Profiting From Unity
December 15th, 2016 by Akio Moriwaki
The construction industry is turning to the cloud for improved efficiency and profitability.
The rapidly growing global construction industry suffers from fragmentation, which increases risks, leads to wasteful practices and negatively affects project delivery and stakeholder interests. But now, cloud-based collaborative tools are replacing traditional industry practices with new business models that imagine, design and construct better buildings.
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Article by Nic Lerner, originally printed in COMPASS Magazine
From the Construction Intelligence Center to PricewaterhouseCoopers (PwC), most industry trackers agree that construction is in for a boom. A PwC–sponsored report entitled “Global Construction 2030,” published by Global Construction Perspectives with Oxford Economics, predicts a compound growth of 85%, to US$15.5 trillion, by 2030. That level of expansion is more than a percentage point higher than the 3.9% annual growth rate projected for the global economy as a whole, driven in large part by rapid growth in urban populations.
But a dark cloud looms behind those silver growth projections. The industry, experts agree, is so fragmented with numerous segments – architects, engineers, construction firms and dozens of trades both big and small – that it is not prepared to handle this level of expansion.
A LEGAL TANGLE
Javier Glatt, co-founder and CEO of CadMakers Virtual Construction, a Vancouver-based integrated construction technology firm, said the reasons for fragmentation come down to legal responsibility. “The causes of fragmentation are risk and liability issues and their apportionment through the industry,” he said.
As buildings become bigger and increasingly complex, they require more specialized skills at every stage. Tiers of subcontractors are appointed not only to do the work, but also to carry some of the risk. Glatt cites a misalignment of incentives between stakeholders and contractors, with some working to push down costs while others seek to benefit from budget increases.
Even the design process becomes fragmented, with different contractors responsible for structures, facades, visualization, analysis and multiple building systems. The good news, however, is that there is plenty of room for improvement.
“Automating processes and making prefabricated components off-site reduce risk, cost, waste and errors,” he said.
“Working with a single unified 3D model that everyone has access to helps solve a lot of problems that arise when contractors don’t or can’t communicate among themselves.”
When each contractor produces its own individual model and data, the chances of error and miscommunication increase. With a unified project model, Glatt said, “builders understand their role in the project and their interactions with other contractors. They can concentrate on their core skills, solve problems and build better.”
Research conducted by Dodge Data & Analytics, a leading data, analytics, news and intelligence provider for the North American construction industry, reinforces these observations. Donna Laquidara-Carr, the company’s Insights Research director, said that their analysis of Architecture, Engineering & Construction (AEC) industry data, from a study conducted in partnership with the Lean Construction Institute, shows that 92% of “typical projects” – those that suffer from fragmentation – experience delays, 85% go over budget and 63% suffer quality defects.
“The data demonstrates that integrated project delivery correlates with significant performance improvements and waste reduction,” Laquidara-Carr said. “And we hear time and again that the key to unlocking these benefits is early stage collaboration.”
The data shows that only 1% of owners deployed project integration tools on typical projects, she said, but that these tools were used on 22% of the industry’s “best-performing projects.” Consequently, positive team chemistry was reported on 68% of the “best projects,” compared with just 10% on “typical projects.” Teams were well- integrated on 61% of the “best projects,” but only on 9% of “typical projects.”
The data indicate that when all stakeholders – including owners, contractors and trades – are integrated in a virtual “big room” that facilitates working together as one team, the AEC industry functions better, Laquidara-Carr said. A virtual “big room” is a term for a unified online communications and collaboration platform.
Building Information Modeling (BIM) was heralded as a solution to fragmentation, but industry experience has not been consistently positive.
Tim Beckett, director of Beckett Rankine, a UK-based specialist marine civil engineering consultancy, is a design contractor on the 25-kilometer (16 miles), 7.4-meter (24 feet) diameter Thames Tideway Tunnel. The super sewer is budgeted at £4.2 billion (US$5.2 billion) and will reach depths of 65 meters (213 feet).
Tideway is building the Thames Tideway Tunnel to tackle the problem of overflows from London’s Victorian sewers for at least the next 100 years, and enable the UK to meet European environmental standards. (Image © Tideway)
Standard BIM systems can be “clunky to use, expensive to buy and require specialist skills to operate,” Beckett said. However, he sees benefits in a cloud-based approach, which offers the advantages and capabilities of BIM while making information more broadly available to people of all skill levels.
“The Thames Tideway Tunnel is expected to operate for more than a century, so all the data must be future-proofed,” Beckett said. “A cloud-based solution to project management at this scale would allow stakeholders simple, easy, cheap, permanent and traceable access to the data that they need, today and into the future.”
“Visual simulations and high-resolution data are necessary to properly think through very complex projects,” said John Cerone, director of Virtual Design and Construction at New York-based architecture firm SHoP Architects. “Standard BIM supports traditional building practices, but builders are seeing that a high-quality, unified 3D cloud-based approach helps them make more money by being more efficient.”
That the industry will accept a unified approach to managing building project data is only a matter of time, Cerone said.
“Construction is such a large part of the global economy that many billions can be saved and made through efficiencies,” he said. Encouragingly, SHoP is hearing significant interest from builders who want to share the benefits of a unified approach.
Replacing linear processes with the concurrent working practices enabled by a unified approach speeds the design-to-fabrication process and introduces greater accuracy while automatically maintaining financial rigor.
“If car companies can know how much steel goes into a car, to the micron, why can’t you do that with a building?” Cerone said.
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a car to the micron; why not buildings? @SHoPArchitects
On a current project, Botswana Innovation Hub, an iconic symbol of Botswana’s support for research and development, SHoP has attained this level of “digital craft” across continents. The results, Cerone said, are “speed with no waste, total accuracy of fabrication and absolute budgetary control.”
“A new 3D-model-based paradigm that actually incentivizes innovation, produces higher profits and helps make better buildings is coursing through the AEC industry,” Cerone said. “The industry is transforming, and it is very exciting to be a part of it.”
4 Benefits of Building Lifecycle Management:
BIM (Building Information Modeling) data, combined with PLM (Product Lifecycle Management) capabilities and processes, creates “Building Lifecycle Management” (BLM), which can increase construction predictability, long-term value and profitability. Main benefits include:
Improve Productivity: BLM helps remove version-control issues, with all users accessing a single live database. Human error, rework and iterations can be drastically reduced.
Increase Quality and Value: Armed with richer data in context, designers can make better decisions. Data access also improves coordination among builders and suppliers, allowing them to more quickly and accurately realize the design intent. BLM also offers built-in governance and traceability, improving accountability.
Reduce Waste, Risk and Cost: BLM is designed to reduce waste by more accurately predicting outcomes, identifying potential points of conflict and optimizing processes. BLM also reduces risk to the project schedule, worker safety and the overall construction budget.
Gain a Competitive Advantage: A BLM system enables a team to become more efficient than competitors, deliver higher quality, gain the loyalties of owners and design partners and retain a healthier profit margin.
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