Thoughts on the Engineering Industry

A blog covering engineering, technology and business topics

Benefits of BIM Modeling in Project Pricing for Head Contractors and Subcontractors

     Hello.  How is everyone doing?  Today I would like to discuss the statistical breakdown of the benefits in project pricing BIM modeling can provide for the head contractors and subcontractors involved in the design process.  BIM modeling is something that is collectively touted by most innovators in the building and infrastructure design/build field.  However, it would be helpful to understand who has the most motivation to implement improved BIM modeling.  As stated by David Mitchell, “For different types of projects the people you need to engage, changes. We need to acknowledge that the savings arising out of a building project differs significantly to those of a civil or resource project.  There also needs to be an appreciation of when a construction contract or subcontract is formed as well as the type of construction contract that has been entered into.”  Therefore, the issue is approached in regards to those factors.

For a commercial scale building project, the indirect cost such as design and overhead management amounts to 17% as compared to 83% for the construction costs.  In addition, the ratio of margins between subcontractors and contractors is 7 to 1.  Therefore, it benefits the subcontractors the most to apply the BIM modeling.  However, when a civil project is considered, the head contractor sees most of the benefits because subcontractors only control 17% of the costs.  The resource sector has some interesting statistics as well.  First of all, for a pipeline, the indirect cost is far greater at 45% of the cost going to head contractors.  In addition, the head contractor owns the material production plant/labor and the resulting cost accounts for 83% percent of the other 55% which amounts to an additional 46% of the direct cost and 91% of the overall cost.  Therefore, in this case, the head contractor holds a large portion of the cost control.  However, when building a refinement plant there are some critical differences.  There is a similar level of indirect cost cost at 45%, but the subcontractor sees 88% of the direct cost in this case.  The result is the subcontractor seeing 48% of the cost of the project as compared to 9% in the previous example.

The above statistics are interesting for several reasons.  The first one, as stated in the article, is the fact that BIM modeling is implemented by head contractor and other associated designers; yet in some cases, the subcontractors see the benefits.  Seeing as changes in pricing are based on estimation based on previous projects, pricing benefits aren’t planned for in the budget as efficiently, and, depending on the project and head contractor, a subcontractor could see large and consistent benefits.  This means that the benefits of using BIM might not be maximized aside from time and documentation for the head contractor in that situation.  And if it is a case where head contractors see a large amount of the cost savings, they can more readily pass along the cost saving of BIM modeling. But the subcontractors may not be motivated to help improve the BIM modeling because it doesn’t help their bottom line.  For both of these reason, it makes sense why it is most common for head contractors and designers to push for improvements and BIM modeling.  However, an often overlooked requirement is that the subcontractor needs to work with the head contractor in implementing the improvements and have proper motivation to pass along the savings the see the full benefit for everyone involved with the project.

What is your opinion on BIM model implementation in regards to subcontractors and head contractors?  Are there any ways to promote a shared interest in BIM modeling?  Thanks for your time and have a good week!

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