A CASE FOR TRANSFORMATION 

Because no other American industry impacts the national economy, ecology and national security like construction does, no other industry needs reform like construction does. Consider construction's critical role in the following:

Once shifted into the performance paradigm, construction will be in the position to revitalize the economy and ecology, both by being a highly productive and innovative industry, and by producing buildings that do the same. This is the first argument for transformation. The second argument concerns the owners.

Owners must understand how much they stand to gain from the performance movement, but also how much the movement depends on them. Owners will not buy a building, no matter how eco-friendly it is, if the building is built and operated to their economic disadvantage. Therefore, construction needs to give owners two things: (1) green buildings where the operational benefits will exceed the capital costs, and (2) empirical evidence that the operational benefits will exceed the capital costs. At this point, in the industrial paradigm, it would be difficult to do either: for a host of reasons discussed below, high performance buildings are not a natural product of the current system, and, even if they were, it would be impossible to give an owner proof of performance because there are neither performance standards nor ways to measure building performance against a standard. 

The third argument for transformation is this: the industry has the means of changing. The first step toward any solution is identifying the problem, and construction's problems are very clear. Most of them derive from industrial-era structures and practices of compartmentalization and fragmentation, which must be replaced with practices of integration and consolidation. The multi-dimensional fragmentation inhibiting construction looks something like this:

1. The discipline dimension — site, structural, architectural, mechanical, electrical, and functional (equipment/furnishings) are the major disciplines with sub-disciplines (trades) within each.
2. The process tier dimension — design, engineering, management, manufacturing, distribution and assembly.
3. The project life-cycle dimension — the building development, production, and delivery process; and the building itself — its function, operation and maintenance (building life).
4. The team life-cycle dimension — where firms and people are re-shuffled on a project-by-project basis, never reaching the optimization that the learning/experience curve provides.

Each dimension, which should be an integrated, collaborating whole, is fragmented into incompatible pieces working to cross-purposes, inhibiting optimization and innovation. Beginning with management and information sharing practices, the industry needs to transition from compartmentalized and linear logic into computational-systemic thinking. This general paradigm shift will bring about the five specific transitions that will launch the high performance building era.

In sum, the case for transformation is this: there is a need for change (from the economy, the environment, and the owner), it's clear what needs to change (industrial-paradigm fragmentation), and it's clear what it needs to change to (performance-paradigm computational-systemic thinking). 

THE PERFORMANCE PARADIGM SHIFT

The proposed performance paradigm shift finds its origin in two late 20th-century movements. The first, systems thinking, comes to construction from the work of W. Edwards Deming (statistician who helped transform Japan's industry post WWII). Deming taught that the economy and psychology behind thinking in terms of a system lead to higher quality and productivity in a given industry. The second, computational science, is a more recent movement in information technology, and is transforming the way information is organized and used. While construction has missed the first systems-thinking movement, it has tried to incorporate computation into some industry areas. However, because computational science presupposes an integrated system — a "network" — in the first place, any effort to use computational science in a fragmented system like construction will fail to achieve its purposes. For this reason, construction must integrate before it can compute. 

Systems thinking is not just thinking in terms of a system, but in terms of a systems goal toward which all individuals, sub-systems, structures, methods, procurement, standards and measures, etc. are organized. If the system-wide goal is performance, then all system parts must be re-oriented around that goal (e.g., how does the mechanical discipline work in terms of the system performance goal; how does the project planning relate to the system performance goal, etc.). A system performance goal requires a set of performance standards and measures for organizing and evaluating production — and also for motivating production. Deming wrote extensively on the psychology of standards and measures, insisting that if you train people to measure "things," they will keep pushing their own standard higher to beat themselves.⁴ In the industrial paradigm, the standard and measure has been the cost of isolated system parts (the cost of an HVAC unit, the steel cost, the architect's fee, etc.), and consequently the costs of the isolated parts are low, while the cost of the total system — comprised of a bunch of mismatched low-cost parts that haven't been created with the system goal in mind — continues to rise. If, however, people are trained to measure their work against a performance system standard, they will keep pushing the system performance standard higher and higher. 

The implications of systems thinking are huge for a dysfunctional construction system, where every discipline, process, procurement practice, etc. is fragmented and needs to be integrated in terms of a system goal. An important example pertains to quality at the point-of-production and the issue of inspection-based quality. Again, per Deming, if a system focuses on production, quality and production decline. There are more mistakes, more rework, poor use of the system, etc. The declining quality necessitates a complex inspection apparatus to deal with mistakes and poor quality.  If, however, a system is focused on performance (aka quality) at the point of production (and that quality/performance is a function of the performance of the overall system), then there are less mistakes, less rework, better use of the system, etc., and productivity and quality increase. 

The National Science Foundation defines computational thinking as the "computational concepts, methods, models, algorithms, and tools" that promise "a profound impact on the Nation's ability to generate and apply new knowledge."⁵ For construction, computational thinking provides the technology capable of processing the complex data structures that make up the construction system. Without computational thinking, performance-based systems thinking would be impossible, because the complexity of the construction system surpasses the capacity of any manual calculus. Beyond understanding and organizing the system, there is also the matter of innovating within the system. Construction needs innovation as much as it needs productivity, and, as NSF observes, the generation and application of new knowledge (i.e., innovation) will come from computational thinking. It's crucial to remember, however, that innovation is not the cause of a healthy system, but the result of a healthy system. Construction can't look to computational thinking for a technological band-aid to solve its problems, but must first integrate, and then innovate. 

FIVE TRANSITIONS TOWARD TRANSFORMATION

So, the performance paradigm rests on a general shift toward computational-systemic thinking, but there are five specific transitions that can serve as concrete goals  as construction makes the shift: (1) Performance Standards & Measures (2) Function-based Computing, (3) Operating Building Focus, (4) Integrated Innovation, and (5) Integrated Optimization. Although the shift will naturally restructure the industry in some fundamental ways, these transitions can be accomplished with relative ease and without a complete overhaul of the current system. Furthermore, even in the early stages, there will be major gains in productivity and performance, which participants, according to their perspective, may regard as an incentive, a reward, or proof of the performance paradigm's value.

Note: In these papers, the term “building producer” refers to, at a minimum, the first tier of the construction contract (this prime contractor may be the general contractor, construction manager, or design-builder, etc). According to the proposed re-organization, "building producer" also includes the design professionals and specialty contractors. This does not necessarily mean that some aspect of the paradigm shift cannot take place under construction management or even the traditional design-bid-build delivery systems. However, the proposed paradigm shift and transitions do anticipate such a “building producer," and a multi-dimensionally integrated organization of some form, whether it be the prime contractor or design-builder or integrated project team, becoming singularly responsible for project performance and oriented toward the operating building performance. 

TRANSITION ONE — PERFORMANCE STANDARDS AND MEASURES: from commodity-based to performance-based standards in areas where productivity and performance improvement are sought.

In the forthcoming study by the National Research Council entitled Advancing Competitiveness and Efficiency in the U.S. Construction Industry, the establishment and practice of "effective performance measurement to drive efficiency and support innovation" is cited as one of five principle actions recommended for industry advancement.⁶ "Performance measures," continues the report, "are enablers of innovation and of corrective actions throughout a project's life cycle." Analysts agree that performance standards and measures are critical for improvement and innovation, but no one has yet detailed how to establish them. This first transition describes what such an establishment might look like, and proposes principles, methods, technologies and organizational structures by which performance measures can be developed and implemented throughout the building life-cycle. 

The industrial-paradigm problem, in short: when value is based on a commodity, not function (performance), all energy goes towards producing a given commodity at the lowest cost, instead of producing a given function or performance at the lowest cost. So, if a document specifies a commodity (a certain fan, for example), whatever supplier can provide the lowest-cost fan within that specification will get the contract. Two problematic consequences: (1) over time, focus on cost reduction instead of quality leads to decreased quality, defects and rework, decreased productivity, and, ultimately, increased costs, and (2) working within a commodity-based specification means that innovative alternatives outside the specification are neither procured nor produced (see the functional chart below for a spatial rendition of this).  

These two charts show the logic of commodity-based standards: the intentions and the consequences. The top chart shows Why (left to right) and How (right to left) commodity-based standards intended to produce value. The bottom chart shows What Happened (left to right) and How (right to left) in the typical commodity-based value situation: reduced quality and performance that caused increased costs and decreased value.

 

When production and procurement revolve around total building performance (instead of component commodities), all purchases, designs, contracts, etc. are chosen for how well they contribute to the overall performance of the building system.  The benefits of this practice are twofold: (1) over time, exclusive focus on performance leads to increased quality, which leads to increased productivity, value and reduced costs (per Deming: less re-work, better use of the system, etc.), and (2) working within a performance-based specification means that innovative alternatives are encouraged because whatever system or combinations of systems best perform that function wins. In this way, performance-based value opens up procurement and production to all sorts of innovations that commodity-based procurement discourages. Moreover, once a performance data archive is established, building teams will be able to access market performance averages and know, for example, the standard heating/cooling performance of like buildings, which will become the performance standard for the team to beat.      

The following chart shows Why (left to right) performance standards and measures lead to reduced costs, and How (right to left) reduced costs, increased value and productivity follow from performance standards and measures. The process for improving quality and innovation resembles Deming's cycle, although much of the "Act" and "Test" stages can be done virtually with today's technology.

 

                                     

In sum, for any area needing improvement, the first step requires replacing commodity-based standards with performance-based standards. Again, "performance" here always relates to "total building performance," which means that, although you can talk about the performance of a component part or sub-system, the component performance must be measured in relation to the performance of the total building system. 

The Deming Standard

The logic behind performance standards and measures was developed by W. Edwards Deming who repeatedly taught both the importance of measurement and the importance of a system. The psychology behind measurement can be summed up: "train people to measure things and they will keep pushing their own standards higher to beat themselves."⁷ In the case of construction, there has not been a rigorous system of performance measures with which to measure the performance of the various construction components. In the absence of performance measures, construction components have mainly been measured by commodity cost, which is only one aspect of true value. In Deming's argument, until people are trained to measure performance, they will not be able to push performance standards higher. The importance of systems thinking was developed in his theory of "profound knowledge." According to Deming, a system is a "network of interdependent components that work together to try to accomplish the aim of the system” (ibid., 50). The aim of the system is its most important feature: "A system must have an aim. Without an aim, there is no system." Management's role, continues Deming, "requires knowledge of the interrelationships between all components within the system and of the people that work in it." For construction, this means understanding all component parts as a network of interdependent disciplines, sub-disciplines, processes, etc. working together to try to accomplish the aim of the system: total building performance. Aiming for total building performance is the most important feature of the construction system. Management's role, therefore, requires knowledge of the interrelationships between all the various disciplines, processes tiers, planning stages, etc. However, total building performance is too complex for manual analysis, which is why systems thinking must be paired with computational science, the computer-aided analysis capable of processing construction's complexities. In any case, once building performance is understood as a holistic system, then performance standards and measures become the necessary organizational apparatus for dealing with the holistic system.

Actually, performance standards and measures have already successfully transformed construction safety. The Experience Modification Rate (EMR) is a relatively straightforward computation that compares a company's annual losses in insurance claims against its policy premiums over a three-year period. The EMR standard was set at the average rate among contractors, and then normalized to a ratio equal to 1.00. This practice of measuring safety performance has proven much more effective than prior practices of rules and regulations. There was no need to establish a safety goal ("Reduce site accidents by 50% by 2020"). Simply by measuring safety performance and understanding performance averages, contractors are motivated to drive their EMR as low as possible by whatever means best work for them. 

Because performance measures and standards will apply to all building tiers, it will be possible to measure a project or building's performance at any level. In tier one, the Capital Expense Effectiveness Index (CEI) and Building Performance Index (BPI) measure project and building performance at the most general level. There will be dozens of measures in at least three other tiers that measure cost and value effectiveness, and environmental and energy effectiveness.

As noted, the ability to "try out", simultaneously, any number of scenarios or trial test fits is among function-based BIM's many assets. The graph, Statistically Dialing in the comparative trial analysis, illustrates a base trial for Options A, B and C for quick and easy comparison. This trial happens to reflect construction cost, but a trial for whatever measure is possible.

Advancement 2: Computing Science for Applied Standards & Measures

So, standards and measures are the first critical transition for the performance paradigm shift – that is for transforming construction into a high performance industry producing innovative, cost effective, high performance "green" buildings.  The function-based modeling science will be instrumental for establishing productivity, performance and value measurement at the whole building level and also for major systems. In fact, there is no other known way to establish standards at these levels.  Using accurate historical data from varying actual/control projects, the functional modeling system is able to simulate such standards of measure as if there were many prior near-identical actual/control projects available as comparables. It begins by modeling the market average baselines (MAB) for various standards associated with the building process and also for the completed functioning and operating building.

When standards and measures and function-based computational modeling science are working together, the result is something like this:

• The owner and building production team begin by entering the function (purposes), scope (magnitude), performance (quality and efficiency) and constraint (physical and market) data into the functional model.
• The functional model produces the standards (market average baseline) for many measures. These include the completed building’s energy consumption, the program spaces and operating costs, etc. They also include measures for the building process: capital costs, waste and debris, indirect and direct labor hours, etc.
• The genius of Deming’s profound knowledge and measurement can be observed. One can imagine "the wheels turning" as the building team is thinking, “If we have everybody working together, we can improve (select a measure) by ten, twenty, twenty-five… percent.”
• If the right team is assembled and equipped with the structures, practices and technologies, then it will be able to achieve significant improvement over the market averages.
• Innovation and optimization is then possible. Teams are motivated to pursue improvements; both internally and from wherever high productivity and performance solutions are available in the market place.

The potential for improvement, through implementation of standards and measures, is made evident by a measure of labor productivity; the only known measure the industry has been entreated to.  The construction industry has lagged in labor productivity by 20% since 1964, while all other (non-farming) industries have increased by 200% — a 220% difference. Let's say that the productivity potential is now quantifiable, and enormous. In this example: The functional model establishes the mean standard value (direct + indirect effort) for the proposed project (design and construction) equal to 120,000 hours. This is the market average baseline (MAB). If the project team achieved the productivity of the other industries since 1964 that amount could be reduced by 88,300 hours to 37,700 hours (120,000 / (1 + 220% (2.2))).  But, realistically, a first project objective may be to increase labor productivity by only 15% (rather than 220%). In such a case, the results would be more than 15,000 hours (to 105,000 hours) or $750,000 in savings (if the average cost per hour were $50/hr). This would be more than the combined income of the architect and builder on a traditional project (based on a construction cost of between 10 and 12 million dollars).

Establishing standards and measures will be a turning point for the Industry. Function-based modeling will be the engine that powers performance standards and measures. The white papers, “Performance Standards and Measures” and “Function-based BIM” further describe both the next generation of BIM as well as its role in advancing the performance paradigm via standards and measures.  These principles and technologies can now be made available, and will inspire and equip people in many corners of the industry. They open the industry up to the pursuit of innovation and optimization. The implications of function-based BIM do not stop with comprehensive project planning. Neither do they end with it empowering systemic standards and measures. Functioned-based BIM technology is integral to Virtual Project Development.

Advancement 3: Virtual Project Development

Many understand that integrated Virtual Design and Construction (VDC) is the process and that BIM is the supporting technology.  In the performance paradigm this process and technology are expanded into Virtual Project Development (VPD) and its supporting BIM Family, respectively. By expanding VDC to VPD a project begins with the Virtual Plan which is supported by the “Functional Model” or “Function-based BIM,” a member of the BIM family.

When talking about expanding the scope of the BIM family, it's important to note that the current application of BIM is "geometric-based"— a geometrical 3-D CADD model with attributes and information that reside in the model database or an external information links or objects. This chart and the following represent the relationship of Virtual Project Development process and generally describe the four members of the BIM family of technologies.

• Function-Based Modeling (fBIM) – A sophisticated virtual planning technology that enables the owner and building production team to simulate multiple whole building (and major system) scenarios in real time by modeling the program, scope, quality levels, capital budget, operations budget and schedule. This technology falls under the top-down, function-based computational modeling science and is not limited to a particular conceptual level.
• Geometric-Based Modeling (gBIM) – The technology currently understood as BIM that has grown out of the 3-D object oriented and data centric CADD systems used in design and documentation at the whole project level as well as the material assembly levels. This technology falls under the object-based modeling as it necessarily begins with form objects rather than concepts, purposes or functions.
• Operations-Based Modeling (oBIM) – The modeling technologies that simulate and automate the aspects of a project that aid in the forecasting, measurement, adjustment and overall operation and management of the completed facility, starting with energy modeling and ending with building automation and facility management systems.
• Procedure-Based Modeling (pBIM ) – Currently recognized as project information management systems providing the interoperability applications that put project information on a global database readily available through a web-based portal. This portal would hold all information and data from the various BIM sources described above.

In sum, function-based BIM gives construction process management incredible control over an incredible amount of performance data. This lets a team approach the big project decisions first ("top down"), and then manage the design and production stages according to the pre-established big decisions.

TRANSITION THREE — OPERATING BUILDING FOCUS:  from a focus on the completion of services to a focus on the long-term performance of the completed building.

A high performance building is a holistic system that needs to be planned, contracted and produced as such (and then innovated for and optimized as such). Above, Transitions One and Two described how performance standards and measures and function-based BIM join in Virtual Project Development, the integrated holistic planning, design, procurement, construction and facility operation technology that many have envisioned.   These first and second transitions enable a third transition toward making the operating building performance the focus of project management. Here, also, building producers can become responsible, and rewarded for, the performance of the completed building according to agreed upon performance goals. 

 At present, a variety of independent designers, contractors and manufacturers are responsible for various fragments of the project, but no one is responsible for the total operating building performance. For example, architects and engineers function as consultants whose service pertains to the design and engineering fragment of the total operating building. If the design turns out an operating building that is inefficient or costly, the consultants have no "product performance warrantee" that the owner can hold them to. Similarly, contractors, subcontractors and manufacturers have responsibilities to build and supply according to the consultants' documents, but their particular services and products pertain only to some aspect of the physical structure of the building, not to its eventual performance. In the end, consultants, contractors, manufacturers, etc. are all evaluated according to their completion of one fragment of the total operating building, so that no one is actually responsible for the total building performance.  This all changes in the performance paradigm.

Under this transition, it becomes possible for a single building producer (or production team) to focus its efforts toward total building performance (functional, operational, and environmental) and not just compliance with documents for completion of construction. There are already versions of this transition in, for example, the sustainability movement (the Leadership in Energy and Environmental Design (LEED) process). However, these are fragmented as well and do not establish standards for the total building system, but only for standards pertaining to some sub-system (HVAC equipment efficiency, proportion of glazing, etc.). There have even been calls for total building performance standards (e.g., the standards tables presented in the 2030 Challenge), but these articulate a goal without providing means for achieving it. Below is an articulation of the goal and means. 

In order to achieve a clear and congruent focus toward the total building performance four key practices should be instituted:

• Performance Standards and Measures — as noted above, this will be the necessary system for the organization of performance data (from actual projects) and the determination of standards, baselines, and progress measures. Like any system of standards and measures, a system of quantitative values for performance requires the collection of data from similar projects. This data has not been collected, in part, because building performance is affected by too many variables (climate, solar orientation, thermal building properties, people load, equipment load, etc.) and has been too difficult to evaluate. Now, new technology systems, including the function-based modeling technology will allow multi-variable analysis to take place.

Performance standards and measures for operating buildings means that the performance of an operating building will be measured against pre-determined performance goals agreed upon by the owner and building producers (which were, in turn, measured against and informed by market average baselines). Therefore, operating building performance will not be a matter of conjecture or chance, but will be a quantifiable and recorded figure that is tracked and maintained throughout the operating building's life cycle.

• TruEx-based (or Life Cycle) Management— Perhaps the most important new performance standard and measure will be the Total True Expenditure (TruEx), the value that represents the total expenditure of the building life cycle, and which all optimization and innovation efforts are ultimately aimed at improving. Currently, projects are planned and measured according to a Capital Expense (CapEx), which is fundamentally incompatible with sustainability and building performance objectives. 

When a project is based on capital expense, all planning and production decisions aim at reducing the initial capital expenditure. This would make sense if the life of a building ended when the construction ended. However, because a building life begins when the construction ends, and because over the course of a building life, the operating costs increase due to inflation, and, moreover, because a building accrues other non-capital costs (to the environment, or to a local community), the true cost of the building is only partially reflected by the CapEx value. Furthermore, because all planning and production decisions try to reduce the misleading CapEx value and not the true expenditure, those decisions inadvertently create long-term increases in the building operation's overhead.

The "Savings Graph with Improved TruEx Driven Design", shows the relationship of the depreciation (and interest) or lease expense plus the OpEx (operating expense) for the three drivers in building planning, design and construction: traditional CapEx, improved CapEx, and the improved (optimized) TruEx.

To achieve sustainability objectives, the industry needs to shift towards the improved (optimized) TruEx driven approach.

• Preplanning Performance Objectives — The establishment of functional, operational and environmental performance objectives should precede all other design and planning actions: not only for the conceptual design, but also, where possible, performance objectives should precede the site selection or the arrangement of buildings and other site improvements. This will prevent the typical loss of performance potential that occurs when the buildings and parking lots are located and situated before an analysis of the climate, solar orientation, traffic and people patterns, etc. takes place.

• Clarity of Roles & Responsibilities — This transition clarifies the organization of roles and responsibilities, and will most likely happen in two stages. The first stage is the restructuring that results in one organization (and leader within the organization) responsible for disciplines and sub-disciplines (HVAC, electrical, site, etc.) within the overall building system. This is important for the performance of the building process as well as the building itself. The fifth transition, Integrated Optimization, addresses this more specifically. The second stage occurs when building producers and owners realize that the building producers (those responsible for the design and the construction) are more qualified and equipped to manage and operate the completed building, building producers should take up the responsibility for its performance. If producers are responsible for performance, there will be considerable incentives for them to innovate and optimize, which will also contribute to total building performance. 

This third transition — especially the transfer of total building performance responsibility to building producers — will be resisted in at least two ways: (1) claims that construction is too complex for a single agent to be responsible for it, and (2) assertions that contracting for total building performance will undermine the professional services practices of designers who consider themselves the "owner's professional agent" rather than a product vendor. Regarding the first, as data measurement and modeling evolve, contracting per performance becomes easy and even natural. Building producers will see how data can be analyzed and standardized, how they can set and beat performance goals, and how they can distinguish themselves in the marketplace and profit from it. Once leading building producers are informed of the merits of contracting per building performance, they will accept the responsibility for building performance, understanding what a remarkable business opportunity it is for them. 

As for resistance from designers claiming that this kind of contract will undermine their professional services, this will resolve itself more or less naturally as performance standards and measures change the way projects are administered and construction compliance assured. Before the construction management (CM) delivery system, the architect was the professional that produced the project design, administered the contract, and certified that the project was constructed in accordance with its design. Although CM and then design-build delivery systems have confused this standard, architects and code officials still operate under the assumption that architects are the "owner's professional agent." Under the performance paradigm, the architect's role will concentrate much more on creative design solutions (resembling designer roles in other industries) and responsibilities that are integrated with other team members. Another "owner's professional agent" may then emerge — one that has command of performance standards and measures. This "agent" could be in-house or a separate consultant. In either event, there will be greater opportunities for the design professionals to be integrated within the whole production team.

TRANSITION FOUR — INTEGRATED INNOVATION: from fragmented structures and practices to interdisciplinary and inter-production structures and practices that promote innovation for total building performance.

The high performance building is a holistic system that needs to be planned, contracted and produced as such (and then innovated for and optimized as such). Above, Transitions One through Three demonstrate how performance standards and measures could be established, and how project planning and contracting could be re-organized around total building performance with help from function-based BIM and performance-based responsibilities. Once construction makes these transitions and the industry is integrated around total building performance, then innovation and optimization will follow. Transition Four therefore describes innovation before and after: The before deals with the current obstacles to innovation and five Innovation Categories ripe for development; the after deals with possibilities for Capacity Development and Application and the possibility of Cloud Innovation Centers that would provide premium research and development services to the construction community at large. 

The primary obstacle to innovation is, per usual, fragmentation (see above discussion of the multiple dimensions of fragmentation (across disciplines, the production tier, the building life-cycle and the project team "life-cycle")). Over the years, this multi-dimensional fragmentation has made an an unusually diffuse and "shallow" construction community: because construction is fragmented into isolated disciplines, production tiers, building and project units, entering construction is relatively easy, in terms of start-up, capital, and operation. This accounts for the over four million design, construction and subcontracting firms that, due to their number, lack the capacity to innovate.  Even the larger firms represent a small fraction of the market share, and have not been able to achieve the scale, mass or capacity to gather together manufacturers, researchers and other resources to undertake applied research and development. Even if they were able to gather such resources, the industry’s institutionalized commodity-based procurement practices would inhibit the opportunities to apply such innovation. 

Fortunately, if Transitions One through Three happen, innovation will follow more or less naturally. That is, performance standards and measures based on total building performance require interdisciplinary, well-funded research and development. When the fragmented construction community realizes that it needs to be interdisciplinary and improve funding for research and development, it will naturally integrate and consolidate in order to be competitive. In this way, performance standards contain a built-in incentive for integrated innovation. If the construction community doesn't integrate and consolidate, it simply won't have the capacity to develop the total-building-performance solutions that the economy and environment demand. 

What is slated for innovation? Because a primary goal for total building performance concerns sustainability and energy consumption, innovation will continue to gravitate toward green solutions. There are at least five innovation categories that are already ready for development:  

1. Cyber Discovery Initiatives (CDI) — CDI is the National Science Foundation's term for "revolutionary science and engineering research outcomes made possible by innovations and advances in computational thinking.” Building Information Modeling (BIM) is the construction industry’s CDI hero, although BIM's potential remains largely untested. For software developers with advanced computational skills, construction offers a vast and yet unexplored horizon.
2. Prototype and Composite Development — every building is a super-composite of prototypical materials and products. Building differentiation happens at the point-of-prototype. For a McDonalds or Wal-Mart, the point-of-prototype happens at the whole building level (i.e., there is little differentiation). For a school or hospital, the point-of-prototype could happen at various levels. There is great need for the development of prototypes and composites (with component data and information residing in the objects) in both program spaces and construction systems and assemblies.
3. Product, System and Pre-fabrication Development — The demand for new manufactured products and systems will expand dramatically, especially for products that integrate architectural, mechanical and electrical systems, or that satisfy sustainability needs. Manufacturers will be teamed with other manufacturers as well as researchers, engineers, architects, construction managers, field foreman, etc. to design and manufacture new systems. For custom and semi-custom systems and assemblies that need to be specially fabricated to fit a particular building configuration or composite, there will be increased opportunities to develop systems that improve field productivity and building performance. Systems thinking will be particularly helpful in evaluating the total first and life cycle cost and performance implications. In this situation, function-based planning evaluates the whole project, not just the cost of one manufactured or prefabricated product or system pitted against the traditional field assembled system. Impact on schedule, accelerated depreciation potential, performance as well as life-cycle costs all become part of the analysis.
4. Project-based Development — At the level of an active project, there will be greater opportunity for architects, engineers, builders and subcontractors to innovate. In an integrated atmosphere, good improvised solutions will reach the broader marketplace through defragged channels. 
5. Applied Research and Development — Universities and vocational research institutions are obvious centers of information and innovation that will be better integrated into the construction industry in the performance paradigm. As owners and functional equipment manufacturers become increasingly aware of the need to innovate, they will naturally turn to universities for consultants and researchers. Academia, in fact, is experiencing its own paradigm shift, and as academic departments become more interdisciplinary, the construction community should benefit from the integrated fruits of this shift.

Much innovation will emerge from combinations of these categories, but the question remains: who will combine these categories? 

Again, to meet performance standards, manufacturers and building producers will have to pursue serious capacity building. Capacity, in this case, has two essential parts: (1) a research and development team profoundly proficient in computational science and systemic, interdisciplinary thinking. These are the cognitive skill sets and training that researchers possess, and which competitive building producers and manufacturers must have access to (in the form of in-house R&D teams or as an out-sourced service provided by an innovation organization (see below)), and (2) the integration of research to include all disciplines and production tiers not typically available to any one construction organization in the current industrial paradigm. In short, true capacity building is a complicated, time-consuming and expensive venture that is probably out of the question for the majority of building producers and even manufacturers.

Given the requisites of true capacity building, innovation will probably emerge in the following situations: 

1. Products and Systems Producers — These are manufacturers and fabricators that, (1) either already have the capacity to conduct applied research and development, or (2) have the financial wherewithal, together with the scope and mass of product lines and market share, to develop the capacity. Alternatively, a joint venture among such organizations could yield products and systems that integrate architectural, mechanical and electrical functions. 
2. Mega or large-specialty Building Producers — These firms (both the large builders, design-builders, and EPC contractors) have the scale and mass to support research and development and to integrate in all dimensions. They will have to bring on computational systemic thinkers and innovators, and will also need to expand their discipline and production tier capacity, either internally and/or with long-standing consultant and specialty contractor relationships. These building organizations could work directly with product and system manufacturers to develop integrated building solutions as well. 
3. Software Developers — These flexible and naturally innovative firms are ready to incorporate innovation from other industry sources. The demand for information and computational technology systems will continue to be high, and the performance paradigm will remove whatever obstacles have hitherto prevented computer sciences making more comprehensive inroads into construction.
4. Research Centers — Some university-based research centers are already partnering with leading industry organizations to combine theory and experience in the production of premium research. For example, the Construction Industry Institute (CII) at the University of Texas at Austin, Stanford's Construction Industry Facilities Engineering (CIFE), and the  Lean Construction Institute (LCI). These industry-academia alliances should be pursued more broadly. 

These organizations constitute less than 10% of the construction community. The question remains: where and how does innovation from the industry-at-large develop (the other 90% of the building community — including emerging or average size manufacturers, fabricators, architects, engineers, builders, and subcontractors)?

Borrowing the transformational concept of cloud computing from the computing science, Cloud Innovation is a strategy for bringing premium research and development services to the building community by way of consolidated and networked innovation organizations. Instead of expecting every architecture, engineering or construction company to come up with a state-of-the-art research and development team, Cloud Innovation Centers could be established to provide R&D services for the vast majority of the construction community. Cloud Innovation Centers would deploy innovative experts within various disciplines and production levels to serve the industry at large.

In the same way that cloud computing provides services to users who could not otherwise access such services without great costs, cloud innovation would provide integrated and interdisciplinary research and development services to the building industry's product and system developers or other innovators who otherwise could not possibly generate that kind of multi-dimensional research themselves.

¹ See www.architecture2030.org (The 2030 Challenge)

² ENR, July 01, 2009, “The recession has caused many owners to take a closer look at green’s benefits,” by Gary J. Tulacz  The article begins, “The American economy is in recession, and owners are under pressure to deliver projects as cheaply and quickly as possible. This has caused some tension in the design sector, with owners seeking sustainable design that brings more to the finished project than simple recognition as a green building. They are looking for operating cost efficiencies and a return on their investment for any extra costs that environmentally friendly design adds to the project.”

³ ENR, July 29 “Productivity Report Calls For Integrated, Efficient Approach,” by Bruce Buckley.  “Productivity has been a hot-button issue in recent years, particularly following a 2004 analysis by Dr. Paul Teicholz of Stanford University. It suggested that construction labor productivity declined by nearly 20% between 1964 and 2003, while other non-farm industries improved by more than 200%.”

⁴ Peter Capezio and Debra Morehouse. Taking the Mystery out of TQM. Career Press, 1993. page 68

⁵ NSF Website, 29 July 2009, National Science Foundation http://www.nsf.gov/crssprgm/cdi/.

⁶  See endnote 3

⁷ Deming, W. Edwards. The New Economics: For Industry, Government, Education. Cambridge: MIT Press, 1995. Pg. 50. 

⁸See endnote 3

⁹See endnote 5

¹⁰Koskela et al. Design and Construction: Building in Value. Woburn, MA: Butterworth-Heinemann, 2002