Chapter 3 Discussion Questions
4.2 BIM APPLICATION AREAS FOR OWNERS
4.2.4 Cost Reliability and Management
Owners are often faced with cost overruns or unexpected costs that force them to either “value engineer,” go over budget, or cancel the project. Surveys of owners indicate that up to two-thirds of construction clients report cost over- runs (Construction Clients Forum 1997; FMI/CMAA 2005, 2006). To mitigate the risk of overruns and unreliable estimates, owners and service providers add contingencies to estimates or a “budget set aside to cope with uncertain- ties during construction” (Touran 2003). Figure 4–5 shows a typical range of contingencies that owners and their service providers apply to estimates, which vary from 50 to 5 percent depending on the project phase. Unreliable estimates expose owners to signifi cant risk and artifi cially increase all project costs.
The reliability of cost estimates is impacted by a number of factors, includ- ing market conditions that change over time, the time between estimate and execution, design changes, and quality issues (Jackson 2002). The accurate and computable nature of building information models provides a more reliable source for owners to perform quantity takeoff and estimating and
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provides faster cost feedback on design changes. This is important because the ability to infl uence cost is highest early in the process at the conceptual and feasibility phase, as shown in Figure 4–6. Estimators cite insuffi cient time, poor documentation, and communication breakdowns between project participants, specifi cally between owner and estimator, as the primary causes of poor esti- mates (Akintoye and Fitzgerald 2000).
Today’s use of BIM is typically limited to the late phase of design and engineering or early phases of construction. Use of BIM earlier in the design process will have greater infl uence on cost. Improving overall cost reliability is a key motivator for employing BIM-based cost estimating methods.
Owners can manage cost with BIM applications to provide:
More reliable estimates early in the process with conceptual BIM estimating
Estimates that use conceptual building information models consisting of components with historical cost information, productivity information, and other estimating information can provide owners with quick feedback on various design scenarios. Accurate estimates can be very valuable early in the project, particularly for assessing a project’s predicted cash fl ow and procuring fi nance. The Hillwood Commercial project case study, discussed in Chapter 9, demonstrates how owners working with a service provider employing a conceptual BIM-based estimating tool called DProfi ler are able to reduce overall contingency and reliability and ultimately save money by borrowing less.
Contingency/Reliability as a Function of Project Phases
0 10 20 30 40 50 60
Preliminary Estimate
Budget Estimate
Final Design Estimate
Actual Stage of Estimate Development
% Reliability/Contingency
Upper Limit Lower Limit BIM
FIGURE 4–5
Chart showing the upper and lower limits that an owner typically adds to the contingency and reliability of an estimate over dif- ferent phases of a project (data adapted from United States 1997; Munroe 2007;
Oberlander and Trost 2001) and the potential targeted reliability improvements associated with BIM-based estimating.
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Faster, better-detailed, and more accurate estimates with BIM quantity takeoff tools
Both owners and estimators struggle with the ability to respond to design and requirement changes and understand the impact of those changes on the overall project budget and estimate. By linking the design model with the estimating processes, the project team can speed up the quantity takeoff and overall estimating process and get faster feedback on proposed design changes (see Chapters 5 and 6). For example, owners can automatically derive accurate quantities and in turn streamline and verify estimates of designers and subcontractors (Rundell 2006). The Hillwood Commercial project case study in Chapter 9 cites evidence that estimating with BIM early in design can result in a 92 percent time reduction to pro- duce the estimate with only a 1 percent variance between the manual and BIM-based processes. In the One Island East Offi ce Tower case study in Chapter 9, the owner was able to set a lower contingency in their budget as a result of the reliability and accuracy of the BIM-based estimate. In the Sutter Medical Center case study, the team performed model-based cost estimating every two to three weeks during design to ensure that the design was kept within the budget.
Owners, however, must realize that BIM-based takeoff and estimating is only a fi rst step in the whole estimating process; it does not thoroughly address the issue of omissions. Additionally, the more accurate derivation
Level of Influence on Cost
Start
Conceptual planning/feasibility
studies
Design and engineering
Procurement and construction
Startup
Operation and maintenance 0%
100%
Project Time
Ability to influence costs Construction cost
0%
100%
Emerging uses of BIM with
examples in Chapter 9 Case Studies More common applications of BIM with
examples in Chapter 9 Case Studies FIGURE 4–6
Infl uence of overall project cost over the project lifecycle.
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of components that BIM provides does not deal with specifi c site condi- tions or the complexity of the facility, which depend on the expertise of an estimator to quantify. BIM-based cost estimation strategically helps the experienced cost estimators but does not replace them.