To reduce costs for any project or product, look at the inputs; can they be improved? Break out the Cost of Goods Sold, or Cost of Sales. In construction the Cost of Sales (which will include material and labor) is at a whopping 84%. This leaves leaving only a 16% gross margin for everything else. To put this in perspective Walmart operates at around a 25% Gross Margin. So is it any wonder the need to lock down costs and reduce waste is more extreme in this industry than most? Compare it to its aligned industry the AE (Architecture Engineering) industry whose gross margin is 3 times as high and there is good reason that BIM was initially more widely adopted and implemented by the construction trades. Any advantage in reducing costs, improving margins or making a firm more competitive in the marketplace will find a receptive audience in construction.
Cost saving were first realized with BIMs starting with the 3D coordination of the digital model, clash detection and then scheduling(the 4th D) of construction and the reduction of the cost of labor. Downtime for crews due to change orders or having material unavailable was reduced. Now we are starting to see more firms focus on the cost of materials and how they can be managed and best integrated into a project.
RIB Software , based in Stuttgart Germany is a leading provider of technical ERP (Enterprise Resource Planning) software solutions for the construction industry recently announced the acquistiono of MC2 one of the leaders in cost estimation software for the construction industry or the 5th D of BIM. In the official press release RIB stated ‘Major step taken in the US market for 5D-BIM technology’. In July Trimble acquired WinEstimator another leader in cost estimation in the United States.