An automated IPD cost management system

: BIM and blockchain based solution

Abstract

Integrated Project Delivery (IPD) in the Architecture, Engineering and Construction (AEC) is characterised by risk/reward sharing, deferring paying the parties’ profits until all project activities are completed, and replacing the tender stage by buyout stage without traditional biding. IPD in integration with Building Information Modelling/Management (BIM) is an optimal approach for delivering construction projects. This is, however fraught with complications, due to the lack of practical methods to direct this integration, and the inability of current cost management practices in developing accurate compensation structures, providing detailed cost information during the buyout stage (to enable parties to make the right decision), and determining fair risk/reward ratio in IPD arrangements.
This research presents a comprehensive cost management system/solution for cost estimation, budgeting, and risk/reward sharing, by presenting; (1) an innovate approach to utilise 5D BIM capabilities with Monte Carlo simulation, hence providing reliable cost estimation during the conceptual Target Value Design (TVD) stage, (2) mathematical models that are developed through integrating Activity Based Costing (ABC) into 5D BIM to determine the three IPD’s cost structure limbs, (3) a novel mechanism of managing overhead costs through distinguishing between saved resources from the organisation level to the daily task level, to increase the trust amongst parties, (4) development of a framework to generate a cash flow approach using BIM tools (considering that IPD does not include tender stage), (5) development of a model (based on the framework) that displays all estimated cost data of each package as minimum/maximum estimated cash inflow during the buyout stage, for informed decision making. Regarding the risk/reward sharing solution, extant literature has highlighted the advantages of Earned Value Management-based (EVM) method for risk/reward sharing, and how ABC method can facilitate automating the sharing process. This study proposes an innovative approach to exploit the capabilities of these techniques coupled with BIM in automating/optimising the process of IPD risk/reward sharing. This includes providing mathematical equations for risk/reward sharing and developing a model that strengthens IPD parties’ relationships.
Diverse Information and Communication Technologies (ICT) were adopted to develop the cost management system that comprises of two sub-systems; a Centralised Cost Management System (CCMS) and a Decentralised Cost Management System (DCMS). CCMS enables implementing the developed framework, and includes an integrated database for cost estimation, budget, and sharing risk/reward calculations. It is also linked with an interactive web-based management system to enable IPD core team members to check their package costs, making the decision during the buyout stage according to the displayed cash flows, access to a comprehensive financial report that includes the three main transaction in every payment milestone, and tracking the project status graphically using the developed EVM-Web grid. This system has been validated using an illustrative case study. DCMS enables all parties to control and track financial transactions, secured with no unauthorised change allowed using blockchain technology. As the first of its kind, this technology is adopted in the present study, in developing a framework to propose utilising the blockchain technology in delivering IPD-based projects. The outcome enables IPD’s core team members to execute all financial transactions automatically, through coding IPD’s three main transactions – reimbursed costs, profit and cost saving – as functions of the IPD’s smart contract. To demonstrate the applicability of the proposed framework, a proof of concept prototype is developed and validated through an IPD case project; the practicality of the built-up hyperledger network (IBM blockchain cloud beta 2) and the advantages of the proposed smart contract functions are examined. Findings demonstrate that the proposed financial system is user-friendly and very efficient in automating all transactions. No deficiency in the blockchain network components is observed. This research will foster the adoption of IPD across the AEC industry by providing a workable solution to existing financial barriers. It also opens a new horizon for researchers and practitioner to exploit blockchain in solving comparable deficiencies affecting the AEC industry.
The research findings have been validated by interviewing BIM and IPD experts. The interviewees confirmed the applicability, practicability and validity of the developed framework and tools to deal with the revealed challenges of the IPD. The findings of this research are recommended by IPD experts to be presented to the industry as a set of steps to globalise its adoption.

Date of Award	Jan 2020
Original language	English
Awarding Institution	University of Portsmouth
Supervisor	Sepehr Abrishami (Supervisor), Mark Gaterell (Supervisor) & Richard Wise (Supervisor)