BIM-FM and consequential loss: how consequential ...

Built Environment Project and Asset Management BIM-FM and consequential loss: how consequential can design models be? Oluwole Alfred Olatunji Abiola Akanmu

Article information: To cite this document: Oluwole Alfred Olatunji Abiola Akanmu , (2015),"BIM-FM and consequential loss: how consequential can design models be?", Built Environment Project and Asset Management, Vol. 5 Iss 3 pp. Permanent link to this document: http://dx.doi.org/10.1108/BEPAM-03-2014-0021 Downloaded on: 27 May 2015, At: 22:08 (PT) References: this document contains references to 0 other documents. To copy this document: [email protected] Access to this document was granted through an Emerald subscription provided by 325738 []

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Introduction BIM supports integration. This means project development data could be contributed from across multiple disciplines to form a single model which could be put to use for the entire project lifecycle. Two notions are connected to this: (a) who is the most appropriate party to own the data which had been contributed simultaneously across multiple disciplines; and (b) what is the implication of such scenario to the facility owners? The purpose of this study is to contribute to extant debates on how integrated virtual models are owned and administered for a successful project delivery. In particular, the study seeks to elicit how such virtual artefacts are propertized and owned in construction project development processes. As intellectual Downloaded by Curtin University At 22:08 27 May 2015 (PT)

property underlying a virtual model originates from project designers and the developers of the software application that had been used for the modelling, it is crucial to establish the evolution of liabilities in such an integrated platform. First, the study reviews intellectual debates on the use of disclaimers for protection against the impact of erroneous judgements and imprecision that may arise from professional services in an integrated virtual property. Later on, it looks at damages or losses that may arise as a consequence of such breaches. Study Background BIM brings facilities managers closer to project conceptualization and pre-construction stages than they were in tradition processes of project development. Olatunji and Sher (2010) have set this in context: BIM enables facilities managers to optimize their management intelligence in different ways e.g. (1) by co-opting BIM’s robust data across different project development stages; (2) by applying BIM databases to the entire project lifecycle. The deliverables from these two examples are critical: the former prevents dissipations in data integrity as a result of fragmentation issues, whilst the latter encourages interdependencies beyond domain-specific constraints. These two combined had meant that an overarching deliverable of BIM would include the possibility that facilities managers are able to prime their management intelligence protocols on BIM databases (Jiao et al. 2013). In the last decade, significant research outcomes indicate that BIM is being adopted and deployed by facilities managers. For example, Ballesty et al. (2007) have narrated how BIM has been used for the management of procurements for the Sydney Opera House (SOH). Nevertheless, it is important to note that the SOH is an iconic facility, completed before the advent of BIM. But how about new building: will BIM impact facilities management more as a retrofit or its benefits are better felt in new facilities? Jiao et al. (2013) reported that BIM

contributes to facilities intelligence whether in retrofits or in new development projects. Other studies have portrayed BIM as a new tradition in project development (see Abdelkarim, 2010 and Olatunji, 2012) and a revolution the industry has long anticipated (Luciani 2008). As espoused by William (2013), current debates on the application of BIM in FM span beyond the ability of BIM to add value to facilities’ intelligence, or whether there are sufficient market drivers for the applications of BIM in facilities management (FM). Concerns have been reported regarding whether there is sufficient knowledge on the legal ramifications of BIM deployment for lifecycle purposes (see Volk et al., 2014 and Olatunji, 2011). At least, according to Volk et al. (2014), there is the need to standardize model Downloaded by Curtin University At 22:08 27 May 2015 (PT)

ownership, data responsibility, levels of development (LoDs) of model data, liabilities and fees. Olatunji and Akanmu (2014a) have added the need to engineer the sensitivity of crossdisciplinary interdependencies in BIM’s integrated platform such that project team dynamics are capable of supporting project outcomes. In a study by Sattenini et al (2011), the researchers concluded that BIM in not an end to all FM issues, and that its main incentive for deployment is facilities’ size. A range of reasons have motivated the issues being debated on BIM-FM. One perspective is whether BIM designers and/or modellers often have the entire lifecycle stages – particularly the FM stages – in mind while designing and/or modelling. If the answer does not affirm this premise, then BIM could be assumed to add little value to FM processes. This is because FM deliverables are not in the original intentions of project designers. Another perspective is whether project models are actually targeted at FM solutions at any stage in design development processes. In an exception of retrofit modelling, there is a growing evidence in literature suggesting that designers have only often thought of the early stages of project development up to the construction stage (Olatunji 2014). As project environments will not remain the same between the very early stages of project development and the facilities management stage, these knowledge gaps are vitally critical. Issues associated with them are discussed below. Ownership of virtual and intellectual properties of design model Propertization of intellectual rights (and liabilities) has become an important subject in legal circles. Researchers have sought to know whether it is economically logical to exclusively own an intellectual right on an artefact for ever without constraints, and whether such ownerships better incentivize creativity (perhaps through competition) or they weaken

competition and democracy (Carrier 2004; Posner 2005). Carrier (2004:7) referred to propertization of intellectual property as “the recognition of defenses to rights….// the expansive duration and scope of the initial right [to exclusively own an intellectual artefact]”. Simply put, propertization is the process of developing and owning the exclusive right to administering a product (Posner 2005) – in the case of this study, an intellectual product. In design management circles, it is important to define this in the context of integration across multiple disciples and lifecycle stages – especially around the adoption of the digital artefact created by non-FM specialists for FM purposes. Whether this occurs as virtual or intellectual


properties (VP or IPs), several complex issues have been raised regarding how project models are developed, owned, administered and enforced in the different project lifecycle stages. First, is there any difference between virtual and intellectual properties? Whether distinctions between the two critically exist or not, what would such mean to the validity of a BIM-FM relationship?

Key characteristics of virtual and intellectual properties of design model Project models are virtual artefacts (see Whyte 2003), purchased at a price, for the services rendered by the designer and/or modeller in developing the product. However, it is easy to erroneously assume a virtual object is simply an unreal object – like computer games’ applications or videos that have been purchased by an end-user (see Bartle, 2004). Virtual models, as used in the construction industry, are not merely an unreal representation or simulation of real physical attributes. They represent significant interdependencies between the real and the unreal phenomenon. For example, Bartle’s (2004) description of a virtual artefact is such that a virtual object has minimal connection to reality e.g. they are invisible items and their life is limited to the unreal virtual world. Whether an active agent lives or dies in a virtual world, such occurrence is merely imaginary – the agents neither exist nor connect to real attributes in a physical life. Design and construction virtual models are beyond these: they are able to replicate and interact with real life as though they determine the validity or reality of a natural existence. The works of Olatunji and Akanmu (2014b), Olofsson et al (2008), Sattenini and Azhar (2010) and Volk et al (2014) have proven this without doubt: design models have been used to actuate site plans, auto-measure cost and time performance of projects. They are also used to optimise intelligence in built facilities and to coordinate the reactivity of digital sensors across real and unreal paradigms.

Clearly, design and construction’s reference to virtual property is unique. It is the right to exclusive ownership of virtual models. However, these models are not just made by a single developer with an intention for a monolithic whole-life application. Unlike conventional virtual objects (see Bartle, 2004), design and construction’s virtual objects are consequences of co-operative production of actors across different disciplines, made possible by specifically dedicated software applications. Invariably therefore, the intellectual property reposed in a virtual property is partly owned by design and modelling software developers, but licensed to designers and modellers (and others) who jointly contributed the data through which the models have been created. This scenario of integration is somewhat of interesting


coloration in academic debates. In particular, many crucial questions have been asked regarding interdependency issues between model authoring and model data ownership in an integrated platform. Ashcraft (2008) is of the opinion that once a model is developed through a licensed application, and by a qualified operative, the exclusive right to own the model could become transferable. There are several exceptions to Ashcraft’s position. First, end-users of modelling applications usually do not have exclusive rights to ‘absolutely’ own a design and/or modelling software and such rights are seldom transferable to project owners. Because end-users do not own the platform absolutely, they can only transfer their inputs and the deliverables thereof to their client; but not the platform itself. Why? It is because such ownership of the platform is constrained to being a vehicle for expression rather than being absolutely owned. Moreover, they can only input data; they do not have an absolute control on how such inputs interact with other data or the data coming from other contributors, and the system in delivering the model. Thus, the software could only serve as a medium of expression rather than as a medium of creation. This notion has been well established by Nakakoji (2005) and Shneiderman (2009) who suggested that both geometric and parametric platforms for design modelling are controlled agents of creativity; rather a platform for expression that might control the users’ creative cognition space. The ramifications of this argument apply to the nature of ownerships – whether to intellectual rights or virtual property – that can be claimed within shared trust, particularly across multidisciplinary boundaries. It helps in understanding how the VP/IP of BIM’s model data is owned or how facilities’ owners benefit from such ownership. For instance, does such ownership automatically become the facility owners’ once they have bought out the professional services and the rights involved in project designing and modelling? Both Olatunji (2011) and Volk et al (2014) seem to agree that answers to this challenging question

has to evolve from professional institutions. Such answer will depend on the tenacity of BIM in reshaping the sociological order of the traditional culture around product development in the construction industry. A shift such as this is a critical factor, especially when BIM is espoused to possess the ability to diminish disciplinary boundaries (Olatunji et al, 2010). Whether it is – or it will be possible – to fully buy-out contributors’ VP/IP rights, contributors need to authorize facility owners on future deployment of both the property and the rights. Where designers and modellers have not targeted design solutions at facilities management problems, it is logical to assume that the model is best kept and used within the intended purposes. On the other hand, where such design solutions have been targeted at facilities


management problems, authorization is still vital such that project models and the rights they retain are not abusive thrusts e.g. incriminating and unprofessional or unintended abuses. Another perspective to the debate model ownerships and property and rights administration is whether it is possible to definitively define the extent of liabilities that become claimable as a result of damages or losses suffered when BIM is deployed without authorization? Answers to this particular question are provided later on, under “Consequential Loss”.

Integrated ownership The debate around ownership of VP and IP to model data has been robust. BIM is often defined as a repository for the lifecycle data of a project (Penttilä, 2006). An integrated model ownership scenario spans the design, project development and the facilities management stages of project life. Consequently, the complexity in their integration includes whether it is often simple technically to have an integrated ownership of virtual and intellectual properties (VP and IP) in construction project scenarios. In particular, it is logical to explore how this will occur and how effective such integration can be. When different disciplines integrate their intellectual properties, it is often difficult to delineate liabilities (Olatunji 2014). The scenario also means none of the contributing parties wholly owns an integrated virtual or intellectual property (IVP or IIP). Unless all interests are converged such that a single entity can administer the IVP and the IIP on behalf of the contributors, coordination is always a complicated problem. An integration scenario also means facility owners can only own the virtual property in part. This is because contributors might have unlimited responsibility to make contributions (to the model) as well as continuously control the deployment of the model. For this reason, it is crucial to clearly understand the context of integration under which BIM benefits project owners, and/or the contexts within which the owner puts the virtual property to use. The significance of such

clarity is that the contributing parties owe the facility owners the duty to protect the integrity of their contributions to the integrated VP and IP beyond the point that the property was transferred to the owner (Fairfield 2005). Another expedient part of the debate is whether a contributing party can prepare model data for a particular lifecycle stage and hold an exclusive stake on a different lifecycle stage. Regardless of the possibilities under an integrated platform, there is considerable evidence to conclude that this is not always an easy argument (see Sattenini et al., 2011). For example, Dean and McClendon (2007) and Olatunji (2014) have pointed out that BIM is still largely used to replicate conventional stage-specific deliverables. As a result, it is arguable that Downloaded by Curtin University At 22:08 27 May 2015 (PT)

commitments to integrated model development and deployment are still weak. In particular, design models are largely made only for the procurement stage; and apparently there are limited frameworks around modellers’ knowledge of facilities management’s requirements. If these issues must be corrected, it could be helpful to have a broad-base understanding of the risks involved such that the design discipline will create industry-wide standards around the deliverables arising from such products. There are two key perspectives to this. Delineation of liabilities is one; administration of authorizations and reciprocity is the other. These two issues have been opened-up above; but their implications will lead us to the next stage of this review. For instance, how would project stakeholders handle liabilities where contract language and standardization issues dissipate model authors’ commitments to project success? Can an as-built model become a principal instrument for the definitive analyses of facilities management solutions where there are significant knowledge gaps between facilities management’s requirements and the designers’ cognitive space? For a leverage, contributors have often added disclaimer clauses that specify the actual intention of the deliverables that may emanate from their services and the limits of such in the face of uncertainties. But how much protections against liabilities can this offer? Answers to this are in different perspectives – see ‘Disclaimers and Integrity of model data’ below. As indicated above, the other view to this is how authorizations that underlie virtual propertizations are administered by model data authors. A theoretical interpretation of this is that the facility owner, to whom the rights to own model deliverables may be been transferred, is controlled and moderated on how the model data is put to use. Thus, there is a wide margin for the authoring parties to escape liabilities when the model deliverables are

used without authorization, or when authorized uses are abused. Nonetheless, model data authors are often responsible for the integrity of their service deliverables, beyond the tenure of a finite ‘contract language’. This is explained further under the second rule of the thumb in the section on ‘Consequential Loss’.

Disclaimers and the integrity of model data Disclaimers are used to indemnify service providers against uncertainties over which they have no control. This could include operational and situational contingencies, and wrongful, unauthorized and extra-contractual breaches. Meanwhile, some legal cases have helped clarify what this might portend. Interesting examples of such are BMD Major Projects Pty Downloaded by Curtin University At 22:08 27 May 2015 (PT)

Ltd v Victorian Urban Development Authority [2009] VSCA 221 and Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465.

Case Study 1: Understanding Contract Language and Disclaimers BMD Major Projects Pty Ltd v Victorian Urban Development Authority [2009] The dispute In BMD Major Projects Pty Ltd v Victorian Urban Development Authority [2009] VSCA 221, the Victorian Urban Development Authority (VUDA) has provided BMD Major Projects Pty Ltd, as well as other tenderers, the project design and some additional information in a particular “Boral file”. The two documents have provided different data on excavation depths required in removing overburden from a quarry pit: the excavation depth indicated in the Boral file is apparently lower than as advised in the project design. Meanwhile, the project design contained a disclaimer to indemnify the designers (and the facility owner) regarding the accuracy of the design. As it turned out, the design is inaccurate, and the contractor has had to do more work than as indicated in the original contract. For this reason, the contractor, BMD Major Projects Pty Ltd (BMD), sued the client because he felt he has been deceived and mislead by the client into doing more work than what was agreed. The project is fixed-cost lump sum contract. Under the Trade Practices Act 1974 (Cth), misleading and deceptive conduct are critical violations. The defendant, VUDA, a public institution, has had to defend its integrity as a government by setting an appropriate standard for the public regarding responsible business

practice. However that is not the only burden, VUDA must proof that the design inconsistencies that caused the dispute were not deceptive and misleading, even though they were wrong. For a defence, VUDA relies on the disclaimer that was contained in the design and the ‘latent condition’ clause of the Conditions of Contract. Generally, Conditions of Contract for lump sum contracts are defined in different Australian Standard (AS) regimes, including AS21241992, AS4000-1997, AS-4300-1995, AS4903-2000, AS4910-2002 and AS4920-2003. All of these allow a contractor who has spotted conditions that may vary the contract cost to inform the client “forthwith” – specifically the word “forthwith” appeared in AS2124-1992 and Downloaded by Curtin University At 22:08 27 May 2015 (PT)

AS4000-1997; “promptly” has been used in the other Australian Standards. A correct interpretation of these two words has become crucial. This is because one of VUDA’s defence premise was that BMD’s claim to deception and misleading conduct (against VUDA) could become invalid if VUDA convinces the court that BMA’s contract allows for variation, provided variation notices were issued “forthwith”. Although, in the latent condition clause, “forthwith” means “promptly”, however both are not entirely synonymous. Consequently, the court has had to judge how much of “forthwith” is “promptly”, and how “promptly” can a notice be “forthwith”. Once the contract language issue is resolved, the justification for BMD’s requests for variation could be decided, and this will help VUDA’s defence. The decision The matter in the case is not simply whether, as a result of the latent conditions, payment for variation raised by BMD would not have been honoured by the client (VUDA), rather it is whether the information contained in the design is not misleading and deceptive, irrespective of the disclaimer clause that was indicated in the design. The contract price could have been adjusted if the BMD had considered the content of the “Boral” file in addition to the project design. However, on the ‘disclaimer’ component of the case – whether VUDA had misled and deceived BMD –, the court found that contractual disclaimers as to accuracy cannot override the statutory prohibition against misleading and deceptive conduct. Nonetheless, the court held that VUDA’s 'disclaimers' attempted to clarify the understanding and beliefs about the information it provided in the tender document. The court saw this as positive information for the benefit of the tenderers rather than an attempt to deny liability for the information given as assistance.

Lessons Learnt Considering the possibility of liabilities against disclaimers, some applications of this case are critical. Foremost, virtual models can be misleading and deceptive; far beyond the relief reposed in disclaimers (see Acharya et al., 2006, Amor et al., 2007). How, when and why? First, modelling errors and cross-disciplinary dissipation of data integrity have given credence to this notion. Second, the basis for the admissibility of digital models in construction contract is a case in point (see Olatunji, 2011). However, this is easily surmountable. Recent efforts – e.g. the Document E202 of the American Institute of


Architects (AIA) (2008) and the ConsensusDOCS-301 (2008), have gained popularity as suitable BIM contract documents. The spirit of these documents and the others to follow after them is to ensure that BIM deliverables (e.g. virtual models) are admissible to play valid primary roles in construction contracts (see Olatunji, 2011). The acceptance of this premise is beneficial because it is the strongest incentive for facility owners to tap into the BIM benefits (Love et al. 2014). If otherwise, the business sense in BIM deployment could reduce to mere academic window-dressing. While this observation has become a leitmotif to BIM sceptics, the certainty around widespread acceptance of BIM has been challenged by the theoretical gap between product and process models made through BIM. A product model provides clear information regarding the client’s expectation of a physical product to be delivered at the end of a construction process. Clients may not have to provide definitive advice on how this product will be achieved, in terms of the process; yet they contractors must deliver them to suit. On the other hand, a process model identifies the processes regarding how a physical entity represented by the model will be achieved. Such processes are not often based on empirical data or strict industry standards, rather on computational elements. Their relationship to reality is ‘virtual’. If virtual process models are contractual, client’s expectation will be raised as to the specific information such models contain. Such certainty erases the margin for variability than otherwise. On the other hand, another contentious issue is in determining the strength of virtual models and the disclaimers they contain against liabilities. Ordinarily, virtual models are intended to provide guidance to stakeholders as though they are able to visualize anticipated risks and benefits as would be in real life situations. A lot of studies have espoused what this might imply to soft situations such as the management of risks and uncertainties (see Haniff and Baber, 2003; Huang et al., 2009; Peña-Mora, 2010). These studies have underlined that stakeholders are able to improve their precision and the quality of their decision when faced

with uncertain situations e.g. by simulating real life situations with virtual models. However, when clients over-rely on the deliverables of virtuality in reality, and they suffer losses, it is becomes expedient that liabilities are established and compensations sought appropriately. Modellers and design authors could be the easy target for this. Evidence, as discussed under Consequential Loss (see below) suggests that such liabilities might be claimed by a subsequent party to whom the designer or modeller has not had a direct contractual relationship initially. As shown below, a few cases have been decided that proved contractors’ liabilities after the products they delivered to their original clients have been validly accepted, used and the ownership transferred to another party with whom the


contractors have not had any prior relationships. At what point then, does a virtual model proves or indemnifies against liabilities? Abdelkarim (2010) has created a clear picture around this. The author demonstrated that as virtual models are gradually becoming a contemporary culture for construction businesses. Businesses are entirely liable for failures arising from virtual models if such deliverable is a primary component of their contract instruments.

Consequential loss Consequential loss applies to exclusion and limitation of liability clauses regarding indirect losses suffered in a breach of contract. Its precedence is in the two limbs of Hadley v Baxendale (1854) 9 Exch 341, a case decided in an English Court. In the Case, the Court held that recoverable damage for a breach of contract applies in two ways: first, whether the damage is fairly and reasonably considered as "arising naturally i.e. according to the usual course of things" from the breach, and; second, where the damage "may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach" (p. 152)1. Consequential loss principle has had different interpretations in the UK and, Australian and New Zealand courts. The dichotomy has been strengthen in the case of Regional Power Corporation vs Pacific Hydro Group Two Pty Ltd [No 2] [2013] WASC 356. The matter in the case of Regional Power Corporation vs Pacific Hydro Group Two Pty Ltd occurred at the Ord Hydro Power Station, a facility located adjacent to Lake Argyle, near Kununurra, Kimberley region, northern Western Australia. Under a purchase agreement that commenced in 1994, the power facility, an integrated project, was designed, constructed, owned and 1

(1854) 156 ER 145)

operated by the Pacific Hydro Group. The obligation of the Pacific Hydro under the contract was to supply electricity to the Regional Power Corporation, whose statutory responsibility was to provide and maintain economical supply of electricity to the entire Kimberley Region. Sometimes in 2006, for about two months, the power station was inoperative because of an outage that occurred due to an unforeseen technical issue. This has caused the station to be flooded because an emergency power generator which could have backed-up the pumping system when the power failure occurred had also failed to work. Its failure was caused by a technical error that was predicated by incorrect wiring system that prevented the batteries of the emergency power generator to charge adequately at the time of the incident.


Consequently, the power station was shut down to allow for rectification works. During this time, Regional Power Corporation (reported hereafter as “Regional”) incurred costs. To meet its statutory obligations, Regional has generated electricity and distributed same to the consumers at a much higher cost than in its agreement with Pacific Hydro. This is the cost Regional seeks to recover from Pacific Hydro. The Claimant argued that its loss was as result of Pacific Hydro’s breach of contract. However Pacific Hydro’s defence was hinged on the exclusion clause in the power purchase agreement (Clause 26.1): "Neither [Pacific Hydro] nor [Regional Power Corporation] shall be liable to the other party in contract, tort, warranty, strict liability, or any other legal theory for any indirect, consequential, incidental, punitive or exemplary damages or loss of profits." The position of Pacific Hydro was that the costs incurred by Regional as a result of the incident were either "indirect" or consequential"; thus excluded by the clause. The burden of proof which Pacific Hydro must provide before the Court would include the considerable evidence that the losses incurred by Regional was as a direct result of the natural breach of the contract – which was the first limb of Hadley v Baxendale. On the other hand, Regional’s burden of proof was to show that the costs were actually incurred as ‘consequential’ and ‘indirect’. The Court held that, in reference to Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82, an exclusion or limitation clause must be considered according to its natural and ordinary meaning, and read in light of the entire contract. The implications of this position are critical: the Court ruled that ‘consequential loss’ should not be a strict precedence to the

two limbs of Hadley v Baxendale, rather to Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd (2008) 19 VR 358 where the court had drawn on Darlington Futures Ltd v Delco Australia to conclude that the natural and ordinary meaning of the phrase "consequential loss” does not apply to all cases the same way. In the case of Regional Power Corporation vs Pacific Hydro Group Two Pty Ltd, the court concluded thus: "To reject the rigid construction approach towards the term "consequential loss" predicated upon a conceptual inappropriateness of invoking the Hadley v Baxendale dichotomy as to remoteness of loss, only to then replace that approach by a rigid touchstone of the "normal measure of damages" and which always automatically Downloaded by Curtin University At 22:08 27 May 2015 (PT)

eliminates profits lost and expenses incurred, would pose equivalent conceptual difficulties. Accordingly, I doubt whether the observations in [Peerless] were intended to carry any general applicability towards establishing a rigid new construction principle for limitation clauses going much beyond the presenting circumstances of that case." Probable lessons from this case are vital. Notably, it is critical to prime a contract only on clear and precise limitation and exclusion premises. Court’s decision was to interpret the claimant’s losses by considering the whole contract. Clause 16.3 of the contract agreement mandates Regional “to generate its own electricity to make up a shortfall or obtain the shortfall from any other source”. The agreement also states that Regional shall “maintain a reliable supply of electricity to its customers during the period that Reliable Operation is lost”. By these provisions, the court found that the costs incurred by Regional were “fully direct damages or losses” – thus Pacific Hydro is not found liable as the losses claimed were neither indirect nor consequential. This judgment can be compared to other decided cases to have a clearer understanding of the applications of consequential loss disputes. Its connection to virtual modelling will then become more evident. An additional example is summarized below.

Additional Case Exemplar on Consequential Loss The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd [2013] NSWCA 317 at [49]

In the case of The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd [2013] NSWCA 317 at [49], a 22-storey building which was contracted to a developer by Brookfield Investments in 1997 (completed in 1999). The facility was later sold to new owners by Stockland Group. After the purchase, the owners had found defects on the building which they claimed had caused them economic loss as a result of Brookfield Investments’ negligent construction. They claimed Brookfield owed them a duty of care, and that this had been breached. After the trial judge had ruled that Brookfield did not owe the owners a duty of care, The New South Wales Court of Appeal overturned the decision. The court ruled that Brookfield owed the Owners a duty of care because the defects reposed in the dispute were


latent defect, and that the claimants have indeed suffered losses. Issues other than construction improprieties often trigger problems similar to the above in the post-construction phase of facilities’ life. According to Acharya et al (2006), design and modelling errors are dominant amongst these. Flyvberg et al (2002) have not spared procurement issues as a huge problem as well. Arguably, there are incentives for these to occur in conventional fragmented approaches of project development because contract lives are more finite than in integrated project delivery (IPD) approaches. According to Poon (2005), it is not out of place for the professionals involved in fragmented project development approaches to sternly refuse to own-up to their faults. Studies have shown that project culture in such convention had meant that contracts are fragmented and extremely finite (Alashwal et al 2011). Thus, the incentives for facility owners to seek redress when issues occur might be reduced. BIM overpowers this limitation. IPDs now imply the tenure of professional services is less finite and multi-staged. Consequently, project models are only able to fulfil their intended purposes if they start off by targeting the post-construction life of the design. To achieve this, designers inevitably need to understand facilities management’s requirements, and be willing to integrate views from that specific domain at the earliest stage of the project’s life.

Implications and reflections A significant wealth of evidence from extant literature has elicited imperfections in conventional construction delivery systems which BIM is espoused to alleviate (Ng et al. 2004; Yang and Ou 2008; Olofsson et al 2008). Challenges in design (and its management) are chief amongst the issues in the centre of this; the incentive to deploy BIM is weak unless these challenges are resolved effectively and owners are able to realise considerable benefits. It is logical to explore how critical these challenges are. In the opinions of Aranda-Mena et al.

(2008), to drive BIM, an effective design team must be able to collaborate seamlessly, as well as integrate their autonomous multi-disciplinary subsystems beyond the marked boundaries of fragmentation. Without this, BIM-FM may not achieve its goal. Currently, a popular opinion in literature is that BIM is seldom used for integrated purposes (Love et al. 2014). In particular, designers only target the construction stage: by default, they often rarely have to comply with facilities management requirements. An effective management of facilities requires more than spatial and geometric precision in design considerations. This is because the ultimate benefit of facility owners stems-out from


appropriate uses and functionality as well as the adaptation thereof. Moreover, contract language issues are a typical constraint to the tenure of BIM application in project lifecycle. Using BIM for fragmented targets is not synonymous to a comprehensive scenario where BIM integrate project’s multiple lifecycle stages. Designers’ responsibilities for each domain are different. In addition, there should be case-specific variants in the contract language for each domain. BIM project teams need a considerable level of retraining to achieve these. There are several applications of the subject of consequential loss in design, construction and asset management contracts. Critical to these are the challenges of contract language and liabilities that associate with the technicalities of duty of care. For instance, as clearly demonstrated in many of the court cases referenced in this work, the spirit of the legal agreement dictates the strength of any protection a party to a contract may enjoy. Drafters of contract languages have to be cognizant of project conditions, especially as BIM motivates the transition from fragmentation to integrated project delivery. As indicated earlier, most current forms of BIM’s professional service agreement are neither multi-disciplinary in nature. Olatunji (2014) as argued this to be crucial: whether BIM adds value to conventional culture of contract documentation or not, its integration philosophy or methodology should be engrained in modern contract documents. Another twist to this is the use of disclaimers as a defence mechanism. Sometimes, it could be unacceptable to substitute un-injurious intentions (the goal of a disclaimer) with deliverables that are innocently misleading (and perhaps deceptive). This is because reality may question the quality and validity of design advice without necessarily giving credence to immediate intentions assumed. When facility owners suffer any loss as a result of this, consequences may be borne by the project team. On the other hand, regarding liabilities that may arise from the duty of care, the project development

team owe the project the duty of care to ensure that modelling data are precise and valid throughout project lifecycle. Irrespective of the contract ‘language’ (i.e. whether models are primarily contractual or they are used as a guide); project models tend to improve on their reliability only when they have been triangulated appropriately.

Conclusion The popularity of BIM’s application in FM process is becoming more robust in the past decade, including the use of retrofit and whole lifecycle modelling. However, whole lifecycle


models are rare. Against BIM’s definition, currently, BIM is predominantly used to deliver fragmented outcomes in project lifecycle stages. This study has pointed out that the vehicle to project success in BIM-FM is reciprocity, shared trust and efficient integration of project team’s efforts across multiple lifecycle stages. An integrated model will only facilitate project success when facility owners respect these key factors, and consider the intricacies of propertization and ownership of intellectual properties on virtual models. The study has also elicited the constraints around the ownership regimes in virtual properties and the intellectual rights underlying them. It concludes that virtual properties cannot be wholly owned: project teams and the facilities owner have to interact seamlessly over a period of time, beyond a traditional lifecycle stage. When this occurs, indemnity through disclaimer clauses might become ineffective. By drawing lessons from BMD Major Projects Pty Ltd v Victorian Urban Development Authority, it was established that virtual models can trigger imprecise outcomes, and this could be interpreted as misleading and deceptive, outside the remit of any disclaimer clause. Moreover, the study also explores the implications of disclaimers to losses that may occur when contract clauses are not efficient and when virtual models fail to deliver as promised. It is found that such liabilities are not substitutable. On this basis, study concludes that BIM is critically consequential to FM processes only when system integration becomes seamless and modellers or designers are able to share facilities managers’ values right from the very early stages of project life. Of immense value therefore is the need to further explore the knowledge gaps recommended below: •

Whether contract instruments in current approaches of multidisciplinary collaboration truly support integration across different lifecycle stages.

•

The intellectuality underlying BIM-FM’s IVP (integrated virtual property) is driven by co-evolution and distributive creation. Conveyance of rights under such premise is unique. Significant empirical studies is required along this direction to determine the latent variables in this e.g. administration of co-contributed virtual property rights, frameworks for measuring mutual trust and reciprocity.

•

BIM-FM is a paradigm shift: from fragmentation processes to the integration of multiple lifecycle stages. The impact of this to tradition disciplinary boundaries is worth exploring e.g. whether such development is better as co-evolutionary or an emerging discipline in the offing.


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