BIM Beyond Design Guidebook (2020)

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30 This section provides an overview of options for building a business case for BIM and methods for measuring ROI. Although several research reports and academic studies have been published on this topic, no formal methodology for developing a business case or measuring ROI has been standardized that airport owners can adopt directly. No airport spoken to as part of the research for this Guidebook reported formally measuring the ROI from BIM either as part of developing its business case or following BIM implementation to measure its effectiveness. There are aviation and non-aviation case studies where ROI was measured for elements of the BIM process. Data from these case studies will be presented in this section. The airports that adopted BIM early shared the common elements of having a strong BIM champion and a vision of how BIM could contribute to meeting strategic and operational challenges. Larger airports have been leading the way on BIM implementation, expecting that it would improve their ability to rapidly and efficiently add new infrastructure and would enable them to meet projected growth demands. Large airports also saw BIM as a program that would improve communications and collaboration among their diverse group of airport stakeholders by breaking down the siloed data stores each group maintained to support its work processes. Although ROI is difficult to measure precisely, the areas where airports can expect a positive ROI from BIM (see Section 4.5.4) include • Maintenance costs avoided through improved maintenance planning. • Uninterrupted operations through improved asset management. • Labor productivity through improved planning, collaboration, and communication. • Greater capital efficiency with shorter construction durations and improved management. U.S. airport organizations that were early adopters of BIM are DEN, Massport, PANYNJ, and SFO. LAX and Seattle-Tacoma International Airport (SEA) are in the early stages of implementing BIM as a life cycle process and will begin the implementation phases in 2019–2020. LAX and SEA developed their preliminary business cases primarily on their experience with contractors on their capital projects who were using BIM. As it became clear that the architecture-engineering- construction (AEC) industry was rapidly adopting BIM, these airports thought they needed to understand BIM better to manage future projects. Also, they needed to understand BIM post- construction benefits. This section will explore building a business case for the use of BIM at an airport and will present options for measuring the effects of BIM on specific operations. This section will not provide a precise way of measuring the total organizational ROI from BIM, but will identify mechanisms for receiving feedback on how BIM is performing. An airport should not introduce S E C T I O N 4 Pre-BIM Activities— Financial Analysis

Pre-BIM Activities—Financial Analysis 31 BIM with the expectation that it will produce immediate returns. The up-front investment and the time it will take an airport to adopt and integrate BIM processes into its day-to-day operations will likely take several years to recover. Another option for airports building a business case for BIM is to include an investment in BIM as part of a larger business case for improving strategic facility asset management. This section will include a discussion of how BIM can support the adoption of a strategic facility ALCM approach such as in ACRP Research Report 172: Guidebook for Considering Life-Cycle Costs in Airport Asset Procurement (Fortin et al., 2017), the ANSI APPA 1000-1 – Total Cost of Ownership for Facilities Asset Management (TCO) – Part 1: Key Principles, and ISO 55000. When evaluating the value of any business investment (whether in construction, capital investment, or an improvement to facility or business operations), the focus needs to be on the stakeholders and the intended outcome for those stakeholders. This focus means that the scope of the business case needs to include the impact on both current and future busi- ness processes. A common problem with many investments in technology-enabled improve- ments, such as BIM, is the failure to fully understand the business processes that will be affected. To avoid that misunderstanding, BIM’s primary benefits include the following: • Improving access to and use of facility data through one single source of truth (a database) • Providing visualization of how resources are being utilized and how investments might be prioritized to address demonstrated deficiencies by establishing relationships between financial and physical assets • The additional depth of analysis offered by adding geographic attributes to facility data Any financial analysis of the benefits of BIM needs to incorporate end-to-end business processes throughout a facility or organization to capture all potential returns. 4.1 Developing a BIM Business Case Business cases may take different forms and be developed on different levels depending on an organization’s objectives. Because of this, there is no generally accepted standard for how a business case for BIM implementation should be developed. In the case of large airports, early adopters of BIM, the business case was informal and primarily driven by the vision of a strong internal BIM champion. Also, there was the recognition that BIM was being produced as part of large capital projects regardless of the airport’s contractual require- ments for plan production and delivery. In short, BIM was becoming a standard operating procedure in the AEC industry for major projects because it saves time and money for the AEC consultants and contractors. Airports recognized that there is a significant cost to not adopting BIM as a standard and to requiring AEC entities to convert their BIM to meet existing 2D plan delivery standards. An alternative to developing a formal business case is to create a BIM roadmap that commu- nicates the long-term vision and benefits of BIM in defined stages. A BIM roadmap is easier to develop and can be very useful in the early stages of BIM adoption to illustrate how BIM can benefit each airport stakeholder group. An example of a BIM roadmap for a Korean Rail project is included in Appendix D. While a BIM roadmap or a strong BIM vision led by an internal champion may serve as a starting point for beginning BIM implementation at an airport, a more detailed business case may be required for approval of the budgetary resources needed for the BIM program. Regardless of scope, all business cases share one common goal: to provide a structured process for evaluating decisions and measuring their outcomes. While defining financial metrics

32 BIM Beyond Design Guidebook plays a key role in the process, business cases can include both tangible (measurable) and intangible (difficult to measure but otherwise valuable) outcomes as part of the evaluation process. Business cases will include the following: • Reasons. What improvements is an organization trying to make, or what problems is the organization trying to solve with this new program? What decision(s) is an organization building the business case to evaluate? Why is this new program needed? • Options. What are all the possible solutions, and what happens if nothing is done? Why was the selected approach chosen? • Benefits/Disadvantages. What are the expected tangible and intangible benefits? What are the specific levels of benefits, the time range for achieving those benefits, and the methods for measuring them? What are the potential costs, disadvantages, or trade-offs that may result from implementing BIM? • Timescale and Costs. What are the expected time investment and costs required for the effort to achieve its goals in a phased approach? • Risks and Opportunities. What are the major downside risks to the effort and upside opportunities that could enhance the expected benefits? In the case of BIM, the “reason” the business case is being developed needs to be well understood. Is BIM being evaluated as a core, enterprise-wide organizational capability that supports strategic operational and asset management activities? Or is the business case being developed to assess the use of BIM more tactically, focused on one or more BIM uses (such as maintenance scheduling or energy analysis)? As part of a BIM roadmap, the business case may include a mix of both enterprise-wide and tactical phases staged out over a few years. The CIC Research Program at Penn State has published a template for developing a BIM business case with its BIM Planning Guide for Facility Owners—Version 2.0 (2013). This business case template, “Business Case for Organization BIM Integration—Version 1.02,” outlines the sections of a BIM business case as the following: • Executive summary • Introduction and background • Problem definition, goals, and objectives • Proposed BIM uses • Cost-benefit analysis • Implementation timeline • Final recommendations The BIM Planning Guide for Facility Owners—Version 2.0 and “Business Case for Organization BIM Integration—Version 1.02” are freely downloadable under a Creative Commons license (“Business Case for Organization BIM Integration—Version 1.02” is available as Appen- dix B of this report). The examples that follow of the development of an enterprise-wide and tactical BIM business case are based on the templates provided by the CIC Research Program. The standard sections and approach in the business case template should map well onto any standard format used at an airport. The following structure for a BIM busi- ness case is based on the CIC Research Program’s “Business Case for Organization BIM Integration—Version 1.02.” 4.2 Example 1: BIM Enterprise Business Case A BIM enterprise business case would be used when an organization is evaluating an enterprise-wide adoption of BIM as a core tool/process for the development, management, and sharing of facility data. BIM may be supporting a shift to the adoption of a more comprehensive

Pre-BIM Activities—Financial Analysis 33 LCC approach to ALCM such as ISO-55000 or TCO. When airports were asked about their BIM uses for O&M as part of a survey for this Guidebook, the top three uses were asset management, maintenance management, and space management/planning. Other uses included work order management, condition assessment, internal QA/QC, capital planning, sustain- ability planning, operational management, and disaster planning. 4.2.1 Data Needs Assessment It is important that the development of an enterprise-wide business case begin with an overall strategic planning effort that includes an organizational data needs assessment. This assessment will identify how facility data are being utilized, where there is a need for more accurate or accessible facility data, and where opportunities exist for BIM to improve overall organizational performance. The needs assessment provides information that is vital to the development of the business case problem statement and sets the stage for collaboration of all the organization’s stakeholder groups in developing solutions. There is an organizational strategic plan template included with the BIM Planning Guide for Facility Owners—Version 2.0 (CIC Research Program, 2013) that includes tools that can be used as a starting point if an airport does not already have a preferred strategic planning tool/ methodology. 4.2.2 Problem Definition, Goals, and Objectives Definition of a problem forms the basis of a BIM roadmap. The problem definition or statement should include a discussion of any impacts of the BIM initiative on organizational structure and culture. A core principle of BIM is the sharing of data to improve workflows, coordination, and communication. Siloed data and isolated workflows are common occur- rences (not limited to airports); the potential change to a more collaborative culture may be challenging for some and so must be addressed in terms of the potential benefits received from implementing BIM and the potential risks of organizational resistance to new BIM processes. The Bew-Richards wedge was developed to illustrate the UK BIM Level 0 through 3 capa- bilities progression and is relevant to any strategic/enterprise BIM discussion. Reading the Figure 4-1 diagram from left to right shows how BIM supports a move from 2D CAD to a comprehensive life cycle management process. A BIM CMM Matrix (see Section 3) is a tool that can be used as part of the needs assess- ment to define the organization’s BIM capabilities and goals. These capabilities and goals would be measured against a variety of different elements such as the existence of a BIM champion, executive management support, BIM uses and project management processes, BIM LOD, facility data needs, software and hardware infrastructure, and the personnel with the required education and training. Current levels of each would be evaluated, and the target levels would be defined to support the goals defined in the enterprise BIM strategy. 4.2.3 BIM Uses and Cost-Benefit Analysis The airport’s overall strategy and goals for BIM will define which BIM uses will be required to support the achievement of those goals. Cost-benefit analyses should be performed for each of these BIM uses. The overall cost-benefit analysis for airports will include the contributions from each BIM use. It may also include cost savings due to resource sharing among BIM uses. For example, the spatial modeling done for energy analysis may substantially reduce the

34 BIM Beyond Design Guidebook Source: Scottish Trust Organization Figure 4-1. Bew-Richards BIM capabilities wedge. amount of modeling needed to support space/property management and thereby reduce the cost of space/property management modeling. Also, there may be difficult-to-measure, or intangible, benefits that need to be evaluated on a qualitative basis (such as improved commu- nication, culture, and knowledge management). Each BIM use analysis should also include an assessment of associated risks or negative outcomes and the mitigation strategies needed to address those negative outcomes if they occur. These need to be as fully explored as potential benefits before approving a BIM use.

Pre-BIM Activities—Financial Analysis 35 4.2.4 Key Performance Indicators To effectively manage organizational change, measures must be put in place to provide feedback on how well those changes are performing against the BIM implementation plan. Key performance indicators (KPIs) should accompany each BIM use business case. For example, the BIM use of “BIM for Energy Analysis” should establish a process by which to review and compare energy utilization against pre-BIM baseline figures between similar types of facilities. Another example might be the average time per asset to enter assets in the CMMS at project handover/commissioning. This feedback can be used to fine-tune BIM processes to improve the ROI or, in some cases, to discontinue a BIM use based on poor results. Likewise, tangible, measured, positive results can be used to justify the expansion of some BIM uses. Enterprise BIM business cases need to be living documents that are updated and refined based not only on the internal business metrics collected but also on changes in the AEC and facilities management industries. BIM and other innovations in enterprise information management are still rapidly evolving. This will deliver additional opportunities for increasing efficiency over time and will expand currently evolving opportunities for the use of BIM beyond construction. 4.3 Example 2: Tactical Business Case for Individual BIM Uses Rather than being evaluated as part of an overall organizational/enterprise strategy, BIM can be evaluated from the perspective of adopting the use of BIM for a specific purpose (i.e., for energy analysis or maintenance planning). This process would follow the same steps as those for the BIM enterprise business case, but the process would focus on a single BIM use. This use of tactical business case development may be the best approach for airports wanting to begin pilot studies of BIM before investing time and resources in evaluating a larger, strategic use of BIM. “Business Case for Organization BIM Integration—Version 1.02,” the business case template developed by Penn State’s CIC Research Program, could be used to develop a business case for a specific BIM use. The example that follows begins with the “Problem Definition.” The “Business Case for Organization BIM Integration—Version 1.02” template also includes an “Introduction and Background” section, where an airport could include some specific details about its organization and any experience it has had with BIM. 4.3.1 Problem Definition, Goals, and Objectives for a Hypothetical Example The sections that follow describe a hypothetical example of a business case that could be developed for the singular use of BIM to improve a backlog of facility maintenance work orders. Problem Definition In the hypothetical example, the backlog of preventive maintenance is typically exceed- ing the airport’s benchmark goal of a maximum of 8 weeks. A time study has shown that the average planning time for each work order includes 2 hours of time to collect data about the site and to perform preliminary site investigations. The existing as-built data for the facility are organized by project, not by location, requiring maintenance staff to review multiple plan documents when detailed site data are required. A pilot using BIM for maintenance planning will test whether BIM can significantly reduce the hours spent in facility data collection as part of work order planning.

36 BIM Beyond Design Guidebook Organizational Mission and BIM Vision The mission of the Airport Maintenance Department in the hypothetical example is to manage, maintain, repair, and remodel the airport’s infrastructure and facilities; provide a safe and comfortable experience for passengers, airlines, concessionaires, contractors, and airport staff; and to manage energy utilization and optimize sustainability of airport facilities. Organizational Goals Goals and objectives of the hypothetical pilot program to use BIM for maintenance planning are listed in Table 4-1, along with their priority. Planning Team Members For the development of a business case for any specific BIM use, a list of contributors must be developed identifying who will develop the business case, and who can answer related ques- tions from the rest of the organization. For the hypothetical example of using BIM for main- tenance planning, contributors who will develop the business case might be the following: • Vice president of operations • Vice president of engineering • Vice president of finance • Maintenance supervisor • Director of asset management • Director of information, communications, and technology 4.3.2 Proposed BIM Uses Following the problem definition in the hypothetical example, the planning team develops proposed BIM uses and assesses their current and desired maturity levels (see Table 4-2). (Descriptions of Maturity Levels 0–5 are provided in Table 4-3.) 4.3.3 Cost-Benefit Analysis, Benefits, and Metrics The following describes performing a cost-benefit analysis of the proposed BIM uses (work order planning, emergency response, and asset management) and metrics defined for the hypothetical example. The actual values identified are for purposes of illustration only and are not meant to benchmark. Priority Goal Description BIM Objective High Reduce unplanned outages affecting passengers and airlines Use BIM to reduce preventive maintenance backlog, implement continuous improvement methodologies, and support improved reporting and response High Minimize downtime due to unplanned outages Use BIM to reduce planning and response time to outages High Provide rapid response to emergencies Share BIM with emergency responders to improve their knowledge of a site in preparation for a response as well as their readiness on arrival Medium Provide more accurate location data for asset inventory Use BIM to supplement CMMS asset data with asset coordinates Source: “Business Case for Organization BIM Integration—Version 1.02” template Table 4-1. Goals and objectives of the hypothetical pilot program to use BIM for maintenance planning.

Pre-BIM Activities—Financial Analysis 37 BIM Use #1: Work Order Planning In the hypothetical example, the first proposed BIM use is in work order planning. There are three goals for this use of BIM: • Goal 1: To increase the percentage of work orders that can be completed within the initial site visit. BIM can provide an accurate location and list of necessary equipment for purposes of tool selection, work performance, and safety planning. • Goal 2: To reduce the time spent per work order in facility data collection. A single, combined, complete, facility BIM can provide the required site analysis and context required for work order planning. BIM can also easily show how systems are connected to augment troubleshooting. • Goal 3: To reduce the response time for unplanned utility outages. The same reduction in facility data collection for planned work orders will also benefit unplanned work orders. Table 4-4 provides an example of how individual metrics/goals could be set and measured by an organization in order to evaluate the benefits derived from BIM. The values provided in X Current Process BIM Use Description Current Maturity Desired Maturity 1 Work order planning Maintenance planning As-built facility data reference 0 3 2 Emergency response Site visualization and analysis Share 3D model for response scenario planning and hazard identification 0 4 3 Asset management As-built facility data Integrate BIM asset location data with CMMS facility data 0 4 Source: “Business Case for Organization BIM Integration—Version 1.02” template Table 4-2. Current and proposed maturity levels for proposed BIM uses in the hypothetical example. Maturity Level Description (0) Non-Existent A process has not yet been incorporated into current business processes and does not yet have established goals and objectives. (1) Initial A process produces results in which the specific goals are satisfied; however, they are usually ad hoc and chaotic. There is not a stable environment to support processes with the inability to repeat such and possible abandonment in time of crisis. (2) Managed A process is planned and executed in accordance with policy; employs skilled people having adequate resources to produce controlled outputs; involves relevant stakeholders; is monitored, controlled, and reviewed; and is evaluated for adherence to its process description. (3) Defined A process is tailored to the organization’s standard processes according to the organization’s guidelines, has a maintained process description, and contributes process related experiences to the organizational process assets. (4) Quantitatively Managed A process is managed using statistical and other quantitative techniques to build an understanding of the performance or predicted performance of processes in comparison to the project’s or work group’s quality and process performance objectives, and identifying the corrective action that may need to be taken. (5) Optimizing A process is continually improved through incremental and innovative process and technological improvements based on a quantitative understanding of its business objectives and performance needs and is tied to the overall organizational performance. Source: “Business Case for Organization BIM Integration—Version 1.02” template Table 4-3. Description of BIM maturity levels from “Business Case for Organization BIM Integration—Version 1.02,” developed by Penn State’s CIC Research Program.

38 BIM Beyond Design Guidebook Table 4-4 are provided purely for purposes of demonstrating the process, not as examples of what an airport organization should be adopting as goals. BIM Use #2: Emergency Response In the hypothetical example, the second proposed BIM use is in emergency response. The main goal in this use is to improve effectiveness of emergency responders and improve under- standing of potential hazards. BIM can be used by emergency responders (police, fire, and others) to review the airport’s facilities virtually, examine hazards, and model different scenarios of response. Although it is difficult to assess a direct economic value of this BIM use, it strongly supports the airport’s mission to provide a safe and secure travel environment. Table 4-5 provides an example of how individual metrics/goals could be set and measured by an organization in order to evaluate the benefits derived from BIM. The content provided in the table is provided purely for purposes of demonstrating the process, not as examples of what an airport organization should be adopting as goals. Benefit Goal/Objective Benefit Calculation Estimated Value Response time to emergencies Accurate facility data available to all airport emergency responders Reduction in response time n/a Emergency preparedness 25% reduction in time to develop and maintain a disaster plan Improved preparedness of responders n/a Disaster scenario response simulation Provision of input into the design/renewal of facilities Improved security/safety design of new facilities n/a Table 4-5. Example metrics/goals for using BIM to enhance emergency response capabilities. Benefit Goal/Objective Benefit Calculation Estimated Value Average work completion time Reduction of 2 hours per overall work order 30,000 average work orders/year resulting in 60,000 total maintenance work hours $3 million Average work order planning time Reduction of 1 hour per work order 30,000 average work orders/year resulting in 30,000 saved work hours in planning $1.5 million (included in average work order time savings) Average # of site visits required to complete work order Reduction of 50% Reduced staff and vehicle traffic at the airport related to maintenance activities Included in average work order time savings % wrench time Wrench time increased 15% Additional 15% of total maintenance technician time available to reduce preventive maintenance backlog Included in average work order time savings Reduced preventive maintenance backlog Average backlog reduced to 4 weeks, All peaks above 8 weeks eliminated Timely preventive maintenance of assets will result in longer average asset life 10%–15% of total asset value Total safety incidents related to work orders Safety incidents reduced by 30% Fewer trips required per work order reduce at-risk time spent on-site 30% claims reduction and lost hours Table 4-4. Example metrics/goals for using BIM to enhance work order planning.

Pre-BIM Activities—Financial Analysis 39 BIM Use #3: Asset Management In the hypothetical example, the third proposed BIM use is in asset management. The main goals in this use are to improve the quality and accuracy of asset location data within the CMMS and reduce the time to perform asset inventory and facility condition assessments. Table 4-6 provides an example of how individual metrics/goals could be set and measured by an organization in order to evaluate the benefits derived from BIM. The values provided in Table 4-6 are provided purely for purposes of demonstrating the process, not as examples of what an airport organization should be adopting as goals. 4.4 Managing Cost and Risks “Business Case for Organization BIM Integration—Version 1.02,” the business case template developed by Penn State’s CIC Research Program, presents a sample table for tracking costs that has been adapted here as Table 4-7. In an actual cost-benefit analysis, the table would be populated with actual and average salaries and estimates of the amount of time individuals would commit to implementing BIM. Category Item Salary Time Factors Cost Planning Cost: Process and Standards, Business Case BIM champion Annual salary Percentage of time allocated Max and min of % of the time % of time multiplied by salary Planning team members Average salary Average time all Max and min number of staff % of time multiplied by salary Education and Training Classes and on-the-job training Average hourly rate Hours of training Max and min time required and # of staff Average rate times total staff hours of training Software Authoring Viewer Integration n/a n/a Max and min # of licenses # of licenses times the cost of licenses Hardware Workstations Servers Tablets Scanners n/a n/a Max and min # of workstations, tablets, and scanners # of devices times the cost of each device BIM Development Single facility BIM n/a n/a Size of the facility and selected scope of BIM BIM-authoring costs per square foot (sf) Learning Curve Additional work hours Average hourly rate Average hours until proficient Max and min ranges for proficiency Average hourly rate multiplied by average hours until proficient Source: Adapted from the “Business Case for Organization BIM Integration—Version 1.02” template Table 4-7. BIM business case cost. Benefit Goal/Objective Benefit Calculation Estimated Value Asset inventory accuracy and facility condition assessment Establish coordinate- based asset locations, and reduce asset inventory time by 20% Asset inventory time and facility condition assessment time reduced by 4,000 hours/year $200K Table 4-6. Example metrics/goals for using BIM to enhance asset management.

40 BIM Beyond Design Guidebook 4.4.1 Risk Assessment Organizational and cultural change can be difficult to manage and the use of BIM can fundamentally change the way teams communicate and collaborate. Organizational resistance is just one of the risks that BIM implementation can face. Table 4-8, adapted from “Business Case for Organization BIM Integration—Version 1.02,” shows some risks organizations commonly face, but it is likely that each organization will also face risks unique to its own culture and work environment. 4.4.2 Implementation Timeline Although there are significant financial and operational benefits to implementing BIM for some uses, the implementation timeline should be phased to enable the airport to measure whether cost-benefit returns are matching expectations. A phased implementation plan also allows staff the time to develop the skill sets required to maintain BIM for those uses. Additionally, enough time needs to be invested in organizational engagement and change management. The example phased timelines that follow reflect an enterprise use of BIM. The length of each phase will vary based on organizational size and complexity. This phasing could be reused as part of a BIM roadmap to illustrate the long-term vision of the airport organization. Phase 1: 0–12 Months Needs assessment, baseline measurements, process development Phase 2: 12–18 Months Pilot BIM facility development and testing, training Phase 3: 18–30 Months Initial pilot, data collection and measurements, process refinement Phase 4: 30–36 Months Test refinement, assess results Phase 5: 3–5 Years Expand program to other facilities and BIM uses 4.4.3 Recommendations The final sections of the business case would include final recommendations and any asso ciated data used to support those recommendations (e.g., preliminary time studies, PARETO break- downs of maintenance activities). For example, maintenance PARETO (see Figure 4-2) analysis predicts that 80% of maintenance resources are consumed and driven by 20% of the assets. Focusing on modeling these assets and associated systems can yield the most immediate benefits. The two business case examples previously discussed are provided only for guidance in the process and are not meant to emphasize these BIM uses as priorities. The figures used are not meant to reflect any industry benchmarks. The next section will explore methods for calcu- lating a financial ROI from BIM uses. While the three example BIM uses and prioritization discussed in Sections 4.3 and 4.4 provide a method for analyzing the impact of BIM on an Risk Risk Likelihood Risk Impact Risk Mitigation Measures Recommendation Organizational resistance Medium High Maximize stakeholder engagement before BIM initiatives Acceptable Cost too high Medium Medium Deploy in phases to carefully assess results before larger commitments Acceptable Unable to find qualified staff to maintain BIM High High Invest in early training and developing of new staff. BIM phasing needs to allow enough training time Acceptable Source: Adapted from the “Business Case for Organization BIM Integration—Version 1.02” template Table 4-8. BIM business case risk assessment table.

Pre-BIM Activities—Financial Analysis 41 airport’s ability to support its vision and mission, an estimation of ROI provides a more detailed, financial view of the investment in BIM (see Section 4.5). 4.5 Measuring BIM ROI ROI from BIM is difficult to measure comprehensively. The difficulty in measurement is because of the complex interactions BIM can have with the development of facility data and on the difficulty in measuring the benefits of improved communications and collaboration on an organization’s performance. A few case studies exist where ROI was measured with some precision. One study involves two very similar buildings, one that was designed using BIM and one that was not; the similarity of the two buildings meant that performance metrics could be directly compared with one another (Giel and Issa, 2013a). This type of situation is a rare circumstance. For complex organizations like airports, making this kind of comparison precisely is difficult, and it is thus hard to predict ROI. Consequently, many studies have chosen to survey “ROI expectation levels” in the absence of methodologies to capture more precise figures. Measuring ROI from the technology and process improvements delivered utilizing BIM can be a complex task. While industry studies consistently identify high BIM ROI expectations from owners, contractors, and architects during design and construction, these studies are often qualitative. The facility management industry has not produced many quantitative BIM ROI studies. The quantitative studies that exist have been focused on a narrow aspect of BIM, such as using BIM for asset creation (Eastman et al., 2008) or reduction of change orders and request for information (RFI) during construction. The industry experience with the use of BIM during design and construction has created the expectation that there will be a corresponding positive ROI from the use of BIM during facility O&M as well. ROI can be used in various situations and for various purposes. In the financial industry, where investment and value are precisely measured and monitored, ROI is calculated and Figure 4-2. Facilities maintenance PARETO chart example.

42 BIM Beyond Design Guidebook distributed routinely and expeditiously. It is not the same case for a technology investment impacting assets and processes, such as BIM. This is especially true in the operation and main- tenance period, which often gets lower priority than the design and construction phases, and where there are typically fewer data available. Despite this, there are approaches to consider in determining ROI (or value derived) from investing in BIM to support the operation and maintenance of airport assets and facilities in the post-construction period. 4.5.1 ROI Methodologies A distinction needs to be made between an ROI methodology and an ROI calculation. The methodology is the overall approach to making the calculation. Inherent to all the calculations is the comparison of return (value/benefit/gain) to the amount of investment made. Some calcula- tions involve the time value of money and discounted cash flow analysis, while others use only nominal amounts. ROI can also be realized by risks mitigated through the use of BIM-enhanced preventive/predictive maintenance abilities to anticipate future failures and prevent them. The selected ROI approach can depend on a variety of factors, including the following: • The complexity of the project/asset being analyzed • The useful life of the project/asset, which serves as the basis for the analysis period of useful life • The required assumptions, level, and quality of necessary data • The purpose of the analysis being performed (to justify a decision or to select an option/ alternative) In selecting methodologies and calculations, it is helpful to consider an overall ROI framework and its separate elements. NCHRP Research Report 866: Return on Investment in Transporta- tion Asset Management Systems and Practices (Spy Pond Partners, LLC, et al., 2018) utilized the following: • Definition of investment and base cases • Identification of benefit and cost categories • Methods of calculating/estimating benefits • Relationship of benefits to performance measurement • Determining the ROI and reporting • Consideration of uncertainty 4.5.2 Baseline and Investment Cases Establishing baseline and investment cases for BIM ROI purposes is often problematic. The comparison can be retrospective (where the investment has been made, and data are available from both before and after the investment was made) or prospective (where the baseline is the current state, and the investment case is based on the most likely future estimated outcomes). There is another approach that has been used by the Oregon Department of Transportation (DOT). Its ROI methodology was a current state based on 5-year-old integrated geographic information system (GIS) technology. Through a survey of staff and available current data, the Oregon DOT calculated the ROI based on the estimated efficiency and cost savings applied over the entire prior 5-year period. A pre-BIM state served as the baseline. These cases can be based on a facility using pre- and post-implementation data (if available) or comparing similar projects (one using BIM and one without BIM). The latter approach was used in some of the early BIM ROI analyses, focusing only on the design and construction phases (Giel and Issa, 2013a). Another approach for BIM ROI analysis is to find a similar BIM-based project in a comparable industry and adapt it to the base case to determine the impact of the investment.

Pre-BIM Activities—Financial Analysis 43 When there are not suitable BIM investment cases available, established industry benchmarks can be used to create models to simulate the most likely future results by applying them to the base case (IFMA et al., 2013). No matter which approach is used, it is best to have sufficiently detailed baseline data to make the comparison meaningful. 4.5.3 Investment/Cost The BIM investment should include the full extent of implementation costs. These invest- ments can generally be categorized as follows (CIC Research Program, 2013): • Software purchase and maintenance costs • The labor cost of new/relocated staff • Staff training costs, including travel time and lost productivity • The labor cost of a BIM planning team, its leader, and any BIM champion • Workstations and maintenance costs • Network infrastructure improvements and maintenance • Process change costs—organizational adjustments, process documentation, and BIM learning curve • Maintenance updates of BIM • Design authoring of BIM • Integration costs with other organizational data systems This last area of integration with other data systems is important in that it allows BIM benefits to be maximized over the entire airport. BIM integration with both CMMS and financial reporting systems enables financial and asset management data to be better coordi- nated and utilized in decision making, not only for improved management of assets but also for analysis of alternatives, rate setting, and cost recovery. When it comes to BIM benefits, however, this integration of systems can make it difficult to differentiate between those benefits derived within one system and those derived in another and to decide how to best allocate benefits between the two. 4.5.4 BIM Benefits BIM provides benefits over the entire life cycle of a project: from design and construction, through O&M, and ultimately through asset decommissioning. This reduces the TCO of an asset. Within the operating and maintenance component of the life cycle, the items listed below were cited as BIM ROI areas to focus on at a 2013 National Facilities Management and Tech- nologies (NFMT) conference (Starkov et al., 2013): • Labor utilization savings (shorter work order time) • Utility cost reduction (energy savings/efficiencies) • Fuel and material savings (less travel and waste) • Risk management (quicker response times) • Regulation compliance (auto checking codes) • Space optimization (smart algorithms) • Improved inventory management (spare parts) • Data accuracy/quality (asset location and condition) A more comprehensive list of BIM benefits for facility management can be found in the “GSA Building Information Modeling Guide” (2011). Within an ROI framework, benefits can also be categorized as directly impacting the asset/ facility or indirectly providing value. For example, energy cost savings will directly show up as a facility cost reduction. Other benefits will not result in direct cost reductions in a specific facility,

44 BIM Beyond Design Guidebook but will result in cost savings or other efficiencies across the overall airport (i.e., time savings through regulation compliance). There are also other BIM benefits that can be termed “strategic” or “enterprise level.” These relate to improving the long-term condition of assets and enhancing value through avoiding maintenance costs, as well as extending an asset’s life. These enterprise- level benefits are measured through both financial and non-financial strategic performance measures. Improved airport customer satisfaction is an important non-financial example. This stratification of benefits can be viewed as a three-tiered approach to returns from BIM investment that can be applied to assets/projects across an entire organization: 1. Direct ROI/value—where the return can be measured at the asset/project level 2. Indirect ROI/value—where the return is shared across the asset/facility 3. Strategic value—where the benefits accrue to the entire organization and are measured or evaluated against overall strategic objectives While most BIM benefit areas are based on cost or time savings, there can also be situa- tions were BIM can positively impact airport revenues. For example, space optimization can increase rentable square feet within a terminal or cargo facility. Accelerating the delivery of a revenue-producing capital project can lead to quicker receipt of revenues and an increased value of the revenue on a net present value (NPV) basis. 4.5.5 Determining Benefits—Measurement, Calculation, and Estimation The most significant, and typically most complicated, component of an ROI framework can be the determination of benefit value: how to quantify, calculate, or estimate it. The nature and level of available data will drive this process. In situations where there are integrated financial and asset management systems, direct financial data are likely more available. Depending on the manner in which labor is tracked and the level of detail tracked and accounted for, time and efficiency savings can often be measured and monetized using appropriate available hourly rates. When data are less available, other options can include applying savings rates from other, similar projects/assets or industry benchmarks to the base costs or surveying staff involved in the process to develop estimated savings rates that will be applied to respective functions/activities. 4.5.6 BIM Benefits/ROI and Asset Performance Measurement Many organizations maintain financial and asset management information in separate silos and include coordination and reconciliation of related data only when necessary as part of the planning and reporting processes. However, there is widespread recognition of the critical role that financial and asset management information systems provide in sustaining any ongoing operation or organization. Without the assets, there is no basis for the generation of revenues and income (key components of any financial return). BIM as a tool for improved asset management and asset maintenance can provide a sub- stantial benefit to the financial management of the airport. BIM can also improve the quality/ reliability of the airport’s infrastructure in providing services to passengers, airlines, vendors, and the local community it serves. Performance measurements for BIM can be organized as shown in Table 4-9. The direct financial impact from BIM, in terms of measurable revenue enhancement, is difficult to determine except in a few emerging applications (such as using BIM to identify the best locations for ad placement within an airport terminal). Determining indirect financial benefits, in terms of

Pre-BIM Activities—Financial Analysis 45 time saved, is a better focus for BIM ROI at airports. The value of time can be looked at in a variety of ways. The value of time can be determined by looking at time saved • Directly through operation and maintenance efficiencies, • Indirectly through organization and process improvements, and • Value realized through cost savings/productivity improvements. The value of time can also be determined by looking at time gained • Through extending asset life—higher residual value—balance sheet impact and • Through more useful years of revenue production—impact on long-term financing capability/ capital capacity. Each of these areas must be examined when measuring the potential indirect impact of BIM on an airport’s overall performance. In addition, the benefits delivered through improved asset protection (inventory, condition assessment, and risk assessment) have potential value in building strategic customer relationships with airlines, cargo carriers, concessionaires, and other tenants that play a key role in strategic airport growth. While difficult to measure, these factors must also be considered as part of the intangible contribution to ROI. 4.5.7 Performing the ROI Calculation Several critical aspects of measuring ROI have been discussed in this section, but how does an airport select the best approach to meet its needs? While some methodologies have been discussed, the ROI calculation should adopt the following basic steps. Establish Objectives Starting with a business case will define the airport’s objectives, or desired goals and expected benefits, from BIM. More than likely, BIM is an enabling element of a larger strategic objective at the airport and needs to be understood in that context. The strategic objectives may be attracting new airlines or route traffic, improving asset management, expanding sustainability programs, or managing existing growth trends. Define Metrics/Benefits Select metrics that will provide measures of the airport’s objectives. These might include service-level improvements important to airlines, such as reducing unplanned outages/gate failures; improved response times to unplanned outages; and improved facility condition indexes. Below this strategic level, the BIM-specific metrics that support these higher-level objectives should be defined. For example, asset locations based on BIM coordinates enable Value Area Value Measure Financial—Direct Directly Measurable Revenues/Savings Financial—Indirect Measures Convertible to Cost in Dollars (Time/Labor) Asset Condition Facility Condition Index/Avoided Costs/TCO Risk & Management Safety The Probability of Avoided Costs Level of Service Operating Statistics Customer Satisfaction Survey Results Other Strategic Elements Tailored to Strategic Objectives Table 4-9. BIM asset performance benefits.

46 BIM Beyond Design Guidebook more rapid response time to unplanned outages and may also enable improved preventive maintenance programs that reduce unplanned outages and improve facility condition. As noted previously, the benefits can be direct and/or indirect and tangible and/or intan- gible. Performing a survey of airport staff may be a useful tool for measuring intangible benefits. In measuring ROI, it is important to include all types of benefits in the calculation, as these will be balanced against the costs. Failing to identify key benefits will make the ROI fall short of actual results. Define the Costs Initial start-up costs and recurring maintenance costs must be defined. Also, achieving the forecast relation between costs and benefits for a BIM program will take time and will not progress in a linear pattern; there will always be a learning curve for new technology and processes. In most cases, the adoption process for new technology will follow the “J-curve” (see Figure 4-3), which predicts that a period of learning (in which performance decreases) precedes the period of expected performance improvements. This initial lag in predicted gains should be accounted for in the ROI. The benefits of implementing BIM across an organization may not be immediately apparent and may require several years of program refinement. Costs of implementing BIM include the following: • Software—authoring, viewing, analysis, collaboration, document control • Integration—custom programming required for integrating BIM into CMMS, enterprise asset management (EAM), space management, and other legacy data systems • Network—network and security upgrades for airport access to BIM • Hardware—upgraded workstations, tablets for field uses, scanners for as-built capture • Training—formal classroom education • On-the-job—field experience to achieve competency • Consultants—if required for pilot or to support migration to BIM • Process and standards—developing standards and processes for internal airport organiza- tional use and external use by contractors/consultants/vendors • Facility BIM development—cost to establish initial BIM for an airport (or selected portions) • External—cost for contractors, vendors, and other airport suppliers/stakeholders to adjust to new standards and requirements Recurring costs also need to be identified: • Facility BIM—cost to maintain BIM to accurate existing conditions • Training—cost to maintain trained staff • Staff—additional permanent staff required to maintain BIM • Consultants—if required to support BIM Figure 4-3. J-curve for new technology adoption.

Pre-BIM Activities—Financial Analysis 47 Measure the Baseline If the metrics selected are well established and baseline data already exist, then the data need to be collected and analyzed to understand how these metrics have performed. If no historical data exist to establish a baseline for the metrics, then the airport should begin a program to measure these data to create a baseline. The maxim that “if you can’t measure it, you can’t manage it” applies here; without a baseline, an airport cannot measure the benefits or costs of BIM. Measure the Pilot Program An airport that wants to establish a BIM program should establish BIM processes and standards and perform a pilot program. It is vital to establish standards rather than imple- ment BIM in an ad hoc manner, to be sure of what the airport should be measuring. Deploying BIM is more than purchasing software or hiring consultants. To accurately measure ROI, the outcomes (measured metrics) must be measured against the inputs (the process refinement contributed by BIM). Failing to control either side of this equation will provide inaccurate data. If the pilot program is built around one project, it is important to fully understand how the selected project is similar to or deviates from historical projects that are being used as a baseline. If an enterprise-wide pilot is being implemented, try to maintain similar team structures within the organization for both the baseline measurements and the measurement metrics taken during the pilot program. The goal is to collect the metrics in as similar an environment as possible, with the single variable being the use of BIM. Make certain an effort is made to collect data and input from external stakeholders. Although the costs of BIM borne by contractors and vendors may not be measured, the effects of these costs may be that some vendors no longer bid on projects, increase their bids, or include larger contingencies. Although directly measuring the cost to external stakeholders is not feasible, surveys can provide qualitative input for the cost side of the ROI equation. Interim ROI Calculation After a pilot project has been completed, perform ROI calculations. The formula can be represented as [ ]( ) ( )= −ROI Value of BIM Benefits Value of BIM Costs Value of BIM Costs This formula is simple, but the components are composed of a variety of complex elements. For example, the Value of BIM Benefits and Value of BIM Costs can be reviewed over 1 year or over 10- to 20-year periods (which may be more appropriate if factors related to extended asset life are included). In these cases, the benefits/costs needed to be examined from an NPV accounting perspective so that future benefits/costs are evaluated regarding the current value of those investments and can be compared equally with other possible investments. How are intangible benefits used in ROI calculations? Intangible benefits are those that cannot be accurately measured (or are difficult to measure). In the first part of this process, the BIM metrics were tied to specific strategic objectives. The intangible benefits can be used to show how potential ROI from BIM (or other possible investments) connects with the airport’s strategic objectives. If an airport is choosing between potential investments, these intangible benefits can be used to show which investments most strongly support the airport’s strategy. 4.6 ROI Industry Standards A variety of methodologies that can be used to measure BIM ROI within an organization or on a project basis have been discussed. Although data are sparse with regard to measured ROI outside of the areas of design and construction, there have been some published case studies

48 BIM Beyond Design Guidebook addressing specific BIM uses and applications. These studies may provide some guidance in the early stages of building the business case for BIM before having any directly measurable ROI. The BIM Benefits for Owners (Institute for BIM Canada, 2013) provides some guidelines for life cycle BIM ROI metrics and what levels of return facility owners can expect to receive from those metrics. The BIM Canada guide separates the facility life cycle into planning, construction, handover, and operations. Planning is further subdivided into three elements: pre-design, design, and integration. During the planning of the project, the guide projects that there will be a 17–35% savings in time to complete the planning process with the use of BIM. Construction is divided into two elements: change orders and construction schedule. The guide projects that there will be a reduction in change orders from the expected 8–10% of the total construction cost to 0–2% with the use of BIM. In addition, the guide states that the overall construction schedule duration will be reduced by 20–28% with the use of BIM. The handover phase is split into two elements: commissioning and capital cost. The guide says that commissioning cost will be reduced by 50–98% with the use of BIM. The guidance on capital cost is that owners should anticipate a reduction in cost overruns, but the guide does not provide a specific level of savings that should be expected. The operations phase is divided into two elements: (1) opera- tions and (2) maintenance. The guide states that owners can anticipate a 17% overall savings across the total life cycle cost of maintenance with use of BIM. For the operational element, the guide states that there is “anecdotal cost recovery” reported by owners, but a specific level of cost reduction is not provided. A summary of additional anecdotal cost savings related to non-design BIM uses is provided in Table 4-10. 4.7 Airport ROI Expectations A survey of commercial aviation airports conducted in this research asked some questions related to BIM ROI. Airports were not required to answer all questions, so the results shown herein vary in the number of total answers received. 4.7.1 What Expectations Does the Airport Have for BIM ROI? An expectation was expressed by 19 of 29 responding airports (65% of respondents) that BIM would have a positive ROI (see Table 4-11). A break-even or better result was expected by 22 of 29 respondents (75%). Only three respondents indicated they did not think BIM would be worth the cost involved. 4.7.2 What Does Your Airport Consider to Be the Primary Contributors to ROI? Responses to the survey indicated that the strongest perceived ROI was in design and construction, where BIM has been most widely used (as shown in Table 4-12). Using BIM beyond design and construction, however, is still of substantial interest to airports. Table 4-9 shows that there was interest in using BIM to support preventive maintenance (57%) and to enable predictive maintenance (27%). BIM’s ability to provide early collabora- tion among airport stakeholders in design optimized for maintenance (57%) and operations (47%) is also seen as a strong potential ROI source. Enhanced disaster planning and emergency response times (20%) and enhanced safety and security (17%) appear to be BIM uses that still require further development.

Pre-BIM Activities—Financial Analysis 49 4.8 Strategic ALCM and BIM Building the business case for BIM may be simplified if it is included as part of building a business case for improving the overall strategic ALCM at the airport. Much study has been invested in the long-term benefits of improved ALCM, and many airports already have programs to evaluate the emerging new systems and standards such as ISO 55000 and BIM ROI Source ROI Source Reference Maintainability of Facility 40% through enabling lean maintenance design 60% of latent defects avoidable through better design “Maintainability Approach for Lean Maintenance” (De Silva et al., 2012) 28% reduction in maintenance cost Construction Industry Institute’s RT-142 Design for Maintainability, http://construction- institute.org/resources/knowledgebase/knowledge- areas/project-planning/topics/rt-142 Reduced Cost of Maintenance Planning ½ hr to 2 hrs per work order Cost Analysis of Inadequate Interoperability in the U.S. Capital Facilities Industry (Gallaher et al., 2004) Reduced Maintenance Labor and Overtime Cost ½ hr per day, per staff member, and eliminated overtime Case study of Denver International Airport (see Section 14 of this report) Operability of Facility 5%–35% increase in operational efficiency “Excellence in Facility Management, Five Federal Case Studies” (NIBS, 1998) Accurate Condition Asset Inventory Greatly reduced time spent locating assets for annual compliance report: 3%–6% savings “GSA Building Information Modeling Guide Series: 08 – GSA BIM Guide for Facility Management Version 1” (GSA, 2011) Sustainability- Driven Cost Reductions 3% energy cost savings due to increased preventive maintenance measures and lower energy cost, improved lighting, LEED compliance, and reporting “GSA Building Information Modeling Guide Series: 08 – GSA BIM Guide for Facility Management Version 1” (GSA, 2011) Note: LEED = Leadership in Energy and Environmental Design Table 4-10. BIM ROI sources. ROI Expectation % of Respondents More than 100% 0.00% 0 50%–99% 13.79% 4 25%-49% 17.24% 5 10%–25% 17.24% 5 Less than 10% 17.24% 5 Break even 10.34% 3 Net cost but worth the investment 13.79% 4 Not worth the cost 10.34% 3 Answered 29 Source: ACRP Project 09-15 Digital Survey Table 4-11. Airport ROI expectations.

50 BIM Beyond Design Guidebook ANSI TCO. The following will provide some basic background in ALCM fundamentals and standards for those airports that wish to consider implementing BIM as part of one of these programs. More detail can be found in the ANSI 1000-1 TCO Standard and the ISO 55000 Standard. Airports are heavily invested in infrastructure and other physical assets. The care and functionality of airport facilities are not only highly regulated but also often subject to stiff competition from airports around the country. Investment in facilities to keep up with cur- rent trends in passenger needs is continuous, and ensuring capacity to meet the demands of all airport stakeholders is a top priority. The demand for growth, the need to provide and maintain a secure and safe environment for air travel, and meeting new regulatory requirements are all drivers for an improved approach to strategic facility asset management and operations. BIM, with its ability to provide a collaborative and transparent platform for sharing facility asset data across airport stakeholder groups, can play a key role in supporting these larger initiatives. Since these larger strategic needs may drive the motivation to evaluate BIM, it is important that these initiatives be reviewed herein. The following is a brief overview of the developing Strategic Asset Life Cycle initiatives and a discussion of how BIM fits in with them. Airports are businesses, and businesses exist to serve stakeholders. Among the factors that weigh heavily in the success of an airport are the variety of airlines and destinations served and traveler satisfaction with airport facilities, as measured through indicators of the effectiveness of infrastructure and airport operations. The 2017 North America Airport Satisfaction Study by J.D. Power measured overall traveler satisfaction by examining six factors (in order of importance): (1) terminal facilities, (2) airport accessibility, (3) security check, (4) baggage claim, (5) check-in/baggage check, and (6) food/beverage/retail. Clearly, airport assets and their utility are core determinants of airport success. The recognition that airport assets are key determinants of business success points to the need to address management of assets strategically, by aligning them with corporate goals and objectives. Alignment of asset management to corporate goals and objectives is a key principle for achieving optimum value from assets (see Figure 4-4). Alignment, also called “line of sight,” ensures that everyone in an organization, or in this case, an airport, knows how they contribute to its success. “Line of sight” involves translating corporate objectives into asset management policy, strategy, and objectives, which then become more detailed asset management plans and activities. Alignment ensures that the actions of employees, whether they are decisions from BIM Uses Contributing to ROI Responses Improved planning 60.00% 18 Reduced design/construction cost 70.00% 21 Improved communication/collaboration 56.67% 17 Improved capital planning 30.00% 9 Enhanced preventive maintenance 56.67% 17 Enhanced predictive maintenance 26.67% 8 Operational efficiencies 33.33% 10 Reduced downtime 30.00% 9 Design optimized for maintenance 56.67% 17 Design optimized for operations 46.67% 14 Enhanced disaster planning and emergency response times 20.00% 6 Enhanced safety and security 16.67% 5 Other (please specify) 6.67% 2 Answered 30 Source: ACRP Project 09-15 Digital Survey Table 4-12. Airport BIM primary ROI sources.

Pre-BIM Activities—Financial Analysis 51 the executive level or they are O&M tasks carried out at the facility, are based on their impact to assets and the achievement of organizational goals. 4.8.1 Asset Value According to ISO 55000, “Assets exist to provide value to the organization and its stake- holders” (ISO-55000: 2014, 2.4.2, Fundamentals). It is easy to see how this quote from ISO 55000 (the internationally recognized standard for asset management) applies to airports when the criticality of such assets as pavement, lighting, signage, access control systems, airport rescue and firefighting (also known as ARFF) vehicles, and aircraft fueling systems are taken into consideration. Stringent regulatory requirements dictate the functionality, inspec- tion, and in-service or uptime minimums for these airport-maintained assets. Non-compliance with these regulatory requirements places an airport at risk of decertification. Airport assets also include terminal buildings, cargo hangars, and baggage delivery systems. Although regulatory requirements also guide the performance of these assets for issues of public safety, it is clear from this and the former list that an airport would not be open for business if these assets were not available and performing to meet customer needs. A comprehensive approach to asset management focuses on achieving the best value for the money through careful consideration, or analysis, of the trade-offs among performance, cost, and risk throughout the entire life cycle of an asset. There are many methods for performing this type of analysis. The first and most important thing required is reasonably accurate infor- mation about asset cost, asset performance, and business risk. When there is alignment between corporate goals and asset management, all this information will be found in applications that provide a single source of truth about assets. Optimum value is achieved when organizations address six primary aspects of asset management (see Figure 4-5). The six primary areas are the following: • Strategy and Planning. An asset management policy is in place that is consistent with the organizational strategic plan and that incorporates external requirements. The policy establishes a framework for the development of asset management strategies, plans, and objectives. • Asset Management Decision Making. Processes exist to evaluate and analyze capital invest- ments and operation and maintenance requirements. Activities balance the costs and Source: Institute of Asset Management, 2015 Figure 4-4. Asset management hierarchy.

52 BIM Beyond Design Guidebook benefits of asset renewal/maintenance/overhaul/disposition events. Methods ensure the best total value of asset systems or portfolios in consideration of life cycle activities and the optimal combination of costs, risks, performance, and sustainability. Resourcing of people, infrastructure, tools, and materials and strategies for shutdowns and outages are cost-effective, efficient, and safe. • Life Cycle Delivery. Processes are in place to implement asset management plans in com- pliance with technical standards and legislation. Processes include gates for asset acquisi- tion, creation, installation, and commissioning, as well as approval and release of funding, handover to operations, and monitoring and capture of actual costs and benefits. Standards exist and are in use for maintenance delivery and reliability engineering, asset operations, resource management, shutdown and outage management, fault and incident response, asset decommissioning, and disposal. • Asset Information. A strategic approach is taken to the definition, collection, management, reporting, and overall governance of asset information to support the implementation of asset management strategy and objectives. Standards exist for structure and format for the collection and storage of information and reporting and include support for management activities and decision making. • Organization and People. Processes ensure alignment of both insourced and outsourced asset management activities. Organizational leadership, structure, culture, and processes support the delivery of asset management objectives. Processes systematically develop and maintain the needed supply of competent and motivated people to fulfill asset management objectives at all levels of the organization. Source: Institute of Asset Management, 2015 (reproduced with permission) Figure 4-5. Strategic asset management framework.

Pre-BIM Activities—Financial Analysis 53 • Risk and Review. Policies and processes identify, quantify, and mitigate risk while exploiting opportunities. Processes and systems support business continuity. Processes are inter- disciplinary and collaborate to ensure a balanced, sustainable, progressive approach to economic, environmental, and social issues. Performance indicators assess asset health and current or historical performance. Business processes exist to review and audit asset manage- ment processes and asset management systems. Processes define and capture as-built, mainte- nance, and renewal costs for valuation and depreciation of assets. Methods are prescribed to engage with stakeholders. 4.8.2 Measuring and Driving Asset Value Value and how it is measured will be unique to the objectives of each organization. Value will likely include both tangible and intangible components. For airports, measurement is usually driven by a combination of statutory and industry conventions or requirements, which, at least from the financial perspective, are probably well established in an airport’s manage- ment structure. Several widely accepted measures are offered here for illustration. So far in this Guidebook, ROI has been the single term used for a financial measurement in support of a project’s or business’s performance. For enterprise-wide measurements, ROI is modified by ROA (return on assets) and ROE (return on equity). In the simplest terms, equity is what business owners have invested in a firm, whereas assets usually include owners’ equity plus borrowed capital invested in the firm. ROA and ROE are two of the basic ratios that financial managers use in assessing a business’s balance sheet (assets and liabilities). ROA is an indicator of how well assets are being managed to generate income, while ROE gauges how well the owner’s investment is generating income (investment as distinct from debt). In the discussion of ROI in previous sections of the Guidebook, no distinction was made between the business owner’s money and borrowed money in business investment (invest- ment equals debt plus equity). At the EAM level, however, analysts must drill deeper. When everything is accounted for and entered into a balance sheet, ROA equals net income divided by total assets, and ROE equals net income divided by equity. ROA and ROE are expressed as percentages, and both are tricky to interpret and only as good as the component assign- ments of asset value. That said, in the hands of qualified financial analysts (perhaps working for bond rating agencies, lenders, or regulators), ROA and ROE are tools for comparing busi- ness performance and assessing financial health. As a simple example, let’s say an airport management team decides to buy a small general aviation airport for $1 million using $500,000 of its own money and borrowing $500,000 at 3% interest. If the small general aviation airport generates $100,000 in net income the following year, ROA would be 9% ($100,000 income minus $15,000 interest divided by $1 million asset) and ROE would be 17% ($100,000 minus $15,000 interest, divided by $500,000 equity). Of course, this is too simplistic to help management evaluate all the differ- ent kinds of assets that make up an airport or the different funding sources and obligations they entail (even at a small airport). For one thing, a meaningful analysis should be looking at performance over several years. On another level, the simple example doesn’t account for the fact that the borrowed principal has to be paid back, not just the interest. However, with the introduction of a few more ratios, a widely used method developed in the DuPont Company can provide a better sense of how ROA and ROE can help managers measure and drive asset value to serve their strategic objectives. The DuPont model of financial analysis created by E. Donaldson Brown (aka “the Father of ROI”) is the basis for most ROI models. Several variations exist with endorsements from various

54 BIM Beyond Design Guidebook associations. While the variations are often couched in terms of private enterprise, it is never- theless useful to look at a couple of them to get a better sense of the components that cause shifts in “equity,” which is the business owner’s essential capital available for use or reinvestment in future periods. The DuPont analysis uses three metrics to break down ROE: • Operating efficiency (net income/equity) • Asset use efficiency (revenue/assets) • Financial leverage, as couched in terms of the “equity multiplier” (assets/equity) The International Facilities Management Association (IFMA) identifies one metric for value as ROA. IFMA follows the DuPont model in defining this metric. According to IFMA, ROA is income before debt service divided by fixed assets. ROA can be used to measure operating performance, or an organization’s ability to generate net sales from fixed asset investments, net of depreciation: =ROA Net Income Total Assets This is consistent with previous discussion. To look at the contributions of assets in deriving economic benefit, the DuPont components can be applied to ROE (which to this point has been discussed as just net income divided by equity): [ ][ ] [ ] = × × × × = × ROE Operating Efficiency Asset Use Efficiency Financial Leverage = Net Income Revenue Revenue Total Assets Total Assets Equity ROA Total Assets Equity To look at fixed asset investments in terms of identifying and analyzing specific asset contribu- tions, the ROE model is reduced to = × × ROA Operating Efficiency Asset Use Efficiency = Net Income Revenue Revenue Total Assets Using this model, ROA can be improved by increasing either operating efficiency or asset use efficiency or both. If the newly acquired general aviation airport in the simple example previously discussed is treated as a single asset, and it is assumed to have operating expenses of $200,000: Operating Efficiency = $85,000/$300,000 = 28% Asset Use Efficiency = $300,000/$1,000,000 = 30% And, as said before: ROA = 9% = [28% × 30%] A different scenario would be an airport that has a mature BIM program, integrated with an EAM program, all of which is implementable at its new general aviation facility (which had been a sleepy, paper-based operation). One aspect of the BIM and EAM programs is that maintenance staff use tablet computers in the field from which they have access and input capabilities to the BIM and EAM systems. As discussed in previous sections as well as in the case studies, one benefit of this system is savings on overtime cost. It is further assumed in

Pre-BIM Activities—Financial Analysis 55 this scenario that the transfer of the BIM and EAM systems to the new airport results in a $50,000 reduction in operating expenses, so they drop from $200,000 to $150,000 and stay at that level forever. As a result, operating efficiency improves to 45%, asset use efficiency remains at 30%, and ROA increases to 14%. On the other hand, if management imposes some EAM measures at the general aviation airport at a cost of $50,000 per year, the expense combined with the reduced overtime costs could result in overall expenses remaining the same. However, the EAM improvements cause customer satisfaction to increase so much that the fixed-based operator (FBO) handling aircraft operations can charge more for its services and airport managers are able to renegotiate the FBO’s lease, resulting in a $50,000 increase in rent. Under this scenario, operating efficiency increases to 39% and asset use efficiency also increases to 35%, resulting in ROA of 14%, as well. Moving away from quantifiable measurements, two additional approaches offered by the Institute of Asset Management are worth noting: • The value stream—a “lean” operations concept, focusing on customer satisfaction and business process mapping to analyze and contrast the current state with a future state to reduce waste. • The value chain—a strategic concept focusing on competitive advantage, where value to the customer is measured in profits (in for-profit organizations) and cost of service (in not- for-profit organizations). Values are assigned to assets that support a customer value proposition. These two approaches are especially significant for airports because they are removed to some degree from the financial accounting for net income and other strictly quantifiable measures of value. Unlike profit-driven private enterprises, airports can hurt their long- term viability by over-reliance on ROI in driving their strategic plan. This is not to say that ROI, ROE, and ROA are not important measures of an airport’s economic self-sufficiency for bonding authorities, fiduciary overseers, and other entities looking for its financial viability and value. Going back to the simplified scenario, improving both the newly acquired airport’s operating efficiency (via reduced overtime) and its asset use efficiency (via increased revenue) resulted in the same ROA (14%) as if only the measures that improved operating efficiency had been implemented and the savings were used to pay for something unrelated. What the quantitative financial analysis has missed, however, is the qualitative improvement in customer satisfaction. The Institute of Asset Management’s value stream and value chain concepts are a way to address these oversights, at least in strategic planning and management. 4.8.3 Asset Management Maturity Early studies in total quality management by Ledet and Paich (1994) looked at how various maintenance methods in manufacturing could improve equipment uptime through • Planning optimization, • Scheduling optimization, and • Preventive and predictive maintenance. The results indicated that only minimal improvement could be realized through any one strategy (<1%). However, when the strategies were used in combination, the improve- ment rose to 5%. When techniques for defect elimination were added, the improvements rose

56 BIM Beyond Design Guidebook to 19%. The exponential improvements were attributed to the motivation, or passion, of staff when tasked with the problem. The results of Ledet and Paich’s study (1994) illustrate how applying a comprehensive management system and achieving alignment, or line of sight, can improve asset manage- ment synergistically and advance asset management maturity: Asset Management maturity is the extent to which the capabilities, performance and ongoing assurance of an organization are fit for purpose to meet the current and future needs of its stake- holders, including the ability of an organization to foresee and respond to its operating context. Organizations that demonstrate Asset Management maturity should be able to foresee and respond to both the changing business environment and changing stakeholder needs in a manner that retains alignment of the various activities within the organization. (GFMAM 2015) Figure 4-6 demonstrates how asset management maturity results from addressing the six primary areas of ISO 55000. Asset management maturity means that an organization is not only taking a life cycle view of its assets, but that it also understands its risk, integrates asset data and financial data, and is committed to continual improvement. To mature in asset management means that the organization is learning and improving from some baseline or benchmark, preferably on a continuous basis. This means that an organization has reliable data for its baseline and is applying a proven model for change such as the Deming Plan-Do-Check-Act Cycle (see Figure 4-7). Source: Institute of Asset Management, 2015 Figure 4-6. Strategic asset management maturity.

Pre-BIM Activities—Financial Analysis 57 4.8.4 How BIM Supports Strategic Asset Management The biggest challenge in asset management has not been finding technology solutions, invoking meaningful change, or applying management standards, but rather to justify that asset management is worthy of strategic consideration and investment. (Fogel and Swanepoel, 2014) A historical bent toward not identifying the life cycle costs or total costs of ownership for assets leaves a void for the identification of historical costs and, therefore, meaningful cost- benefit analyses to support technology solutions. CMMSs have been established to be funda- mental tools for the management of assets, regulatory compliance, and legal defense. However, systems that offer functionality beyond work order management, such as those included in EAM and BIM, still face skepticism. From all indications, this has resulted in two distinct positions among BIM consumers throughout the United States: 1. Asset owners/operators: Reluctant to invest early for fear of implementation failure, asset owners/operators wait for others to identify clear benefits to justify the expense. 2. Contractors and developers: Contractors and developers see BIM as a differentiator. Contractors include those in design-build, design-build-operate-maintain, and design- build-finance-operate-maintain business. For firms using BIM only for design and con- struction, it is a specialty that can result in longer-term business for future design changes and additional service offerings. For firms that are in the operation and maintenance end of the business, BIM can provide cost efficiencies that lead to more competitive pricing and more desirable management services, including contemporary asset management methods, metrics, and reports. Strategic asset management implies that best practices such as LCC or TCO are in use. LCC is the accounting of costs for managing an asset throughout its life. TCO is the alignment of an organization’s mission with its investment strategy for an asset’s life cycle, including all related infrastructure and business process costs. Best practices have also come to include the use of an EAM system (formerly a CMMS) to automate planning and scheduling of preventive, corrective, and inspection work and to ensure a single source of truth about assets over their life cycle. TCO standards readily acknowledge the use of BIM as an enabler for asset management. The ANSI standard for TCO endorses BIM and suggests that the minimum location data required to support a “transparent, holistic, and efficient approach to financial management, asset management, and resource allocation” would incorporate asset attributes for geospatial locations. Core BIM capabilities include not only the collection and storage of location data Figure 4-7. Deming Plan-Do- Check-Act Cycle.

58 BIM Beyond Design Guidebook but also the capability to share that data throughout the organization for collaboration among staff with different asset management roles and responsibilities to optimize ROI. Overall, for its collaborative features, its ability to place assets in a geographic context, and its ability to integrate with EAM systems to model concepts of operations and life cycle events (asset modification), BIM appears to be the best investment to achieve long-term effectiveness and maturity in a comprehensive asset management program. Its acceptance in the United States has been slow to date, but proof of its use for advancing asset management is expected to come from countries that have adopted it as public policy. 4.9 Summary When evaluating the use of BIM at an airport, it is recommended that the process begin with the development of a business case that evaluates the strategic objectives/outcomes that would be supported by the adoption of BIM. To fully assess the business case for BIM, it is necessary to understand how BIM and its specific uses will support those strategic objectives. The airport financial environment has some unique aspects that must be considered in devel- oping the initial strategic objectives properly. Depending on the specific airport’s financial environment, the relevance of the BIM business case to airlines and other tenants may differ. Larger airports may look to aggregate long-term operating costs as part of capital budgets by negotiating long-term warranties for new facilities. Including the cost of developing BIM and collecting asset data as part of a capital program may be an attractive solution to funding BIM. For smaller airports that may need to fund BIM as an operational expense, the scope of BIM requires a more selective approach focusing on where BIM would deliver the most value. BIM as a supporting element of gathering more accurate and complete facility asset data can be strongly aligned with strategic asset management systems such as ISO 55000, TCO, and other ALCM methodologies. If an airport is currently evaluating asset management improvements, the cost-benefit analysis of BIM should be included. While the business case defines these high-level strategic objectives for utilizing BIM, ROI is the tool for defining financial objectives and the framework for measuring the success of BIM in achieving these objectives. The industry does not yet have the foundation on which to base an accurate benchmark for an ROI that airports should expect from BIM. Nonetheless, airports can design a framework to measure future ROI if they define BIM metrics and develop a baseline for those metrics before implementing BIM. It is recommended that in 5 years an ACRP project should reassess the topic of BIM ROI, as more entities around the world start to use BIM beyond construction. ACRP-managed research could review BIM-affected cost metrics from the airports now investing and imple- menting BIM, including DEN, LAX, SEA, SFO, DFW, PANYNJ, and some of the newly constructed international airports that plan on using BIM-developed facility plans for O&M. These include the Grand Istanbul International Airport (Turkey), Changi Inter national Airport (Singapore), and Beijing Daxing International Airport (China). Also, the future research should review the many non-aviation entities worldwide that are on the cusp of implementing BIM beyond construction. This will provide airports with more accurate expectations of ROI and the best framework for measurement. Section 4 Checklist 1. Determine a BIM pilot program and parameters (BIM uses). 2. Determine the benefits and costs of implementing BIM and establish current baseline cost. 3. Develop a business case for imple- menting BIM. 4. Establish BIM ROI goals.