CONSTRUCTION JOURNAL

Setting a blueprint for future infrastructure spending

The new RICS insight paper Benchmarking in the infrastructure sector aims to promote good practice in standardising, classifying and predicting performance including cost across buildings and infrastructure assets

Author: Anil Sawhney and Alan Muse

02 September 2020

Benchmarking is fundamental to the continuous improvement of organisations, particularly those that are project-based. Organisations use benchmarking to measure their own performance, compare their performance with other organisations, identify gaps and develop improvement plans.

In the infrastructure sector, benchmarking is closely associated with measuring costs and performance at the project level. Most organisations active in infrastructure work are project-based bodies, and each project is unique, with the goals, objectives, scope, project team, project stakeholders, and other internal and external project conditions changing from one project to the next. The complex nature of infrastructure projects makes it challenging for organisations in this industry to improve their project and business operations.

Benchmarking is a blueprint for future spending, helping both government and industry make more informed and transparent decisions about the future of infrastructure priorities and providing the evidence and analysis needed for government to make crucial decisions with greater confidence, ensure value for money for taxpayers and avoid excess costs and missed benefits.

Infrastructure spend is expected to increase substantially over the next few years. A report produced by Global Construction Perspectives and Oxford Economics estimates that the volume of construction output will grow by 85% to $15.5tr worldwide by 2030, while McKinsey Global Institute predicts that keeping up with projected GDP growth will require an estimated $57tr investment in the same timeframe. Therefore, the importance of benchmarking in the infrastructure sector has never been greater.

The new RICS insight paper Benchmarking in the infrastructure sector provides an overview of the practice for RICS firms and professionals, discussing the types of benchmarking, the processes involved, and demonstrating examples of best practice. It includes sections on:

  • what benchmarking is, particularly in the context of the infrastructure sector
  • performance measurement
  • the infrastructure benchmarking process
  • data analytics
  • the benefits of benchmarking.

Several case studies are also included, illustrating how different infrastructure organisations use benchmarking to improve their working practices and better serve the communities in which they deliver infrastructure assets.

Much of the methodology links back to relevant international standards, particularly data standards, including ICMS – all of which serves to enhance the role and effectiveness of benchmarking.

“With infrastructure spend expected to increase substantially over the next few years the importance of benchmarking in the infrastructure sector has never been greater”
Case study: Utah Department of Transportation’s program delivery dashboard
Highway bridge over the Colorado River in the southern Utah desert, USA

Highway bridge over the Colorado River in the southern Utah desert, USA

The Utah Department of Transportation (Utah DOT) has developed a program delivery dashboard to evaluate the performance of its projects and programmes at the regional level. The dashboard is used as a benchmarking system to measure, monitor and manage the performance of projects during the project development process and construction within the regions.

It was developed based on a comprehensive set of metrics. Data is presented in a graph and provides a year-to-year comparison of the regions meeting the project schedule, budget and scope, including a comparison of the actual letting date and committed letting date for the project. In addition, the dashboard provides detailed explanations and graphs that explain the performance of the projects in each region compared to the baseline, current advertising performance and advertising performance history.

The Utah DOT page also displays 2 other dashboards – a zero fatalities panel and a program delivery dashboard – and additional information about related factors such as pavement condition, bridge condition and current interstate travel times.

Submit your case studies and experiences of construction benchmarking, particularly using ICMS, to the editor at sfairbairn@rics.org for a future article.

Levels of benchmarking

Infrastructure benchmarking can be considered at multiple levels in the industry, from an element of the work to the highest level of the industry at regional, national or international levels. The UK government’s Construction cost benchmarking: departmental progress update 2012 categorises principles and methods of cost benchmarking into 4 types.

  • Type 1 benchmarks

    These involve comparing the total construction costs of delivering a specific quantity of the project in units commonly accepted by the industry, for example £ per metre squared of accommodation. Such benchmarks can represent the overall state of the infrastructure industry for a client in a geographical region.

  • Type 2 benchmarks

    These are functional measures that are specific to a department or a functional unit, for example monetary value of flood damage avoided, or monetary value of investment made in flood control system. Business outcomes are directly related to the functional measure.

  • Type 3 benchmarks

    These are also functional measures, but outcomes indirectly related to the benchmark measures, for example, the ratio of right-of-way acquisition cost to total construction cost.

  • Type 4 benchmarks

    These are focused on the cost of major project components, for example foundation costs measured by £ per metre cubed of placed concrete.

An effective benchmarking system should consider the entire life cycle of an infrastructure project, from planning to design, construction and operations. The sector should embrace broader performance measures related to the outcome of the project, such as economic, environmental and social metrics. A critical challenge for the industry is to establish a unified set of metrics throughout the infrastructure project to measure performance at each phase.

Benchmarking process

Three guides outline principles of benchmarking and the required steps to implement a benchmarking system:

  • National Cooperative Highway Research Program (NCHRP) research report 902 (2019)
  • Transit Cooperative Research Program (TCRP) research report 141
  • IPA, Best Practice in Benchmarking (2019).

They each outline similar steps, including:

  • establishing the context
  • identifying the levels of benchmarking
  • selecting peer organisations for external benchmarking
  • collecting and processing data
  • analysing the data, validating the results and interpreting the findings
  • presenting and communicating the results
  • identifying best practices
  • implementing the benchmarking strategies
  • monitoring the benchmarking process and auditing the results.

The role of a benchmarking manager

Benchmarking requires expertise that many organisations may not have, yet the role requires experienced professionals who have seen different approaches to managing infrastructure projects. An independent – that is, external – benchmarking manager may be hired to lead all benchmarking efforts for organisations participating in the network, as independence is key to the success of peer-to-peer comparison.

Infrastructure benchmarking is not solely based on hard aspects of benchmarking – for example, metrics and processes – the softer aspects of benchmarking, with a focus on people, are also important. A good benchmarking manager is a skilled leader who knows how to create an effective environment based on a culture of learning and collaboration.

RICS professionals qualified on the Project management, Quantity surveying and construction, or Infrastructure pathways are well placed to undertake the role of a benchmarking manager, as these pathways provide a suite of relevant competencies. Later this year RICS will publish the a global professional statement in cost prediction that will provide a template for professionals to see a connected picture of ICMS, benchmarking, and cost prediction.

Benchmarking provides a collaborative environment to share experiences and avoid mistakes. Infrastructure benchmarking, if done correctly, is an effective tool to enhance the strategic objectives of all organisations in the industry.

As projects experience supply chain disruptions, productivity declines, and stoppages caused by the pandemic, the role of benchmarking has become even more critical. A data and an evidence-driven approach can help bring some clarity and predictability to projects in an uncertain operating environment. Benchmarking can help make critical decisions on projects by pulling data and evidence from past performance. Project teams must become more intelligent about data and information used on projects.

Harnessing of data, cultivation of useful data, and decision-makers knowing what to do with large volumes of data is crucial. It is essential for enhancing project performance that we convert data into meaningful actions based on strategic and tactical questions for the benefit of projects. While governments provide an immediate response to the health, economic, and social difficulties our communities face, there is a clear desire to include construction and infrastructure in medium- and long-term stimulus and recovery packages. Our sector can respond to these initiatives by continually enhancing project performance, and for this benchmarking is key.

“RICS professionals qualified on the Project management, Quantity surveying and construction, or Infrastructure pathways are well placed to undertake the role of a benchmarking manager”

asawhney@rics.org

amuse@rics.org

Related competencies include: Cost prediction and analysis, Project finance, Programming and planning

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