Every engineer working in construction knows the constant pressure to deliver quality results while keeping costs under control. But short-term fixes and reactive planning only get you so far before the cracks start to show, literally and financially. That’s where BIM comes in, not just as a design tool, but as a long-term investment that pays off well beyond project completion. From reducing rework and delays to improving decision-making, BIM helps teams avoid the costly pitfalls that eat into profit margins. In this article, we’re digging into how proper BIM implementation can drive long-term ROI and unlock measurable cost savings across the lifecycle of a construction project. If you’re tired of budget surprises and inefficiencies, this is the shift you’ve been waiting for.
This will be a full series of articles on the ROI of BIM for construction, which I encourage you to read and follow closely. After finishing this first article, be sure to scroll down and continue with the rest of the five-part series. Let’s get started with Series Four!
So far, we’ve looked at how BIM impacts design, scheduling, and even construction workflows. But what happens after the handover? This is where the long-term value of BIM really starts to show.
Think about it: if we’re saying BIM can save you money every month and every year, the next question becomes, over how many years do you want to calculate that window?
In the case of the project we’re referencing here, the developer was looking at a 20 to 25-year time frame. That’s not just a temporary gain, that’s sustained operational value.
On the project we just delivered, we had the model fully integrated with the equipment database, and every major component was tagged with barcodes. For the facilities management (FM) team, that was a game-changer. The ability to scan a piece of equipment and instantly access its specs, history, and maintenance requirements? It was huge. This kind of access reduces downtime, simplifies asset management, and ultimately delivers the kind of ROI that extends far beyond construction.
99 cents is a great target and I can tell having talked with facilities guys the guys with the wrenches in their hand that are going to be out there in the field this is a really really valuable deliverable for us to provide. Not hard to be able to work with use the guys we were working with at this particular facility were pretty sophisticated but we’ve delivered this on other office buildings and quite honestly for some public work at some higher ed institutions as well where the facilities guys are not the high-tech guys that you might get in Boston and Cambridge but they can use these tools and it’s really valuable stuff for them just at the basic level being able to take some of the information that we’ve given them and have the information they need like an operations manual sitting on an iPad where they can get to it right away.
Calculating 20-Year BIM Savings with Conservative Estimates
Client delight so if we take 20 years and we say that we’re saving nine cents a square foot and you have five hundred thousand square feet what’s that come out to savings per year is that 45,000 a year and if you multiply that times 20 we get 900,000 with all of those 20 years added up so we’ll put that in 900,000 in terms of savings over 20 years now I’ll acknowledge it some of the other research that I’ve got is coming up with much much larger numbers than this nine cents but I think that if I’m coaching a lot of construction companies and their customers as they think about this you don’t need to take the higher number the numbers are so high to begin with even if you take the low end if you’re offered a range from the research and you take the lowest number on all of them you’ll come up with such dramatic savings that people are going to wonder if you are exaggerating.
Cumulative Value and Predictability as Drivers of Owner Satisfaction
We’ve gotten some big fat numbers so far can I see the numbers that we got so we got RFI reduction of a million dollars a thousand times a thousand we got fewer preventable change orders going from four percent of the total budget and reducing that by half five million faster schedule in terms of general conditions 750,000 three months more confidence in the geometry leading to more prefabrication leading to work that could be brought in from the field to the shop where it’s safer it’s better life the quality of life but we’re going to gain some dramatic efficiencies we have four million there 270,000 in terms of field efficiencies and 900,000 in the value of BIM during the operations and maintenance. We have one more number and that is what’s the value of this project if we deliver it to the owner it doesn’t go in your pocket as a contractor but it delights the owner and it’s real money so we’re going to turn this thing over three months early you said right so we wish we had your owner in the room and it makes for a better workshop when you get an owner in a room and says yeah I can tell you what the value of that is this is a developer that can collect rent of maybe 50 dollars a square foot per year. Go ahead tell us what your calculations are, so that’s the math if you’re looking at three months earlier and it’s 50 bucks a foot and maybe you’re going to take away ten dollars a square foot for operating costs right so you’re not going to see all that 50. So three months times that square footage is five million dollars of additional revenue that they can recoup or that they will see because they’ve been able to move somebody in earlier and get three more months of rent.
How BIM Increases ROI in Construction: Measurable Owner Benefits and Predictable Project Delivery
To be honest there was a lot of great stuff that we found out from this previous project but that was just the icing on the cake. Your customer would be happy bringing you back for another project if you can turn this project over in three months earlier than we used to be able to. The value of that is five million. There will be operating costs but you took those out right so the difference is five million. So here’s a thought that my elite customers often ask a question to me: hey Ken, that three months isn’t any good to my customer if they can’t plan on it and so this is why predictability is so key. You’ve got to be confident that you’re going to deliver three months earlier and so some of this BIM value relies on your confidence level and it’s one of the reasons why I’m really keen on encouraging customers around the world to measure your performance. Just get really down on how predictable you can be and how you can improve predictability. Well, let’s take a look at the cost of BIM. We’ve got all these numbers adding up and I think we’re picking your digital version there. What do we get I think we’re in the around 17 million of benefits all in but we haven’t figured out the cost of that. The 17 million on 250 it’s a big big 250 million dollar project what’s the cost of BIM. If you take a look at all the research that was referenced in the Canadian study you keep coming up again and again with half of one percent.
One percent of 250 million would be two and a half million and that’s what the UK is coming up with. One percent cost you one percent to do BIM. Another study is coming up with a half and I say that’s very compatible because every BIM initiative like when you study and you calculated half of one percent what were you really buying what level of BIM implementation what level of detail how many trades were represented in the model did you really do all in BIM did you plan on harvesting did you educate the owner. So I think half a percent is a little bit low when I read all the studies and up to two percent can be spent so that would mean five million invested to get the 17 million back. That certainly is the highest I’ve ever seen. What I usually encourage folks to do is don’t depart from one percent too far in either direction and Andy I think we talked about one percent two and a half million all in that means investing in all your sub trades that are going to involve all the field folks all our hardware software.
Assessing the Learning Curve and Cost Efficiency
Training time out of production in order to get the skills engineers, designers, and then operational folks, that would be one percent, be two and a half million. Comes in pretty close to where we were on this last project and so I actually think what we’re going to do on this next one coming up, which we’re going to target a little lower than that, if we’re working with the same team or about the same team and everybody’s already done this and we all know where it’s going to go again. There’s less uncertainty about how it’s going to go. We know we’re going to do well. So I think the cost have been in this case it’s going to be under one percent just because we know each other, we’ve done this before, and we’ve learned. So we’re on the learning curve a little bit further. But I think one percent is a, I think you’re right, that’s a pretty fair bar to be set and you’re somewhere around there either. So you’re gaining efficiencies each year. A lot of the same folks will be back on this project, some new players. You’re gaining efficiency.
What I suggest to most of my customers that explain to me, this is going to be a very expensive project because we’re going to have to build all this modeling content for this project and we’re going to do all this training for this project, and I say okay. I don’t suggest that you kind of in your calculations load up your first project and call it a loser because it’s funding all this training and content that’s going to be enjoyed by the second project. Because your second project is going to look like superstars and the first project looks like it didn’t make a profit. So what I see among the more elegant approaches is let’s make an investment, in our calculations let’s charge that upfront cost. So let’s spread those costs out over time but do a very serious calculation in terms of what things cost.
Cost Allocation Based on Benefit Share
In our calculations then we have one percent which is two and a half million. When we add up all the benefits they come out to be 17 million. Now the question is who enjoys those benefits because we’re going to ask the question who pays the two and a half million. So my coaching, which only goes so far, says why don’t you look at who benefits, and if you’re enjoying 25 percent of the benefits, why don’t you even fund 25 percent of the costs. You can imagine that this contract language is very sensitive. And the other thing is I’ll have a lot of customers that will say my owner is going to get 65 percent of the benefits but isn’t aware of it and so they’re not going to fund the BIM initiative. Do they allocate extra money or you just build that all in just like you used to build in general conditions?
Well in this case the owner was upfront with the entire team ahead of time, so they were telling us that this is the way they wanted us to work, so everything was on the table in this case. So there was a BIM implementation line item in the budget. Well that’s, to me, that’s an educated owner making a good decision. Let’s take a look at how much the owner is the beneficiary on this project.
Let’s not go over each individual. Andy and I have gone through this last week. The one million that we’re going to save in terms of RFIs, that was really all the money that we spent when we followed the workflow of going out and getting a problem solved and bringing it back. That’s going to be spread between everybody. The design team does, it’s RFIs and they don’t have to answer. The CM has a piece of that, they’re going to see some savings because it’s some work that they don’t have to do. So the design and construction team are primarily the people who are going to benefit from that.
The Financial Value of BIM for Owners and Construction Teams
That’s split. Design team gets the biggest chunk and then the CM, the sub-trades, get about 30 percent apiece, 40 to the design team. The change orders, the contingency is funded by the owner. The owner has a contingency but the construction company also has a contingency. So if we save five million in preventable change orders, we split that money up. We think about the owner getting the biggest pie, that’s 3.3 million out of five. So 66 percent of the benefits of change orders go to the owner. But everybody else is more efficient compared to the old days where those change orders caused a lot of staffing challenges and time and acceleration challenges. One million to the sub-trades and 500,000 to the general contractor team and 200,000 to the design team.
I think that’s how it shakes out. Now we have the general condition savings of 750,000. It is split between those folks that are spending money just to be there. All their time variable costs are just paying out every month. So that number is split. I think we split it equally between the CM and the subcontractors. The sub-trades are suffering with the same sort of time variable cost and their own staffing and rental, and the general contractor has the same. So that 750 is split 50/50.
The prefabrication, now that you move work from the field into the shop and enjoy this efficiency, you have 4 million in savings. So who enjoys that 4 million in efficiency? The owner enjoys some overall savings, probably 50 percent of that, so 2 million. And then the subs are the ones that are really getting the efficiency out of their shop and so they get the other half of that as their savings, 2 million. This is probably one of those moving targets. If nobody is competing with me in a given geography and I figure out a way to safely save 4 million bucks, I’ll put it in my pocket. Maybe I made out of the goodness of my heart and let the owner have some, but as everybody in these competitive environments is pursuing this excellence, the financial benefits and the other benefits of moving into the shop, it’s a moving target. We just have to figure out a way to be better than anybody else if we’re going to continue to win work and do it profitably.
So that money gets split between the owner and the sub-trades. In a sense, half of it goes to being competitive and half of it goes to my profit line. The field efficiency and safety, that gets spread out. That’s really specifically CM staff, so construction managers. Our field staff is going to be, if we’re more efficient, we’re going to be saving. That’s the money that we save. I think we said that was a little north of 250,000. And the owner is the big winner in terms of the efficiencies that come from operations and maintenance and the early occupancy.
So the owner gets, what percentage? The owner is getting about 77 percent of the savings. Not bad.
Owner Mandates Driving BIM Adoption
A memorable quote is I’m tired of paying for rework. The owner is getting 77 of 17 million in savings and this owner is saying I want them. I’m going to have them. You want to work on my project, you will be doing better. And the UK is saying you will be doing that. A lot of other agencies around the world, Singapore, Australia, they’re all starting to mandate them.
Internal Resistance Disappears with Owner Demands
So one of the questions that got asked earlier is how can we convince people inside our company to do BIM. We had that conversation for a while, but once we had enough owners that were just telling us, hey, if you want to be competitive, if you want to work with us, you have to. That conversation went away because it just became part of the environment that we’re in. We have to be able to do it to be able to compete for work.
The Proactive vs. Reactive Approach
Some of my coaching around the world sounds like the mandates are coming. So you have two choices. You can be proactive or reactive. A reactive company says, oh, they’ve been willing to win. The proactive company says, I wonder if there’s any profit for me. I wonder if my quality can go up. I wonder if my safety program will be more effective. I wonder if I can win work by educating owners that they’re going to save 77 percent. I wonder if. And so this proactive decision is the message that I’m telling customers all over the world, and I really believe it’s true. I think it’s a very bad decision to wait.
In the next article, we’ll continue exploring this topic in depth series don’t miss the next article in this series. We’ve only scratched the surface, don’t miss the next part where we dive even deeper into Why BIM Mandates Are Changing Global Construction Standards
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