BIMScaler Blog – Often, the way to get the most out of digital twins is to think about the financial implications. So, what are the cost implications of adopting digital twins?
This question is a big deal for businesses looking to make the leap into this technology, especially as it’s catching on across industries globally.
For Australian companies, it’s crucial to find a way to balance the need for innovation with the reality of cost constraints.
And that’s why we’re going to break it down here.
How Much Does It Cost to Implement Digital Twins?
How much it costs to implement digital twins depends on how complex the system is, the size of the business, and the level of sophistication needed.
Adam McClenaghan and colleagues say in their 2023 paper, “Cost Benefit Analysis for Digital Twin Model Selection at the Time of Investment,” that capital expenditure (CapEx) and operational expenditure (OpEx) are two big cost areas.
The upfront costs, or CapEx, include things like hardware, sensors, and digital models.
Ongoing expenses, or OpEx, cover things like cloud computing and system maintenance.
Their case study on thermal expansion monitoring shows how the cost of the analytical digital twin was about £10 (AUD 18) compared to £700 (AUD 1,270) for a more advanced finite element (FE) model.
In the construction industry, as Christian Toochukwu Abugu shows in “An Investigation of the Costs and Benefits of Digital Twin Implementation in Construction,” the cost picture is just as complex.
Construction projects are always changing, and they often involve lots of different technologies like BIM and IoT, which makes it tricky to know how much something is going to cost.
However, Abugu’s research, which involved talking to people in the industry, shows us what all the different costs are.
Type of Cost When Adopting Digital Twins
Initial Investment Costs
The first thing to think about when you’re getting started with digital twins is the initial investment.
The initial investment in a digital twin usually involves a lot of upfront costs.
For example, the hardware components – things like sensors, metrology equipment, and software licenses – make up the majority of these costs.
Also, hiring experts or consultants to design and set up the digital twin adds to the cost.
As Adam McClenaghan and others have pointed out, an analytical twin can be pretty cheap to set up and run.
But more complex twins, like finite element analysis (FEA) models, can cost a lot upfront. Software subscriptions alone can run to £500 (AUD 905).
What’s more, in sectors like manufacturing and healthcare, the initial investment can be even higher because of custom integrations with existing systems.
Implementation and Integration Expenses
How much it costs to implement and integrate new systems depends on the size of the business.
Integrating digital twins with existing IT and operational technology systems is a big task for large enterprises, and it costs a lot too.
For instance, McClenaghan et al., point out the financial commitment needed for real-time digital twin operations in manufacturing automation.
The investment covers cloud computing platforms and the costs of the data collection infrastructure needed for real-time operations.
These costs can be pretty high when you’re implementing complex systems where accuracy is a big deal.
This is especially the case when models need to be updated all the time because of changes in the physical environment, such as temperature variations or equipment adjustments.
Learn more: How Do Digital Twins Integrate with Existing Infrastructure: A Simple Guide
Ongoing Operational Costs
The ongoing costs, or OpEx, of a digital twin system are a big deal throughout its lifecycle.
These costs can include things like cloud storage fees, energy costs for running simulations, and regular software updates.
The Grand View Research Digital Twin Market Report says there’s a growing move towards cloud-based solutions because they’re more cost-effective.
Cloud platforms help cut physical infrastructure costs while letting you do real-time data analytics, which is key for predictive maintenance.
That said, businesses still need to think about the long-term operational costs.
The Grand View Research Digital Twin Market Report shows how, in 2023, predictive maintenance made up the largest share of revenue. This suggests that maintaining these systems can be expensive.
Hidden or Indirect Costs
Adopting digital twins isn’t just about the upfront and operational costs. There are also some hidden costs that can have a big impact on a company.
Putting money into a digital twin might mean you can’t afford other projects that could be good for business.
Furthermore, when the team first gets to grips with the new system, there might be a few blips in productivity.
With cyberattacks always a risk, it’s important to invest in strong security to protect the digital twin and its data.
Abugu’s research shows how important it is to spot these hidden costs, as they can make a big difference in whether a digital twin project is a success and whether it’s financially viable.
So, your organisations need to think about more than just the immediate costs.
You should also consider the broader implications for how the organisation operates and its strategic goals.
Cost-Saving Potential of Digital Twins
The savings generated by implementing digital twin technology can be substantial, particularly in industries like construction, manufacturing, and healthcare.
In construction, for example, using digital twins can streamline operations by improving communication and reducing the need for Requests for Information (RFIs), which account for up to 5% of project costs.
A study conducted by McClenaghan et al., revealed that RFIs and miscommunication could be slashed by up to 95% when digital twins are integrated with Building Information Modelling (BIM), as seen in typical projects.
Another aspect of cost-saving comes from the predictive capabilities of digital twins, which enable companies to identify potential issues before they escalate.
This predictive maintenance can reduce downtime and unnecessary repairs, helping organisations save up to 18% on maintenance costs.
But don’t get carried away. What are the cost implications of adopting digital twins?
The thing to remember is you’re looking at both the upfront costs and the ongoing costs of putting it into practice.
While there are some big savings to be made, it’s important to think about whether the investment is worth it.
Learn more: The Digital Twins Advantages & Disadvantages: Guide to Get the Balance
Return on Investment (ROI) Considerations
The bottom line for businesses thinking about using digital twins is understanding the return on investment (ROI).
The upfront costs can be high, so it’s important to know if it’s going to pay off.
McClenaghan et al., point out that, like many new technologies, digital twins can be tricky to measure accurately in terms of ROI, especially because projects often differ in scale and complexity.
Their research shows the returns can be pretty impressive once construction and infrastructure projects have fully integrated the technology.
In their study of facility management, they found the ROI for BIM implementation – which is basically the precursor to digital twins – was around 64%, with a payback period of just under two years.
This is a great example of how digital twins can offer even more advanced capabilities.
In real terms, it’s thought the cost of using digital twins in a general hospital building could be between AUD 4.7 and AUD 6.6 million, with big savings on energy use and maintenance.
These savings help you get a faster return on your investment, especially when you use the digital twin systems to make sure you’re using as little energy as possible.
How to Controlling Cost During Digital Twins Adoption
As mentioned before, using BIM with digital twin systems is a great way to make it easier for companies to afford to adopt these new technologies.
BIM is already used a lot to improve communication, reduce design errors, and cut down on rework in construction.
It’s also scalable, so it’s a great stepping stone for digital twin projects.
That’s why we at BIM Scaler have got you covered with a complete solution.
We bring BIM and digital twin tech together to make your project management a breeze and cut costs.
BIM Scaler is all about Revit modelling, digital engineering, and model auditing. This helps to make sure your projects run smoothly by stopping data corruption and rework.
Also, your business can use 4D and 5D BIM models to simulate construction timelines and financial data, which helps them avoid problems early on.
BIM Scaler’s clash detection and model audits help to avoid issues, costly delays, and RFIs.
We’d love to show you how this all works in the real world. For all the details, kindly visit our BIM Management Support page.
Or perhaps we could grab lunch? No sales, no pushy pitching.
Let’s talk, have a few laughs, and figure out how to make those complex digital dreams a reality, one step at a time.
In Closing
In a fundamental sense, you can make your way through the complexities of digital twin adoption by leveraging existing technologies like BIM, carefully evaluating the ROI, and focusing on effective implementation and data utilisation.
But, of course, the cost of implementing digital twins is a complex issue, involving both tangible and intangible expenses.
So, what are the cost implications of adopting digital twins? It is a complex one, with no easy answer. It’s a tricky one, with no simple answer. That’s why we at BIM Scaler are ready for you 24/7.
