The role of BIM in reducing information asymmetry in construction projects

Publisher:
PMI Organization Centre
Publication Type:
Conference Proceeding
Citation:
Project Management Excellence: Education, Research and Practice, 2015, pp. 115 - 125
Issue Date:
2015-02-13
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The purpose of this paper is to determine the impact of Building Information Modelling (BIM) on Information Asymmetry (IA) in construction projects. Further, the focus is also on a comparative analysis of the extent to which firms in Australia and India are looking at BIM as a solution to IA in construction projects. IA is a common concern in contracting relationships during the procurement of construction projects. While the agent (contractor) opportunistically takes advantage of the Principal (Client), the Principal is continually exploring the best means of managing information on projects. The question that needs to be answered is: To what extent in real-time scenarios, can BIM help reduce the imbalance in information between the two contracting parties? Principal agency theory proposes three issues due to IA including: Adverse Selection, Moral Hazard and Hold Up which are all typical ways in which an information imbalance can be used opportunistically to exploit the Principal. This paper discusses the manifestation of IA in construction procurement and project delivery, the impact of contractual controls commonly used to manage IA, and the potential of BIM to control IA. Contractor, Developer and consultants in India and Australia were interviewed and their responses are presented in the paper. Among the three areas of IA, respondents were of the opinion that BIM can help to a greater extent in overcoming Hold Up and Moral Hazards. While clients in the Australian context are keener and oriented towards BIM implementation, clients in India do not insist on BIM except where large developers are involved. In other words, the level of penetration of BIM in the Indian context is comparatively low. Surprisingly, while the contractors in Australia do not see significant benefits from adopting BIM, many contracting firms in India have gone ahead with BIM as they consider that it can provide a better protection under material variation. While developing high technical capability in terms of BIM utilisation is the immediate challenge in both the countries, one can be sure that there is a good potential for BIM in the years to come in both these countries.
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