In this installment I'd like to discuss profitability. Before I get typecast as a heartless businessman, I would like to point out that I'm a bleeding heart liberal and maintained my entire staff when every firm around me was laying off. But, in order to remain in business for very long, A/E firms should consistently turn a profit. It's a sad cold fact. But, equally sad has been the difficulty in doing this over the last couple years.
As a guest lecturer before I took the Revit teaching spot at the University of Kentucky's School of Architecture, I remember a student asking how much faster is Revit than AutoCAD? While it seems like a simple enough question, the answer is not so simple. It usually begins with "that depends" and may include "not much or no faster". While our Revit based office can go head to head with any office using AutoCAD on speed, the real benefits are in all the other features BIM offers up. But examining these added features, you would be hard pressed to identify the underlying answer to the student's question, which is actually a question of profitability. In his case perhaps a question of how can I get through architecture school with more time for sleep?
What makes BIM more profitable than CAD? While it's well established that once the construction documents are completed the firm using BIM will have fewer RFI's and Change Orders. Equally true is the fact that the level of expectations among the clients of BIM platform A/E's is higher. As a result, these clients expect more service but don't expect to pay any more for it. They expect more renderings and animation, environmental impact results, fewer Change Orders, better all around design results, etc. And while they don't expect to pay more for the additional service, the partner responsible for marketing will frequently give this additional service away in an effort to close the deal. That marketing partner knowingly or not, largely determines a firms profitability. Once fees and services are established there is little that can be done to change the financial outcome. Improvements in efficiency with reduced errors and omissions, or taking shortcuts with associated risk, round out the options.
I would highly recommend the first of these two options. A BIM strategy partially addresses the second half of the first option; reduced errors and omissions. But, rarely will you find that BIM out-of-the-box can dramatically improve production efficiency. When it comes to improved production efficiency, with a few exceptions, BIM is playing catch-up to established CAD based add-on tools, and probably will for awhile. Additionally, those time tested CAD detail libraries are hard to resist (unless you know better). Those office CAD detail libraries are possibly more responsible for firms failing to make the switch than any other excuse.
That's where the ARCxl detail library comes in. Try to find an available and convenient single source library of completed drafting details for CAD, built with quality standards, that numbers more than 42,000 ready for use in your projects. That's what ARCxl.com has done for Revit users, and there are more details and features on the way.
What about profit and ROI? While I'll be writing in more detail about profit and ROI later, I believe that there are projects of certain types that will achieve profit margins well exceeding 20% using our detail library. Most other projects will substantially benefit as well. The simple explanation is that if you can cut your total project production cost by 10% you just added 100% to your total profit assuming a 10% profit target.
Those familiar with producing small to medium commercial and residential projects with Revit, will agree that by the time you get to the construction documents phase, the majority of the actual production work has already been done. What remains is largely the detailing. If it can be agreed that detailing a BIM project accounts for 15% of the total cost of producing a BIM project, reducing this cost to 5% would give you a net reduction in total cost of 10%. This reduction of cost can now be added to a target profit of 10% or more, to achieve a 20% or more total profit margin.
