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International standards: building confidence in infrastructure investment

Accurately predicting the costs and final value of infrastructure projects could bring global investment into UK infrastructure. 

It is axiomatic that good infrastructure leads to higher productivity, which is in turn a factor in attracting inward investment. And it follows, then, that significant infrastructure investment is needed if the UK is to remain internationally competitive, particularly in a post-Brexit economy. The government’s project pipeline illustrates grand ambitions to boost infrastructure; however, the UK is not alone in its ambition to attract inward investment. With infrastructure forming one of several asset classes comprising a diversified investment portfolio, there will be competition between nations to attract investors. 

Investment criteria 

The prerequisite characteristics for long-term investors include transparency, certainty and assurance. An impending Brexit threatens to reduce or remove all of these, and may instead explain investor sentiment as demonstrated by recent contractions in the construction sector. If the UK is to maintain its world-class reputation for excellence in construction and in the wider economy, it must attract domestic and international investment, through the use of international standards. 

International standards attract investment

International standards, defined as common frameworks adhered to by practitioners, can influence investment decisions by providing the certainty that attract investors, particularly where ethical compliance is robustly regulated. They are agreed collaboratively by international standard setting and professional organisations acting in the public interest by providing consistent reporting, increased transparency, facilitating accurate comparatives, and reducing the risk of fraud. International collaboration adds credibility to a sector that knows no borders, exemplified by constructors undertaking work globally. 

Accurately reporting construction costs 

Rarely are projects, especially those of national significance in the UK, completed on time and to budget. This signals that data on the initial cost are flawed. The built environment is of a magnitude that merits the formulation of a transparent international consistent method in reporting construction costs, capital expenditure (capex), associated with projects. This would benefit investors whose investment decision may rely on the metrics associated with capex, such as where breaching a debt service cover ratio can change a project’s credit rating, which may form part of an investment criteria. 

The International Construction and Measurement Standard (ICMS) was launched in 2017, in collaboration with over 40 global professional bodies, to report construction costs. It aims to provide global consistency in classifying, defining, measuring, analysing and presenting entire construction costs at a project, regional, state, national or international level. The regulatory compliant data that underlies ICMS can also be used by investors to assess the economic viability of a project before construction and monitoring its liquidity position during the risky construction period. The accurate and transparent reporting of capex can increase investment as investor will take assurance from a practitioner that is complying with ethical regulatory reporting requirements. 

Standards across land, property and construction 

Together with the ICMS, global standards covering land measurement (ILMS), property measurement (IPMS) and international valuation (IVS) can form an all-encompassing set of standards to assess the feasibility of a project at initiation or during investment assessment. The ILMS standardises land tenure and ownership rights, a global challenge especially in emerging economies. The IPMS aims to enhance the transparency and consistency in the way property is measured across markets – the IMF has said it will request IPMS for its premises. The IVS builds confidence and public trust in the valuation process through the creation of a framework for delivery of credible valuation opinions. 

The adoption of international standards can provide assurance that relevant output is in line with ethically regulated international standards. The Royal Institution of Chartered Surveyors (RICS) forms part of several global professional coalitions acting to develop and embed strictly regulated international standards that provide assurance and mitigate investor uncertainty. 

It can be surmised with a degree of certainty the adoption of international standards would not only increase infrastructure investment but would also benefit future generations and the built environment. Increased transparency through the presence of qualified and regulated professionals working to globally recognised standards in the public interest can only improve how the sector is portrayed. Adopting international standards will be advantageous for the UK government’s ambition to bring in international investors. 

 

Mo Rahee is the Infrastructure Policy Senior Manager at the Royal Institution of Chartered Surveyors

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What the university staff strike reveals about our broken higher education system

The marketisation of our universities is facing its biggest opposition yet.

The biggest industrial strike ever by academic staff in Britain's universities has begun.

National newspapers are running panicked headlines about what may happen if the strike lasts: “University strike puts final exams in danger”, warns The Times. “University strikes could hit exams and graduation ceremonies”, says the Guardian. But as well as affecting the education of students who are heavily in debt, the strikes will hit academics with very different levels of job security, and university establishments at a time when higher education is on the political agenda. 

The University and College Union voted for strike action last month over a failure to reach an agreement with Universities UK (UUK), the body which represents of the Vice Chancellors of every university in the country, over changes to academics' pension plans.

The pension scheme at the heart of the conflict, the Universities Superannuation Scheme, currently has over 400,000 participants. UUK have stated that the pension scheme currently has a £6.1bn deficit and that the cost of future benefits has increased by one third since 2014. They are proposing a switch from a direct benefit pension scheme (fixed, guaranteed pension payments) to a direct contribution scheme (reliant on stock markets) to maintain the scheme's sustainability.

However, many academics argue the deficit is overstated, and is instead a cynical attempt to reduce the universities' pension liabilties. 

Older and more senior academics who have already spent several decades paying into the system will be less affected by the changes, as contributions will be protected under the old scheme until 2019. 

UCU however allege that this change will result in an average yearly £10,000 loss in staff members' pensions. Academics at 61 universities, including the likes of Oxbridge, UCL, Imperial College London, Cardiff University and the University of Edinburgh will be striking for 14 days. 

The strikes begin on Thursday, and yet no-one seems to know what will happen. FAQs provided by universities to students all appear to have a similar theme: Academic disruption will be minimised, but if you have a complaint, please email us. 

16 percent of academic staff at these universities will be on strike (because most academics aren't a part of a union) but lectures and seminars have still been cancelled. It is still unclear for students whether they will be examined on subjects that they will miss. 

But for the most part, students appear to support the academics. Mark Crawford, a Postgraduate Sabbatical Officer at UCL (the biggest university in the country to strike) says he has been pleasantly surprised by the number of students who have messaged asking him how they can help. 

Perhaps this is due to the pains some academics have gone to minimise the disruption their students will face. Some lecturers have made presentations available online, and have amendeded their reading lists. One academic at King's College London, KCL, has even rearranged her seminars off campus. 

Yet this feeling of goodwill may disappear when reality kicks in. Robert Adderly, a second year Law student at KCL, and a campaigner for the student group provocatively titled “Students Against Strikes” says he’s unsure how supportive students will be once the action actually begins. 

Adderly, while sympathetic to the concerns of the academics does not believe striking is the most effective way to negotiate with Universities UK. He goes on to say that he believes “neither side is willing to compromise” and says that the “only people losing out are students.”

He also says he believes a lot of students “haven’t assessed how they really feel about the strikes” and that the “longer it goes on, the more students who will get angry”. 

Adderly's thoughts are backed by a poll conducted by Trendence UK, a market research company, which found that 38 per cent of students supported their academics on strike, compred to 38 per cent who did not.

Several academics have spoken to the New Statesman off the record about feelings of uneasiness around the strike, arguing that there is a better, less disruptive way of resolving the pension debate. Others are unsure about the leadership of UCU and believe striking will only lead to a build up of work later. 

Professor Andrew Pomiankowski at UCL emailed his students saying while he supported the strike, he would continue conducting his classes this week. He later told the New Statesman “I have a lot of sympathy with the reasons for the strike - the loss of provision of pensions, especially for the younger members of staff. Talking is the only way of resolving this problem. However, I don’t feel that I should disrupt teaching of students. That’s a step too far.”

The strikes go to the heart of the debate about the marketisation of university. Even students who support the strike are in conflict with one another. Notably, students who support the strikes are unhappy with campaigns such as Adderly’s which are also demanding universities compensate them for lost teaching hours. Crawford says your “first instinct shouldn’t be how much am I losing? It should be how much is our staff losing.”

On the other hand, Adderly argues we shouldn’t pretend the marketisation of university hasn’t already happened, saying “It’s here. It’s happening. We are now consumers.” 

Though it appears unlikely that universities will refund students, these strikes are highlighting how our attitudes to higher education have changed in a short space of time, and causing some to ask if this is the future we want for British higher education.