By Randall S. Newton
Editor-in-Chief
A new study from the National Institute of Standards and Technology (NIST) says the capital facilities construction industry in the United States wastes $15.8 billion annually due to inadequate interoperability among CAD, engineering, and other software systems. The study claims two-thirds of this loss is borne by owners and operators. The lack of ability for O/O’s to be involved in the design and construction phases is cited as a key roadblock to change.
The report, Cost Analysis of Inadequate Interoperability in theU.S. Capital Facilities Industry, is based on a study NIST made in 2002 of the capital facilities construction industry, which includes commercial/institutional buildings and industrial facilities.
To download the report, visit http://www.bfrl.nist.gov/oae/oae.html; follow the link on that page to download the PDF document.
Interoperability problems in the capital facilities industry stem from the highly fragmented nature of the industry, the industry’s continued paper-based business practices, a lack of standardization, and inconsistent technology adoption among stakeholders,” the report states in the introductory abstract. The authors examined design, engineering, facilities management and business processes software systems, and redundant paper records management across all facility lifecycle phases.
In addition to the $15.8 billion in annual interoperability costs quantified by the study, NIST estimates there are additional significant inefficiency and lost opportunity costs associated with interoperability problems that were beyond the scope of their analysis. “Thus, the $15.8 billion cost estimate developed in this study is likely to be a conservative figure,” the report states.
Examples of inefficiencies cited in the report resulting from inadequate interoperability include manual reentry of data, duplication of business functions, and the continued reliance on paper-based information management systems.
Three general cost categories were used to characterize inadequate interoperability: avoidance costs, mitigation costs, and delay costs.
- Avoidance costs are related to the activities stakeholders undertake to prevent or minimize the impact of technical interoperability problems before they occur.
- Mitigation costs stem from activities responding to interoperability problems. Most mitigation costs result from electronic or paper files that had to be reentered manually into multiple systems and from searching paper archives. Mitigation costs may also stem from redundant construction activities, including scrapped materials costs.
- Delay costs arise from interoperability problems that delay the completion of a project or the length of time a facility is not in normal operation.
Following the sections explaining the empirical data, the NIST report shares the views of many of the stakeholders interviewed for the report. Issues raised include the interconnectedness of various forms of interoperability. “Owners and operators, in particular,” the report summarizes, “were able to illustrate the challenges of information exchange and management due to their involvement in each phase of the facility life cycle. In summary, they view their interoperability costs during the operations and maintenance phase as a failure to manage activities upstream in the design and construction process.”
Owners and operators were not the only ones to express such frustrations regarding the costs they bear. During interviews with the three other stakeholder groups, many of the same issues were discussed. They reported that interoperability costs do not simply result from a failure to take advantage of emerging technologies, but stem from a series of disconnects, both within and among organizations, that contribute to redundant costs.
The report is authored by Michael P. Gallaher and Alan C. O’Connor (RTI International) with John L. Dettbarn, Jr., and Linda T. Gilday (Logistics Management Institute) for NIST. The report was prepared for Robert E. Chapman, Office of Applied Economics, Building and Fire Research Laboratory, NIST, and sponsored by the NIST Advanced Technology Program Information Technology and Electronics Office.