International Construction Measurement Standards, 2nd edition

Part 4 Definitions

4.1 Defined Terms

Acquisition Costs: All payments or considerations required to acquire/lease/purchase the land, property or existing Constructed Asset, and all other expenses associated with the acquisition, excluding physical construction.

Base Date: The date used in conjunction with Construction Costs at which the costs in ICMS construction costs reports are considered to apply and for which no Price Level Adjustments are required. A different date (the Common Date) may apply for Life Cycle Costs.

Client: The entity who pays for the works and services provided.

Coalition: The International Construction Measurement Standards Coalition, comprising not-for-profit organisations, each with a public interest mandate.

Common Date: The date to be used in conjunction with life cycle costing, being a date not earlier than the completion of construction. All future cash flows occurring at different times are discounted or compounded as if the costs are incurred at that date.

Constructed Asset (or Asset): The output from any building or civil engineering project.

Construction Costs: Expenditure on labour, materials, plant, equipment, site and head office overheads and profit, including taxes and levies, incurred as a direct result of the construction intervention. It is the total price payable for work normally included in contracts to construct a building or civil engineering works, including any goods or materials supplied by the Client for the Constructor to fix. It also includes all temporary works required to undertake the construction works.

Constructor: The organisation (also commonly known as the Contractor) commissioned and paid by a Client to construct or implement the construction of a Project or part thereof including, in some cases, providing funding, design, management, maintenance and operation services. In the context of other life cycle costs after construction, it also means the organisation undertaking the renewal or maintenance works.

Conversion date: The date or dates at which any currency conversion was made.

Cost Category: A division of Project or Sub-Project costs into Acquisition Costs, Construction Costs, Renewal Costs, Maintenance Costs, Operation Costs, and End of Life Costs.

Cost Group: A division of costs under a Cost Category into a small number of broad groups to enable easy estimation or extraction of cost data for quick, high-level comparison by design discipline or common purpose.

Cost Management Professional: A Service Provider competent to calculate, interpret, analyse, apportion and report using ICMS.

Cost Sub-Group: A division of costs under a Cost Group according to their functions, services, or common purposes irrespective of their design, specification, materials, or construction to enable the costs of alternatives serving the same function or common purpose to be compared, evaluated and selected.

Discount Rate: Factor or rate reflecting the time value of money that is used to convert cash flows occurring at different times (Source: ISO 15686-5).

Discounted Cost: The resulting cost when the real cost is discounted by the real discount rate or when the nominal cost is discounted by the nominal discount rate (Source: ISO 15686-5).

End of Life Costs: The net costs or fees for disposing of an asset at the end of its service life, including costs resulting from disposal inspection, decommissioning and decontamination, demolition and reclamation, reinstatement, asset transfer obligations, recycling, recovery, and disposal of components and materials, and transport and regulatory costs.

External Costs: Costs associated with an asset that are not necessarily reflected in the transaction costs between provider and consumer and that, collectively, are referred to as externalities. These costs may include business staffing, productivity and user costs; these can be taken into account in a life-cycle cost analysis but are to be explicitly identified. (Source: ISO 15686-5)

Externalities: Quantifiable cost or benefit that occurs when the actions of organisations and individuals have an effect on people other than themselves. Example: Non-construction costs, income and wider social and business costs (Source: ISO 15686-5).

GEFA: Gross external floor area measured according to IPMS 1 as set out in IPMS and provided in Appendix H.

GIFA: Gross internal floor area measured according to IPMS 2 as set out in IPMS and provided in Appendix H.

ICMS: International Construction Measurement Standards.

Income: Money received from sales and other activities during the life of an Asset.

Inflation/Deflation: Sustained increase/decrease in the general price level of resources. (Source: ISO 15686-5)

IPMS 1: The total of the areas of each floor level of a building measured to the outer perimeter of External Walls, Sheltered Areas and Balconies, as further defined and detailed in Appendix H.

IPMS 2: The total of the areas of each floor level of a building measured to the Internal Dominant Face of all External Walls and Balconies on each level, as further defined and detailed in Appendix H.

IPMS: International Property Measurement Standards. IPMS are the global standards that aim to enhance the transparency and consistency in the way Property is measured across markets. It was developed by the IPMS Coalition, an independent group of professional bodies from around the world.

Life Cycle Cost (LCC): Cost of a Constructed Asset or its parts throughout its life cycle from construction through use, operation, maintenance and renewal till the end of life or a shorter Period of Analysis, while fulfilling the performance requirements, as illustrated in Figure 1.

Maintenance Cost: The total of necessarily incurred labour, material and other related costs incurred to retain a building or its parts in a state in which it can perform its required functions. (Source: ISO 15686-5). Maintenance includes conducting corrective, responsive and preventative maintenance on a Constructed Asset, or its parts, and includes all associated management, cleaning, servicing, repainting, repairing and replacing of parts, where needed, to allow the Constructed Asset to be used for its intended purposes. It excludes Renewal Costs.

Major Adaptation: A one-off substantial modification/adaptation/extension of, or improvement to, the main parts of an existing building or civil engineering works that is not classified as a Renewal.

Net present value or cost: The sum of the discounted future cash flows. (Source: ISO 15686-5)

Nominal Cost: The expected price that will be paid when a cost is due to be paid, including estimated changes in price due to, for example, forecast change in efficiency, inflation or deflation and technology. (Source: ISO 15686-5)

Nominal Discount Rate: The factor or rate used to relate present and future money values in comparable terms taking into account the general inflation/deflation rate.

Non-Construction Costs: Include finance costs, service charges, parking charges and charges for associated facilities.

Occupancy Costs: Costs that arise exclusively as a result of the occupation of the Constructed Asset, including reception, library services and porterage.

Operation Costs: Costs incurred in running and managing the Constructed Asset, including administrative support services, rent, rates, insurances, energy and other environmental/regulatory inspection costs, local taxes and charges.

Operator: The entity responsible for the running and operation of the Constructed Asset, whose costs should be included under the Operation Costs.

Period of Analysis: Period of time over which life-cycle costs are analysed as determined by the Client. It may cover the entire life (physical, technical, economic, functional, social, or legal life) or a selected stage or stages or periods of interest as required by the Client.

Present Day Value: Monies accruing in the future which have been discounted to account for the fact that they are worth less at the time of calculation. (Source: ISO 15686-5)

Price Level Adjustment: An allowance for the increases or decreases in the price levels, due to inflation or deflation, over a defined period.

Project Attributes: The principal characteristics of a Project or Sub-Project relating to time, cost, the scope of works, design, quality, quantity, procurement, location and other contextual features that might impact its life cycle cost.

Project Complexity: The relative intricacy of a Project or Sub-Project by reference to its form, design, site constraints, method or timing of construction, renewal, operation, maintenance or end of life activities.

Project Quantities: The physical quantities (numbers, lengths, areas, volumes and weights), functional quantities (capacities, inputs, outputs) and degree of repetition required to be captured in the Project Attributes and Project Values such that the costs of different projects or design schemes can be converted to a unit cost per the desired Project Quantity for evaluation and comparison. Both physical and functional quantities are required for each Project or Sub-Project.

Project Values: A standard set of descriptions and/or measurements for each of the Project Attributes.

Project: A single or series of construction intervention(s) with a single purpose or common purposes to create a series of or single Constructed Asset commissioned by a Client, or group of Clients, with a defined start and end date. A Project may comprise a number of Sub-Projects.

Real Cost: The cost expressed as a value at the Common Date, including estimated changes in price due to forecast changes in efficiency and technology, but excluding general price inflation or deflation. (Source: ISO 15686-5)

Real Discount Rate: The factor or rate used to relate present and future money values in comparable terms, not taking into account the general or specific inflation in the cost of a particular asset under consideration. (Source: ISO 15686-5)

Renewal Costs: The costs of replacing a Constructed Asset and/or major components once they reach the end of their life, and which the Client decides are to be included in the capital rather than the revenue budget.

Reporting Date: The date at which the report describing construction or life cycle costs is compiled.

Risk allowance: A quantitative allowance set aside as a precaution against risks and future needs to allow for the uncertainty of outcome. A risk is an uncertain event or circumstance that, if it occurs, may affect the outcome of a Project.

Risk: Probability of an event occurring multiplied by its consequences. Risks may have a positive or negative influence on a Project's outcome. (Source: ISO 15686-5)

Service Provider: Any organisation or individual providing advice or a service to a Client at any point in a Project's life including, but not limited to, project managers, architects, engineers, technical architects or engineers, surveyors, Cost Management Professionals, constructors, facilities managers, planners, valuers, property managers, asset managers, agents and brokers.

Sub-Project: A subdivision of a Project that can be described by a single set of attributes and values.

Taxes and Levies: Mandatory costs taxed or levied in connection with any phase of the Project by national governments, states, municipalities or governmental organisations, whether paid by the Client or the Constructor or the Operator.

4.2 Substructure and Structure Delineation