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State of the art ‘smart building’ technology has
rapidly become a key differentiator for all stakeholders in the
real estate value-chain – owners, operators, tenants and end
users. However, as building technology becomes more complex,
building developers and operators face new challenges that require
technology-specific skill sets to address.
The data-driven ‘smart buildings’ of tomorrow will be
made possible by the core technologies of Industry 4.0 –
namely, 5G, IoT, AI and cloud. They will offer unprecedented
customisation and control, operational efficiencies and cost
saving, and will also generate valuable data sets. Smart building
technology will use fleets of IoT sensors, machine learning and
data analytics to learn occupant preferences, monitor occupant
activity, connect physical and electronic identity, provide digital
design tools, and automate ‘operational’ building
technology (e.g. climate control, lighting, fire, and
security).
COVID-19 has brought many of the benefits of smart buildings
into acute focus: automated and remotely managed building systems
have minimised the need for onsite staff during lock-down, and
technologies such as thermal cameras, occupancy monitoring systems
and dynamic space allocation management offer innovative solutions
to safely return to work. However, with these benefits come a
number of new challenges that require technology-specific skill
sets to address, for example:
- IoT devices used in smart buildings, and their connection to
various cloud environments, present a far greater attack area for
hackers to gain access to building systems, and the
interconnectedness of building systems will increase the risk of
harm that may be caused by cyber breaches; - the data sets generated by smart building sensors and analytics
systems are likely to contain personal information of individual
occupants or visitors and will require rigorous attention at the
design stage and ongoing controls to ensure privacy compliance;
and - the design, integration and lifecycle management of smart
building technology will involve an increasing number of vendor
solutions and greater complexity to manage internally.
Many developers and operators will not have the internal
capability to address these challenges and, for this reason,
procurement and management of smart building technology is
increasingly outsourced to specialist building technology
contractors, or ‘Master Systems Integrators’
(MSIs). However, the procurement approach to (and
commercial and contractual model for) engaging an MSI is not well
established.
Traditionally, building developers have contracted numerous
technology vendors for a range of particular building systems,
generally under the head building contractor and after the building
planning and design stages are complete. As technology moves from
the periphery to the centre of future building design, early
engagement with an MSI will be integral to ensuring that technology
solutions are adapted to meet business objectives and overall
building strategy.
MSI engagements will become far more complex than traditional
technology contracts, and will often involve outsourcing end-to-end
responsibility for design, build, commissioning, and ongoing
management, support and evolution of smart building technology.
Developers and operators of smart buildings should be rethinking
their procurement and contracting approach to technology
implementation in order to reap the benefits promised by smart
building technology.
Outcomes-based procurement
The reality of most building systems today is that information
is siloed in individual systems. A core aim of smart buildings is
to integrate building systems to enable data flows from these
systems to be collected, analysed and used in real-time to support
desired outcomes. For example, a business objective may be to
identify whether a meeting room is occupied. There may be many ways
of achieving such an objective, using data from one or more
building systems:
- data from a meeting room scheduler may show a room is
booked; - data from a lighting sensor may show that a room is unoccupied;
and - data from workplace tracking systems may show that the
scheduled attendees are not in the building, or in another meeting
room.
Generally, when procuring smart building technology, developers
and operators should focus on developing clear business outcomes or
capability ‘use cases’, rather than prescribing particular
technology requirements to achieve these outcomes. This
‘business outcomes’ procurement approach is well suited to
the smart building context, as it allows MSIs to utilise their
specialist knowledge of legacy, new and on-the-horizon technology,
and design and integration expertise, to propose cost-effective
solutions. This approach will also speed up the time to issue an
RFP, and increase the scope for MSIs to innovate and compete to
provide the best value solution that meets the required business
outcomes.
Engagement model
There is no ‘industry standard’ model of MSI engagement,
and contracts take on a number of forms. However, the MSI
engagement model will expand beyond simple consulting services, or
delivering integrations between particular building systems, and
will often encompass end-to-end responsibility for the design,
integration, operation and lifecycle of all building technology
systems.
The characteristics of deeper MSI engagement models will
generally include:
- End-to-end design & build responsibility.
The MSI will be responsible for designing and delivering a turn-key
technology solution that meets the customer’s requirements,
including responsibility for ensuring all third party systems
incorporated in the solution are fit for purpose. This approach
shifts design risk from the developer to the MSI, whose expertise
in the vendor market leaves it best placed to recommend the right
systems, and removes the opportunity for finger pointing between
vendors if requirements are not met. This model of engagement is
generally contracted on a fixed-price / fixed-scope basis. - Project responsibility. The MSI will have
contractual responsibility for delivering the technology solution
to meet a project timetable, and for project managing third party
technology vendors and the inputs from the building owner and other
stakeholders. In the case of a new construction or renovation, the
MSI will need to develop its project timetable around the
construction timetable, and work closely with the construction
project team to identify design and access requirements. Early
engagement in the building design stage is essential for ensuring
that the technology and construction projects progress in
harmony. - Post-commissioning ops. Traditional facilities
management functions will be transformed and in many cases replaced
by smart building systems, which require specialist IT and data
expertise to operate and maintain that may be beyond the abilities
of in-house facilities management and IT teams. Accordingly, MSIs
will have a greater role to play in managing the operation of smart
building technology than traditional ‘operational
technology’ contractors, which may include IT support and
maintenance services, technology vendor management (including
management of licensing, vendor software support, and end-of-life
issues), cyber security, unified data management, privacy
compliance, optimising and improving building operations through
data analytics, and training services for in-house teams. A key
part of the value MSIs offer in the operational phase of a smart
building is to connect building stakeholders to the data generated
by building systems in meaningful ways, and assisting operational
decision-making based on such data. Performance of such ongoing
operational services will be driven by service levels, which may
include metrics for systems availability, energy efficiency,
preventative maintenance, systems security, and customer
satisfaction, among others. - Upgrade and enhancement. Building lifecycles
are significantly longer than technology lifecycles, and the
technology in smart buildings will evolve in time. In many cases,
technology upgrade or enhancement work will commence from the
moment the building is commissioned. There is often a gap in
perspective between the design and build teams and the stakeholders
most invested in the operational use of the building, and this will
often result in the MSI development team being engaged in continual
development or re-configuration of building systems to meet
operational needs. MSI contracts need to contemplate more than the
initial solution delivery, and include terms governing how future
projects or continuous delivery will be governed. Engagement models
may include minor enhancement work built into operations and
support services, priced technology roadmap options, gain-share
mechanisms for joint investments, and/or agile project development
regimes.
Looking ahead
How a smart building owner chooses to engage with a MSI will
depend on a number of factors, including the complexity of their
technology requirements and their in-house capabilities. Although
engagements with MSIs are likely to continue to involve significant
consulting work on an hourly rate basis, and piecemeal integration
projects, the trend in MSI engagements for truly integrated
building systems will shift towards outsourcing end-to-end
responsibility for all building technology, both in the delivery
and operations stages.
There will always be a cost for pushing greater contractual
responsibility on an MSI, but as technology and the smart building
industry continues to develop, the value in deeper partnerships
with such service providers will become more compelling, and MSIs
will become more accustomed to accepting and capable of managing
such risk.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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