouraging cooperation and commitment to resolving differences early, without the need for escalation to adjudication, arbitration or the courts. CAP enables contracting parties to avoid and control disputes. It is underpinned by relationship management which includes incentives to encourage cooperation. CAP is now incorporated into standard NEC forms, which are used by TfL and Contractors on the current upgrade of the London Underground.
The procedure includes: • The right of any party to invoke the services of a CAP • A flexible procedure and timetable to allow for simple and complex issues to be dealt with • The facility for CAP to make non-binding recommendations • A requirement for a party who disagrees with the CAP to provide written reasons.
Construction and Engineering Arbitration Service Another example of RICS DRS innovation is the Construction and Engineering Arbitration Service (CEAS) CEAS has been developed for construction and engineering disputes in England and Wales. Its purpose is to give confidence to parties that arbitration will provide high quality decisions quicker than litigation, and at a realistic cost. CEAS uses only highly experienced and creditable arbitrators who are committed to managing the process effectively and reaching decisions within prescribed /or agreed, timescales. CEAS provides unrivalled customer services that meet the expectations of parties to arbitrations in terms of quality, standards and overall user experience. CEAS offers arbitration services at two levels, depending on the value and complexity of the dispute: • The CEAS Fast Track Arbitration Service for construction and engineering disputes can be used as an alternative to the County Court and where the value of a claim is £100,000.00 or less. The service is subject to procedural timetables and rules, which aim to achieve an award within 6 months • The CEAS Select Arbitration Service for construction and engineering disputes can be used as an alternative to the Technology and Construction Court and where the value of the claim exceeds £100,000 and is relatively complex, required in depth examine of evidence. The above are just two of many examples of DRS ability to consult and work with industry to design and deliver conflict avoidance and dispute resolution services, which are innovative and meet the particular needs of clients who utilise them.
RICS in Infrastructure
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Best Practice commercial delivery in infrastructure
7.0 Future Direction and Next Steps RICS has identified infrastructure as an outstanding opportunity to position itself as a major provider of standards, training and qualifications. The institution will continue to raise its profile, engage with the market and ensure that it is supporting the sector – while at the same time acting in the public interest through the ongoing development and regulation of professional standards. To this end the ongoing focus for RICS moving into 2017 and beyond will be on; • Developing its pipeline of standards, intellectual property and guidance • Engagement with Infrastructure and Projects Authority, HM Treasury and National Infrastructure Commission clearly identifying key stakeholders and a clear role for RICS to support • Collaboration with other professional bodies in the built environment to raise standards and champion infrastructure development • Communications on the role and value of RICS professionals to end users - clients, consultants, contractors and investors • Developing opportunities and propositions around ICMS and relevance for the UK Infrastructure market • Engaging with Government on the National Infrastructure Plan for Skills and deliver a strategy for engaging with Higher Education bodies leading to clear routes into employment including apprenticeships • Policy initiatives aimed at achieving the effective ‘de-risking’ of infrastructure investment and barriers to infrastructure financing • Further development of data services into the sector to meet market needs. For more information visit rics.org/infrastructure
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RICS in Infrastructure
rics.org/infrastructure
RICS in Infrastructure
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Confidence through professional standards
We accredit 118,000 professionals and any individual or firm registered with RICS is subject to our quality assurance. Their expertise covers property, asset valuation and real estate management; the costing and leadership of construction projects; the development of infrastructure; and the management of natural resources, such as mining, farms and woodland. From environmental assessments and building controls to negotiating land rights in an emerging economy; if our members are involved the same professional standards and ethics apply.
United Kingdom RICS HQ
Ireland
t +44 (0)24 7686 8555 f +44 (0)20 7334 3811 contactrics@rics.org
t +353 1 644 5500 f +353 1 661 1797 ricsireland@rics.org
Parliament Square, London SW1P 3AD United Kingdom
38 Merrion Square, Dublin 2, Ireland
Media enquiries pressoffice@rics.org
We believe that standards underpin effective markets. With up to seventy per cent of the world’s wealth bound up in land and real estate, our sector is vital to economic development, helping to support stable, sustainable investment and growth around the globe. With offices covering the major political and financial centres of the world, our market presence means we are ideally placed to influence policy and embed professional standards. We work at a cross-governmental level, delivering international standards that will support a safe and vibrant marketplace in land, real estate, construction and infrastructure, for the benefit of all. We are proud of our reputation and we guard it fiercely, so clients who work with an RICS professional can have confidence in the quality and ethics of the services they receive.
Europe
(excluding UK and Ireland) Rue Ducale 67, 1000 Brussels, Belgium t +32 2 733 10 19 f +32 2 742 97 48 ricseurope@rics.org
Office G14, Block 3, Knowledge Village, Dubai, United Arab Emirates t +971 4 446 2808 ricsmiddleeast@rics.org
Africa
Americas
t +27 11 467 2857 f +27 86 514 0655 ricsafrica@rics.org
t +1 212 847 7400 f +1 212 847 7401 ricsamericas@rics.org
East Asia
China (Shanghai)
China (Beijing)
Japan
t +852 2537 7117 f +852 2537 2756 ricsasia@rics.org
t +86 21 5243 3090 f +86 21 5243 3091 ricschina@rics.org
t +86 10 6597 8586 f +86 10 6581 0021 ricschina@rics.org
t +81 3 5532 8813 f +81 3 5532 8814 ricsjapan@rics.org
ASEAN
South Asia
t +65 6635 4242 f +65 6635 4244 ricssingapore@rics.org
t +91 124 459 5400 f +91 124 459 5402 ricsindia@rics.org
PO Box 3400, Witkoppen 2068, South Africa
3707 Hopewell Centre, 183 Queen’s Road East Wanchai, Hong Kong
06-22 International Plaza, 10 Anson Road, Singapore 079903
One Grand Central Place, 60 East 42nd Street, Suite #542, New York 10165 – 2811, USA
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South America
Middle East
Rua Maranhão, 584 – cj 104, São Paulo – SP, Brasil t +55 11 2925 0068 ricsbrasil@rics.org
Room 2507-2508B, Jing Guang Centre, No.1 Hu Jia Lou Road, Chaoyang District Beijing 100020, China
Oceania
Suite 1, Level 9, 1 Castlereagh Street, Sydney NSW 2000. Australia t +61 2 9216 2333 f +61 2 9232 5591 oceania@rics.org
Level 14 Hibiya Central Building, 1-2-9 Nishi Shimbashi Minato-Ku, Tokyo 105-0003, Japan GLOBAL/JULY 2016/DML/21586/INFRASTRUCTURE
RICS promotes and enforces the highest professional qualifications and standards in the development and management of land, real estate, construction and infrastructure. Our name promises the consistent delivery of standards – bringing confidence to the markets we serve.