'Cost as information' for construction supply chain improvements

The construction industry is challenged to improve its work processes and reduce costs. Contractors have the clearest view of work done and how costs are incurred as they estimate the cost of work to be carried out, agree costs to a client and then carry out the work. However, in construction subcontractors’ undertake around 70% of a project and so work done and project costs must be considered as a supply chain. This being the case, improvements in site operations and a reduction in costs require working collectively between the main contractor and their supply chain. The advent of Building Information Modelling (BIM) has been presented as enabling more detailed information and analytical modelling capabilities. In BIM, cost is just another item of information that can be created and manipulated within the model giving advantages of automation, detail and rich data access. However, to take advantage of BIM, the nature of the costing process needs to be clarified and made robust. This encouraged an exploration of "cost as information" in the construction project supply chain by analysing current practices of creation of cost information deep within the supply chain; the flow of cost information through the supply chain and the effect of cost information on recognising improvements in site operations. Supported by a UK main contractor, the project was given access to their estimating, operations and supply chain. The research firstly investigated, via non-participant observation, semi-structured interviews, document reviews and workshops, how cost information is created and flows from forecasts of work to be carried out, to costs to a client. The research then investigated the effects of contractors’ current costing practices on decision-making about improvements through the supply chain. The study provides data on the actual practices of estimating and cost control in a unique investigation that makes connections between costing practices within individual organisations and across the supply chain. The findings reveal that despite cost information being presented in formal cost models, detailed estimates of costs created in organisations are lost and corrupted as cost information flows through the supply chain. People recognised that, despite being presented as hard information in formal cost models, cost information is used in a soft negotiable world in which subcontracting is run as a set of commercial decisions in which price bargaining is a key aspect in bidding for projects and in delivering projects. The findings also revealed that project scheduling also involved much negotiation in which planning and re-planning of work packaging and construction methods was undertaken in the 2 delivering of projects. Participants viewed formal cost models as effective for tendering and payment purposes. But the incompatibility between the formal and informal routines of cost handling and project delivery mean that formal cost models are not trusted for reflecting improvement. This has implications for immediate moves to automate the current process of costing in BIM, as this may produce non-viable results and so cannot be justified for the assessment of improvement. This thesis uses the information-use model of Beynon-Davies (2011), involving the data aspects of cost (forma), the communication of costs (informa) and the system of costing (performa), to interpret both the methods of costing and the system of costing. Through the lens of "cost as information" this thesis proposes a systemic change in costing processes and the use of new representations of cost that better represent work done in the supply chain to provide meaningful, manageable and measureable. The softness and negotiability inherent in the process means that hard representations such as cost are surrogates for evaluations and actions. Thus, for an effective representation in BIM research needs to refocus from the pursuit of greater detail in current formal cost models towards finding and agreeing a new surrogate. This thesis proposes an information ontology, which represents costing of the system of construction delivery. This will be called a systems ontology of costing. The ontology includes measurement of dependencies that can support collaborative decision-making, using soft system approaches, about improvements deep in to the supply chain. This systems ontology of costing in the supply chain is argued to be of value in developing new analytical models of costing in BIM that can link design, programming and management for identifying, evaluating and costing real improvement in work done. As the thesis found that project scheduling also involves much negotiation, future work to analyse and evaluate "construction planning as information" would provide data for specifying the nature of future measurements of dependencies in the continually changing conditions of construction projects, that would better link costs to work done.