Why not add value?

Otto Alhava/CTO

20.3.2013

DISCLAIMER!This material contains heavy criticism forprevailing practicies and conventions ofconstruction industry. Direct exposure to thispresentation will cause a desire to improveproductivity. No animals were harmed in themaking of this presentation.

IRRITATING

INDISCREET QUESTION #1:

Are we creating value ordestroying it?

Lähde ja ©: Maila Suvanto, Vianova, 2013, Lean koulutus

Waste

Value‐adding

Supporting

Construction industryManufacturing

HOW DO YOU FEEL ABOUT IT?

CONSTRUCTION INDUSTRY-WHAT'S THE MATTER WITH YOU?

Talouselämä/Jan Vapaavuori

WHAT CAN WE DO FOR THIS?

• From where to start?

• Let’s dig into low growthof productivity!

• (and then:• service innovation• business model

innovation)

LOW GROWTH OF PRODUCTIVITY

Why should we be worried about low growth in national productivity?

http://www.ek.fi/www/fi/talous/tietoa_Suomen_taloudesta/tuottavuus.php

We have lost our national competitive advantage and it is up to construction industry to fix it

..becauseconstruction industryspends today the moneywhich export intdustrytries to earn!

IS THERE ANY HOPE AT ALL?

HUGE OPPORTUNITY!

”Mikä on suurinta mihin voimme näistä 

lähtökohdista päästä?”

Mikael Hed, Rovio, 08/2012 Fakta

Long lasted low growth + Extra large Market = HUGE POTENTIAL

of productivity 25 MRD EUR

ONE STEP AT THE TIME

OLD WAYS ARE THE BEST?

Source: DPR/Conover, Krajewski, 

Lähde: Maila Suvanto/Firan IPD‐koulutus 2012

WE HAVE BUILD THEM, SO IT’S OUR JOB TO..

IF YOU CAN’T FIGURE IT OUT BYYOURSELF – WHY NOT LEARN FROM

OTHERS?

IntegratedProject

Delivery

Lean construction

BIM

How can we benefit from these building blocks?

IT IS A QUESTION OF SERVICE BASEDBUSINESS MODEL

Time

Budget

20 MEUR

Exact prices and percentages are not so relevant. The logic behind processes, models and tools is.

10‐20%higher cost,delayed projectand angry users

Design Build

Bid

Traditional way Modern way

15%

Investment ‐15%if compared to marketprice

We just have to accepttwo facts:

1. Value can not be createdwithout customers

2. Value can not be capturedwithout co-creation

17

Käyttäjät mukana koko hankkeen ajan -------------------------------- >

Käyttäjien vaikutus lakkaa--- >

WHY INTEGRATE(INSTEAD OF DISINTEGRATE)?

THE CHANGE REQUIRES INNOVATION

HOW CAN WE INCREASE PRODUCTIVITY, ADD VALUEFOR CUSTOMER AND AT THE SAME TIME INCREASE

PROFITS?

19

Financing

BusinessProfits

Investment

Life-cycle costs

Firan nelikenttä

OpexUsability

SolutionsInvestment

A: only by creating valuefor customer

Added value today• Bim based desingand cost calculation

Possibility to create even more value

BIM BASED COST ESTIMATION PROCESS- Make it happen four times faster

• Better informed decisions in shorter time span• Makes creation of more alternatives possible because time

spent for desing is no more an issue

Traditional way BIM based cost estimate and co‐creation

Redesigning the building layout 10 days 1 day

Bidding concepted building 20 days 5 days

Design&Build ‐ alternative solution 5 days 1 day

Attitude towards design changes Estimator doesn’t like design changes Estimator is searching better solutionfor the client

Working method Designer and estimator are workingseparately

Designer and estimator are a team

”BUILD VIRTUALLY FIRST ”– THE FIRA WAY(BIM END-TO-END ALSO IN IPD)

M2€

InvestmentDecision

Project Development Design Optimization inTraditional Concept Design phase = ”Solution design” 

QTO & CostEstimation

Design, DetailedDesign & 

Preconstruction

BIM COVERING THE CONSTRUCTION PROCESS

BIM

Visualizationmodel

BIM

Costmodel

BIMStructural

model

BIMProduction

model

BIM…..

Project development Design Construction

MaintenanceModel

BIM…..

FacilitiesManagment

BIM BASED COST ESTIMATION PROCESS

Option 1b: Sufficient geotechnical data

Changes:Option 1: Customer requirements,Insufficent geotechnical data

Option 3:Smaller building ‐> expectedprofit too low

Option 4:Alternative design solution

Option 2Changing part of concrete structures to steel

Cost Estimation Process

Investment

Price

INTEGRATED PROJECT DELIVERY:WHAT MUST BE CHANGED

24

Integratedprojectdelivery

Contracting: incentives for

co-creation

Production system:tools for co-creation

Organization:ability to co-create

BIM is only a technology,part of production system.It is not the silver bullet.

GOOD SIGNS..

• Alliance model is coming into use

• New technology is available

• There is not enoughmoney in publicsector

• Gowernment is takingactions

• Case Järvenpää

CASE JÄRVENPÄÄ: INTEGRATED PROJECTDELIVERY FOR PUBLIC SECTOR

National modelfor procurement

of virtualdevelopment and

desing

CHALLENGES TO BE SOLVED

Not opex driven

High opex

High capex

Money wasted in court

WHY SHOULD PUBLIC SECTOR

Why the publicsector should’t takethe advantage of the 

same business models and 

innovations as private sector?

=> method for procurement model

is needed

Building blocks already inbuild: Lean, BIM and IPD 

CONCLUSION: BIM IS JUST A FIRST STEP

30

Informationmodel

Common understanding

Testing forbusiness

Tool for professionals of construction industry

End-users can participateeffieciently to the design process

Understanding of businessprofit/loss when using the construcion

BIM:

Visualization:

Simulation

Value co-creationwith customer

Value creation within process

Framework: new model for contracts, organisation, production system

THANK YOU FOR YOUR ATTENTION!

(Rakennusalan #1   job applications: annabella.haavisto@fira.fi)

GO AND IMPROVE PRODUCTIVITY!