An iCIRT rating recognises the multifaceted elements that distinguish high-trust property development and construction companies. But what does this look like in practical terms?

This article is the fourth in a series designed to explain the iCIRT assessment process and illuminate 'What Good Looks Like' for businesses aspiring to achieve a strong rating. An iCIRT rating is the result of an objective and independent assessment across six critical pillars: Character, Capability, Conduct, Capacity, Capital, and Counterparties.

Here we focus on the ‘Capacity’ pillar of the iCIRT assessment.

iCIRT rated Billbergia Constructions achieved a strong ‘Capacity’ assessment score, reflecting their proven ability to execute on their engagement pipeline.

Defining 'Capacity': Can the business manage its workload?

When iCIRT assesses a company's 'Capacity,' it scrutinises its ability to support its pipeline of work. This differs from the 'Capital' pillar of the assessment, which we look at in our next article.

‘Capacity’ examines whether the business has the operational maturity and procedures in place to deliver reliable assets. Key aspects include: 

Operational resources:

Does the business have the right people in the right locations with the right skills to support its current and projected pipeline? This includes examining the size and scale of its teams, where they're located, and how that's evolving as the business grows. For example, a developer moving from lower-rise to high-rise projects needs to show it has the appropriate resources to support this expansion.

Financial resources:

Does the business have sufficient financial resources to meet its obligations as and when they fall due? This involves understanding their pipeline of work and  how well they understand their cash flow needs. 

iCIRT rated John Fletcher Properties (Cryton Investments) achieved a strong ‘Capacity’ assessment score, reflecting their proven ability to execute on their engagement pipeline.

How to strengthen your 'Capacity' profile for an iCIRT rating

Businesses aiming for a strong score in the 'Capacity' iCIRT assessment can take several proactive steps. Here's “What Good Looks Like”:

Demonstrate a clear understanding of your project pipeline

Be prepared to provide a clear and transparent overview of your current and future project pipeline. This includes detailing the projects, their locations, and how your team structure supports their delivery. A builder, for example, should show how their pricing, profitability, working capital, and liquidity align with their workload. 

A technical services provider should showcase how their team and locations support their pipeline of client engagements, including their people, pricing and payment terms. This demonstrates an awareness of potential risks, such as concentration risk in a particular area, client, or project.

Provide a detailed cash flow projection

Be ready to disclose your development plan and cash flow projections. It’s important to demonstrate how you are planning to deliver your project, including access to funding and acquisition of the right team and resources. 

Also, show how you have secured sufficient reserves or access to additional facilities to manage periods of cash burn. To support these assumptions, provide independent valuations and third party consultant reports.

⭐For developers with newly created Special Purpose Vehicles (SPVs) and no cash yet in the door, the assessment will focus on the team’s proven track record of successfully managing similar projects, demonstrating their ability to showcase project controls, cash flow projections, a solid business plan, and access to the necessary resources. 

Evidence strong financial discipline

Businesses should demonstrate strong financial discipline and a clear understanding of their break-even points and profitability on projects. This includes being able to show how contingencies are factored into project pricing. 

For builders, this means providing evidence of how they price for emerging profits and manage working capital and liquidity. 

For technical services providers, it involves demonstrating how their pricing and payment terms, such as time-and-materials, impact their cash flow and overall business health.

Showcase a commitment to maturity and improvement

For many businesses, the iCIRT assessment process itself can be a catalyst for improvement. Companies should be willing to engage with the assessment and use it as an opportunity to mature their processes, particularly in pricing and cash flow management. 

Providing evidence of how internal processes have been improved as a result of past experiences can be a powerful way to demonstrate a commitment to continuous improvement. For those concerned about their lack of maturity in this area, the assessment can actually help them develop the necessary financial oversight and commercial acumen to build a more resilient and profitable business.

⭐The iCIRT assessment is tailored to the specific business type - such as developer, builder, or service provider - due to the fundamental differences in their roles and responsibilities. The financial metrics and operational considerations for a developer with a single project are very different from a builder with multiple projects or a services provider whose main asset is their people.

By focusing on these key elements of 'Capacity,' businesses can improve their iCIRT rating prospects and build trust with stakeholders by demonstrating their proven ability to handle their workload sustainably.

Stay tuned for our next article in this series, where we will delve into the ‘Capital’ pillar of the iCIRT assessment.

Useful resources:
Understand how we assess ‘Character’
Understand how we assess ‘Capability’
Understand how we assess ‘Conduct’

Get iCIRT Rated to establish trustworthiness as your competitive advantage.