BIM: a behavioural economist’s view

Professor Michelle Baddeley and Dr Chen-Yu Chang from UCL’s Bartlett School of Construction and Project Management are exploring the potential and pitfalls of collaborative BIM, a project funded by RICS Research Trust.

BIM offers rich opportunities for using information technologies to manage and coordinate projects more effectively. Collaborative working has the potential to leverage social relationships and interactions, decreasing conflicts and opportunism within teams and throughout supply chains. Collaborative BIM combines the advantages of both, and has the potential to significantly reduce project costs and improve supply chain efficiency.

We are working with the RICS Research Trust on a research project exploring the potential and pitfalls of collaborative BIM. Using interviews and online surveys, they are applying novel insights from behavioural economic and incentive theory to explore the potential of BIM-enabled collaborative working practices, focusing in particular on lower tiers of supply chains where small and medium-sized enterprises (SMEs) are strongly represented.

Some of the early findings from this research are showing how poor information, and opportunistic use of information, can inflate transaction costs and damage supply chain efficiency, particularly at lower tiers of the supply chain.

One representative example emerged from an interview with a water infrastructure supplier: suppliers can use high-quality polymer pipes with the potential to last 10 years or longer; or they can use cheaper, low-quality polymer pipes, which still meet BIS standards, but are likely to deteriorate within a couple of years, therefore inflating maintenance and replacement costs.

At the procurement stage, clients do not have easy access to information about these quality differences, and suppliers will have an incentive to exploit their superior information by using cheap but poor-quality pipework – a cost saving for them but one which can significantly inflate the lifetime costs of a project.

Behavioural economists suggest that collaboration can reduce this sort of opportunism by building trust and cooperation and encouraging people to take a longer-term view. Applying these insights to the pipework example: if a supplier values their long-term relationship with a client, then they will be less likely to take cheap short cuts.

The survey results so far show that suppliers recognise the virtues of collaborative working in building trust and cooperation, and reducing opportunism and short-termism throughout the supply chain.

Bringing these insights about collaboration together with an analysis of BIM, we are now conducting surveys to explore the potential for BIM to embed collaborative solutions. Collaboration can help to align the incentives of clients and suppliers, but – even with the best will in the world – communication and coordination can be difficult to achieve, particularly for complex projects.

If properly designed, collaborative BIM can provide solutions: the virtues of collaboration can be harnessed with the better coordination and communication that BIM provides.

There are pitfalls too, however, and the surveys also explore some of the limits and constraints on collaborative BIM – for example, the behavioural and financial constraints on BIM uptake, especially among small businesses.

The RICS Research report Collaborative BIM: Insights from Behavioural Economics and Incentive Theory is due for publication in early 2015. The project brings together Dr Chang’s expertise in construction economics and BIM with Professor Baddeley’s expertise in behavioural economics, information economics and game theory.