Inadequate Interoperability: A Closer Look at the Costs

The 2004 NIST interoperability cost study estimated an annual cost burden of $15.8 billion due to inadequate interoperability in the capital facilities segment of the U.S. construction industry. The $15.8 billion estimate is the sum of individual annual cost burdens for four key stakeholder groups: architects and engineers ($1.2 billion); general contractors ($1.8 billion); specialty fabricators and suppliers ($2.2 billion); and owners and operators ($10.6 billion). From a business perspective, these costs represent approximately one percent of annual receipts for each of the first three stakeholders and nearly three percent of the annual value of construction put in place for owners and operators. Building on the NIST interoperability cost study, this paper addresses the cost burden and business-related issues by explaining the methodology behind the estimates, analyzing key “cost impacts,” and discussing challenges and implications for change within the industry.