The discourse around Return on Investment (ROI) in smart buildings often gets confined to traditional financial metrics. However, true value in our digitally transformed built environment extends far beyond a simple bottom line. As a market engagement specialist, my work involves orchestrating crucial dialogues that challenge conventional thinking, driving a more holistic understanding of value.
This commitment to rethinking core industry concepts was central to my involvement at last month’s Smart Buildings Show, where I moderated the ‘Holistic smart building ROI rethink’ panel. This session was part of a series connected to the Digital Buildings Council’s (DBC) ‘Project Costing and the Business Case’ Focus Area, reflecting an ongoing effort to redefine how we measure success in intelligent buildings. I also authored an accompanying article for Smart Buildings Magazine to delve deeper into these insights.
Beyond the Bottom Line: A Paradigm Shift
The panel, featuring experts like Jess Costanzo (Simmtronic/DBC), Daniel Watson (Hereworks), Jonathan Wilson (Gardiner & Theobald LLP), Shreya Sheth (PATRIZIA), and Viktoras Cesnulevicius (Facility Performance Consulting), championed a crucial shift. The consensus was to move beyond purely financial metrics and embrace a holistic approach to Smart Building ROI, encompassing user experience, broader ESG goals, cybersecurity, and operational efficiency. The core challenge is aligning the often-disparate agendas of owners, operators, and occupiers to agree on what “success” truly means.
Navigating the Hurdles to Realising Value
This holistic vision faces significant challenges that hinder smart buildings from fulfilling their potential:
- Ambiguous Client Briefs: Lack of clarity on desired outcomes hinders effective implementation.
- Value Engineering: Cost-cutting often removes crucial smart features, diminishing value.
- Procurement Misalignment: Traditional models struggle with smart tech integration.
- Knowledge & Skills Gap: A lack of expertise among operational teams.
- Marketing Hype vs. Operational Reality: Disparity between promises and performance erodes trust.
- The Project-Operations Gap: This fundamental disconnect prevents smart building value from being realised in operations.
Actionable Strategies & Future Vision
Our discussion put forward several key recommendations:
- Shift from CAPEX to OPEX Thinking: Prioritise long-term operational efficiencies. As Jess Costanzo highlighted, “If 20% of a building’s expense is that capital expense of building it, surely we should be more focused on what’s going to improve and optimise operational efficiencies.”
- Success Criteria over Use Cases: Define clear metrics. Daniel Watson argued, “A use case doesn’t give you enough information to determine success. What we need to start seeing during the design phase is more clearly defined success criteria.”
- Comprehensive Value: Incorporate factors like avoided costs (cybersecurity) and embodied carbon into ROI.
- Standardisation: Streamline integration and management for cost savings.
Panellists envision smart building technologies becoming the industry norm within five years, seamlessly integrated and no longer subject to value engineering, as Shreya Sheth predicted. New roles, like the digital main contractor (suggested by Jonathan Wilson), and the pragmatic call for the supply chain to “either prove you deliver and prove the ROI or die” (from Viktoras Cesnulevicius), reflect this evolving landscape.
This panel, and my accompanying article, collectively highlight the urgent need for the industry to actively engage in developing standards, frameworks, and best practices. This will help clients define desired outcomes and secure tangible value from their smart building investments. Ultimately, success hinges on a holistic approach that balances efficiency and effectiveness, with crucial investment in training and upskilling.
