Incentivizing Collaborative BIM-Enabled Projects: A Synthesis of Agency and Behavioral Approaches

Author

Executive Summary

The Research Questions

While the concept of Building Information Modeling (BIM) has been around for nearly two decades, the large-scale rollout of this technique is a recent phenomenon. In this project, the focus was initially placed on the effect of BIM incentivization measures on project performance in China, the United Kingdom, and the United States. However, through several pilot studies, it soon became evident that, while explicit monetary incentivization is uncommon in practice, there are implicit nonmonetary motivators that could have driven BIM participation. Through contrasting BIM practices observed in three countries, it is manifest that the best framework for understanding BIM diffusion is based on a life cycle perspective; in other words, the development of BIM in different national contexts can be best portrayed as an S-curve: starting sluggishly, accelerating in the middle, and slowing down in the end. This view has led to a shift of research focus to the evolution of BIM practices in the process of BIM proliferation with the aim of exploring the effect of explicit and implicit incentivization on the effectiveness of BIM. BIM incentivization could arise out of two motives: intentional and spontaneous. In the current research, the former refers to the actions imposed by governments through BIM mandates, while the latter represents the actions chosen according to economic calculations. The central question of interest is: How do spontaneous and intentional incentivization drivers interact with each other over different stages of BIM diffusion? Given the different level of BIM maturity in three countries, the questions addressed for each country are slightly different:

China:

In what way has mandate-driven BIM adoption in China propelled the evolution of a more integrated and better-incentivized delivery environment?

United Kingdom:

What are the critical factors that affect the impacts of BIM use on project performance?

United States:

To what extent have incentivization measures led to an improvement in project performance through the lens of user-related factors?

Context of the Research

The proliferation of BIM on a national scale has only emerged in recent years. The United States led the way, the United Kingdom came next, and China was catching up. The development of BIM in these three countries is at different levels of maturity. The environment in which BIM is implemented varies widely in these three countries. The greater maturity of BIM development, the stronger awareness of what governance could be desirable for implementing BIM; and hence, the more likely BIM is to be implemented within the right delivery environment—specifically:

Practitioners are still experimenting with different incentivization arrangements for BIM-enabled projects. The issue of interest is whether different methods have resulted in a systematic difference in project performance.

The drivers for BIM participation may emanate from tangible and intangible factors. As for the tangible effects, incentivization could be derived by two levels of forces: procurement system selection (first-order economizing effect) and incentive measures (second-order economizing effect). The effectiveness of these drivers can be scrutinized in an econometric way by drawing upon a complementary theoretical framework.

The effectiveness of incentivization measures could be affected by behavioral biases. The issue of interest is: To what extent have behavioral biases blunted the effectiveness of incentivization measures?

Brief Overview of Methodology

Since this research attempts to capture a broad range of motivators that could incentivize BIM participation from the perspective of the principal-agent theory and behavioral theory, the research method should be exploratory in nature with the aim of discovering the current BIM incentivization practices through case studies and exploring their effectiveness using rigorous structural equation modeling (SEM) techniques.

Clearly Stated Project Findings

Theory

The benefit of BIM could vary significantly with the breadth, depth, and level of its employment on a project. The proliferation of BIM is most likely to take an S-curve trajectory. Initially, BIM is considered an add-on to existing project information systems. However, ill-fit delivery environments could militate against the potential of BIM for efficiency improvement. Following the tenet of transaction cost economics, the formation of the desirable delivery environment should be understood as a process of seeking alignment at two levels: The first-order economizing is achieved by getting the delivery system right, while further refinements can be made by getting incentives right. As the latter can be implemented in a piecemeal way, it could evoke much lower cost in transition than the former. The life cycle theory of BIM diffusion aims to capture the drivers discovered in the case studies and empirical investigations of three countries with equal emphasis on the internal benefit of BIM mandates in improving project performance and its external benefit in raising the awareness and thus acceptance of advanced incentivization measures.

Empirical Findings: China

In the case studies of four advanced BIM applications in China, it is found that BIM employment is primarily driven by the practical need of dealing with complex projects. Owing to China's rigid procurement law, the mandatory use of design-bid-build has forced project stages to be separated, making it infeasible to apply BIM coherently across the project life cycle. The case evidence reveals that an ill-fit delivery environment has led to transaction costs in various forms, especially about the duplication of effort in building BIM models.

Using the data from 145 Chinese BIM-enabled projects, the first survey result of China reveals the channels through which BIM application could have impacted Integrated Project Delivery (IPD) acceptability: First, the firsthand experience of working in a BIM-enabled environment can make practitioners better appreciate the importance of incentivization, and that perception can drive the acceptability of IPD; second, the positive impact of BIM on communication quality can translate into another drive to support IPD. It is hoped that these robust statistical relationships can spark follow-on research to investigate the benefits of BIM in a wider context.

In the second survey of China containing returns from 223 Chinese BIM-enabled projects, it is shown that the benefit of BIM is sensitive to the way it is implemented in the project, and its potential cannot be fully reaped in a delivery environment where project parties are not well incentivized to harness BIM in improving communication and coordination across project stages. However, the employment of integrated systems could present a great challenge in some countries as it may require new legislation and heavy training. It is easier to achieve the second-order incentive alignment through a piecemeal implementation of incentivization measures. The data reveal that the perception of actual incentivization created by the project delivery environment has a significant impact on the perceived usefulness of advanced incentivization systems. The establishment of this awareness could herald a smoother process when introducing these systems into BIM-enabled projects. Embedding BIM in a better-incentivized environment provides a self-sustaining driver for the proliferation of BIM, which will eventually pave the way for the acceptance of integrated delivery systems. This research also explores the influence of behavioral biases on the effectiveness of incentivization.

Empirical Findings: United Kingdom

Considering Britain as a country striving to catch up to become the world's BIM leader and with a greater acceptance of advanced delivery practices, the focus of analysis is slightly different. United Kingdom (UK) case studies are designed to explore whether the incentivization structure embedded in two renowned integrated systems can facilitate the deployment of BIM. Interviews span the supply chains of two systems. The main conclusions are twofold: First, while both systems have an established incentivization scheme, its influence is only limited to first-tier contractors. Lack of system-wide incentivization has inhibited the participation of lower-tier contractors in the production of BIM information. Second, there is agreement among interviewees that it could be more efficient to incentivize BIM participation through a project-wide incentivization scheme instead of an incentivization scheme geared for BIM only.

The primary objective of the UK survey is to explore the web of relationships among project attributes, incentive measures, behavioral biases, and the effectiveness of BIM. The causation runs as follows: In the execution of a complex project, it is more likely for the owner to engage with the contractors at early stages and motivate them with an incentive pool tied to the joint performance of the project team. Early involvement and the use of a group incentive scheme could increase the likelihood of project goals being set jointly. The performance of incentivization could benefit directly from the use of common project goal setting, and indirectly from the experience the contractor has previously had working under the incentive scheme, but the contractor's aversion toward risk could militate against it. How well incentivization works is a crucial factor in the effectiveness of BIM utilization.

Empirical Findings: The United States

The United States (U.S.) case studies are based on two projects at the San Francisco Airport (Air Traffic Control Tower completed in October 2016 and the Terminal 1 Redevelopment Project that commenced in October 2016) that involved the use of an advanced form of integrated project delivery and the implementation of 6D BIM, which includes the functions of program management, cost management, and life cycle facility management in addition to traditional 3D geometric information. The Terminal 1 Redevelopment Project is seen as a more collaborative and technologically advanced construction environment than was utilized for the control tower. In these two projects, few monetary incentives were employed, and BIM participation was mainly driven by instilling trust into the partnering relationship.

The U.S. empirical study is positioned differently: Explore the extent to which an organization's external support for BIM implementation could be affected by BIM incentivization and user resistance, and how the joint effect of these factors could impact project performance. By drawing upon the insights from the technology acceptance model, this model aims to probe the paths through which the aforementioned cause-effect relation could transmit by changing the user's perception of BIM usefulness and ease of use and, as a result, changing the intention to use and actual system use. The empirical findings reveal that the impediment of user resistance to the effectiveness of external support can be lessened by the proper use of incentivization, which could eventually lead to project performance improvement.

Applications to Practice

As an enabling tool, BIM's full potential depends on the readiness of all parties concerned. To secure BIM readiness, the architecture engineering construction (AEC) industry needs to make a lump sum investment in hardware, software, and training at the outset. The worthiness of this investment bears upon how frequently the acquired capability can be reused. In the early stage (Stage I in Figure 18), inhibited by lack of sufficient evidence in support of its benefit, the employment of BIM is limited to the small group of early adopters. In cash flow terms, the additional cost arising from BIM is high, as most AEC companies have to build in-house capability from scratch, which will naturally constrain the possible scope of BIM application in the project. In the environment of projects featured by a web of independent parties (designers, constructors, and suppliers), the benefit of BIM can grow exponentially as its application grows broader (more life cycle stages), deeper (levels of BIM), and more diverse (variety of analysis supported by BIM). As a result, fragmented application of BIM can only realize a small fraction of its potential. The gap in financial feasibility (∆ in Figure 2) is a fundamental problem hindering the voluntary adoption of BIM. In economic terms, it can be regarded as a case of market failure under which coordination mediated by the price signal cannot occur spontaneously, and that gives a rationale for government intervention.

This reasoning explains why mandating BIM deployment in public projects is widely embraced as a kick-start strategy by governments. The nature of a government mandate is not much different from regulation as both serve to restrict the range of legal actions for public interests. In recent decades, the pendulum of regulatory philosophies in Europe has swung to risk-based assessment in which the cost of regulation is explicitly evaluated against its benefit. In the design of BIM mandates, the benefit is significantly harder to evaluate than the cost because the latter involves a direct cash expenditure, while the former involves a delayed receipt of benefit. During the development stages, the cost and benefit of BIM deployment will tend to converge as more companies upgrade to BIM-ready (see Figure 2). To the left of the point where those two trajectories intersect, the promotion of BIM is primarily driven by push forces, such as BIM mandates. After the benefit can cover the cost (to the right of the intersection point), then pull forces will dominate. It is useful to understand this conversion from the perspective of the Nobel Prize–awarded principal-agent theory. In designing an optimal contract, the principal should first ensure that compensation could more than cover the agent's opportunity cost. This so-called participatory condition can persuade the agent to take part, but cannot induce him to exert the best effort. This theory suggests that efficiency can be improved by holding the agent accountable for the outcome of his action via risk-sharing arrangements. In the promotion of BIM, mandating can push some owners to embark on experimentation with the hope of driving industry BIM capability toward greater maturity through a learning by doing process. The push force could only make BIM nominally deployed as an enhanced 3D visualization tool, instead of giving participants strong incentives to explore the potential of BIM. For this reason, after BIM deployment becomes financially viable, the pull forces should be considered by way of various incentivization measures. With the data collected from countries covering a BIM-leading country (i.e., U.S.), a BIM-following country (i.e., UK), and a BIM-lagging country (i.e., China), this research can build a robust evidence base to support the broadening of BIM mandates.

Introduction

Research Background and Significance

In recent years, the construction industry has undergone a transformation from a traditional system emphasizing competition and contract enforcement to a collaborative system that stresses early supplier engagement and collective sharing of risk and reward. The key lesson learned from price-driven procurement practices is that the squeezing of contractors’ markups by competitive tendering could translate into massive costs for contract enforcement and intensify the contractor's proclivity to withhold information and hold up the client during change order negotiations (Chang, 2013b; Chang & Ive, 2007). In response to these problems, construction owners are encouraged to adopt integrated project delivery (IPD) (or partnering) to govern and facilitate cross-party and across time coordination (American Institute of Architects, 2010a).

In the meantime, we have seen an upsurge in the application of building information modeling (BIM) in the built environment worldwide. The benefit of BIM does not only vary widely with the depth, breadth, and diversity of its utilization in the project, but also with the delivery environment where it is employed. As observed by the authoritative BIM Handbook (Eastman, Teicholz, Sacks, & Liston, 2011):

These requirements, however, are often difficult to meet without some modifications to the fee structure and relationships between project participants or without the