Is it chicken and egg when it comes to the growth of BIM and professional indemnity insurance in Latin America?
BIM (Building Information Modeling) is an intelligent 3D/4D and 5D model-based process providing architects, engineers, contractors and developers with greater insight into their projects. It is perceived to provide enhanced integration of project processes, improved project performance (e.g. cost, time and environmental performance) and outcome predictability.
Benefits of BIM
Providing for more certainty in respect of construction risks underwritten, BIM is a tool that should be welcomed by insurers. Especially so in Latin America (LATAM), where we see a significant dearth of preliminary design (few scale models), lack of consideration of complex ground conditions (which are rife in the region), and inappropriate procurement structures which fail to allocate responsibility properly between stakeholders.
Furthermore, BIM is invaluable for claims analysis, helping to identify fault when problems arise. BIM can also be used for asset management so that the insurer has full understanding and visibility on the exact specification and make and model of all fixtures and fittings within a building, avoiding debates with insureds about underinsurance or lack of cover.
Both the construction and insurance industry have embraced BIM, the use has grown exponentially in the UK where it originated in 2011 (according to the BIM study released in May 2018, 75% of project teams in the UK are using BIM and it has grown year on year). This growth is in part due to the UK government mandating the use of BIM for all centrally procured government projects from April 2016.
Is LATAM ready for BIM?
Uptake elsewhere has not been so fast, nor mandated, especially in LATAM. However, as with many things related to LATAM, we cannot apply this assessment to all of the region, as BIM will be mandatory from 2021 in Brazil and its universities are third behind the US and Sweden on publishing BIM-focused academic papers. According to research by Teeside University, BIM is used by 85% of Brazil’s biggest contractors, with a focus on cost control in the construction phase rather than collaboration at design stage. Brazil’s transport department is also embracing BIM with a 30% costs saving target. A notable project utilising BIM was the 44,000-seat Amazon Arena in Manaus.
Elsewhere in LATAM, BIM was used from the outset on the Panama Canal expansion, allowing designers in five different offices worldwide to collaborate on one 3D model. Construction of Mexico City’s new airport (which was cancelled mid-way through) involved the use of BIM, including modelling of geotechnical conditions – the site is in a seismic zone – to help civil works. The use of BIM for seismic zones should prove very useful for the region.
Where Brazil leads the way on technology in the region, especially as the Brazilian army already uses OPUS (similar to BIM), elsewhere the cost of implementing BIM can be prohibitive on an industry which is already tightly squeezed since the Lava Jato scandal significantly impacted the industry. In countries like Chile, Colombia or Peru it is being used but at a slow pace and only for large projects.
Culturally it is also meeting some resistance. There is also a dearth of experience amongst designers on how to use BIM, and in the absence of employers funding training their salaries do not enable them to invest in this aspect of their career.
Whilst studies indicate that by 2020 the BIM market will increase to 11% in LATAM, the region does not have a well-developed professional indemnity market which could be a potential spanner in the works to further growth. In most LATAM jurisdictions, it is not compulsory for architects or engineers to hold professional liability insurance, which prevents claims against professionals as there is no guarantee of a recovery.
Great reliance is placed on Construction/Engineering All Risks (CAR) policies which may capture some elements of design (but usually for on-site activities only and with many exclusions).
Who assumes liability if an architect makes an error relating to BIM and what happens where there is no professional indemnity policy to respond? A CAR policy is unlikely to react even if BIM is not excluded. The big question is, whose exposure is it? If there is insurance, it is important that the insurer knows about the use of BIM from the start and that the project is procured clearly, as a common problem will be the possible blurring of responsibility between consultants.
Where professional indemnity insurers of construction professionals do exist, they should obtain confirmation from their insureds of the incorporation of BIM into agreements by competent lawyers, to ensure the correct obligations are being allocated to the insured and additional duties are not being adopted in error.
As to what will come first, BIM to drive professional indemnity or no BIM until the region has an established professional indemnity market, time will tell.