Sunday, February 27, 2011

BIM and IPD Making Value Engineering Irrelevant

The effective implementation of Building Information Modeling (BIM) and Integrated Project Delivery (IPD) systems and protocols is replacing Value Engineering (VE).  The payoff of this shift is in higher quality, lower budgets and shorter timelines.  Value is increased, not “engineered out” as is often the case with VE.

Value Engineering’s biggest fault is that it was and is typically implemented too late in the project cycle.  It is most often thought of as a tool to bring project costs back in line.  Doing this late in the design process, as is usually the case, means that the cost of the design itself goes up even as the quality turns down.  Compromises made in late stages to fit the design within budget invariably lead to changes that sacrifice aesthetic, functionality and sometimes even programmatic requirements.

BIM and IPD are changing the model.  The design advantages of BIM coupled with communication principles of IPD bring design and budget conflicts to light much earlier in the design process.  As a result, the team is able to search for and select alternatives that meet all project requirements.  Discovering and solving these issues early on saves time, eliminates rework, improves quality, and allows everyone on the project team to be successful. 

But these new tools are not yet common in the marketplace.  At this point I see them being mainly used on very large projects such as new hospitals, research facilities, institutional buildings and the like.  There are too many owners who have not yet gotten the message.  Their “design-bid-build” mentality is meant to ensure minimum cost.  What it really does is force every entity involved in the process to have a parochial mentality, therefore denying the advantages of transparent collaboration to the project, and the owner.  Projects take longer, carry more risk, cost more and deliver less.

BIM and IPD are tools which actively contribute to and improve the value of projects.  As with any new tool, there is a learning process.  New team models and behaviors, increased trust and collaboration, a willingness to be transparent and a “us” mentality are keys to IPD success.  These don’t come easily to everyone, making the selection of team members more important than ever.

In the old model contracts emphasized constraints and penalties.  Guaranteed Maximum Price (GMP) and Lump Sum contracts along with Liquidated Damages clauses and litigation were used to define and enforce project parameters.  In IPD relationships and shared risk take a much more prominent position.  The emphasis is on Design to a Budget principles where project deliverables  and the allowable maximum funding are established.  The profit buffer between the two then becomes an incentive pool.  In the conventional model design and construction were managed to standard of care and warranty requirements.  In the IPD model design and construction are managed by joint decision making and quality adjustments as the project progresses.  In short, the contract becomes a tool, not a threat.

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