AALTO UNIVERSITY SCHOOL OF SCIENCE AND TECHNOLOGY Faculty of Information and Natural Sciences Degree Program of Information Networks – Business Process Networks

Vertical integration refers to a combination of several or all functions in the value chain under a single firm. Many researchers have suggested that vertical integration facilitates the development and implementation of systemic innovations. As opposed to autonomous innovations that can be introduced as such without any major changes or modifications to the rest of the business system, systemic innovations require significant adjustments in other parts of the business system in order to be implemented successfully. However, systemic innovations are often too complex and large to manage and coordinate under a single integrated firm. Building information modeling (BIM) is an example of a systemic process innovation in the construction industry. BIM is a set of interacting policies, processes, and technologies generating a methodology to manage the essential building design and project data in digital format throughout the life-cycle of a building. BIM has been expected to bring significant improvements in productivity in the construction industry since the 1980’s but the implementation and diffusion of BIM have been proved to be slower and more difficult than expected, largely due to its interorganizational and systemic nature. At the same time, there has been a trend of vertical integration in the construction industry in recent years. This study aims to shed more light on the connection between BIM implementation and the organizational structure, and examines the advantages and disadvantages of vertical integration in the implementation of BIM as an example of a systemic process innovation. The empirical research is based on two opposite case studies from the Finnish construction industry; a vertically disintegrated project network and a vertically integrated project network. Both case studies included a single construction project where BIM was being implemented. The qualitative data consists of project documentation, interviews, and observations. A theoretical model of the advantages and disadvantages of vertical integration is first constructed based on the literature review. The model is later tested with the empirical data and refined into an improved model based on the analysis. The findings of the study propose that there are seven structurally relevant factors in BIM implementation; (1) management support, (2) coordination and control, (3) learning and experience, (4) technology management, (5) communication, (6) motivation, and (7) defining roles. There are both advantages and disadvantages of vertical integration related to each of these implementation factors. Thus, in order to achieve as smooth implementation as possible, managers should understand the impact of the organizational structure in BIM implementation and plan the implementation projects accordingly.