Measuring the Value of Construction Soft Costs

To gain transparency into the process of design and construction, detailing, and BIM (building information modeling) activities, owners need a way to monitor the construction coordination process. Construction coordination activities are listed as an overhead cost in the contractor’s general conditions. These costs are overhead activities, including office expense and project-management expense. These are known as soft costs, as opposed to the hard costs of physical installed construction. Soft costs are invoiced as percentages of the monthly pay application, which track to the end of the project.

Hard costs, the physical construction costs of the project, are submitted as invoices against actual construction progress. These costs are validated by field observation by the designer. The builder submits a progress pay application to collect on the work completed. The architect and builder review the pay application, and approve payments based on completion. As BIM and coordination activities are represented as an overhead soft cost, the builder submits a percentage of costs as part of the pay application review.

Means and Methods

How a contractor completes the work is described as means and methods. In traditional design and construction contracts, the designer provides design intent to the owner in the form of drawings and specifications. The owner delivers those documents to several contractors who bid on the project. Once the contractor is chosen, construction proceeds. First by creating their own construction documents—coordination, shop, and field installation documents—which are reviewed by the design and owner’s team to determine if the contractor understands the design intent of the project.

Builders have created the role of VDC (virtual design and construction) project manager to oversee BIM and model coordination activities, correctly identifying that the construction model; the construction BIM, is a virtual representation of the physical building. However, the owner, by allowing the contractor to continue to treat modeling as a soft cost, rather a representative twin of the physical building; the virtual building, that should be monitored and adapted as the modeling progresses, forfeits the ability to assist the builders in creating a model that continues its usefulness beyond the construction cycle.

Monitoring the Activities

To gain insight into the builder’s activities of coordination and detailing, some owners take the lump sum value of detailing submitted at the beginning of the project (a line item in the contractor’s schedule of values) and track it through the review of modeling time cards.

Review of time cards and tracking of that time against the coordination progress by continuous review of the model allows the owner opportunity to monitor and observe the coordination progress, ensuring that it follows their requirements and design intent.

In traditional design and construction contracts, the owner is the nexus between the designer and builder. Weekly time card and model review, of both design and construction models, and their combination during construction provides the owner with valuable knowledge that their design requirements are being met.