Contractors should invest in BIM technology now because more owners are requiring its use on projects, where bottom-line savings are well documented
By Michael Kenig
Michael Kenig, Holder Construction CHAIRMAN, AGC PROJECT DELIVERY COMMITTEE
Michael Kenig is vice chairman of Holder Construction Co., a commercial construction services firm with offices in Phoenix, Charlotte, Atlanta and Washington D.C. Kenig is recognized for his expertise in project delivery systems and BIM implementation. He has been involved in many publications, including AGC's "Contractor's Guide to BIM" and the "Project Delivery Systems" textbook. He is on the Process Transformation Committee for CURT, the AGC of America AIA-AGC Joint Committee, and the tripartite 3xPT committee. Kenig also serves as an adjunct professor at Georgia Tech, teaching a graduate course on project delivery, and on an advisory board at Purdue University's Construction Engineering Program.www.holderconstruction.com
As the fire sprinkler piping is being installed, the installer discovers that his piping is going to run right into a steel brace supporting the exterior wall system. Despite everyone's best efforts to avoid this situation, time and money will be wasted while this issue gets resolved. The sprinkler piping contractor has to rework his piping to go around the steel support, and the project continues. How much does this cost? How many times during a project does a similar event occur?
A recent analysis revealed that approximately 1% of the construction cost on a particular project was spent resolving non-owner-initiated changes that could have been avoided if the project had used a building information model.
Instead, these changes were resolved within the guaranteed maximum price with money from the project's construction contingency. How much would the model have cost to create and maintain? The model is estimated to have cost approximately 0.5% of the construction cost. Quick math shows that the return on that investment would have been at least double. Using these figures, if the project was $20 million, the model would have cost approximately $100,000 and the savings would have been at least $200,000.
Show Me the Money
Does the use of building information models save money? Yes, absolutely! However, as is so often the case, the answer is counter-intuitive. To save money, you have to spend money. To achieve this project savings, owners must recognize that they have to spend some money up front. This is no different than money spent on a construction manager's preconstruction services—generally accepted as a small amount to pay versus the value received through input on cost, schedule, constructibility and value-engineering ideas.
The key is that the cost is to the designers and contractors, and the savings is to the project.
As the graphic illustrates, BIM does bring benefits to projects. Collaborative projects enhanced by the use of BIM have proven to need less contingency during construction. This additional benefit is the "incremental" benefit available on technology-enabled projects.
Everyone who uses BIM to enhance the way they do many of the same things they do on 2D projects will say, "BIM saves money." The challenge is that the money saved is often in the cost of the project. Most agree that the return on the upfront investment in BIM is at least two to three times the amount spent—in fact, many have seen savings in the five to 10 times range, or greater. The key is that the cost is to the designers and contractors; the savings is to the project.
So who should make this initial investment? Who ultimately realizes the savings? Under a typical open-book, not-to-exceed GMP contract, an owner gets the majority, if not all, of the savings from the cost-of-the-work and any unused contingencies. The owner realizes the savings from using BIM, and most owners are starting to recognize this and are willing to reimburse project teams for upfront costs.
The challenge in the short run is on fixed-price, lump-sum contracts where the savings does not return to the owner. If the savings is realized during construction, where is the incentive for the design team to spend the additional money up front? Additionally, are the contractors confident they will save enough to offset their upfront investment or enough that their bids will reflect that future savings?
Eventually, the industry will develop confidence in the savings that project teams can achieve, and the competitiveness of the marketplace will drive most of that savings to the owner, but for now, low-bid projects with lump-sum contracts face a real challenge for owners to realize savings from the use of BIM.
The challenge in the short run is on fixed-price, lump-sum contracts where the savings does not return to the owner.
As the rate of adoption of intelligent BIM increases and the industry nears the tipping point with its use, more people are moving beyond trying to understand BIM and are instead focusing on how to get started. More firms are using the technology, and once they get past the initial investment and the learning curve, they experience the benefits for themselves.
As this occurs, the one thing everyone learns is that using BIM saves money. Smart owners are recognizing this, and more are beginning to expect the use of BIM on their projects. These owners also recognize that, at least for now, they need to use open-book contracts to get the savings that BIM offers. Projects are realizing these savings today. The time to get started is now.
