The Future of Construction

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Waltham, Mass.—As readers of HQ know, companies can demand an awful lot from a well-designed building: that it enhance productivity, attract top talent, motivate existing employees, burnish the brand and contribute to a healthier planet.

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Photo © Jeff Goldberg/Esto

Autodesk’s new AEC headquarters may represent the future of construction.

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Project delivered $65,000 below target

37% (est.) savings on energy costs

Certified LEED-Platinum

Pride of Place

Just as you probably wouldn’t go to a barber with a lousy haircut, or patronize an auto-body shop whose owner drives around in a dented jalopy, you might think twice, if you’re an architect, about purchasing cutting-edge design software from a company occupying the sort of space that Autodesk had been in: “a boring suburban building,” as Jay Bhatt, Autodesk’s senior vice president of architecture, engineering and construction (AEC) solutions, describes it.

“Our customers have very high design expectations. The headquarters of the world’s most important AEC software company can’t look like an insurance agency,” adds Phil Bernstein, Autodesk’s vice president of building industry strategy & relations.

And it’s not like Autodesk could hide the uninspiring space it formerly had: As with many big-ticket, enterprise-wide software vendors, Autodesk often invites potential clients to its home office to experience what its product can do—so it was judged critically important that its new AEC headquarters “come across as a next-generation facility that encourages customers to see we’re a company they want to do business with,” says Bhatt.

Two key customer-centric components of the new space: A 5,000-square-foot gallery featuring customer designs from all over the world; and an intensively designed customer-briefing center. “We’ve seen a marked uptick in the number of customer briefings since the new headquarters opened,” says Bhatt. “People are really interested in coming to see the site.”

“The briefing center is booked solid all the time,” adds Bernstein—and not only for client events. Industry associations such as the local chapter of the American Institute of Architects have used the space for social events—exposing the Autodesk brand to other potential customers. 

The space is not only about customers, either. As with any company that depends upon its employee brainpower, Autodesk must have a space that energizes its staff.

“We expect our employees to develop tools that help our customers build great things, do groundbreaking design work, create infrastructure that will last 100 years,” says Bhatt. “So we absolutely needed to create a building, using our own tools, that would serve as a constant reminder to them that they aren’t just collecting a paycheck—they’re doing something vitally important.

“And we succeeded with a gorgeous design: an office building where people feel good about where they are spending 10 hours a day and that gives them pride about what their work makes possible. What a motivator that is,” says Bhatt, who adds that a once-unheard-of sighting is now quite common: employees taking their families on tours of their workspace.

And what does Bernstein like most about the space? “It captures the character of what we do as business; it exemplifies a very modern view of the world and demonstrates an office where people are working on hard problems in a collaborative way.”

Concludes Bhatt: “It’s an amazing example of our walking the walk. Instead of telling people what they can do with our tools, we’re showing them.”

And when Autodesk created a list of performance expectations for the new headquarters of its largest division by revenue, the Fortune 1000 software company wanted the space to deliver all those benefits.

But Autodesk, one of the dominant suppliers of the software used to design the world’s buildings and civic infrastructure, asked something even more of its headquarters: that it do no less than “represent what’s important for the entire future of the AEC industry,” says Jay Bhatt, Autodesk’s senior vice president of architecture, engineering and construction (AEC) solutions. 

The future, in Autodesk’s view, revolves around three key concepts that will affect everyone who designs and constructs—and owns and occupies—buildings.  And its headquarters is meant to showcase the enormous potential benefits of each one of these ideas—and the “peril” of ignoring them, says Bhatt.

 “We built this headquarters to demonstrate to our customers what’s possible with a technology-driven process change to the design and construction industry,” says Bhatt.  “With this headquarters, we’re telling the world we can build in a fundamentally different way.”

Adds Chris Leary, a principal and project director at the architecture firm of KlingStubbins, which designed the headquarters: “The intent was to challenge conventional construction practice—to use the project as a test bed for how to do it all better.”

What this headquarters shows can be accomplished, Bhatt says, are offices built:

•  much faster (from design concept to occupancy was eight months on this project, which involved fitting out the interior of a just-completed, 61,000-square-foot speculative office building);

• cheaper (finished for $65,000 below the final target, with lots of design enhancements added as the project progressed well below budget);

• more sustainably (Bhatt estimates about 37 percent savings on energy costs on this building that just received LEED-Platinum certification for its interiors);

• more safely (no accidents);

• and with no litigation.

Big Idea #1: BIM

It’s no exaggeration to say that commercial construction is one of the most inefficient industries in the country—perhaps even the most. Huge amounts of waste—in time and material—are endemic to the traditional process. In fact, construction is the only non-farming U.S. industry where productivity has declined since the 1960s; in most other industries, it has skyrocketed.

Like many others, Autodesk believes that BIM, or building information modeling, is a technology (and also, really, a different way of thinking about the building process) that can eliminate much of this waste and will therefore play an increasingly essential role in construction—which, if true, is great news for the company, which is a leader in BIM software (see HQ’s article defining BIM).

In its essence, BIM enables all parties to a building project—architects, contractors, owners, etc.—to collaborate around an acutely accurate digital model (as opposed to paper-based blueprints) that is universally shared and updated whenever a design change is made.

In practical terms, among the many benefits BIM can deliver: identifying during the design phase the innumerable costly “clashes” that plague the construction process (like an HVAC duct running disastrously into water pipes) rather when they are usually discovered—on the building site, which requires work to be stopped and extra money to be spent as the problem is fixed. “With BIM, you fail on the desktop not in the field,” says Bhatt.

BIM can also enable subcontractors to order the precise amount of material they need—instead of the traditional padding that occurs.

The savings implications are potentially enormous—upwards of 20 percent of a typical project’s all-in costs are attributable to the sort of waste BIM can reduce. And considering the trillion-dollar-plus size of construction spending—a good chunk of the American GDP—removing this waste would actually make a significant contribution to improving the efficiency of the U.S. economy as a whole, Bhatt points out.

Another BIM benefit: the biggest expense of a building is actually not its construction, but operating it over its entire lifecycle, and the BIM model can serve as an incredibly powerful owner’s manual that can help better manage energy and maintenance costs for decades to come.

In the case of Autodesk’s AEC headquarters, the use of BIM software also directly contributed to Bhatt’s favorite detail: a striking undulating wooden ceiling whose form dominates the first floor. Building this element on site would have been too cost prohibitive (about $700,000), but it was modeled in Autodesk’s own BIM software and then machine-fabricated offsite (for $280,000).

“I love the way it looks, and I love the change in process it represents, with the industry moving to more efficient off-site fabrication,” says Bhatt. 

Big Idea # 2: IPD

IPD, or integrated-project delivery, is such a radical concept today that Phil Bernstein, Autodesk’s vice president of building industry strategy & relations (and an architect himself), estimates that Autodesk’s AEC HQ project is one of only about 10-15 “100-percent pure-play” IPD projects undertaken in the United States. But with the benefits to owners of the IPD approach so powerful—in theory, at least—he predicts we could see many more over the decade ahead.

The best way to begin explaining IPD is to contrast it with the status quo: On the typical construction project, there is usually a contentious, even adversarial relationship between architects and contractors, and there are stringent contractual barriers between them. This is due in part to the extreme concern with liability. Both sides are eager to make sure that the blame for anything that goes wrong on the job—as it often does—falls on the other party. The owner is left trying to referee where the fault lies, and these disputes often wind up in court.

Also the norm on construction jobs: many of the subcontractors, paid by the hour, actually make their money on change orders and mistakes. “The profit structure is based on waste—it’s sad but true,” says Bhatt.

In an IPD project, the owner, architect and contractor become, in essence, a singular contractual entity for the duration of the building project; the parties to the agreement all have a financial stake in the outcome and promise not to sue each other except in cases of gross negligence.

For the owner, this approach carries with it a tremendous possible upside: the incentives in the contract are structured such that profits are allocated based on delivering not necessarily the cheapest building, but the highest-value one as determined by the owner in terms of a more comprehensive package of performance metrics: quality, speed of delivery and, of course, cost.

This team-based method, with the risks and reward shared by all parties, alters the very psychology of those working on a project, says Bhatt, with the focus shifting from worries over liability to cooperation. “People can feel like they’re working not for themselves, but for the good of the project, because it’s on that basis that they’re getting paid—and the contract has them feeling confident they won’t get bitten in the butt for this more owner-friendly approach.”

Adds Bernstein: “I think every owner would prefer a situation where people are getting paid on outcomes. With IPD, the owner is saying, ‘This is what I want, and I’m willing to pay for its achievement; fail to achieve this, and I’m not paying.’ If they blow my outcomes, the first thing I start spending to address it is the money set aside in contingency, which is where their profit comes from. That is an extremely strong motivator.”

“It’s no longer an us-and-them situation,” says architect Leary. “Because us is them.”

Besides the advantages that can accrue to any owner using IPD, Autodesk had an added incentive to choose the IPD approach: It’s difficult to execute an IPD project without BIM software, which provides the collaborative capability, transparency and pinpoint design accuracy required.

Because it’s such a dramatically different way of working—and of structuring contracts—owners inspired to pursue the IPD approach will find there is a limited pool of architects and contractors ready, willing and able to do them. But to help their members overcome their concerns, two of the largest AEC organizations—the Associated General Contractors of America and the American Institute of Architects—both have developed IPD contract templates, which should aid in the mainstreaming of the concept.

IPD also requires owners to be involved at every step of the construction process, so they need to be ready to make that level of commitment; and they need some level of sophistication with the building process—not at the level of a licensed architect, but of the sort that an experienced director of real estate or facilities has. Bernstein also thinks the appeal of IPD may grow at such a pace that we’ll see “a bunch of consultants” offering IPD advice to owners.

IPD does require a certain appetite for risk. “As an owner, I’m taking a leap of faith that the design and construction process will perform so much better without the threat of litigation that I’m giving up the right to sue,” says Bernstein. “But for me as an owner, having been through enough projects, I knew two things: One, I take a risk [with a non-IPD project] because I ultimately have to clean up any problems anyway; and two, litigation is the least efficient way to resolve a matter. It takes forever.”

What were some of the specific benefits Autodesk realized as a result of the IPD approach?

“We upgraded finishes, equipment and other elements in the project from funds that were generated by the inherent efficiencies of the IPD approach. … We believe that such improvements were valued at approximately 7.5 percent of the base construction budget,” says Bernstein.

Autodesk, for example, tripled the amount of conference space at its new headquarters to encourage collaboration. With the extra funds made available, it was able to enclose these spaces in glass instead of standard walls.

“Just because we’re the building-design division doesn’t mean we got any extra money from corporate to spend on this project,” says Bernstein. “But thanks in part to our use of the IPD method, we have by far the nicest office in the portfolio.”

Big Idea #3: Sustainability

The third key concept that Autodesk’s headquarters is meant to embody is sustainability. “One of our main goals was to show that building LEED-Platinum buildings is an economically viable decision for everyone, including for-profit corporations,” said Bhatt.

And just as Bhatt sees macroeconomic implications in greater BIM adoption, so, too, does he see the issue of building green as a matter vital to the national interest.

“Our being less energy dependent starts with buildings,” he says. “Everything else is just Band-Aids if we don’t fix buildings, which account for 35 to 40 percent of all our electricity usage; and 30 percent of all energy. And we can create an entire new economy around greening buildings—creating [untold] number of on-shore jobs and benefiting humankind.”

Concluding Quotes

What are some of the lessons owners should take away from the Autodesk experience?

“Owners are very commonly unhappy with the building process, and they like to complain about the process,“ says Bernstein. “Well, they need to be willing to try something very new to change the experience.”

Agrees Leary: “The industry is trying and failing time and again to squeeze the waste out with conventional practices. If we want different results, we need different practices.”

“There is clearly some risk to doing things differently,” adds Bhatt. “And exercising that change muscle is never easy, especially for an industry so heavily wired to one way of doing business.

“But the good news is, for people pushing these changes,” Bhatt continues, “anyone not on board with BIM and sustainability is going to miss the boat and become utterly irrelevant at some point soon. Regulations will require that only sustainable projects be built, and BIM is a key facilitator to driving green design.”

Says John Tocci, CEO of Tocci Building Cos., the general contractor on the Autodesk project: “The argument about to BIM or not to BIM is over. The benefits are irrefutable. Only the malingerers persist to resist.”

As with anything in business, Bhatt is sure that BIM, IPD and sustainability will become more universally embraced concepts when the profit case is made more explicit. “We can’t allow BIM, LEED-Platinum and IPD to be perceived as ‘do-gooding’—but not monetizable. We have to create profit structures visible in spreadsheets so everyone can get comfy around these concepts and can be clear around how to make money with them.”

And Bhatt’s last bit of advice? “Owners need to be the biggest advocates for the changes in the construction process that will cut the massive waste involved in a building project. It’s in their economic best interest to do so.”