NIST Study of Cost of Construction Industry Inefficiency

NIST Study of Cost of Construction

Industry Inefficiency

The National Institute of Standards and Technology (NIST) performed a study

of the additional cost incurred by building owners as a result of inadequate

interoperability (Gallaher et al. 2004). The study involved both the exchange

and management of information, in which individual systems were unable to

access and use information imported from other systems. In the construction

industry, incompatibility between systems often prevents members of the

project team from sharing information rapidly and accurately; it is the cause of

numerous problems, including added costs, and so forth. The NIST study

included commercial, industrial, and institutional buildings and focused on

new and “set in place” construction taking place in 2002. The results showed

that ineffi cient interoperability accounted for an increase in construction costs

by $6.12 per square foot for new construction and an increase in $0.23 per

square foot for operations and maintenance (O&M), resulting in a total added

cost of $15.8 billion. Table 1–1 shows the breakdown of these costs and to

which stakeholder they were applied.

In the NIST study, the cost of inadequate interoperability was calculated by

comparing current business activities and costs with hypothetical scenarios in

which there was seamless information fl ow and no redundant data entry. NIST

determined that the following costs resulted from inadequate interoperability:

Avoidance (redundant computer systems, ineffi cient business process

management, redundant IT support staffing)

Mitigation (manual reentry of data, request for information management)

Delay (costs for idle employees and other resources)

Of these costs, roughly 68 percent ($10.6 billion) were incurred by
building owners and operators. These estimates are speculative, due to the
impossibility of providing accurate data. They are, however, significant and
worthy of serious consideration and effort to reduce or avoid them as much
as possible. Widespread adoption of BIM and the use of a comprehensive
digital model throughout the lifecycle of a building would be a step in the
right direction to eliminate such costs resulting from the inadequate interoperability of data.