What is the ROI of Colocation?
If so many industries are using colocation, there must be a benefit.
Although it’s difficult to calculate the true ROI of colocation, we are starting to come across metrics as we develop our own.
A Harvard Medical School study analyzed the impact that colocation has on the quality of biomedical science research. The study used the number of times a paper is externally cited as a measure of quality. Findings:
- Two heads are better than one. Research with multiple authors prevailed over that of a single author.
- One room is better than two. Research quality (statistically) significantly improved when collaborators colocated.
General Electric colocated a team of design engineers, manufacturing engineers, line workers, staff from marketing, and sales to move manufacturing of its GeoSpring water heater and dishwasher lines from China to the US.
What started as a manufacturing challenge became a redesign with impressive results. The colocated US design and manufacturing team:
- Cut material costs by 25%
- Cut assembly time from 10 hours to 2 hours
- Cut factory to warehouse delivery time from 5 weeks to 30 minutes
- Improved design quality and energy efficiency
- Reduced retail sticker price by 19%
A recent project colocated the owner, design team, and construction team during Design Development and Construction Documents to finalize, coordinate, and document the design. While the team found it difficult to document the value of their on-going communication and collaboration, they recorded several discrete examples including ceiling height optimizations, beam penetrations, and alternate design solutions.
The colocated team reduced the design schedule by several months and delivered cost savings in excess of $1,000,000 in savings.
Source: ROI Calculations Performed by Tocci Building Companies