When the Government announced in May 2011 that Building Information Modelling (“BIM”) would be compulsory on all public sector projects from 2016, BIM was rapidly elevated from the status of clever software used by some to a development insurers needed to monitor.

With no reported claims yet to emerge anywhere in the world (a claim involving BIM in the US in 2011 was settled out of court), insurers are keeping a watchful eye on the ways in which BIM is being implemented.

In March 2013, the Construction Industry Council (“CIC”) launched a BIM Protocol with the aim of setting out stakeholders’ rights and liabilities when working on BIM projects. It also published the Best Practice Guide for Professional Indemnity Insurance when using BIM and the Outline Scope of Services for the Role of Information Management.

Is this the clarity the construction industry and the insurance market have been waiting for?

What is BIM?

BIM is a process whereby the multiple stakeholders on a construction project collaborate to create a shared digital model of the project.

Government plans for the public sector call for BIM Level 2, whereby the architect, structural engineer and other design consultants each issue separate models to each other at regular intervals, to be fed into a project model. 4D and 5D BIM may be used at this level. 4D BIM adds a time element, permitting detailed programme scheduling. 5D BIM adds costs and quantities to the model, permitting the generation of bills of quantities, for example.

The next stage of BIM’s development, Level 3, involves fuller integration with the parties to a building project working simultaneously on a centrally hosted model. In addition to 4D and 5D BIM, 6D BIM adds facilities management information. The idea behind 6D is that, at completion, the employer acquires a detailed as-built model which can be used for lifecycle purposes (enabling, for example, a facilities management contractor to refer to the model to determine the supplier of components).

What is the likely impact of BIM on design and construction risk?

The hope among many in the construction sector is that the technological advances of BIM (such as detection of design clashes), combined with greater collaboration between parties, will result in a reduction of risks on projects, meaning lower insurance premiums for all. Some even foresee a time when not using BIM on a project is perceived by insurers as the greater risk.

However, more cautious observers have argued that BIM increases risk for the following reasons:

  • BIM has the potential to blur traditional responsibilities therefore making risk allocation more difficult. With BIM Level 3, a change by one design consultant could automatically be carried through to another consultant’s work due to the intelligent nature of the software.
  • BIM inherently brings IT/cyber risk. The greater the electronic data and the more parties using the model, the greater the risk in the event that the model becomes corrupted.
  • Collaborative working makes it harder, particularly for design consultants, to safeguard intellectual property rights over shared data.
  • The more uses the BIM model is put to, the greater the risk becomes. Where the BIM model is used for lifecycle purposes, liability could span long after completion.

The BIM Protocol

The BIM Protocol commissioned by the CIC aims to address some of these concerns. It is a concise document, intended to be used as a contractual document appended to and expressly incorporated into the existing contractual arrangements of all parties involved in using, producing or delivering BIM models. Importantly, it is intended that the Protocol will take precedence over existing documents in respect of any BIM-related issues.

Clause 4 of the Protocol sets out the obligations of the project team member:

  • To produce specified models, to a specified level of detail. The Protocol includes two pro-forma Appendices: Appendix 1, the Model Production and Delivery Table (“MPDT”), sets out the models required at each stage, which party is responsible for preparing them, and the level of detail required. Appendix 2, the Information Requirements (“IR”), sets out the processes and procedures governing the development of the model. These Appendices will need to be developed in further detail and tailored to the specific project to clearly define and set out the parties’ obligations.
  • The models must be produced applying the same level of skill and care required under the main appointment/contract.
  • Other obligations are subject to a reasonable endeavours obligation (e.g. delivery of the model, and incorporating the Protocol into sub-contracts).

Clause 5 of the Protocol addresses the risks and liabilities associated with the provision of electronic data, and seeks to remove the need for electronic data exchange agreements between project team members by defining the liabilities. The project team member gives no warranty as to the integrity of any electronic data, and liability is excluded for any corruption or unintended alteration after transmission (unless it is caused by that project team member’s failure to comply with the Protocol).

The Protocol also brings clarity in relation to IP rights. Clause 6 clearly limits use of the BIM model to purposes related to the project and confirms that information loaded into the model remains the property of the party that developed it. The Protocol then sets out a comprehensive set of licences and sub-licences to ensure full use of the BIM model by the project team.

New role of Information Manager

Perhaps the biggest change is the introduction of the role of Information Manager. The Outline Scope of Services for the Role of Information Management sets out further information on the suggested scope of services. A more detailed version is currently being produced by the CIC.

The Information Manager will be responsible for managing the process of information exchange and policing compliance with the Protocol, the MPDT and IR. The Information Manager also bears responsibility for security of the BIM model. The Information Manager is a separate role to that of BIM Coordinator, which is usually undertaken by the design lead. The BIM Coordinator has design responsibility for clash detection and model coordination (for example) while, on the other hand, the Information Manager has no design-related duties.

Despite this separation of roles and duties, the Protocol guidance envisages that a stand-alone third party will only be used as Information Manager in some circumstances, and the role of Information Manager is more likely to be performed by the design lead or the project lead.

Design consultants may need to adapt their practices in order to be able to perform this role, and there are risks that any issues with the compatibility or integrity of data fed into the models will increase the risk that the model will not perform as expected. The Best Practice Guide (as to which see more below) suggests that the role of Information Manager is not expected to cause concerns for PI insurers, provided that the role remains a procedural data-checking role and does not creep into the checking of design clashes and design co-ordination and therein, perhaps, lies the rub.

Best Practice Guide for PI Insurance when using BIM

The Guide was produced after lengthy consultation with insurers. The response from the market was that no issues have arisen from BIM Level 2 that are sufficiently serious to require coverage restrictions. Premium implications are also expected to be minimal, as BIM Level 2 should not materially alter consultants’risk profile.

Despite this, the Guide sets out some practical guidance for design consultants when taking on BIM projects. Insureds are advised to consult with their brokers and make disclosures if, for example, they are undertaking the role of BIM Coordinator or Information Manager or if they will be hosting a BIM environment (in which case, separate technology/cyber risk insurance may be needed). This is sensible advice that reflects what is already happening across the market.

Looking forward

PI insurers on the whole have become comfortable with Level 2 BIM. The BIM Protocol and the role of the Information Manager should bring the contractual certainty and process management the construction sector has been calling for.

However, as the Guide readily admits, BIM Level 3 (full collaboration on a centrally hosted model) raises “very different liability issues which will need further consideration”.

Some believe that the best solution to this era of more collaborative working is more collaborative insurance, in the form of single project insurance (which has traditionally been seen as too expensive to be used widely). Only as the construction industry approaches BIM Level 3 will it become clearer to insurers whether such a change of course is required or indeed is affordable.