The New Economics of Design

by ConcertVDC

The first six modules of this series discussed the opportunity that the AIA Digital Practice Documents offer as a mechanism to define digital deliverables in design and construction. In this last module, we ask the question – Will it change the industry, and is it worth it? Since the earliest days of its adoption, technology has always been considered an expense in AEC, a cost of doing business. Technology investments now represent between 5-10% of the total expenses for the average design firm. Rarely have these investments resulted in new revenue opportunities or created something that increased the value of the work done. We firmly believe that digital delivery, managed and documented properly, for the first time, shows greater promise to capture the value of data across the built environment. Concert is the only technology purpose-built to capture that value. So, our answer to the question is an unequivocal yes!

The Conundrum of the Standard Fee Model

Typical design firms do not have a mechanism to generate Annual Recurring Revenue (ARR) because fees for design services are project-based and limited in scope and duration. The standard model of fee-for-service – the architect is contracted to design and document a building project and to create plans and specifications to build it – limits the opportunity to leverage the value of the data created in that process – data is an expense. Yet, digital design data has real value throughout the entire lifecycle of the building and should not be relegated to an expense category on an income statement.

Digital delivery should be considered more as an asset-based economic opportunity – data is exchangeable and is used to transfer value to the appropriate party when needed. In this model, the data will have different values based on the need at different times during the building’s design, construction, and operations:

  • Early in the design process, the value of the data is tied to modeling outcomes – building performance, functionality, alignment with the building program and budget, or desired design outcomes.
  • As the process progresses, data is refined and added, and the outcomes move toward pre-fabrication, construction, systems integration, schedule, and budget.
  • After construction, data becomes the core of operational management – building systems, security, comfort, optimization of inputs, and adaptation as uses change.

Through all of that, the common thread is the building data.

Such a fundamental shift in the economic model is difficult to imagine, requiring a change in preconceptions of value rooted in the deep traditions of the fee-for-service model. This would be challenging in simple systems, let alone something as complex as a building design process. But difficult is not impossible. The new model recognizes the value of data as the information that will build and operate the building – literally. But that value relies on the validity of the data – only realized if there is confidence in the accuracy and currency of the entire data set.

Properly defined and memorialized digital delivery mechanisms will be the basis for changing the standard model from fee for service to one based on the value of data.

The Economic Promise of Technology – and its Failure to Deliver

The history of technology adoption in the AEC industry has not lived up to the economic promises they presented:

  • CAD replaced drawing by hand, but efficiency only marginally improved
  • Digital printing replaced printing sepias and bluelines, but the cost of reproduction didn’t go down
  • BIM promised greater efficiency by modeling the design and auto generating the documents from that data, but its true value has not been realized

Yet fee value remained the same or, in many cases, went down over time. New tools like Project Information Management (PIM) and Common Data Environments (CDEs) promise to streamline communication and increase collaboration, but they don’t recognize the true value of data. We discussed how these systems are intended to work in last week’s post, but the real question is – will digital delivery be any different?

Authentic collaboration is not built on where the data is stored, it is built on the commitment to bring your best value to the process, leveraging the combined value of the team to achieve an outcome only possible with the expertise of all who are involved. In this process, authority is shared and allocated based on what is needed at intervals across the project timeline. It acknowledges that each participant’s value is unique and should be protected. Thus, for data to be more than an expense – for it to be valuable – the data generated and delivered by each participant must be authentic, reliable, and authorized.

The Value of Concert as a Tool for Digital Delivery

Recognizing the need, and desire, for data to have value, Concert created the mechanism to record, share, authorize, and authenticate data in the design and construction process. This mechanism is critical for realizing the full potential of a digital system, one that leverages all the digital tools in development, and those promised to come. Concert is the only technology that creates a permanent record of the data you create, one that you control and will always have access to.

We admit that we are biased about digital delivery – we see it as the only future for design and construction. Concert is built around this belief and a passion to create a digital data system that protects, effectively communicates, and authorizes how data will be used to create the high-performing buildings of tomorrow.

Visit us at www.getconcert.com and follow us on LinkedIn.