The Builder Owner as a Catalyst for Change in the Construction Industry

Building owners are at the very core of the construction industry. Ultimately it is the building owner who pays every dollar for a project to be realized—be it design commissions, engineering fees, construction labor costs, the purchase of building materials, acquisition of equipment, and so on, all the way down to the reimbursement of printing costs.

So when the owners of commercial and institutional buildings read a recent report by the National Institute of Standards and Technology (NIST), they should be concerned. That report, published in August 2004 and entitled "Cost Analysis of Inadequate Interoperability in the U.S. Capital Facilities Industry," quantifies the annual cost of waste due to inadequate interoperability among computer-aided design, engineering, and software systems in the construction industry to be $15.8 billion (see AECbytes Newsletter #14 for an overview of the report and its key findings). Moreover, when the breakdown by stakeholder group in the report shows that owners and operators directly bear the highest share of this cost burden at $10.6 billion (or about two-thirds of the total estimated costs), they should be up in arms!

Why then, aren't more building owners demanding better interoperability? I contend that the majority of building owners do not realize that they have the power to eliminate this waste and its associated cost burden. By mandating the sharing of project information, collaborative project delivery, and the use of interoperable technology, building owners can drive the integration of the processes and business workflows of all project participants, across all phases of the lifecycle of a facility.

The Dilemma of a Typical Building Owner

A significant observation documented in the NIST study is that "building owners view their interoperability costs during operations and maintenance as a failure to manage activities upstream in the design and construction process. Poor communication and maintenance of 'as built' data, communications failures, inadequate standardization, and inadequate oversight during each life cycle phase culminate in downstream costs."

In a series of market research meetings, Newforma observed a recurring disconnect between the expectations of the owner and the responsibilities of the contractor. Owners view the information from upstream design and construction processes as a strategic asset, whereas contractors view it as a final deliverable for project close out. The typical process is for the contractor to deliver a set of as-built documents, usually delivered as a field mark-up of the original design documents—often as multiple boxes of physical drawings, specifications, equipment manuals, warrantees, commissioning documents, etc.

The challenge for building owners is to define the delivery of as-built information, in sufficient detail and structured to meet their ongoing maintenance and operations needs, as part of the general requirements of the construction contract.

By requesting "digital" project information that has been kept up to date throughout the construction phase of the project, building owners have a ready reference and re-usable information for ongoing building maintenance and operations. For example, with the emergence of Building Information Modeling (see June 2003 Cadence cover story, Should We BIM? Pushing the State of the Art in AEC), owners now have the option to request that the BIM database be a deliverable on completion.

The NIST Report concludes that problems with information management and accessibility not only seriously hamper efficient facilities management and operation but also represent the highest proportion of the cost of inadequate interoperability—$9.1 billion for the operations and maintenance phase of a project (or approximately 60% of the total waste annually).

By asking for relevant information in a usable form as a condition of project delivery, building owners can and will eliminate much of the duplication cost to recreate redundant information.

A Pioneering Building Owner Drives Change

At a cost of £4.2 billion, Terminal 5 at Heathrow Airport in London, currently under construction, represents a huge program of construction works. The project owner, BAA (British Airports Authority), recognized at the outset that the risk associated with such a huge infrastructure project, coupled with the sheer complexity and scale of work involved, required a fresh approach to the way the project was to be managed if it was to be built on time and within budget. It devised a solution in the T5 Agreement.

The T5 Agreement is the legally binding contract between BAA and its key suppliers. Described as groundbreaking, it is unique in the construction industry. Through the agreement, BAA accepts that it carries all of the risk for the construction project. With this burden removed from contractors and suppliers, it enables everyone working on T5 to:

• focus on determining the cause of problems, not the effects if they happen
• work in truly integrated teams in a successful, if uncertain, environment
• focus on proactively managing risk rather than avoiding litigation

BAA has set itself a target to reduce the cost and program uncertainty associated with building procurement. "This is being achieved in large part by creating a single 3D computer model that BAA and its project partners will use to design, build and ultimately maintain the terminal building," explains Andrew Manington, BAA's T5 Production Support Manager. "To do this, the project team had to agree to use a common set of technology applications and to create a single building information model which coordinates the work of various design disciplines."

Lessons learned at T5 are being disseminated to the rest of industry. The construction Project Information Committee has published the Code of Practice for Production Information (CPIC), which contains the processes and protocols developed for T5. The process is scalable, so that small organizations can take advantage of it too. The code is aimed at the 2D majority with the objective of making it easier for them to advance to 3D.

What the Mandate of a Building Owner can Achieve

The Genzyme Center in Cambridge MA was designed and built with a specific mandate to achieve 'Platinum'—the highest rating in the Green Building Council's LEED certification process for energy efficiency and environmental design. Without this mandate by the owner and its tenant, sustainable design initiatives including a 12 story atrium with rooftop heliostats and collector mirrors, prismatic louvers and chandeliers to distribute natural light, rainwater recycling, 800 operable windows and double curtain wall, computer adjusted blinds, four-pipe fan coil system throughout, steam-absorption chillers, waterless urinals, and low emission paints and carpet would never have been included in the building. "Working together with Genzyme as the single tenant in our building, we made the commitment to invest a 15% capital cost premium, not only to achieve significant lifecycle cost savings, but also to create a superior workplace for Genzyme's employees," says Randy Long, Director of construction for Lyme Properties, the project developer.

The Leadership Role of Government as a Building Owner

The U.S. General Services Administration's Public Building Service issued a December 2003 policy directive which calls for the use of standardized Building Information Models (BIMs) to support concept reviews for projects receiving design funding in FY2006, including checking designs against program requirements and cost estimates.

Further, the GSA has recently contracted with the International Alliance for Interoperability (IAI) in North America, a NIBS (National Institute of Building Sciences) council, to advise them on BIM adoption and how to achieve interoperability by leveraging open data sharing via IFC compliant software as a technology platform for their FY2006 projects (see the AECbytes feature article, The IFC Building Model: A Look Under the Hood).

With a building program currently comprising 196 current major projects worth $10.5 billion, GSA has previously demonstrated its capacity to drive innovation in the construction industry as a leading proponent of sustainable design and by being one of the first building owners to require LEED certification for public buildings. With this new policy directive effecting its FY2006 building program, GSA is once again using its power of mandate not only to drive bottom line savings to the federal buildings capital spending program but also to provide a leadership role in advanced technology adoption as an influential building owner.

What can Commercial Building Owners do?

The Architectural/Engineering Productivity Committee of The construction Users Roundtable (CURT), comprising representation from across the building industry, has been analyzing why building owners, particularly those represented within CURT, regularly experience project schedule and cost overruns.

In its August 2004 report, entitled "Collaboration, Integrated Information and the Project Lifecycle in Building Design, construction and Operation," the committee points out that the construction process is fraught by lack of cooperation and poor information sharing. The report concludes that: "The goal of everyone in the industry should be better, faster, more capable project delivery created by fully integrated, collaborative teams. Owners must be the ones to drive this change, by leading the creation of collaborative, cross-functional teams comprised of design, construction, and facility management professionals."

In addition to making four specific recommendations, the report also includes a Vision Statement in which the A/E Productivity Committee envisions this future building environment: " A virtual design process is used; Owners are fully engaged; Owners demand higher-performing and deeply collaborative AEC teams; Project information flows quickly, effectively, and freely amongst project participants; and, Digital information created by the collaborative team flows throughout the lifecycle of the building project."

This significant report is available for download by non-members from the CURT website and I commend it to you as important reading.

A Call to Action

In my experience as a professional and in business, one recurring theme applies. It is best known as "the golden rule" which, simply stated, says that, "he who has the gold makes the rules."

Building owners ultimately pay every dollar spent on a building project. As such, they absolutely do have the ability to mandate how a project is designed, constructed and delivered.

I encourage every building owner to exercise this power of mandate. Owners should insist on more collaborative project teams, require open information sharing, demand the use of interoperable technology, help mitigate the risks associated with project delivery, explore new contractual relationships and set the expectation that traditional work processes will change.

By exercising their power of mandate, building owners can be the catalyst that drives the transformation that is required across the construction industry. By not accepting the status quo, building owners can eliminate the unacceptable cost burden that they are paying on every project today.

About the Author

Ian Howell is CEO of Newforma, a venture funded software development company serving architecture, engineering, construction, and owner-operator (AECO) companies. Newforma is striving to dramatically increase the effectiveness and productivity of the AECO industry by developing software which enables the seamless flow of information between every building project team member, in support of both project and business processes. Ian is an Australian architect, a co-founder and current board member of the International Alliance for Interoperability, and has extensive experience in applied technology in the building industry in his previous roles as a director at Autodesk and as vice president of Citadon. Ian can be contacted by email at ihowell@newforma.com.

Note: The views expressed in Viewpoint articles are those of the individual authors and do not necessarily reflect those of AECbytes. Also, no advertising or sponsorship is accepted for Viewpoint articles.

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