Farewell to Overspending

The economic situation in the construction industry demands efficient project execution and tight schedules. Although the majority of architects and engineers are aware of the importance cost management has in this respect, we realise in our daily work that appropriate procedures and solutions are rarely used. Many projects in the construction industry are still completed over budget and even high profile projects sometimes go astray. Cost overruns are recognised too late or after the project has been completed—then the search for scapegoats begins.

Although technologies are now available to solve these issues, the construction industry has not changed much during recent decades. The main problem is a lack of optimisation and integration in the workflow of construction projects. Furthermore, architects and contractors are no longer primarily responsible for design; instead, the traditional scope of duties is shifting increasingly towards a more general approach. Architects and general contractors are now responsible for construction management, facility management and the coordination of the construction process with all the parties involved. Thus, an integrated approach is indispensable for a future-orientated building industry.

Paving the Way to Integrated Construction

I'm convinced that the well-known concepts of supply chain management and product lifecycle management (PLM) can help the construction industry to become more competitive, to speed up its performance and to offer its services less expensively than today. Lean construction is the key, which implies that everyone involved in the construction process takes responsibility for the whole process and a reliable workflow. In my opinion, cost saving potentials of up to 40 per cent can still be achieved if the design phase is improved by the use of intelligent content. Change management processes should be implemented on the basis of the design model and architects, engineers and contractors should establish joint processes.

Integrated concepts aiming at an all-encompassing lifecycle management are thus gaining in importance. The underlying idea is to create better managed construction projects with change management and cost transparency at all stages of the project combining creativity with cost guarantee. Even small alterations in the planning phase often result in time-consuming and cost-increasing corrections. The design in construction projects changes 7 times on average, but the quantities are often not recalculated. Integrated cost management thus plays a central role in this respect. Costs are a fundamental driver and yardstick for any project. We recognise that more and more clients have higher expectations, which require cost transparency at all levels—from design to procurement stages. When it comes to improving project costs and performance, data integration is essential for the optimisation of process logistics. Therefore, one of the principal goals in the construction industry must be to integrate all the services related to the design, construction and management of buildings in an overall concept provided by a single source. Consequently, integrated software solutions are set to become increasingly important. Innovative IT solutions need to enable architects and engineers to link the individual processes involved in designing, building and managing as well as providing support to business partners in the highly fragmented building process.

Cornerstone of Cost Security

Our vision, therefore, has to be to create an integrated solution for architectural design, visualisation, building and cost management that enables users to harness even more advantages of integrated design, in particular in the field of integrated costing. In addition to quantity takeoff operations based on graphics, the individual processes including all of the planning and construction phases should be linked and access the same master data. This way, users can combine data in order to run analyses and evaluations based on a wide range of different criteria, such as costs, time, geometry and quantities. With this integrated approach, all the advantages provided by an efficient and interdisciplinary flow of information based on a common database could facilitate better and more reliable costing and scheduling procedures.

The combination of different solutions could allow better management of construction projects and an easier cost calculation at any stage of the project. Drawing changes being automatically extracted from the model and maintained both in the plan and in the tender, proper coordination could finally be ensured. Quantities produced using this solution could then also be exported for use in a local TAI (tendering awarding invoicing) system. And costs could be automatically adjusted when parameters such as the quantity or quality of components are changed—without any manual recalculation. Designers or quantity surveyors could enter the data directly in the CAD model and reuse this information for the cost plan calculation or the preparation of the bill of quantities. Alterations due to the customer's wishes would thus no longer result in time-consuming adjustments, but could be easily adopted and displayed at any time. Additionally, the quality and consistency of visualisations and design documents could be improved, allowing architects to present their designs in convincing presentations and visualisations through an all-in-one system—from the draft through to the working and detailed drawings. An intelligent building model would thus form the ideal basis for traceable quantity takeoff—the cornerstone of cost security. Ultimately, both the architects and the clients could benefit from greater financial control thanks to consistent planning, quantity and cost security, coupled with better traceability.

Vicious Circle: No Investments, No Revenues

Cost management, lean construction and construction project re-engineering will be the drivers of software investments in the construction industry. Unfortunately, so far the construction industry invests only 1.5 percent of its revenues in information technology, while the prospering manufacturing industry invests twice this amount. This is a vicious circle: no investments in IT without revenues and no higher revenues without better management methods and modern IT solutions.

Due to the current structural changes in the AEC sector, the continuous IT-based integration of the design, construction and managing processes is an important competitive factor. Here it is essential to take advantage of the opportunities and potentials that can be created by interconnecting sustainable methods with modern information technology and to achieve improved process quality. The new, intelligent system makes multiple entries, data discontinuity and interface problems things of the past. Users thus may realize competitive advantages through enhanced project and cost transparency, exact and customized quantity calculation methods, and accurate time and project management.

About the Author

Harald Krohmer has been Managing Director of Nemetschek UK since September 2004 and is responsible for Business Development International. Prior to joining Nemetschek UK, he worked in different positions in IT Sales and Business Process Re-engineering. From 1988 to 1996, he gathered professional experience in Sales and Reengineering by implementing ERP, SCM and EDI solutions for the automotive-, supplier- and process industry. In 2000, he became Country Manager at Pivotal. Mr. Krohmer holds a degree in Business Administration from the University of Mannheim in Germany.

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