Unbundling Transaction Cost Components in Building Information Modeling Adoption Procurement

Abstract

Building information modeling (BIM) adoption is an emerging trend in Malaysian construction industry. BIM is expected to bring better project performance and address the various construction dilemmas stemmed from construction disputes. Construction disputes has been associated with high transaction costs, which subsequently increase overall project costs. Hence, BIM has been adopted in project procurement to address construction disputes for better project performance. Studying the transaction costs in BIM adoption procurement is deemed beneficial particularly when the ambiguity of a project performance is high. This is especially true when the number of projects adopting BIM is still comparatively small to ascertain the benefits of BIM. Transaction cost economics (TCE) is a theory and methodology for relatively evaluating the cost-effectiveness of institutional arrangements in managing transaction, and therefore, studying TCE in BIM adoption procurement can be beneficial. Such an effort can improve the understanding of the benefits of the transactions made. Previous research has managed to conclude that the traditional procurement resulted in higher transaction costs compared to the design-and-build procurement. Hence, this study attempts to identify the transaction costs in BIM adoption procurement. A systematic literature review was performed to investigate the TCE in procurement to profile the transaction costs and its components in BIM adoption procurement. The outcome of the systematic structured literature is a conceptual framework combining the “RIBA Plan of Work with BIM Overlay” developed by RICS with a refined transaction cost components categorisation. The framework is further classified into pre-contract and post-contract transaction cost components specifying the fixed and variable components, and either visible or hidden. It is believed that the unbundling of the components of transaction cost in BIM adoption procurement could provide a solid foundation in developing a guideline for industry players to better understand, apply, and manage BIM adoption procurement