Published 2Q Tom Machinchick Industry Analyst. Eric Bloom Senior Analyst

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1 EXECUTIVE SUMMARY: Building Information Modeling Software, Training/Support Services, and Project Management/Collaboration: Global Market Analysis and Forecasts NOTE: This document is a free excerpt of a larger report. If you are interested in purchasing the full report, please contact Pike Research at sales@pikeresearch.com. Published 2Q 2012 Tom Machinchick Industry Analyst Eric Bloom Senior Analyst

2 Section 1 EXECUTIVE SUMMARY 1.1 Market Overview The building information modeling (BIM) market can be considered nascent, even though market vendors are touting a decade or more of development and use. This market is also evolving rapidly with new innovations in tools, techniques, and methods for practitioners to work together in a more collaborative manner. For many in the industry, BIM is just the latest buzzword created by the vendors to sell more products. For those who are, or have been, using BIM tools and collaboration techniques for a longer period of time, BIM has proven to be remarkably successful in the quality of the results that it can produce. As for building owners and financiers, BIM has driven costs down and made the estimation process more accurate. Additionally, BIM helps facilitate more visibility and interaction in the overall design/build process for the owners of a building, enabling them to take a more active role in determining the final outcome of capital-intensive projects. On a global basis, BIM adoption can vary significantly by region or by country. Some countries are taking an active role in BIM adoption by mandating its use in both public and private projects. As is the case in other industries, the lagging countries are taking a waitand-see approach as the BIM market evolves. Nonetheless, building efficiency is at the forefront of conversations everywhere regarding energy and water use, waste, and cost of operations. As energy conservation and carbon emissions become increasingly important on a global basis, the adoption of BIM tools and practices will become a higher priority, since it can significantly affect the efficient use of valuable and scarce resources. 1.2 Market Opportunities Early adopters of BIM tools and practices can gain a significant advantage over their competitors. Recent market conditions have created a slowdown in the architecture, engineering, and construction (AEC) industry in most countries and regions around the world. For some, this has not affected their desire to change the way they work. However, many have used this as an opportunity to try innovative approaches to the construction process. When market conditions do shift to a more favorable climate, these firms will be ready with new tools and new methods to help them gain market share or advance the state of their businesses. They will be trained and conversant in working in a more collaborative environment, with the ability to literally show the benefits of BIM to their clients at any point in the project lifecycle. Many firms are currently taking advantage of the transition to BIM in the AEC industry by sharing their knowledge and experience through consulting services for projects to help the project team work with the BIM tools and in a more collaborative way. These consultants come from firms that range in size from single individuals to larger firms, and even well-known software vendors taking advantage of the opportunity to expand their company s offerings. AEC industry software vendors have been heavily involved in advancing the case for BIM adoption. Although the outside perception may be that BIM is an avenue to market new products, it is really not the case upon closer inspection. The leading vendors are taking an active role in standards development so that interoperability between software systems is facilitated, and many have agreements to share proprietary file types and formats as is the case between Autodesk and Bentley, two of the leading software vendors. Additionally, many of the leading software vendors publicize the fact that they 1

3 spend generous amounts of their revenues on research and development (R&D) activities. The market for BIM software tools is led by a handful of well-known names, such as Autodesk, Bentley, Tekla, Nemetschek, and Gehry Technologies. Small firms that enter the market with an innovative BIM (or other) solution generally do not last long as independent firms because the larger players strategically acquire them to enhance their own product portfolios. This serves to maintain the pecking order and market share structure in the industry. Mergers and acquisitions (M&A) have also played a part in the industry in recent years, as firms prepare for the next phase of BIM technology advancement in areas like BIM to Field solutions, cloud-based solutions, and mobile capabilities. An example of this can be seen in the acquisition of Tekla by Trimble, a provider of field-based communications technologies. The next generation of BIM tools should serve to enhance BIM functionality and usefulness to an even greater extent. 1.3 Competitive Environment The AEC industry is in the midst of changes that some say are long overdue with regard to improving processes in the design and construction phases. BIM has been identified by many as the solution to the inefficiencies that have existed in the industry for quite some time. As BIM tools and BIM processes take hold in the industry by more and more firms, and the advantages of these tools and processes will begin to be realized through higher quality and more reliable deliverables, BIM adoption will become a necessity for competing effectively in the market. As it stands, some question still exists as to BIM s true effectiveness, as well as some confusion as to what BIM truly is, which will not last for long. In any competitive environment, leaders and early adopters will forge the path ahead and reap the benefits of the new competitive landscape. Those who choose to lag behind these early adopters may be left behind or left in a mode of playing continual catch-up, while those who adopt BIM practices will realize a measurable return on investment (ROI). The leading regions of the world for BIM adoption are North America and Western Europe, followed by high growth in the Asia Pacific region. One of the key factors influencing adoption of BIM in these markets especially in North America and Western Europe is the fact that public organizations, such as the U.S. General Services Administration (GSA), are requiring the use of BIM tools on their building and facilities management projects. These organizations are serving to push the body of knowledge regarding BIM tools and processes forward. BIM has higher visibility in these areas and, because of that, more building owners are asking for it or requiring it on their projects. They have seen the claims of reduced design/construction costs and this proves to be a significant driver for them, especially in the most recent economic environment. Owner requests and public mandates serve to establish a solid footing for BIM in these areas of high adoption. Companies and practitioners that have adopted BIM practices and tools and have successfully completed projects using BIM are realizing its true benefits. They are finding that it is incorrect to assume that, because the overall cost of a project is lower, their fees will also be lower. BIM is allowing an expansion of their businesses through the addition of value-added services, through higher quality work products and increased client satisfaction. Other regions of the world have been slower to adopt BIM and are taking more of a waitand-see approach. In these areas, the BIM market hurdles have had a stronger influence. Changing to BIM practices and tools can imply significant upfront costs, such as the cost of new software and hardware as well as the cost of training and, potentially, the reconfiguration of skill sets within a firm. Firms can experience an upfront loss of productivity, as they initiate themselves to new ways of working and collaborating. One of 2

4 the key factors hindering the wider adoption of BIM is the reluctance of firms to change the way they work. Some confusion still exists within the AEC industry about what BIM truly is. Some feel that, if they are using a three dimensional (3D) modeling tool, they are using BIM. Others have a slightly deeper understanding of the concept of BIM, but use it only partially during the design/build process still maintaining a silo method of working. These two factions serve to give BIM a bad name, so to speak, as the true value of BIM is not realized and is diminished in the minds of those practitioners and others. 1.4 The Market for BIM Software and Services The market for BIM tools and services will experience relatively strong growth for the next several years in the regions of the world where BIM adoption has taken hold. These regions include North America, Western Europe, and Asia Pacific. North America and Western Europe enjoy a market share lead, although the Asia Pacific region will grow at a higher rate than these two leading areas. Much of this is due to the fact that the Asia Pacific region has a large building stock, as well as a significant amount of building and construction taking place. Growth rates in the Asia Pacific region can potentially be significantly higher if this region becomes more active in mandating the use of BIM for construction and facilities management. Other regions in the world, such as Latin America, Eastern Europe, the Middle East, and Africa, will not see an increase in BIM adoption rates until later in the forecast period of this report, which spans the years of 2012 through As the leading regions sort out the initial growing pains of BIM adoption and start to show and realize the benefits of BIM, it will slowly become standard practice in those regions that are lagging behind as well. Pike Research projects that, in 2012, the global market for BIM products and services solutions will be approximately $1.8 billion, growing at a global CAGR of 17.3% to reach a market value in 2020 of almost $6.5 billion. These figures represent both BIM software revenue and revenue from BIM-related services, such as training/support and project management/collaboration. Growth in the early years of the forecast period will be relatively higher in the leading regions, as more firms adopt the tools and practices. In the regions that lag behind, higher growth rates will not be seen for another 4 to 5 years, but those areas will eventually move more and more toward using BIM. Chart 1.1 Building Information Modeling Revenue, World Markets: $7,000 $6,000 $5,000 ($ Millions) $4,000 $3,000 $2,000 $1,000 $ (Source: Pike Research) 3

5 Section 8 TABLE OF CONTENTS Section Executive Summary Market Overview Market Opportunities Competitive Environment The Market for BIM Software and Services... 3 Section Market Issues Market Overview Characteristics of the Building Industry Market Landscape Market Participants and End Users Market Landscape Global Building Stock Growth Market Opportunities Definition of Building Information Modeling Building Information Modeling Objects Virtual Buildings Building Information Modeling Data Advantages of BIM Increased Productivity Reduced Costs Pre-Design through the Asset Lifecycle Lifecycle Asset Management Optimized Building Performance Higher Quality Deliverables Enhanced Project Predictability Better Project Communication and Coordination Less Rework Project Safety Earlier Visibility into Design and Operations for Building Owners Challenges of Building Information Modeling Unclear Deliverables Building Information Modeling Ownership Questions The Potential Need for Staffing Changes Market Drivers Strategic Business Imperative Competitive Advantage Owners Ask for Building Information Modeling Will They Get It? Building Information Modeling Changes the Competitive Landscape Market Hurdles Lack of Information Resistance to Change Upfront Costs Interoperability Other Building Information Modeling Market Issues Fee Structures The Uses of Building Information Modeling Global Building Information Modeling Initiatives United States National Institute of Building Sciences

6 buildingsmart Alliance General Services Administration Other U.S. Public Mandates, Programs, and Organizations United Kingdom Norway Netherlands Finland Sweden Singapore Other Countries Section Technology Issues Introduction System Use Determines System Specifications System Components Hardware Systems Memory and CPU Hard Drives and Storage Capacity Networking Considerations BIM Cloud Solutions Software Architecture Sustainability Structures MEP Construction Facilities Management Services Building Information Modeling Standards Industry Foundation Classes Construction Information Building Information Exchange Section Key Industry Players Company Profiles Arcat, Inc ArchiDATA Inc Asite Solutions Ltd Autodesk, Inc Bentley Systems, Incorporated buildingsmart Alliance Design Data SDS/ Gehry Technologies Nemetschek Vectorworks, Inc. / Graphisoft Rhinoceros / McNeel North America Tekla Corporation Other Industry Players BIM Products Ltd Constructivity.com LLC ENGStudios, Inc. / YouBIM Section Market Forecasts Market Conditions for Global Building Information Modeling Adoption Forecast Methodology

7 5.3 Assumptions Determining the Market Forecasts Regional Market Forecast Overview Global Market Forecasts North America Western Europe Asia Pacific Market Forecasts Other Global Regions BIM Market Forecast by Software Segment Section Company Directory Section Acronym and Abbreviation List Section Table of Contents Section Table of Charts and Figures Scope of Study Forecasting and Market Sizing Data Collection Defining Service Offerings Project Management Support and Collaboration Consulting Software Support and Training Sources and Methodology Notes

8 Section 9 TABLE OF CHARTS AND FIGURES Chart 1.1 Building Information Modeling Revenue, World Markets: Chart 2.1 Commercial Building Stock Growth, World Markets: Chart 2.2 Commercial Building Stock Growth by Building Type, World Markets: Chart 5.1 Building Information Modeling Revenue, World Markets: Chart 5.2 Building Information Modeling Market Segmentation by Region, World Markets: Chart 5.3 Building Information Modeling Market Segmentation by Region, World Markets: Chart 5.4 Building Information Modeling Revenue by Market Segment, World Markets: Chart 5.5 Building Information Modeling Revenue by Market Segment, North America: Chart 5.6 Building Information Modeling Revenue by Market Segment, Western Europe: Chart 5.7 Building Information Modeling Revenue by Market Segment, Asia Pacific: Chart 5.8 Building Information Modeling Revenue, Other Regions: 2012 and Chart 5.9 Building Information Modeling Revenue by Software Segment, World Markets: 2012 and Chart 5.10 Building Information Modeling Market Share by Software Segment, World Markets: 2012 and Figure 2.1 United States Construction Industry Productivity: Figure 2.2 Current AEC Industry Practitioners Figure 2.3 Diagram of BIM Project Team Interaction Figure 2.4 Constituents and Beneficiaries of the Building Information Modeling Process Figure 2.5 Productivity Lag Using BIM Tools and Processes Figure 2.6 Cost to Correct Errors in the Building Process Figure 2.7 Project Timeline and the Cost of Making a Design Change Figure 2.8 Lifecycle Cost Savings of Additional Design Effort Figure 2.9 Probability Curves of Ad Hoc Process versus Optimized Process Figure 2.10 Building Information Modeling Tools Usage Figure 3.1 COBie Information by Type of Data and Project Phase

9 SCOPE OF STUDY 9.1 Forecasting and Market Sizing This report examines the building information management software and services markets with a global perspective. Pike Research presents a worldwide forecast and market sizing for seven major regions, including: North America Western Europe Eastern Europe Asia Pacific Latin America Middle East Africa In addition to a global view of the BIM market, Pike Research provides separate market sizing and forecasts for the software and services markets. Note that Pike Research looks at the entire BIM market, including services that are provided as standalone offerings, but eliminates those services that are not specific to the BIM market. Some services consultants working on a BIM type project provide services that are not directly related to BIM, such as drafting or document production. If the services are not directly or specifically related to BIM facilitation on the project, they are not included in the forecast. This study also examines the BIM software and services competitive landscape to identify and analyze the key players in this market. Pike Research interviewed a mix of software and services vendors and, subsequently, produced a profile of a selection of those companies. 9.2 Data Collection The forecasts provided in this study represent Pike Research s best estimates and projections for , for which the base year is It is based on primary and secondary information obtained in 1Q During these months, interviews were conducted with more than 20 industry players of various sorts. Secondary research information was collected from a wide range of sources, such as industry publications, governmental agencies, national and international laboratory research reports, standards organizations, press releases, and industry peer interviews and discussions. 76

10 9.3 Defining Service Offerings Pike Research refers to four major service segments in the use of the term service offerings or just services : Project management support and collaboration consulting Software support/maintenance and training 9.4 Project Management Support and Collaboration Consulting These services typically consist of: BIM business strategy advice BIM process improvement Role of BIM manager Business process reengineering (an approach to restructuring a business process in a significant way) Operations assessment (an assessment of how effectively an organization uses resources and how well operating units perform) BIM benchmarking BIM needs assessment Report and review of building information models and documentation Change management (includes a communication plan) BIM strategy advice BIM design BIM IT capacity and maintenance planning (future support requirements for IT) BIM supplier analysis 9.5 Software Support and Training These services focus on supporting the purchase of BIM-related software: Installing and configuring the software Building custom-specific applications and models Creating the data extract, transform, clean, and load data Preparing and automating custom reports Documenting the whole software setup and environment Systems integration with other building software and building automation components Installation and configuration of software-specific hardware components Training for the BIM software applications 77

11 SOURCES AND METHODOLOGY Pike Research s industry analysts utilize a variety of research sources in preparing research reports. The key component of Pike Research s analysis is primary research gained from phone and in-person interviews with industry leaders, including executives, engineers, and marketing professionals. Analysts are diligent in ensuring that they speak with representatives from every part of the value chain, including, but not limited to, technology companies, utilities and other service providers, industry associations, government agencies, and the investment community. Additional analysis includes secondary research conducted by Pike Research s analysts and the firm s staff of research assistants. Whenever applicable, all secondary research sources are appropriately cited within this report. These primary and secondary research sources, combined with the analyst s industry expertise, are synthesized into the qualitative and quantitative analysis presented in Pike Research s reports. Great care is taken in making sure that all analysis is well-supported by facts, but when the facts are unknown and assumptions must be made, analysts document their assumptions and are prepared to explain their methodology, both within the body of a report and in direct conversations with clients. Pike Research is an independent market research firm whose goal is to present an objective, unbiased view of market opportunities within its coverage areas. The firm is not beholden to any special interests and is, thus, able to offer clear, actionable advice to help clients succeed in the industry, unfettered by technology hype, political agendas, or emotional factors that are inherent in cleantech markets. NOTES CAGR refers to compound average annual growth rate, using the formula: CAGR = (End Year Value Start Year Value)(1/steps) 1. CAGRs presented in the tables are for the entire timeframe in the title. Where data for fewer years are given, the CAGR is for the range presented. Where relevant, CAGRs for shorter timeframes may be given as well. Figures are based on the best estimates available at the time of calculation. Annual revenues, shipments, and sales are based on end-of-year figures unless otherwise noted. All values are expressed in year 2012 U.S. dollars unless otherwise noted. Percentages may not add up to 100 due to rounding. 78

12 Published 2Q Pike Research LLC 1320 Pearl Street, Suite 300 Boulder, CO USA Tel: This publication is provided by Pike Research LLC ( Pike ). This publication may be used only as expressly permitted by license from Pike and may not otherwise be reproduced, recorded, photocopied, distributed, displayed, modified, extracted, accessed or used without the express written permission of Pike. Notwithstanding the foregoing, Pike makes no claim to any Government data and other data obtained from public sources found in this publication (whether or not the owners of such data are noted in this publication). If you do not have a license from Pike covering this publication, please refrain from accessing or using this publication. Please contact Pike to obtain a license to this publication. 79