By Josh Girvin, O3 CEO
During our Annual Planning sessions with CII AWP Leadership, one of the greatest challenges to the adoption of Advanced Work Packaging (AWP) that we identified is the lack of decision-maker buy-in on the business case for implementation. Many project professionals recognize the value in adopting an AWP-based execution strategy, but struggle to convince their management team, who are looking for proven quantification of the benefits to justify any additional cost.
There are a lot of misunderstandings regarding the costs associated with implementing AWP and a lack of belief in the high-level benefit numbers that are often thrown around. The most commonly referenced Return on Investment (ROI) is “2 for 10”, which is the belief that a 2% increase in spend to implement AWP will result in a 10% decrease in overall project Total Installed Cost (TIC). The 2% increase in costs is often attributed to the implementation of new tools, the hiring of additional The primary benefit is attributed to a 25% increase in field productivity which translates to a 10% overall savings when you assume that direct field labor is 40% of the overall cost of the job.
This approach to AWP ROI is overly simplistic and it is no surprise that decision-makers question its accuracy. The benefits from AWP go way beyond direct field labor productivity with savings in scaffolding, supervision staff, support personnel, construction equipment, rework, request for information delays and punch list items, as well as related benefits in safety, quality and schedule.
In addition, the assumption that personnel and engineering costs must increase in order to support AWP is a highly contested topic. AWP-mature engineering contractors are already providing sufficient model attribution to support the virtual construction model and when done correctly, AWP can increase engineering work efficiency even when accounting for the fact that engineering is supporting the path of construction. The “additional cost of WorkFace Planners” is also a myth because the reality is that you are paying for the work to be planned in a non-AWP environment, you are just paying for it to be done poorly.
O3 has developed its own much more detailed AWP ROI calculator that is based on AWP subject matter expertise and feedback from client implementations. We offer a very high-level public version of this tool on our website which can be accessed here: ROI Calculator
The full tool is much more in depth and requires some discussion to complete. An image of the output can be seen here:
O3 is contributing some of this intellectual property to the CII AWP Performance & Benchmarking Committee, which I co-chair, in the hopes of creating a widely accepted industry tool for helping organizations build the business case for AWP. This effort is on-going with the plan to release a CII-approved version of the tool this year.
If you are interested in becoming involved in CII’s efforts, send me a message and I will gladly add you to our team. The more input from other organizations that we can include, the better the end result will be.
AWP Champions can help their organizations by:
- Leveraging CII’s AWP tools to classify their level of desired AWP maturity
- Building a believable ROI case that goes well beyond the “2 for 10” high-level approach
- Testing their ROI assumptions against previous project performance to refine their ROI model