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Commentaries & Highlights

Wednesday, October 26, 2016

AEC Technologies and Transformation: Survey Results and Interpretation (Commentary)

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Key takeaways:

  • Top AEC industry performers tend to employ more technologies, and their performance is strongly correlated with current technology usage and growth in IT investment
  • The majority of respondents see potential to reduce costs by more than 10% for both pre-commissioning and post-commissioning phases of building lifecycles
  • The greatest potential for process improvement is expected from reducing risks, a need for fewer changes, and better project estimating

Introduction

CIMdata recently conducted an online survey of professionals involved with the Architecture, Engineering, and Construction (AEC) industry. The survey was fielded in July 2016, with a second distribution to a more senior group in September 2016, and 84 completed responses were included in the subsequent analysis. 73% of survey respondents were executives, managers, architects, or engineers. 64% of respondents indicated that they work for companies based in the U.S. or Canada, while 67% of respondents indicated that they work for companies with more than 100 employees. Please note that statistical significance testing was not performed on the results since the survey size was insufficient for a 5% error margin within a 95% confidence interval.

Respondents self-reported the performance of their companies relative to competitors in one of four categories—Lagging (6%), Slightly Underperforming (35%), Slightly Overperforming (28%), or Leading (30%). The upper two performance tiers were then categorized as “High Performers” for certain analysis purposes, while the lower two tiers were deemed “Low Performers.” The self-reporting demonstrated a slight bias toward above-average performance, with 58% of respondents categorized as High Performers.

Room for Improvement

One of the most notable results from the survey is the degree to which respondents see potential for improvement. 56% believe that design and construction costs for a typical facility can be reduced by 10% or more, while 54% estimate that 10% or more of operations and maintenance costs can be saved. Fewer than one in ten respondents estimated the potential cost reduction at less than 5%. The dividing line between pre-commissioning and post-commissioning phases was defined at the handover point.

The potential for improvement covers several areas. Survey results indicate that the single largest opportunity is reducing risks, followed closely by fewer changes and more accurate estimating. On the operations and maintenance side, nearly equal contributions are expected from improving facility performance and maintenance efficiency.

Even better, the potential gains are widely distributed. Owners and operators and general contractors are the most likely beneficiaries, with 49% of respondents indicating that they stand to achieve the largest benefits. Architectural and engineering services firms and building products manufacturers also stand to benefit, with more than 40% of respondents identifying these companies as major beneficiaries. Note that respondents could select multiple company types for this question.

Technology Investment Correlated to Performance

The survey results demonstrate a strong relationship between investment in advanced technologies and performance vs. competitors. This came through both in the range of technologies used by High Performers, as well as trends in overall investment. Specifically, there was a strong correlation between increased investment over the past three years and relative performance, as shown in Figure 1 (bubble size is proportional to the number of respondents in each cell of the matrix).

Figure 1
Figure 1—Correlation Between Increased Investment and Relative Performance Over the Past Three Years

Another key differentiator of High Performers, as reported by those surveyed, is where they prioritize their investments. For this part of the survey, respondents were asked to consider all investments in technology, training, and process improvement, not merely IT related investments. While the overall ranking of priorities was similar across both performance bands, two areas emerged as much higher priorities for High Performers—Quality (reducing errors and need for rework) and Skills Development (employee training). Figure 2 compares investment priorities against performance level.

Figure 2
Figure 2—investment Priorities vs. Performance Levels

From a technology perspective, investments by the best performing companies have gone into a wide range of technologies. On average, the High Performers reported that they use five key technologies (out of eleven listed), while Low Performers use fewer than three. The largest differential for current technology usage is seen with Building Information Modeling (BIM) and Virtual Design and Construction (VDC), although major differences can be seen in other technologies as well. These differences are shown in Figure 3, which compiles answers from respondents stating that their companies use these technologies and techniques today.

Figure 3
Figure 3—Technologies and Techniques Identified as Being in Use Today

By contrast, for respondents indicating technologies that their companies plan to begin using within the next three years, the differentials between High Performers and Low Performers were nearly reversed. For most technologies, Low Performers were much more likely to indicate that they plan to adopt a variety of technologies, which is not surprising considering that in many cases High Performers have already adopted these technologies. The aspirations of lower performing companies may be difficult to realize however, since most of these companies expect stable IT investment over the next three years, whereas the best performing companies expect increased investment. The one technology that High Performers are more likely to adopt over the next three years is Artificial Intelligence (AI). Although the survey did not ask what applications these companies will target using AI, it is CIMdata’s view that the technology offers significant benefits for computational design, construction planning optimization, and predictive analytics.

Opportunities and Obstacles

These investment plans have a purpose—to improve the core processes of designing, constructing, and operating new and repurposed facilities. The top three benefits that respondents expect to reap from process improvements are:

  • Reduced risk combined with more predictable project schedules and outcomes
  • Fewer project change orders during fabrication and construction
  • Improved margins from more accurate estimating and bidding for project proposals

These benefits will come from increased capabilities as companies learn to effectively integrate existing and new technology investments into core business processes. Respondents were asked to identify capabilities that have been prioritized for improvement, based upon the potential business benefits that would result. The top four areas for improvement are:

  • Design collaboration
  • Change management
  • Technology interoperability
  • Project collaboration (other than design)

Although respondents believe that there is opportunity to improve post-handover costs, the top opportunities they identified relate to design and construction processes. The survey did not uncover the reason for this, but one possibility is that inefficiencies are highly visible to many parties during construction. Comparatively, maintenance inefficiencies are relatively hidden.

Of course, there are obstacles to achieving these improved capabilities and the associated benefits. Respondents were asked to identify the major factors that are preventing the investment in time, training, and information technology needed to improve processes and business outcomes. Interestingly, the problems were not related to affordability or technology complexity—those were the bottom two responses. Instead, three issues stood out as the major obstacles to improvement:

  • Solutions from different software providers do not work with each other
  • Owners do not understand what deliverables to ask for
  • No single organization is able to implement change in isolation, and unless everyone changes, there is no benefit to change

Summary

Significant opportunity exists to improve the efficiency, predictability, and profitability of AEC projects. Equally importantly, there is potential for many players in the AEC value chain to benefit from these improvements. Working together, the AEC industry has an opportunity to transform how it designs, delivers, and operates buildings, infrastructure projects, and other facilities.

These CIMdata survey results suggest that interoperability problems and the fragmented nature of the industry are limiting the rate of improvement. It will take a concerted effort to drive better interoperability. Industry organizations such as buildingSMART are moving in the right direction, but the AEC industry needs an even more concerted push among owners, operators, and leading services firms to drive change. Technology providers also have a major role to play in supporting this change. By becoming better informed, and through smarter specification of project deliverables, owners and operators have an opportunity to lead the industry transformation.

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