Below, we dip into the latest RICS Global Construction Monitor to investigate the impact the pandemic has had on variables such as tender prices, cost of materials and supply of skills – all critical factors in cost prediction.
The coronavirus has led to persistent supply chain disruptions in many markets, leading to a shortage of materials, an increase in the cost of materials, or both.
Andy Birtles (FIMMM), a mining industry specialist, explains: “It is difficult to achieve social distancing in an underground mine, so this may have caused the disruption of supply chains, which meant demand outstripped supply. It is easier to continue quarrying or extracting material from surface mines while observing social distancing rules, but many of these materials; aggregates, limestone, clay or sand need to be converted into construction materials like cement, bricks or glass. These conversion processes would also have been affected by disruption caused by the COVID-19 pandemic.”
The unpredictable nature of supply chains highlights just how important the role of cost managers are to projects. This is particularly true of large, complex capital infrastructure projects, which the report suggests many governments will be turning to in order to stimulate post-pandemic growth.
As Alan Muse FRICS, RICS' Director of Built Environment, observes: "Construction has always been a risky intervention, which deters investment. COVID-19 has added to this uncertainty, while at the same time governments around the world see construction as an important post-pandemic stimulus measure. Therefore, improving predictability for demanding clients and, as projects become increasingly complex, is key. Predictability in terms of quality and time, but also, critically, in cost and value."
As economies look to "build back better" following the pandemic, RICS is moving to boost confidence and define best-practice in the cost prediction process through a new global standard. The cost prediction professional statement will enable RICS professionals to work from one set of guidelines that implement ICMS – the International Construction Measurement Standards.
"Through the use of global RICS standards and the skills that they have developed, RICS professionals can improve predictability, and this will lead to better-value construction outcomes for clients and society as a whole," adds Muse.