Budget Briefing: Kentucky Can Do More with AEC Industry Changes

Multiple industry resources and publications indicate there is, on average, 30 percent waste on a typical construction project. The causes of this waste include underutilized talent, excessive waiting and scheduling delays, overproduction, rework and defects, to mention a few. This causes building owners to pay far too much for the inefficiencies that occur along the value stream of designing and constructing the built environment.

The 2020-2022 Kentucky Executive Branch budget proposed by Governor Andy Beshear calls for nearly $6.8 billion in total capital projects from various funding sources, excluding the state roadway fund. Based upon the 30 percent industry metric, the Commonwealth is at risk of losing $2 billion caused by wasteful practices if it continues to accept the traditional way of designing and constructing buildings.

In an environment where the needs are great, budgets and labor resources are scarce, and the cost of construction and land are rising, we are missing the opportunity to provide the public with a greater return on their taxpaying investment. The industry simply has not advanced itself in a manner to address this epidemic of waste. Why is that?

First, the architecture, engineering and construction (AEC) industry is among the lowest digitized index of any industry sector. Few AEC organizations reinvest profits into research, development and technological innovation. Some firms resist these changes while others are eager to embrace it but don’t know where to start. Additionally, owners within the industry, those entities who are paying for the construction project, invest even less to force the industry to innovate.

Second, the industry is plagued with the individual silos based upon the separate contractual responsibility of each stakeholder associated with designing, building and operating a building. This presents challenges with communication, sharing information and pushing a collective team-wide use of innovations inclusive of the design team, contractors, supply chain vendors and building operations professionals.

Finally, too many AEC firms are relying on third party software vendors to issue the resources needed to make significant change. While there is a will among some sectors of the industry to innovate, few companies are doing so independently. This leads to an industry simply “waiting” for something better even though options do exist if we seek them out.

To every state official, legislator, finance director, agency project manager and stakeholder in the AEC industry, know this: there is a better way! Now is the time to capitalize on the “Era of Disruption and Digitization.”

Here is how we do it:

1. Issue statewide mandate for BIM on Kentucky-funded projects.

Several states require building information modeling (BIM) be applied to all projects. In 2009, the State of Wisconsin became the first state to require BIM on all projects over $5 million. Since then, states such as Ohio, Texas and New York have adopted BIM standards for state projects.

By issuing a legislative mandate to utilize BIM on all state-funded projects, Kentucky’s state and local agencies would leverage its benefit beyond the visual attributes of the model itself. The AEC industry can help the state understand the value of the model as a database storing project information. Project teams can leverage the information to positively impact multiple project dimensions including cost estimating, scheduling and construction coordination, manufacturing, assemblies and installation, and asset management.

Specialized design standards created by state agencies can also be embedded in the model to improve design and quality control processes. The model can then serve as a central point of truth for decision making from planning through long-term capital improvements for decades to come.

2. Leverage project data.

Construction documents contain thousands of calculations, data sets and information that means something to each stakeholder along the project value stream. In current form, the owner articulates to the architect their needs to develop a building program and final design. As the building program and construction documents are developed, critical data is lost as the project passes throughout the process from one stakeholder to the next. At the end of the project, so much information is lost that inefficiencies and waste builds.

Using data integration strategies as a critical portion of project delivery forces the design team to identify and capture building information and find opportunities to improve efficiency throughout the value stream. Just as the architect engaged stakeholders for programmatic information, the full force of the project team can set a standard for what project data should be captured and utilized to improve the project delivery. This will also help remove the silos that challenge information sharing.

Information captured earlier can improve building programming, create early budget awareness, identify opportunities for modular, prefabrication, design for manufacturing and install, and aid long-term asset management. Each opportunity is a step towards lowering the cost of constructing and operating the building.

3. Provide design and construction innovation training for state and agency employees.

Workforce development is vital to any industry and Kentucky needs to budget for training of its capital improvement and facilities management professionals. New forms of training should be deployed to prepare existing project management teams statewide with the inevitable digitization of the industry. New positions should also be created to respond to changes including virtual design and construction (VDC) managers, model managers and construction analytics professionals.

Technologies are also reshaping the project team composition such as 3D scanning, field robotics and drones that require training. State officials must understand how to interpret and use this information. As these technologies accelerate, the workforce training will ensure state employees can readily adapt to advance their projects.

4. Embrace and join the private sector innovation journey.

Embracing change is not easy and takes time. For example, in 2016 the Kentucky General Assembly became the 38th state to pass enabling legislation for public-private partnerships (P3) as an alternative project delivery model. It took time to build confidence in the model despite the fact 37 other states had such provisions and we ourselves had several build-to-suite successes prior to the P3 bill adoption. Today we have a broader adoption of P3 with multiple successful projects completed and underway.

Embracing new workflows, big data and technologies will also require change. The rate of technological advancement in society is moving at a pace quicker than human’s ability to adapt. This means the longer we wait to adapt the more challenging it will be come. Maintaining an open perspective of data integration, BIM utilization, digitizing construction workflows, modularization and advanced manufacturing strategies, and field resources is critical in reshaping how we view construction.

The private sector is leading this charge and needs the public sector to be part of the journey by offering ideation. We have the opportunity to do more with less if we have a governing body willing to embrace technological innovations that can inevitably reduce costs.

We can no longer predict that a digital disruption is coming to the construction industry. It is now at our doorstep! Rather than be laggards, we can be transformational leaders by embracing the digitization of our industry in a manner that can bring to life our creative spirit while saving taxpayers money.

Our state motto is “United We Stand, Divided We Fall.” It’s time to stand together as one industry so we don’t fall behind. Then together we can do more if we modernize the industry today.

About the Author:

Brian M. Bruggeman is the Chief Client Office for KLH Engineers, Inc. He has 22 years of experience analyzing state budgets and public policy impacting the AEC industry.