Cost Benefit Analysis and BIM

Cost Benefit Analysis (CBA) is one of those rare and arcane accounting tricks accountants use to help us understand which tire, window, home appliance, or building facade system is most cost effective for the benefits delivered. Pretty rarefied stuff for most of us, but when you stop and think about it CBA is one of those data inputs we need when making good decisions in a collaborative IPD / BIM environment.

One of the great benefits of BIM is the ability to quickly substitute individual component elements for others using global commands. The BIM authoring tools do all the counting for us, we just need to put in the modifying variables like life cycle times, cost per unit measured and a benefit ranking analysis. Some BIM authoring tools allow you to store
multiple design options in a single model awaiting the day when you decide which one you want to use in the final documents. If your tool offers this kind of functionality, then as you build each option make sure you use unique model elements as you need to. I've found you don't need to spend a lot of time getting all the graphics just so, but close enough but you do need to pay attention to the data attributes of the model elements so you can accurately measure the cost vs. time vs. benefit matrix.

For instance if you have several different vapor barrier products which have some differences in installation methods, life cycle times and cost, then you can create a CBA. In the end you should know the differences in unique benefits not already accounted for in the cost such as differences in labor when the total cost will account for those as well as differences in installation. But items like required maintenance might not be included in first costs so they would qualify as a benefit. Another might be the reputation and past performance of the vendor. In the end a choice will appear and a trade-off between quality or price or benefits will drive the final decision.

The equation is 

F = N[(E x M) – C], where

F = Financial utility
N = Number of units affected 
E = Effect of the activity or product, usually measured as a statistical difference
M = Monetary value of the effect, savings from a baseline cost
C =Cost of the units affected

For a clear set of rational value to be demonstrated in the Virtual Design and Construction process we need to move beyond guesses to informed decisions. Cost Benefit Analysis is one of those tools to use which creates that value for owners and future operators by allowing them to know what the anticipated cost / benefit will be.

References and Resources:
How to Conduct a Cost Benefit Analysis
Introduction to Cost Benefit Analysis, San Jose University, Department of Economics 


  1. We at Impact Infrastructure have been thinking along similar lines. I have published some ealy work on our blog and am compiling the information into a more polished paper that should be ready to share soon. In the meantime my early thinking is here: http://impactinfrastructurellc.com/blog/?p=368.

  2. John, thanks for the comments. I'm looking forward to the additional content you will have to add to the discussion. Andrew

  3. Andrew, I have been posting some research that should form the basis of "to move beyond guesses to informed decisions."

    Cost Benefit Analysis (CBA) in BIM paper - http://impactinfrastructurellc.com/blog/?p=417

    CBA-BIM presentation at Globe 2013 - http://impactinfrastructurellc.com/assets/ii_globedeck_v7_03272014.pdf

    Literature review for using CBA in a GIS context - http://impactinfrastructurellc.com/blog/?p=548

    Linking the willingness to pay CAB concept with BIM - http://impactinfrastructurellc.com/blog/?p=643

    1. John,
      Thanks for keeping up on this line of thinking. I'll review the references and get back to you.

    2. John,
      The articles you reference have significant impact on larger scale infrastructure projects, which have enormous economic impact on regions over a long time span. I find the Willingness To Pay (WTP) discussion interesting on that scale, but it also may have a similar kind of impact at the individual building scale as well. If you look at an amenities center in a condo project, what is the willingness to pay for different amenities and how does that affect the overall unit values and salability during initial phases and for following resales. By trying different models deriving cost to develop / revenue over a time span a reasonable index for value could help a developer decide which kind of mix could perform best.
      Point being CBA does not have to be limited to infrastructure scaled projects, but can help decisionmaking at building scales as well. I'd welcome your thoughts on application John.