The design & construction industry is drowning in data. We estimate that as many as 10.2 billion files are shared on construction projects, and Autodesk estimates that this is growing by as much as 50% year-on-year. These files record the design, means and methods behind the buildings in which we live, work and play.
Each one of these firms maintains a copy of this data and everybody has developed preservation strategies. The cost is not inconsequential. For every $10 million in firm revenue, there are about $25,000 in data storage costs, and for larger firms working on more complex projects, the numbers could grow significantly. The data is required by contractual provision and is perceived as a necessary expense.
Even with meticulous record-keeping, there is a high likelihood that each firm has a different version of the truth. Teams work in siloes. Projects move quickly. This explains why one-third of the cost of errors & omissions insurance claims is spent on discovery and the reconstruction is told through the lens of a project manager who left the firm 3 years ago.
At the very foundational level, we envisioned CONCERT would unify data across all firms working on a project. Cryptography enables us to create digital fingerprints for project data and this can permanently and transparently be stored on the blockchain. This has the potential to save time, save money and reduce risk on construction projects, but this also misses the big opportunity.
Digital Assets in Design & Construction
This concept of data is what has been driving (and holding back) the architectural industry. Data is perceived as the necessary evil that must be managed between multiple parties whereas many in the construction industry have come to understand that that data is an asset.
This may have started with the advent of 4D & 5D BIM, the idea of using BIM as a means of incorporating supply chain and scheduling into the 3D model. This value extends to automated progress reports that can come from tablets operated by field workers or survey robots & drones that using AI to inform of progress and model variation. The data is also used to inform fabricators, which can accelerate construction time, or automated robots that stencil wall locations, lay bricks, or hang sheet rock. These technologies will shave massive time and cost off construction, and by implication, all require high-fidelity data. One might even say that the value of good data is the difference in time and cost between a building done the old way and data-driven design and construction.
It is also what pains us most in the design process. The model that is used as the basis of design is typically thrown away. The basis for imparting design intent, the “instrument of service,” is typically a 2D drawing, which ironically the contractor takes time and money to reformulate into a 3D model if they intend to utilize data-driven construction.
So what is the value of the digital assets? We consider two – the value during design & construction and the value during operation.
It is by now well-known that construction lags other industries in productivity. McKinsey had estimated that there was a recoverable $1.6 trillion in annual capital costs from technology and process improvements, or approximately 11% of total costs. As a firm is planning out their strategy for success, they might look to all the potential time and labor-saving technologies that require high-fidelity digital assets. This is one potential valuation of the digital assets in the construction industry.
Data as an Asset in Operations
From the perspective of the general contractor, each implemented technology and process reduces the construction value of the digital asset while increasing the real value of the building. While the digital assets do trade some of their value, there is a need to consider that the digital assets can have tremendous value in building during the operations phase.
Unfortunately, the value is not often understood by the construction industry. Aon estimates that 95% of the information delivered is to the owner at the end of a construction project is wrong. Nothing could be further from the truth. The digital asset that was used to design and construct the building can now be used to operate the building in the form of a digital twin.
Digital twins are being used for a host of purposes. The obvious ones include the dimensioning the building management system, but they also far extend that concept. The Digital Twin Consortium estimates as many as 300 separate use cases for digital twins including evacuation simulation, space planning and thermodynamic modeling.
It is possible to recreate a digital twin on existing buildings. In our experience, the cost for this ranges from $0.25-$1.25 per square foot. The outcome is often sub-par and the access to the static elements of the building, like the manufacturer-based data is never complete or updated. The value proposition may still make sense to many owners, but certainly the value of the digital assets would suggest retaining them.
Thus, the value of the digital asset could be perceived either as the recreation cost of a digital twin or more accurately, should be considered as the value of the digital twin to the operation of the building. This is a harder number to come by because of the many varied benefits of a digital twin, but let’s just assume a 20% improvement in energy costs on a 100,000 square foot office building. Assuming 52.9 kBTU/sqft/year, 6% cap rate and $0.10/kWh, the value of the digital asset would be over $500,000. This would obviously increase quickly as other aspects of the digital twin are considered.
CONCERT was not conceived to provide digital twins nor any of the exciting construction technologies that are starting to impact supply chains and schedules. Rather, we perceived that we could provide a single digital thread that held the digital assets for consumption and ownership throughout the circuitous route they typically undertake throughout the building lifecycle. The table stakes is the expense reduction that comes from having a single source of truth for the data. But the real value is the maintenance of the digital assets for the firms that participate in data-driven construction and operations.