Virtual Construction brings real savings

contractjournal.com Newsletter: 01.09.05

Virtual Construction brings real savings

A new software solution soon to launch in the UK, giving developers the ability to plan and manage an integrated supply chain, has already produced cost savings on some projects of 3-4%. Here Graphisoft explain how their Virtual Construction solution represents one of the most significant steps forward in software dedicated to the construction industry for many years.

The UK construction industry provides a tenth of the country's gross domestic product, employs 1.4 million people and is worth around £80bn per annum.

Despite these impressive figures, developers' profit margins are typically only 3-6% of total build cost. What is perhaps most surprising, is that these profits could be almost doubled by closer management of waste and inefficiency within the construction process.

The amount of capital simply 'lost' through inefficiency and poor project management is estimated by The Latham Report to be as much as 30% of the total capital costs of construction. According to The Economist magazine, 30% of the construction process is taken up with reworking, 60% of labour effort is wasted and there is a 10% loss due to wasted materials.

In the construction industry there is a strong correlation between poor IT adoption, inefficiency and escalating costs. Construction, at its core, is a process-based business; although the specifics may change, the fundamentals remain constant. Many within the sector realise that success will only truly be achieved through a fully integrated supply chain in which 'waste' and 'inefficiency' are minimised by the application of clearly defined, highly visible and measurable processes.

In the construction of a building, individual processes can be drawn together and placed under one of three broad headings; constructability (design, estimation and scheduling); procurement; and site management. Inefficiencies in any one of these areas can seriously hamper a project, having negative knock-on effects elsewhere. Ironically, while a fragmented construction supply chain has all too often failed to adequately integrate these processes, so IT solutions have also failed to provide a holistic approach, instead choosing to focus on addressing specific process elements.

The next logical step is a single IT solution drawing together each of these key processes. At a glance, this would allow the developer to interrogate the design and monitor how estimation, scheduling, procurement and site management impact each other. In order to realise this ambition, the question that remains is how are these processes best 'connected' - or rather, what common 'medium' would bring each of these processes together in a way that can be easily understood by the developer in a meaningful and logical way?

The answer? 'Model-based' construction.

The architectural sector has already woken up to and embraced the benefits of 3D modelling. Specific working benefits aside, you cannot escape the inherent logic that as the finished building is a three-dimensional object, it makes sense to design in 3D from the beginning. This logic applies equally to the construction process. By looking at how estimating, scheduling, procurement and site management tools can be integrated and based around a fully interactive 3D construction-based model, Graphisoft has developed a software solution that finally gives developers the ability to plan and manage an integrated supply chain.

Known as Virtual Construction (VC), Graphisoft, and an increasing number of developers worldwide, believe it represents the most significant step forward in software dedicated to the construction industry. Far more than an 'off the shelf' package, such is the depth of VC that Graphisoft's dedicated construction team partners closely with developers during the first few projects when they use VC, ensuring they will then have the necessary expertise to fully utilise the software on future projects.

Graphisoft's chief executive officer, Dominic Gallello, says: "The impact on profit of using Virtual Construction can be really significant, and to ensure developers are able to fully utilise the benefits, we work very closely with them on initial projects. The results obtained by the first customers have been extremely impressive with the costs of each project being reduced by an average of 3-4%."

Despite only entering the market some nine months ago, early adopters include China State Construction, one of the world's largest construction companies, US-based Turner Construction and German giant Hochtief.

Californian-based developer Webcor has had the most experience with VC, having recently completed the development of the California Academy of Science in San Francisco. Revolutionising the way Webcor had worked previously, the 5-D model linked design, cost and time bi-directionally so the project team could immediately see and examine the effects and consequences of any change.

Andy Ball, chief executive officer at Webcor Builders, adds: "Virtual Construction provides a quantum leap in our ability to collaborate with the architect and sub-contractors, leading to huge reductions in the inefficiencies, waste and rework that plague our industry. Revolutionising the way we plan projects, it has allowed us to build the building virtually before so much as putting a shovel in the ground."

With its official UK launch taking place at the end of June, there has already been considerable interest among UK developers. Recognising the ethos encapsulated by PFI's, Procure 21 and LIFT; projects in the public sector are likely to be early adopters of the software. In terms of supply chain integration, collaboration, and removing waste, VC is a classic example of how IT, when developed specifically for the industry, can stimulate a three-way dialogue between the designer, developer and client.