Wicked IPD Procurement Programs: IPD & BIM Solutions Unleashed

June 5th, 2012

This is the latest article in the Wicked Series.  Here we explore the challenge of procuring building information modeling (BIM) enabled infrastructure—in both the public and private sectors—from integrated BIM-enabled teams capable of operating in an integrated project delivery (IPD) environment and delivering BIM-enabled infrastructure.

Introduction

Stewards of public infrastructure and their counterparts in large private enterprises know Design-Bid-Build is broken; they just aren’t sure how to replace it or with what.   CM at Risk, Design-Build and Public Private Partnerships (P3), all currently in vogue, offer different paths forward.  Integrated Project Delivery (IPD) offers another.  This article explores adoption of IPD by large institutional owners, public and private, that own, operate, and maintain large infrastructure portfolios and consume planning, design, and construction services in volume.

Integrated Project Delivery (IPD) is characterized by:

  • Early engagement of key project stakeholders
  • A pain share gain share approach to compensation and risk
  • Collaborative control of the project
  • ADR processes that support private adjustment of legal relationships
  • Collaborative development and validation of targets / goals

The Owners’ Challenge

Governments around the world mandate high-performance buildings, increased energy efficiency, reduced water usage, and so on—all in hopes of achieving sustainable infrastructure with a small carbon footprint.  Those same governments insist such infrastructure perform flawlessly, at lower costs, and they want it all now.  In short, public owners want better sustainable infrastructure faster and cheaper than ever.  Private owners make similar demands.  These timeless demands—better, faster, cheaper—have historically been viewed as mutually exclusive, with one or more being sacrificed to achieve another.  While laudable, especially when tied to the concept of sustainable infrastructure and smaller carbon footprints, these goals are very difficult to achieve.

A constant lament from governmental agencies tasked with procuring sustainable and green infrastructure involves their inability to procure planning, design and construction services from integrated teams.  Antiquated procurement laws and regulations are viewed, rightly, as thwarting any effort to procure services from integrated teams.  Large institutional owners in the private sector often feel bound by similarly restrictive procurement procedures, though they too want high-performance buildings faster better and cheaper.  Only integrated, BIM-enabled teams have a realistic chance of delivering BIM-enabled infrastructure that is sustainable and green.  Traditional teams operating in silos simply lack the tools necessary to plan, design, and deliver such infrastructure.  It’s very, very hard to pound a round green peg through a square brown hole.

Frustrated procurement officers, in charge of acquiring sustainable infrastructure with a tiny carbon footprint, see BIM as a potential solution.  However, BIM deployed under a Design-Bid-Build procurement model never reaches its full potential.  In fact, few in the industry operate under any illusion that sustainable green infrastructure can be achieved under a Design-Bid-Build model of procurement.

BIM—at least good BIM in a BUILT environment—captures information authoritatively from the moment the project is a gleam in the owner's eye through demolition, displaying digital representations of physical characteristics, serving as a shared knowledge resource, and enabling intelligent and effective decisions regarding operations, maintenance, and other activities related to the BUILT environment.

The Designers’ and Constructors’ Challenge

Design professionals, slow to embrace BIM, now recognize its value.  General contractors, who embraced BIM as a means of reducing their own costs, recognize the value, too.  But designers and contractors view BIM differently and leverage BIM differently within the context of their own business models.  Designers initially adopted BIM to increase efficiency, but now realize BIM is emerging as the new standard of care in the design profession.  Contractors, initially enamored with clash detection and visualization, now exploit BIM’s capacity to deliver quantity take-offs, material lists, virtual first-run constructability analysis, and a variety of other lean business processes crucial to success in the competitive world of construction.  Owners, who sat on the sidelines for several years, now see the potential in BIM and many want designers and contractors to hand over critical data that will empower owners to operate and maintain infrastructure more efficiently. 

The challenge is to hand over useful BIM and not just a box of jumbled BIM ala Katy’s Castle  or Humpty Dumpty BIM.   Designers and contractors who toss BIM over the wall to owners are delivering Humpty Dumpty BIM.  And we know owners—the King—don’t have enough men or horses to put Humpty together again.  Owners don’t want or need Humpty Dumpty BIM. They want BIM-enabled infrastructure they can operate, manage, and maintain intelligently over time. 

As hard as it is to deliver BIM-enabled infrastructure, owners, contractors, and designers are beginning to figure it out on a project-to-project basis.  IPD procurement programs represent the next logical step.  Excitement among this group of hands-on stakeholders, at an all-time high and rising, contrasts sharply with the “know-nothing” attitude towards BIM that prevails among institutional stakeholders of a financial bent.  Stakeholders in the financial sector control business processes critical to successful deployment of an IPD procurement program, and must join the conversation.

Where is the Financial Sector?

Lenders, insurers, sureties, government bonding agencies—and the professionals who advise them—have enormous financial interests, along with the core team of owner, contractor, and designer, in successful project delivery.  Unfortunately, the average financial stakeholder knows little about BIM, less about IPD, and appears uninterested in either process. 

In many instances these tangential but critical stakeholders, and their professional advisors, instinctively recoil from the perceived complexity of BIM and IPD, with many counseling against adoption of IPD as a novel and unknown risk magnifier, while reluctantly conceding to the use of BIM, provided BIM is kept in silos.  Unaware of the need to tie BIM to an integrated procurement processes to fully leverage BIM, the professional advisors—with vested interests in the outdated legal, lending, and insuring instruments—resist change. 

Sure to be targeted for revision and or replacement under an IPD Procurement Program existing legal, lending, and insuring instruments are perceived and touted by their champions as insurmountable barriers to an effective IPD Procurement Program.  Nothing could be further from the truth.

This ignorance reeks of opportunity.  Just get your head out of the sand! Lenders, insurers, sureties, and others with a financial stake in complex construction projects who learn to leverage BIM stand to reduce risks exponentially, increase profit margins, and may help launch a revolution in the delivery of BIM-enabled infrastructure globally.  Owners—both public and private—planners, designers, constructors, lenders, insurers, sureties, and other stakeholders on complex infrastructure projects need solutions to myriad problems associated with the procurement, operation and maintenance of infrastructure.  An effective IPD procurement program—on a BIM backbone—can be a first step to delivery of solutions to those problems. 

Wicked IPD Procurement Programs

Enter Wicked IPD Procurement Programs, a procurement model featuring fully integrated IPD and BIM solutions.  To date, IPD has typically been project centric.  Project specific IPD ensures the owner, contractor, designer—and ultimately an entire integrated BIM-enabled team—operates on a common legal platform that facilitates the use of BIM on a specific project.  While a vast improvement over Design-Bid-Build and other procurement models, project centric IPD ignores the real potential of IPD and BIM. 

Wicked Procurement Programs, which envisions the use of IPD and BIM solutions across an entire portfolio of facilities and infrastructure and legions of integrated BIM-enabled teams, throws open the IPD door to the entire universe of stakeholders and includes owners’ entire portfolios.  Public sector clients, who consume vast quantities of planning, design and construction services annually—and often take on the burden of operating and managing that infrastructure over time—stand to gain the most from a Wicked IPD Procurement Program.

In search of increased efficiency in procuring, operating, and maintaining public infrastructure, public sector consumers now demand BIM.  Of course, few making such demands know exactly what BIM is, how to leverage it, or what kind of BIM they want, need, or can handle.  Further, few bother to determine what kind of BIM, if any, their partners in the BUILT industry can deliver.  Fewer still acknowledge the need to sidestep the morass of antiquated procurement laws and regulations in a way that enables them to demand planning, design, and construction services from integrated BIM-enabled teams in a BIM-enabled IPD environment.

Regardless of the barriers—which actually represent opportunities—keen interest exists among owners in procuring planning, design and construction services more efficiently. 

Further, public owners routinely express the desire to retain a seat at the decision-making table throughout the design and construction process.  This is ironic, given the willingness of public entities to adopt Design-Build and P3 as procurement methods, as neither of those procurement models typically reserve the owner’s seat at the design table and leave the lion’s share of value accumulated from increased efficiency to the contractor or other private entities.  Substantive, solution-oriented conversations eventually turn to the merits of IPD as a procurement method and BIM as a process for managing infrastructure related information.  Public owners, intrigued by the possibility of an effective public IPD procurement model, see many billions of dollars in annual savings on procurement, operations, and maintenance costs.  Green advocates and fiscal conservatives alike see value in IPD and BIM solutions.

The Numbers Don’t Lie 

Public owners, keenly aware that operations and maintenance costs consume 85 cents of every dollar budgeted for infrastructure, desperately seek to control those costs. Those costs, which rise dramatically in the later stages of the life cycle of most infrastructure, i.e., when infrastructure procured under the P3 model is typically turned back over to the government, represent a long-term burden.

Government projects account for almost half of the $4.6 trillion spent in the construction industry annually.  The $4.6 trillion, however, represents only the 15 cents on every dollar allocated to procurement of design and construction services.   Ignored are the accumulating costs—85 cents of every dollar—required to operate and maintain an ever growing portfolio of global public infrastructure.  If governments accumulate $2.0 trillion in new public infrastructure annually for the next 20 years, those entities will be responsible for existing, and aging, infrastructure plus $40 trillion in new infrastructure.

If governmental entities reduce the cost of procuring planning, design, and construction services by 10 percent—a modest goal given inefficiencies known to permeate the Design-Bid-Build model—then $4.0 trillion would be freed for other purposes over a 20-year span.  Those savings would have to be achieved globally, of course, to see such results, but even modest success would entail significant gains. Pushing the savings rate to 20 percent would net close to $8 trillion. 

While impressive, savings on procurement costs pale in comparison to the savings achievable if owners leveraged IPD, BIM, and lean business processes to wring inefficiencies out of operations and maintenance over time.

Lean experts contend 30 to 50 percent of the monies spent to procure planning, design, and construction services are wasted.  Reducing waste in the arena by 10 to 20 percent is entirely reasonable.  Of course, a wide array of individuals and businesses make a living off the $1.2 to $2.3 trillion in waste embedded in the system.  Those with a vested interest in waste resist IPD and BIM with a vengeance.  Similar levels of waste associated with the trillions of dollars spent annually on operation and maintenance costs related to existing and future infrastructure represent even more low-hanging fruit available to owners of BIM-enabled infrastructure.

Typically, operations and maintenance costs for infrastructure average 2 percent of current value.  That number is much lower early in the life cycle—often .5% or less—but inevitably climbs north of 3 percent and may be close to 5 percent near life-cycle end.  Government infrastructure typically has a longer life cycle than private infrastructure, with much government infrastructure in place 60 to 100 years after construction.

These numbers are significant for two reasons.  First, knowledge of this information enables one to estimate potential savings associated with reductions in operation and maintenance costs.  Second, such calculations provide insights regarding the use of P3 and other procurement models.

With respect to potential savings, the calculation can be simple.  The cost of maintaining $40 trillion in public infrastructure, at 2 percent, is approximately $800 billion annually or $16 trillion over 20 years.  The cost jumps to at least $48 trillion—if not higher due to aging—over 60 years.  Knocking 10 percent off those numbers at the 20- and 60-year mark, respectively, could save governments $1.6 trillion and $4.8 trillion respectively.  If 50 percent could be saved, the numbers jump to $8 trillion and $24 trillion.  Savings of this magnitude would enable governments to return vast sums to taxpayers which, in turn, would spur entrepreneurial endeavors of all kinds around the globe.

The foregoing figures apply with equal force to private sector infrastructure which represents the other half of the $4.6 trillion spent annually around the globe to procure planning, design, and construction services.

In short, IPD, when deployed in conjunction with integrated BIM processes, has the potential to save governments trillions and trillions of dollars in reduced costs when procuring, operating and maintaining infrastructure projects.  The value of “Googlizing” our infrastructure that is tying an information-rich data stream to the design of the infrastructure, has the potential to add even more value and improve the lives of users and citizens in ways we cannot even fathom at this time.

By contrast, Design-Bid-Build, Design-Build, and P3 fail to increase efficiency and are ill-suited to enabling owners to obtain and leverage fully functional digital assets that result in truly BIM-enabled infrastructure.  P3, touted by many governmental entities as the best procurement method available, achieves little in the way of savings during procurement and even less in the operations and maintenance phase as the private entity that leases the infrastructure enjoys use of the facility during the prime of its life.  Governments resume ownership obligations during the infrastructure’s later years.  Accordingly, the infrastructure projects being procured under the P3 models today have the potential to be returned as spent shells with high operations and maintenance costs and little or no useful data. 

In short, IPD as a procurement method and BIM as an information management process offers public and private consumers of planning, design, and construction services better results and will enable those owners to operate and maintain BIM-enabled infrastructure more intelligently over time.

What’s an Owner to Do?

Features of an effective IPD Procurement Program appear in the sidebar. While drafted for both public and private owners the program has drawn the most attention from public owners shackled by antiquated procurement laws and regulations.  Flexibility is the watch word in the public sector. As public entities adopt IPD and BIM, we will find better ways to use those tools. Meanwhile, it's important we start using the tools!

ELEMENTS OF AN EFFECTIVE IPD PROCURMENT PROGRAM

  1. Align Interests.  Align the business purpose of your IPD procurement program with the business purpose of the infrastructure you intend to procure.  Align your interests with the interests of your partners in the BUILT industry.  Align their interests when and where you can.
  2. State Your Business Purpose.  Public entities, which procure planning, design, and construction services, need to ensure the infrastructure being procured has a viable business purpose. 
  3. Seek Sustainable Infrastructure.  Infrastructure that is sustainable—both environmentally and economically—empowers government and its citizens to achieve great things.  Unsustainable infrastructure becomes an albatross around their collective necks.
  4. Exploit the Loopholes.  Restrictive regulatory and statutory procurement rules need not be a barrier.  Treat the laws, rules and regulations as an opportunity to innovate.  Loopholes exist. Find them. Exploit them. Use them to the taxpayers’ advantage for once!
  5. Create Target Cost Templates.  Develop a template for assessing the cost of procuring, operating, and maintaining sustainable infrastructure.  In-house staff and trusted designers create similar templates already.  Tap and use those resources.
  6. Know Your BIM.  Owners need fully functional digital assets to operate and maintain sustainable infrastructure.  Quiz your operations personnel.  Pick the brains of experienced maintenance staff.  Know what you need to operate and maintain sustainable, BIM-enabled infrastructure.
  7. Communicate Your BIM Needs.  Tell your partners in the BUILT industry what you want and why you want it.  Don’t demand BIM in a vacuum.
  8. Know Your Partners’ Capacities.  Know what kind of BIM your partners in the BUILT industry produce; know what they can deliver; know what they cannot deliver; know what they will deliver; know who they will deliver it to; and know whether it is compatible with your FM system.
  9. Demand Integrated BIM.  Don’t be bamboozled by BUILT industry partners who insist integrated BIM is impossible.  Learn together.  Those not ready for prime-time need to get ready.
  10. Encourage Innovation.  Host a series of workshops for your industry partners at which you communicate your needs, explore their capacity to deliver, and agree on a path forward.
  11. Wicked Procurement Guidelines.  Announce your intention to adopt IPD and to require integrated BIM.  Publish Wicked Procurement guidelines that layout the business case for procuring, operating, and maintaining sustainable, BIM-enabled infrastructure from integrated BIM-enabled teams capable of delivering in a BIM-enabled IPD environment.
  12. Craft an RFP for IPD.  Once you know what you want and what your industry partners can deliver vis-a-vis IPD and BIM, work with those partners to craft an RFP that enables your organization to call for bids from integrated BIM-enabled teams.
  13. Craft an RFQ for IPD.  The new RFP for IPD should be accompanied by an RFQ that details the skills required to be a member of an integrated BIM-enabled team capable of delivering sustainable, BIM-enabled infrastructure in a BIM-enabled IPD environment.
  14. Analyze the Metrics.  Leverage the vast river of information-rich data flowing through your existing procurement, operations and maintenance processes and compare IPD, Design-Build, Design-Bid-Build, with P3 and other procurement models to identify the best mechanisms for delivering the best value in light of the business purpose of the sustainable, BIM-enabled infrastructure you procure.

Based on the foregoing figures and analysis, IPD, especially if combined with BIM and certain lean business processes, deserves careful consideration in the public arena.  The BUILT industry, which prides itself on a can-do spirit of innovation, enjoys a challenge.  Green buildings, bridges, skyscrapers, giant ships, and complex infrastructure of all kinds exist around the globe as a result of the BUILT industry’s commitment to getting the job done.  Inclement weather, maddening government regulations and red tape, recalcitrant teammates, and a wide range of similar obstacles are overcome every year to bring new infrastructure online.  Convincing planners, designers, and constructors to adopt and implement IPD and BIM will be easy if those procuring their services insist on doing things better.  But old habits die hard and there are some processes and tools that need to be set aside or modified to move forward.

Design-Bid-Build tops the list.  It is practically useless as a procurement tool and is the most outdated, antiquated, and inefficient procurement model in existence.  Governmental entities interested in improving the efficiency with which they procure, operate, and maintain infrastructure—whether sustainable and BIM-enabled or not—should abandon Design-Bid-Build as quickly as possible.  If that requires legislation, so be it.  Meanwhile, those really interested in IPD and BIM seem to find ways around the restrictions imposed by antiquated procurement laws and regulations every year.

Design-Build works well for public owners with zero appetite for risk and those with no interests in participating in the planning or design process.  P3, while initially effective and easy on the budget, likely entails significant long term risks and costs.  But neither of these methods offers the flexibility and ownership advantages of IPD and neither leverages BIM on behalf of the owner the way IPD can.

For all the excitement and hubris displayed toward IPD and BIM in this article, public entities interested in procuring planning, design and construction services under an IPD model must not get too far ahead of their industry partners in the adoption process.  IPD is an integrated team process that cannot succeed without the support of key stakeholders.  Thus, public owners must involve the BUILT industry in the effort to deploy IPD as a procurement model.  In addition, it is critical that BIM be utilized throughout the process and that a fully functional digital asset (aka, an integrated BIM) be delivered to the public owner at the end of the project. 

Conclusion

There is nothing simple about adopting a new procurement model, especially one as revolutionary as IPD.  Combining IPD with BIM, while necessary, does complicate the process.  The value to be derived from these innovative new processes is so high though, only the most timid will shy away.  Leaders in the BUILT industry stand ready to pursue IPD and BIM on behalf of owners—public and private—that demand it.  Let’s roll!

James L. Salmon is President of Collaborative Construction Resources, LLC, Cincinnati, Ohio, USA.

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