For projects, the missing piece to this puzzle has always been that you cannot build the same project twice in order to quantify what the savings would be in direct comparison to having it built traditionally.
Technology vendors say that BIM tools are the enabler to improved production of a project through a return to best practice project management. They are tools for companies to create efficiencies within their workflows and business operations. They allow project teams to economise and leverage their resources through upskilling and have more immediate access to information in a way that has never been possible before on a project.
By way of example, the Dutch company, Vabi, has just released the Vabi Financial Simulator™ which is a plugin for Autodesk Revit®. It has been specifically designed to bring together and display financial performance data across BIM design teams to demonstrate P&L, Balance Sheet, Discounted Cash Flow and ROI impacts of design decisions. We are likely to see more of this type of technology as we focus as an industry on how to determine savings during early stages of design seek greater assurance on the longer term viability of a project.
The Stanford University Centre for Integrated Facility Engineering is well referenced in relation to its 2007 report on a study of 32 projects from across the US, Europe and Asia. The study is reported to have shown that when used on a project BIM could eliminate up to 40% of unbudgeted changes, increase cost estimation accuracy to within 3% and reduced the time taken to generate a cost estimate by 80%.
In 2010 Allen Consulting Group published the results of its industry sponsored study into the impacts of BIM on productivity. The study’s findings reported that the accelerated and widespread adoption of BIM on the Australian economy was likely to increase GDP by 0.2 basis points in 2011. Whilst this may not seem much, the study also noted the likelihood of a cumulative effect given the likely increase in the pace of adoption by 2025. This would mean an increase of 5 basis points in comparison to what they describe as a “business as usual” scenario.
Real Return on Investment – Is the Secret Already Out?
In this first article of a 3 part series on ROI and BIM, we have compiled a number of stories from owners and stakeholders who have accepted the early evidence and are forging ahead with BIM adoption to hold the construction industry and supply chain to account. These organisations are already establishing the metrics and benchmarking against the data to realise project savings and returns for the life of an asset.
Owners and Stakeholders
The UK Government has published cost data since 2012 in relation to achieving its overarching target of a sustainable reduction in the cost of construction by 15-20% by 2016. Their July 2014 data report, “UK Departmental Cost Benchmarks Cost Reduction Trajectories and Cost Reductions” demonstrates a continued decline in costs and further evidences that the target “remains practicable”. Trial procurement projects with set cost reduction targets and publicly documented are:
- £212m New Prison, Wrexham, North Wales, where construction began in May 2015 and is expected to be completed in 2017, has a 26% cost reduction target.
- Cookham Wood Young Offenders New Build valued at £20m hit its cost saving target of 20%. This is a good example of project specific ROI. The reported findings are quantified in relation to “taking into account value indicators of similar projects, cost savings achieved (as analysed by the client and cost consultant Sweett Group)” in order for them to show a cost saving of 20% on the square metre rate anticipated for a comparable project at the time of establishing the agreed maximum price.
- £119m Property Services Cluster of Primary Schools involving new buildings, extensions and refurbishments for 22 projects, has a 14% cost reduction target set and has already reported a 7% reduction.
- Project Horizon, £100m highway repair and improvement program with a cost reduction target of 17.5% averaged over 5 years achieved 15% against spend in 2013.
The UK’s Crossrail is a whole of industry commitment led by the Transport for London and Department of Transport. The aim is for Crossrail to be the first major infrastructure project in Europe to fully realise the BIM lifecycle concept. The company is focused on achieving long-term savings through the application of BIM and its accuracy of information to handover to the rail operators, an opportunity to realise the longer term benefits of the asset. Crossrail’s current success measures focus on key information elements including:
- 1 centralised set of linked databases
- 25 design contracts
- 30 main works contracts
- 60 logistics main works contracts
- 1,000,000 (1 million) CAD files created, approved and integrated within centralised information model
Along with its sustainability strategy, Crossrail wants to create a skills legacy and sites the creation of over 2900 new jobs of which 94% have been filled by local people to April 2014. Crossrail #2 is now the focus of realising the savings from the Crossrail project and industry commentators are considering savings achievable in the region of 10-15% against an estimated construction budget £25bn.
US General Services Administration’s (GSA) commitment for more than a decade to a National 3D-4D-BIM Program is realising consistent and measurable sustainability savings across a public sector building portfolio of more than 9000 assets. Its initial 10 pilot projects have reported cost savings that covered the cost of the first year’s pilot program. It’s now reporting regular savings in early detection of errors and omissions, reduced construction times, fast and accurate space measurements with less than 5% variance and better transparency and reliability of energy performance measures.
The University of Colorado, Health Sciences Center is one of the few projects able to measure the success of BIM implementation against a similar project using conventional processes. R1 ($216m) was successfully completed on time and within budget using a traditional delivery approach. R2 ($201m) was built a few years later using an integrated virtual design and construction process (VDC) and resulted in “outstanding” results for the project with improved productivity, increased prefabrication, less rework, reduced RFIs and change orders and was completed 2 months ahead of schedule and under budget.
The award winning Collaborative Life Sciences Building (CLSB) a joint university project in Portland, Oregon, opened in 2014 and was awarded LEED Platinum certification status. In 2015 it was one of the winners of the COTE Top Ten Awards program recognized for its sustainable architecture and ecological design. The $295m project involved the collaboration of 28 different design teams and directly attributes BIM technologies to a $10m saving on construction costs.
Sutter Health Care over the last 10 years has invested more than $4.7 billion in the improvement of its facilities through construction, renovation and replacement for less than the conventional health construction costs and without public funding. Its $320m Eden Medical Centre, completed in 2012, was delivered on time and within budget and was a landmark in BIM collaboration bringing together an 11 party Integrated Project Delivery Contract.
In 2008, UNITEC, New Zealand’s largest institute of technology, undertook a 4 year whole of campus BIM integrated information system to dramatically change the management of its facilities for the whole of their life cycle. The development of the information is now being used to accurately plan and manage the facilities and operations of teams and contractors and the institution is reporting an annual return on investment from the project of approximately 23%.
So what’s in BIM for me?
For many projects the longer term ROI is yet to be realised for building owners as the buildings themselves are still in their infancy and many projects not yet out of the ground yet.
However, we are now seeing strong evidence of progressive governments, health care and educational institutions, particularly, those who are managing large asset portfolios and have embraced BIM to garner the efficiencies needed to manage these facilities better within tight budgets. This success is being attributed to the commitment to BIM upfront which is considered the determining factor on whether the ROI of the whole project in relation to budget, time and the building’s expected useful life is achieved.
As an industry we now need to move discussions on from “what are the expected BIM returns” and back to best practice for construction projects. The longer term ROI will become evident as the industry best practice establishes itself over the coming years and the discussions around whether to BIM or not to BIM will become obsolete.
Keep an eye out for my Part 2 of ROI on BIM where we look at the contractors and sub-contractors and how innovative technologies and upskilling of their teams is quantifying their return on investment in BIM.
David Mitchell is a 5D Quantity Surveyor and Partner of Mitchell Brandtman. With 30 years of industry experience and a family background in construction consulting, David has a deep understanding of construction and development. David is passionate about people, open leadership, technology and the collective ability to create and shape opportunities for positive industry change through innovation. He is also Chair of Consult Australia’s BIM/IPD Steering Group and Board member for BuildingSMART Australasia
– See more articles like this by our Board member, David Mtichell at the Mitchell Brandtman Website or email him direct at email@example.com