insight - currie & brown · global as we enter the last quarter of 2015, fears of a new global...
TRANSCRIPT
Insight #7
INDUSTRY FOCUSThis month it's all about BIM (business information modelling)
/ Global economy insight/ Middle East markets update/ Commodities price analysis
Welcome
Welcome to Insight #7.
In our seventh edition of Insight we once again analyse the global economy and Middle East markets.
Our focus this quarter is all about building information modelling (BIM). We examine why BIM is gaining momentum and being implemented on both goverment and private projects across the world.
We also include our commodities price analysis to keep you up to date with the latest prices.
Page one / Global
Page three / Regional
Page four / Commodities price analysis
Page six / Focus: Building information
modelling (BIM)
Page twelve / Currie & Brown offices
Currie & [email protected]
Insight #7
Insight / September 2015 / Page one
Global
As we enter the last quarter of 2015, fears of a new global economic slowdown have risen sharply – particularly for the GCC states. China, the Middle East’s largest external trade partner, experienced a sudden market blow. Oil, the source of over 50% of the Gulf’s annual income, was hit with another sharp decline in price. Conflict in Yemen and a mass exodus from Syria are also raising questions about long-term stability in the region.
Confidence in China’s consumer welfare, businesses development and state spending took a blow. Most view this state-driven economy as the catalyst for international and Middle East prosperity and therefore the ramifications of recent developments should not be understated.
So what is the source of all this negativity? There are several factors to consider here. Indicators of China’s all-important manufacturing sector have shown surprising signs of contraction, with purchasing manager index (PMI) figures dipping below 50. House prices have been declining consistently this year, highlighting an over-capacity of capital, and an over-investment and reliance on government stimulus. Furthermore, important policy changes in China and the US have exacerbated these concerns. America’s contractionary monetary policy poses a substantial financing constraint. With quantitative easing slowing and interest rates expected to be raised by the US Federal Reserve, the days of cheap debt combined with prospects of a further strengthening dollar may limit the cash needed to boost and restructure emerging markets, like China, which are so key to long-run development of the global economy. The threat of debt and tax revenue obstacles has added yet more doubt to the other key source of finance for the second largest economy in the world – stock markets.
Oil prices continue to suffer through
continued oversupply in the market.
Brent Crude is sitting at USD46.49/barrel,
which is a 54.4% negative movement in
the last 12 months.(14 September 2015)
As the Shanghai composite fell approximately 40% this quarter and commodity prices hit their lowest point in a century, many are questioning how much worse this vicious cycle of diminishing confidence can get for this Asian Tiger.
Alongside this, oil prices continue to suffer through continued oversupply in the market. Brent Crude is sitting at USD46.49/barrel (14 September 2015), a 54.4% negative movement in the last 12 months.
Is there any positive news this quarter? Of course. The US is offering some real hope, growth figures remain solid, with improvements in the labour market set to continue.
Consequently, US GDP growth has been revised up to 2.5% from 2.4% previously. Landmark steps towards improved foreign relations with Iran and Cuba have excited investors all around the world thanks to the huge commercial possibilities of entering these untapped and, soon to be, unsanctioned markets.
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SHANGHAI COMPOSITE
5k
4k
3k
2k
1kOCT '14 JAN '15 APR '15 JUL '15
2.5%U
S G
DP
RIS
ES
TO
6 MONTHS
1 YEAR
3 MONTHS
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Insight / September 2015 / Page three
Image credit: america.aljazeera.com Jean-Christophe Bott/AP
'The removal of sanctions on Iran
could provide a timely lift for the property market in Dubai after it ‘flattened out’ in recent months’
Cluttons
-8
-7
-4
-2
-2
0
SA
LE/R
EN
TAL
NUCLEAR DEAL STRUCK
RESIDENTIAL PRICE CHANGE IN DUBAI (%)
Source: Reidin
Regional
After almost a decade of dialogue and negotiations, the nuclear deal was struck on 14 July in Vienna between Iran, USA, EU, China, Russia, France, Germany and the UK. This sees crippling economic and financial sanctions on Iran lifted in exchange for closer monitoring of their nuclear programme and a freezing of any real centrifuge investment for at least a decade, essentially stopping any risk of a Persian weapon of mass-destruction.
While reduced risk of armament in the Gulf helps to restore some much-needed geo-political stability, it is the huge injection of money into Iran and access to the region’s second largest economy (after Saudi Arabia) that should bring a smile to any investor interested in the Middle East.
With a population of over 80 million people, the majority of whom are young and desperate to import and export, this nuclear deal really does appear to be a win-win for the rest of the world. Over 60% of Iran’s population are below the age of 30, raised during a time of paralysing inflation with access to a reduced range of low-quality goods and services. What would you do in their position? To top it off, there are some people hoarding trillions of Iranian rial in savings (due to double-digit inflation) and some
who will be benefactors of billions of dollars of unfrozen assets. Both demographics are bursting to invest, build businesses, trade and spend both domestically and abroad – particularly with their neighbours.
Cluttons property consultancy has published its 2015 UAE property report, which states that Iranian nationals accounted for 12% of all property transactions in Dubai in 2010. By the first quarter of this year, this figure had dropped to 3%.
The head of research at Cluttons, Faisal Durrani, said: ‘If sanctions are formally lifted as expected in January or February next year, global companies looking to target the market are most likely to set up shop in Dubai.’
The report also points out that UAE-Iran cross-border trade was AED62.4 billion last year and that Iran’s government estimates that its oil and gas sector requires AED734 billion investment over
the next five years, as well as AED18 billion for aviation.
Commodities price analysis
■ Non-ferrous metal prices derived from London Metal Exhange, whereas steel prices derived from Middle East steel price indicators; all based on average prices for the month.
■ The price of rubber derived from International Rubber Board, based on average prices for the month.■ All prices for commodities are based on bulk quantities, cash trade and US dollar. An average price has been assumed.■ The rate for beams - channels has been derived from Far East/Europe/India market.■ Cement prices derived from UAE local supplier.■ Crude oil derived from light crude Brent, US market.■ Diesel rates are from EPPCO.■ Concrete rates AED/m3 based on the average price of concrete 45/27 from four UAE suppliers.■ Reinforcement bars are taken from four UAE suppliers.
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Insight / September 2015 / Page four
2014 2015Commodities Unit Q4 Q1 Q2 Q3Non-ferrous metals Aluminium alloy US$/tonne 2,036.67 1,876.67 1,796.67 1,686.67 Aluminium US$/tonne 2,043.67 1,890.08 1,772.33 1,609.83 Copper US$/tonne 6,662.33 6,006.17 6,056.17 5,323.83 Lead US$/tonne 2,021.33 1,869.17 1,910.67 1,701.67 Nickel US$/tonne 16,095.00 15,088.33 13,053.33 10,335.00 Tin US$/tonne 20,193.33 19,017.50 15,825.00 15,305.00 Zinc US$/tonne 2,278.17 2,125.00 2,176.67 1,853.00Steel Reinforcing bars US$/tonne 578.75 511.17 445.00 420.00 Steel beams - channel US$/tonne 654.23 633.38 570.00 573.33 Hot rolled plates US$/tonne 522.50 478.50 410.00 366.67 Cold rolled coils US$/tonne 611.00 572.33 478.33 418.33 Prepainted galvanised steel, 0.35 US$/tonne 800.00 773.33 735.00 653.33 Stainless steel HR coils 304 base US$/tonne 2,791.18 2,612.55 2,293.33 1,991.67Energy Crude oil US$/barrel 74.17 58.01 58.44 50.42 Diesel (Dubai only) AED/gallon 13.25 11.99 10.98 8.59Cement Cement US$/bag 3.59 3.41 3.38 3.47 Concrete (Dubai suppliers) AED/m3 257.67 255.33 255.00 258.67Rubber Rubber US$/100kg 196.45 203.37 209.59 186.41AggregateAggregate (Dubai suppliers) AED/m3 - 350.00 350.00 350.00Gabro aggregate (Dubai suppliers) AED/m3 - 275.00 270.00 270.00Bitumen 60/70Bitumen US$/tonne - 531.69 516.26 506.35
Commodities price analysis
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Insight / September 2015 / Page five
-
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
30,000.00
35,000.00
40,000.00
45,000.00
50,000.00
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Copper
Nickel
Tin
Non-ferrous metals(2006 - 2015)
US
$/to
nne
-
15.00
30.00
45.00
60.00
75.00
90.00
105.00
120.00
Q1
Q2
Q3
Q4
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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Crude oil (2006 - 2015)
US
$/ba
rrel
-
5.00
10.00
15.00
20.00
25.00
30.00
Q1
Q2
Q3
Q4
Q1
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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Cement (2006 - 2015)
AE
D/m
3
-
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Steel beams - channel
Hot Rolled Plates
Cold Rolled Coils
Reinforcing bars
Prepainted Galvanised Steel, 0.35
Stainless Steel HR Coils 304 Base
Steel (2006- 2015)
US
$/to
nne
-
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
3,500.00
4,000.00
4,500.00
Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Lead
Aluminium Alloy
Aluminium
Zinc
Low non-ferrous metals(2006 - 2015)
US
$/to
nne
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
Q1
Q2
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2009 2010 2011 2012 2013 2014 2015
AE
D/g
allo
n
Diesel (Dubai only)(2009 - 2015)
The construction and property sector is enduring a period of prolonged economic pressure, enhanced expectation of efficiency gains as a consequence of technological advancement, and culture change. What will the medium to long-term impact of the global financial crisis be for construction? What impact will the polarisation of the market from mega global corporates to the local niche players have on procurement, tendering and contract administration? With the advance of virtual modelling of design and construction, what impact will BIM have on the participants in the design and construction process?
Firstly, what is BIM?
BIM is a collaborative way of working, underpinned by the digital technologies which unlock more efficient methods of designing, creating and maintaining built assets. BIM embeds key product and asset data and a three-dimensional computer model that can be used for effective management of information throughout a project lifecycle – from earliest concept through to operation. It has been described as a game-changing ICT (information and communications technology) and cultural process for the
construction sector. A number of countries are starting to realise the opportunities it brings and are now investing in developing their own capability. BIM processes are mainstream to both new buildings and infrastructure and have further potential in retrofit and refurbishment projects when complementary workflows such as laser scanning and rapid energy analysis are employed. BIM technology should be seen as a collaboration between the construction sector and the software industries, and creates an environment in which there are opportunities and synergies for both.
There is still a view that BIM is simply the hardware technology and software purchase – BIM in a box. However, this is simply not the case. Understanding and application of the technology are clear components, but the processes and exchange of data, information and knowledge underpin the technology aligned with the cultural changes required in order to break down the professional or disciplinary silos, so that understanding, appreciation of perspective and exchange can take place efficiently and effectively.
Why is BIM gaining momentum and being implemented on both government and private sector projects?
Using BIM for the full lifecycle can deliver better buildings, more quickly and at a lower cost than the traditional building process. Effective BIM implementation will help avoid design alterations, reducing risk and time re-working the scheme. The effective use of data throughout a building’s lifecycle lends itself to further benefits in generating long-term maintenance cost plans for the built asset. This data enables the design team to resolve design problems, such as service clashes, and can be used to inform clients about the running costs before a project even reaches site.
Detailing the BIM model upfront allows us to provide cost, energy and time saving solutions during the construction programme.
Benefits of using BIM include but are not limited to:
■ Added value to the client - clear understanding and visualisation of the building
■ Added value on site - more intelligent construction information and linked data on demand
■ Avoiding problems - improved clash detection at early design stage
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FOCUS: Building information modelling (BIM)
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■ Controlling building costs - live cost planning; review design changes and access to accurate costing
■ Understanding running costs - compare building costs and energy requirements for different design options
■ Avoiding waste - ordering accurate quantities saves money
■ Better planning - see the construction process virtually and monitor progress against programme
■ Better management - store all your building data in a central intelligent 3D database
■ Speed of design - a quick and effective way to visualise the design and build sequence
■ Utilisation and leveraging of mobile technology
It is important to state that BIM is not a magic wand that can be waved to resolve the inherent inefficiencies of the design, construction and operation of built assets. Best practice, in the digitally enabled environment, still needs to be applied to ensure that the benefits of BIM are delivered.
Best practice application
There are four key stages in the implementation of a plan for the procurement of BIM for an organisation. These stages progress from identifying the uses of the models, to putting in place the infrastructure to deliver them,
Museum of the Future, DubaiA pathfinder project for the deployment of BIM
Image credit: Dubai Goverment
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Insight / September 2015 / Page eight
such as modelling standards and contracts.
Investment has been made in a number of mature markets to develop and refine these processes and standards.
Consequently, the learning curve has been accelerated. In the Middle East, where client, consultant and constructor understanding of BIM uses and related information requirements are less well developed, the opportunity exists to engage, educate and inform on the development and deployment of BIM. The key stages are:
1. Prioritising key uses and outputs of BIM
A habit common to the successful delivery of projects is to start with the end in mind. Early interrogation of key strategic outcomes and planning for success will inform the project team members, from internal stakeholders and project sponsors to design consultants, constructors and users of the built asset, on how the model is going to be used and which information is to be created at the best time, thus avoiding unnecessary re-processing or re-keying of information. A good example of this is the early adoption of a data classification that aligns with the employer’s asset management
system – so that even though none of the model objects are populated with operational data until later, the objects can be readily linked up to existing data structures. Other examples of uses for BIM on a project include project sequencing, health and safety, energy utilisation and consumption models, and visualisation. The ability to deliver planned uses on a project depends on the capability of the team and the maturity of the client’s systems. The use of models as the basis for cost estimation relies, for example, on the project team to be able to provide a comprehensive design to an agreed level of detail as well as having a cost consultant with the software tools and systems needed to generate NRM (new rules of measurement) compliant outputs. By assessing the effort required to deliver a model output, as well as the benefit gained, clients can make informed decisions as to what the best uses of the model are.
2. Developing the processes that deliver the key uses and outputs of BIM
Processes and the exchange of information between different members of the project team are required to develop the key uses and outputs of BIM. The processes used to produce information for visualisation of
the design are quite different to those used to prepare models for use in a tender, but the models, objects and standards used are fundamentally the same. In effect, each use needs a recipe which sets out the required outputs, the steps in the process and the data that needs to be provided and processed by different parties. The key components of a successful BIM recipe are: ■ The output: Often defined by a
‘plain language' question such as: ‘Will the design meet the brief?’ Outputs typically support decisions at the end of project stages, such as before a client instruction is given to proceed to construction.
■ The processes: The combination of design, analysis and model development activities that are needed to deliver the answer. The complexity comes from the sequence of team activities and how these affect the flow of information. Some of the processes will be developed by the client, but most will be undertaken by the project team and will become increasingly standardised as BIM adoption increases.
■ Data inputs and outputs: The actual data that is needed to complete the task. The importance of defining the data requirement is to ensure that
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only the information needed to complete each use is included in the model. This tackles the risk of ‘infobesity’ – where too much information is included in models, while also making sure that the data foundations are in place for other priority uses.
Sufficient detail of the outline of these processes is needed in the employer’s information requirements (EIR) so that consultants and contractors can develop an outline response in their initial BIM execution plan (BEP). Lack of clarity at this stage could result in an incomplete BIM submission.
Employers with a large enough project portfolio could benefit from developing standard recipes focused on supporting their business process. However, detailed aspects of the processes will have to be developed by the project team – which encourages early appointment of delivery teams, programme-based procurement and effective collaborative working.
3. Documenting the exchange of data and information
Documenting the information exchanges involves a process of defining the content of the ‘data drops’ required at different project stages. Some data drops will be internal, such as the substitution of detailed design
elements provided by a sub-contractor. Others, such as the issue of design or as constructed information at the end of a project stage, will be a formal contract deliverable.
Defining information requirements is the most difficult aspect of the BIM process as it requires employers and project teams to really understand their processes and how data is used and re-used. For clients with a large portfolio of work, the benefits of investing in streamlined, automated information exchanges could be significant.
However, even for occasional clients, the ability to define information requirements for a limited number of uses using the digital plan of work is an opportunity to improve project performance.
4. Developing BIM processes
BIM processes are the infrastructure on which a successful implementation is based. They include planning tools, contracts, data exchange processes and quality control. The development of BIM processes in the UK has been concerned with ensuring that all of the building blocks of Level 2 BIM are put in place. These cover process and many aspects of project culture – giving clients the opportunity to build on an increasingly consistent
way of working which will become even more effective as project teams become more experienced.
The key components of the Level 2 suite are as follows:
■ PAS 1192:3, which defines the information management requirements associated with the operation of assets. It is an essential document as it enables employers to define their lifetime asset information and operational information requirements. It embodies the principle of planning BIM with the final outcome in mind.
■ PAS 1192:2 defines the information management for capital delivery. In common with PAS 1192:3 it defines the work stages to be adopted on a project, the use of the Common Data Environment and the format of project outputs – including structured data. PAS 1192:2 also defines the content of the EIR and the BEP – the key tools for defining the client’s BIM uses and standards and for describing the project team’s detailed response.
■ BS 1192:4 is the standard for digital information exchange using the standard Excel-based format COBie. Employers need only COBie because it is the best standard to use to enable information to be transferred from one software platform to
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another. For example, COBie will be a key solution in getting asset data out of BIM into a computer-aided facilities management (CaFM) system.
■ The digital plan of work, produced by NBS, defines tasks, information requirements and allocates responsibility for both. The standards built into it enable project teams to collaborate effectively as all parts of the team know what information will be produced and who is responsible. The digital plan of work is currently in a beta issue ahead of formal launch this autumn. It makes the planning of information exchanges much easier by defining the basic building blocks of information.
■ Standard classification, based on Uniclass, a common language of classification, makes it much easier for project teams to readily exchange and aggregate information. If a designer and a specialist contractor are using the same names to describe their objects it is much easier to substitute one for the other – reducing rework and enabling wider use of the model.
Other important building blocks of Level 2 include the BIM Protocol – a contract addendum, which creates useful additional obligations and rights associated with the production and use of
models and PAS 1192:5, the standard for security-minded digital information exchange
Knowledge management and behaviours
At its core, BIM explicitly requires the capture, distillation and exchange of data, information and knowledge. In addition to this process, the players involved also need to consistently exhibit the appropriate behaviours to facilitate this transparent exchange.
A structure for managing knowledge is formed around three core areas: knowledge, research and best practice.
Whatever the form in which it is held, knowledge is a resource that creates value principally for its owner but also for others, once it is mobilised on projects to meet clients’ needs. While considering the exponential increase in digital data, the steps to forming knowledge are:
Data = Unorganised factsInformation = Data and contextKnowledge = Information and
judgement
Knowledge, is therefore, information interpreted and applied; it is the product of people sharing, developing and adapting learning for their own purposes, kept current by the people who use it and apply it regularly.
Research is broadly described as the establishment of facts and the discovery and qualification of end results. As a process it may or may not be scientific, but it is seen to be the analysis of data or information to generate effects when results are presented as findings.
Best practice involves the methods and techniques, refined over time, that describe the optimum way of completing a task or activity that ensures that it is ‘world class’ and delivers excellence in customer satisfaction.
At its broadest level, through an effective knowledge management structure, there is a need to facilitate:
■ Connecting people with people through collaborating, assisting, exchanging ideas and experience.
■ Connecting people with information through capturing, organising, retrieving and sharing.
Sharing knowledge will enable any organisation or project team to improve business performance by harnessing and applying know-how and by giving people access to the information that they need to do their jobs. >>
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The ability to understand the current state as well as the future state of either business-wide, collaborative team or project-based knowledge management is essential. Undertaking periodic ‘knowledge audits’ will provide a marker on which to base action and implementation plans as well as measuring progress.
Behaviours
Inherent within the technological and process advances that BIM will deliver, increased transparency and openness will be available immediately. The consequential impact on individuals working with built assets will be fundamental.
This new virtual and data-intensive environment will demand increased application of knowledge, innovation and cultural awareness. Effective communication skills across a multitude of channels will be required as working across cultures, time zones and regulatory frameworks increases. Frequent interfaces across traditional boundaries will become the norm as the whole-life of the asset is considered and managed within the digital model – from concept to operational facility management and conversion of use.
Enabled by technology and facilitated through revised process workflows and interfaces, a culture of collaboration will increasingly be seen within the construction industry.
KNOWLEDGE MANAGEMENT: A 10-STEP CHECKLIST 1. Find out if there is a client for this knowledge currently or in the future2. Create a specific scope for the asset3. Form networks related to the subject4. Tag existing material related to the subject5. Provide principles/guide6. Build a checklist7. Emphasise links to people8. Validate the guide9. Publish – share the tactic and make it explicit10. Keep it alive – initiate feedback and ownership (shelf-life)
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Insight / September 2015 / Page twelve