Despite its potential to increase efficiency and deliver cost reductions, many in the construction industry remain hesitant to embrace BIM. The commercial reality is that BIM’s wider uptake will ultimately depend on the economic feasibility of investing in it.
Typically, when distributing the lifecycle costs of a building, it is widely assumed that the operating costs account for about 80% of total building costs. Our colleagues in Germany recently analysed the return on investment for BIM on one of their construction projects. This revealed that the majority of costs (about 65%) were attributable to the design/construction phase and the smaller share (about 35%) to the operating phase.
In the research example, this effect was intensified with the use of BIM, and the costs of operating the building only accounted for about 31% of the total costs. This shift is because initial investments, such as more energy-efficient technical building or construction concepts, mean that costs are higher at the start of a project. In the example project, the costs shifted proportionally even more to the construction phase, due to further savings in the operating phase generated by BIM.
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It is clear that a considerable cost reduction can be made in the operating phase and an analysis of this sample project showed that a 67-fold ROI can be achieved with an investment in BIM.
This investment takes into account the costs incurred for the implementation of the individual project, using the BIM methodology during initial application on the side of the client and the planner. The resulting effects consist of increased revenue through BIM, in terms of an increase in the value of the building, as well as cost savings in the planning, construction and operating phases.
‘Even though the savings in the planning phase are relatively small, an investment in BIM will pay for itself in the short-term due to the high savings made in construction costs.’
Dave Peacock, TÜV SÜD
Even though the savings in the planning phase are relatively small, an investment in BIM will pay for itself in the short-term due to the high savings made in construction costs. Around 47% of the improvement in EBIT (earnings before interest and taxes) for the example project was attributable to savings made in the planning and construction phase and 40% from the operating phase.
When examining the question of where the use of BIM has the greatest impact in terms of costs reduction, the following six key drivers were identified during this analysis:
- Space optimisation
- Reduction of maintenance work preparation
- Reduction of operational running costs
- BIM-based thermal building simulation
- Avoidance of profit loss due to timely completion
- BIM-based system simulation
Other drivers, that play a role in improving revenues or reducing costs, were also identified during TÜV SÜD’s research. These included the reduction of the volume of additional work through clash detection and control; optimal construction process planning and budget monitoring with real-time control; the optimisation of construction site logistics; BIM-based cost management; and the reduction of material waste through need-based purchasing.
Apart from the drivers that have a direct financial impact, BIM has various effects that cannot be measured quantitatively. Examples include the positive effects on the environment, health and safety, and the reputation of the parties involved. For example, BIM supports sustainability goals as they can be taken into account from the very beginning of planning.
Correct implementation
However, it is important to note that these key benefits can only be achieved when the BIM methodology is implemented correctly, as the quality of BIM throughout a project’s entire lifecycle plays an essential role in maximising these benefits. In projects where BIM has not been implemented correctly, we have seen costs increasing by approximately 10% to 30% over the initial design budget.
In the project example, the contractor was only able to benefit indirectly from many drivers that lead to a reduction in construction costs. However, in relation to the construction costs, based on a risk and profit margin of 3%, an increase in the margin of construction companies by a factor of 3% to 9% could be identified. These efficiency improvements also optimise capacity utilisation and create order capacities for additional projects.
Furthermore, the improved customer interaction and higher customer satisfaction created through BIM implementation delivers potential increases in future sales.
The profitability of BIM and its potential to improve overall project quality and utility can hardly be questioned. Although the positive effects are only slightly apparent in the planning phase, the effect is even greater during the construction and operating phase.
Since all players benefit sufficiently in terms of their own optimisation potential, we believe that the use of BIM should be demanded as standard. The maturity of BIM should thus become a core criterion in the selection process for planners and contractors, and it is only a matter of time before BIM becomes established across the board. However, as we all know, BIM is far more than a technology and requires a holistic transformation process to reap the rewards.
