The Value of Building Information Modeling:
Can We Measure the ROI of BIM?

Dr. Burcin Becerik-Gerber and Samara Rice
University of Southern California

At the recent BIM CON ! FAB 2009 symposium hosted by the University of Southern California, architecture, engineering and construction practitioners described how their firms have effectively used Building Information Modeling (BIM) in their projects—their BIM processes, and the benefits they believe they have found. With the increasing number of case studies on the topic of BIM in practice, anecdotal evidence suggests that the use of BIM makes the building industry more efficient and effective. However, these case studies can only provide insight into singular situations; they fail to provide a complete and comprehensive list of benefits and associated costs and they rarely assign quantitative values. The question still remains: is BIM really lowering costs and making the building industry more productive? The intuitive answer is ‘yes’ but what is really needed are models for establishing metrics and benchmarks, so the benefits of BIM can established more definitively.

ROI for Technology Implementation in AEC

In the building industry, information technology investment evaluations are complicated by the fact that each project is unique in terms of its parameters and characteristics such as financing, inter-organizational relationships, end user requirements, etc. What makes it even more complicated for the building industry is that there are no benchmarks to build on or measure from to provide meaningful comparisons. Specifically with BIM, there has been a lack of consistent fiscal benchmarking that is associated with the conversion from CAD to BIM, let alone from BIM to BIM process enhancements and innovations. In addition, information technology investments are often characterized as being extremely hard to evaluate due to difficulties in quantifying the relevant costs and benefits, as well as due to high degree of uncertainty with respect to the expected technology value. Many of the benefits fall into the semi-intangible or intangible category (for example, improved product quality, better decision making capabilities, increased availability of data, etc.) and therefore, lack the weight of clear revenue improvements. Confidentiality roadblocks that are also common in the building industry remain a large impediment to data collection.

However, the ROI for BIM can still be measured. In 2006 in the Harvard Design School Department of Architecture, we examined the proposed opportunities of Online Collaboration and Project Management (OCPM) technology and measured the benefits/values that these technologies can provide to project stakeholders and their collaborators during the life cycle of construction projects. Five OCPM technology vendors and several of their clients supported this research and the results were published in the book, Computer Aided Collaboration for Managing Construction. We drew from our experience of this study and applied it to the problem of determining the ROI for BIM as part of a research project in the Department of Civil and Environmental Engineering at the University of Southern California

The Need for ROI for BIM

The technology, process and organizational investments required to implement BIM are considerable and costly, and adopting BIM requires substantial changes to how the industry has traditionally been designing and building projects. Managers often need to prove that an investment will produce a return before they receive the money to spend on new systems and processes. Investors feel sure that there must be benefits, but they have neither been able to predict what these benefits are, nor been able to measure them after the investment has been made, frustrating all those interested in pushing the technological state of the art forward.
                                                                                                                      
One of the primary motivators for professionals in the building industry to adopt new technologies is the opportunity for direct gains and benefits in their own operations. Therefore, an increase in the availability of fiscal information would be significant. Although the issue of ROI has attracted attention in both academic research and the private consulting industry, there are no valid results available today to encourage faster adoption by industry stakeholders.

The USC ROI Survey

For our ROI study, we chose to use a survey methodology as it provides anonymity and confidentiality and allowed us to collect information from a large constituency of the industry. The goal of the survey was to explore how BIM investments have been valuable for project team members. The survey was aggressively distributed to industry professionals in the first part of the year. Over 400 respondents from all disciplines (including architects, engineers, construction managers, contractors, and building owners) completed the survey of twenty-two questions. Most of these respondents were, as a minimum, moderately experienced with BIM; almost 40% of the respondents had implemented BIM on more than ten projects. The survey focused on BIM use, experience levels and adoption, as well as costs and benefits associated with BIM. More details about the survey questions and its results are briefly described in the following section. What the survey has made readily apparent is that further cross-discipline and cross-company comparisons, ROI models, and benchmarking are essential to the value proposition studies.

Survey Details and Results

The survey investigated tangible costs associated with printing, document shipping, traveling, staff and space requirements, hardware, software and training, and change in overall project durations and costs related to the use of BIM.  While these costs are certainly not the only factors contributing to the perceived and sometimes calculated ROI, they are among the easier ones to find and quantify. In terms of some results, 41% of the respondents realized overall project profitability increase with the use of BIM, while 12% of the respondents reported that there was a decrease. For firms that indicated more experience in implementing BIM, their ROI was likely to be higher. The results support this argument—of the respondents who are implementing BIM on 100% of their projects, 73% found an increase in profitability and only 3% stated a decrease, an anomaly one would expect given the uniqueness factor within our industry.

So where are the firms in the 41% category finding their increase in profitability?  It seems that the reduction of both project duration and associated costs contribute in some part to this profitability.

50% of the surveyed industry professionals found that overall project duration was reduced by up to 25%.  An additional 13% of the respondents found that project duration was reduced between 25% and 50%.  This is quite substantial when you put it in terms of how long projects can take and their FTE costs.  If a project takes four years from conception to ribbon-cutting and you reduce that time frame by a quarter, that is an entire 12 months; if it is reduced by 50%, that is two years.  While these are numbers at the higher end of the surveyed spectrum, even the mid-range is remarkable—at a 12.5% reduction there is a decrease of 6 months.

Let’s explore the changes in project phase durations due to the use of BIM shown in Figure 1. 34% of the respondents reported a reduction in duration for schematic and conceptual design phases.  However, 37% of the respondents reported an increase in duration and 29% of the respondents reported no change in duration for these two phases. This might be due to the additional set up time required to implement BIM successfully. Although the data supports that while there is some reduction in these phases, they are not the major contributors to the total project duration reduction. 49% of the respondents indicated that they have realized a reduction in duration for detailed design. The duration for construction documentation has been dramatically reduced or in some cases is almost non-existent. 47% of the respondents reported reduction in duration for bid preparation.  Though there is a reduction of duration at most stages, the most substantial one is in the construction phase with approximately 58% of respondents reporting a reduction in duration. Each one of these small or large reductions add up to an overall reduction that is noticeable and impacting ROI.  The survey results suggest that time reduction is possible for all types of project team members and at all phases of the project. But how do these savings translate into one’s fees or how do these change fees for each phase of the project?

Based on the survey results, overall project costs remained unchanged for 30% of the respondents. However, 55% of the respondents said overall project costs were reduced in comparison to 15% of the respondents that said it was increased by the use of BIM. Therefore, as of 2009, we are seeing a drastic validation of ROI implicitly. Yet, models, metrics and benchmarks need to researched and made available to the industry as a whole.

While the majority of the respondents indicated no change in staffing and space requirements, about 10% of the respondents reported an increase in staffing requirements (see Figure 2). 60% of the respondents indicated that there are no changes in space needs and only 11% of the respondents indicated that they actually could decrease their space.  This could be a result of how difficult changing office locations can prove to be.  Additionally, while companies realize a reduction in space requirements, they may not move in hopes of re-expanding into the current location.  20% of the respondents found that they need less staff because of using BIM, while 13% of the respondents reported that they needed more staff.  Again, the majority reported no change in their staffing requirements.  The survey results clearly enumerate that while there are some reductions in these areas, it is unlikely that BIM will really provide a costs savings to the individual company through changes in staffing or space needs. In the future, the survey will seek to equate staff productivity or output per unit as a measure, as we believe this is a critical factor in measuring the value of BIM.

More substantial cost reductions were found in travel, shipping and printing costs, as shown in Figure 3.  For all three cost factors, the majority of the respondents realized “no change.”  However, travel cost reductions were noted by 42% of the respondents.  45% of respondents realized a reduction in document shipping costs, and 47% of the respondents realized a reduction in printing costs.  While these categories might be a small percentage of project cost, any cost reduction that is a byproduct of a process change (BIM implementation) should be surveyed and factored appropriately into ROI modeling and benchmarking.

At the core of the problem of measuring the value of BIM, one must consider the effect of BIM implementation costs on fees.  Based on the survey results, the industry is unable to pass on the costs of the implementation and use of BIM to clients, either through fees or direct owner participation. 85% of the respondent firms are absorbing the costs of BIM software, software upgrades, hardware, hardware maintenance, and training. Less than 4% of the owners are directly covering any of these costs. Anecdotally, owners are asking for BIM. It seems owners consider many of these costs as retainable and reusable. Therefore, if the owner is not a frequent builder, they do not invest in these perceived expenses.  Only 10% of the respondents were able to pass on the costs to the owner through an increase in fees. As it stands now, the cost of BIM is primarily borne by architects, engineers and contractors.

Discussion

Although the cost reductions listed here don’t represent the complete list, it may be possible to capitalize on each one in order to offset initial start up costs. However, the first question to be answered is, “Does measuring the ROI for BIM matter?” If it does, then a more comprehensive study that covers a full spectrum of hard and soft costs, as well as the concept of cost avoidance has to be conducted in order to evaluate the real value of BIM. This is work currently being done at the USC i-LAB (Innovation in Integrated Informatics LAB). Although this is a topic being discussed incessantly in the industry, the “value of BIM” is still a challenging topic for many, both in the academic and professional worlds. Several questions still remain, such as: What is the suitable methodology to measure ROI of BIM? How can we normalize project-specific attributes across projects? By whom and through what mechanism will the information be provided? Or is BIM a mature enough technology to study its ROI? Or does it all even matter?

In fact, it does matter, as argued earlier in the section, “The Need for ROI for BIM.”

Conclusion

Whether BIM reduces costs or not, the building industry is adopting BIM based technologies and methodologies at a rapid rate, as demonstrated in the recently held USC conference BIM CON ! FAB 2009. More than 20% of the respondent firms indicated that they use BIM on 100% of their projects, arguably up from almost 0% only a few years earlier. Owners are demanding the use of BIM and more and more project teams are implementing BIM. Like most worthwhile investments, the return is not immediate but over the long term. While it is proven that it is not easy to see how BIM is paying off, it is important to start tracking the value of BIM with a long-term perspective. By establishing the first benchmarks and models, we can justify and validate the ROI of BIM with confidence. As one of our research trajectories, i-LAB at the Sonny Astani Department of Civil and Environmental Engineering will be continuing to collect, normalize, and demonstrate calculable and shareable metrics to validate the value of BIM as further means to create efficiencies and productivity for the building industry.

About the Authors

Dr. Burcin Becerik-Gerber is an Assistant Professor in the Sonny Astani Department of Civil and Environmental Engineering at the University of Southern California. Her research focuses on innovative computational tools, techniques, and solutions for design, construction, and operation of facilities that are economically efficient, performance based, and environmentally sensitive. More information on her current research agenda and projects can be found at http://i-lab.usc.edu/ and she can be reached at becerik@usc.edu.

Samara Rice recently completed a Masters in Construction Management at the University of Southern California. Throughout her studies at USC, she focused on Building Information Modeling and more specifically on how to evaluate the benefits and costs associated with the implementation and use of BIM.  Currently, she is working as a consultant for Gehry Technologies and their Knowledge Services department. She can be reached at samarari@usc.edu.

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