[Title will be auto-generated]

COMMITTED TO HEALTHCARE, FOCUSED ON YOU

Capital Project Solutions 2012

TRUST, INTEGRITY, RESPECT, COLLABORATION

JANUARY

COMMITTED TO HEALTHCARE, FOCUSED ON YOU

TRUST, INTEGRITY, RESPECT, COLLABORATION

Capital Project Solutions – January 2012

An Amazing Recovery - The Phoebe Sumter Medical Center Roman Buckner, Senior Consultant

At 9:15 pm on March 1, 2007, a powerful E-F3 tornado tore a thirty-eight mile path through Sumter County, Georgia. The city of Americus bore the brunt of the storm loosing many of its homes, businesses and schools. Sumter Regional Hospital was completely destroyed by the devastating twister. Now, almost five years later, the community has recovered and the new Phoebe Sumter Medical Center has emerged from the wreckage.

When planning began, the goal of the new medical campus was not to rebuild what had been destroyed or to create a small version of a large hospital but to build a new paradigm meeting the specific needs of the community. The project team of KLMK Group, Gresham Smith Partners and Brasfield Gorrie provided the design, direction and management needed to move the project forward and aid in the healing of the community. This month’s edition of Capital Project Solutions provides insight to the new health village and shares details of how the project was able to finish on budget and ahead of schedule.

The Phoebe Sumter Medical Center is a 240,000 square foot health village located in Americus, Georgia. The new replacement campus was designed and constructed with a sustainability initiative and is targeting a LEED Silver Certification status from the U.S. Green Building Council (USGBC). The medical facilities are built on 32 acres within a 272 acre “green-field” site. The campus is comprised of five structures including a 190,000 square foot Hospital, a Wellness & Education Center, a Women's & Family Medical Building, a General Surgery & Oncology Building and a Central Energy Plant capable of cogenerating electricity for the facilities. The Hospital is a four story structure (plus basement) that houses 76 patient beds of all private rooms and is providing medical services to the City of Americus and surrounding Sumter County.

Scope & Budget Management One of the first orders of business for the team was to validate the scope for the new campus. A Launch Gap Analysis was conducted to evaluate the proposed size and ensure that all aspects of the project had been vetted.

Ultimately, through a collaborative effort involving the project delivery team 1

Capital Project Solutions – January 2012

and leadership from both Phoebe Putney Health System and Sumter Regional Hospital, all of the gaps were identified and addressed and a course was set on a common vision. This process aided in “right-sizing” the scope and fine-tuned the pathway for the development of Phoebe Sumter Medical Center.

The total Master Program Budget for the facility was set at $125 million, with a Construction Budget of $81 million. Funding for the project came from primarily three sources: An insurance payout due to the total destruction of the previous 150 bed facility A partnership/merger agreement with Phoebe Putney Health System Federal Aid Funding from the Federal Emergency Management Agency (FEMA) These combined resources allowed for the new health village, to relocate to a “green-field” site that was significantly larger than the existing site. Taking advantage of the new location, the project team worked to “right-size” the facilities in order to maintain the current healthcare needs of the community provide greater opportunity for future growth and enhance profitability. In addition, leadership made a solid commitment to sustainable and responsible construction and developed a budget that would support pursuing LEED certification for all new facilities. Though sustainability can add cost to a project, the benefits far out way the initial investment. This is reflected in the 24,000 square foot vegetated or “greenroof” and 80,000 gallons of underground storage tanks that harvest rainwater to irrigate the campus landscaping.

Currently, the Women's and Family Health Building has received LEED Silver and the other certifications are pending.

In order to minimize changes and maintain the program budget, full scale “finished” mock-ups of each patient room were constructed at an offsite location. Having the spaces “finished” enabled the project team and staff to visualize the size/feel of each room and to examine the operational aspects of the space. In addition, it allowed for modifications to be made to the placement of fixtures, finishes, and hardware. Being able to adjust the mock-ups saved a considerable amount of time and money as opposed to having made changes in the field or in the midst of construction. The finished mock-ups were also used for training purposes and aided in familiarizing the clinical staff with the new facility and equipment. Ultimately, this process proved beneficial in streamlining facility activation as staff was more comfortable with their new surroundings.

Finally, once finished, the mock-ups were used as a tool for physician 2

Capital Project Solutions – January 2012

recruitment as well as for public relations - community members were allowed to get a glimpse of the new facility prior to completion.

Schedule & Facility Activation The construction and activation schedule for the project was originally set for 25 months. This time duration included the completion of all construction activities, IT infrastructure, medical equipment procurement, staff training and ultimately the patient move/relocation. Through a collaborative team effort, the project was delivered a full three months ahead of schedule without impacting the Master Program Budget. As each floor and building phase was completed, they were issued a Temporary Certificate of Occupancy (TCO’s) and delivered to the owner and facility activation team. With the cooperation of State and Local authorities, this strategy allowed for the inspection and approval of each floor or phase independently and thus the team was able to mobilize and install the final fixtures, furniture and equipment. Once an entire floor was completed, staff could begin to train and familiarize themselves with the new building and layout. Therefore, the project team was able to reduce the typical lag time from construction completion to building turnover and facility activation. The ribbon cutting for the new hospital was held on December 10, 2011, three months ahead of schedule.

Conclusion The Phoebe Sumter Medical Center now serves as one of the finest examples of a successfully executed health village with all the modern amenities and ability to provide world class healthcare. Collaboration and commitment on behalf the project team enabled delivery that exceeded the client’s expectations. This rebirth has aided in healing a community and will serve the residents of Americus for years to come.

3

FEBRUARY

COMMITTED TO HEALTHCARE, FOCUSED ON YOU

TRUST, INTEGRITY, RESPECT, COLLABORATION

Capital Project Solutions – February 2012

Are You Ready To Sail Your Ship: Top Budget and Schedule Considerations When Undertaking an Existing Campus Revitalization

David Vollmer, Senior Consultant “I'm not afraid of storms, for I am learning to sail my ship.”

Aeschylus A large healthcare capital construction project can be challenging and create a storm of information. Once an Owner commits to undertaking a major Campus Revitalization Project, there are many issues that must be balanced in order to successfully deliver the new facility on time and within budget. This month’s issue of Capital Project Solutions will analyze the causal relationship that major issues may have on the Owner’s ability to effectively manage the project.

Regulatory Approval Process Once a Launch Gap Analysis has been conducted and the Master Facility Plan, Project Vision and Guiding Principles have been developed, the Owner can move forward with the Regulatory Approval Process. After setting the basic structure for the project, the Owner must then determine the necessary jurisdictional approvals. In addition to the local approvals, many states also require a Certificate of Need (CON).

Once the necessary approvals have been identified, they must be worked into both the project schedule and budget. Timing is a critical factor and if not managed properly can play havoc on the schedule. Clearly identify which approvals are prerequisites to others as well as what aspects of the project must be completed in advance. It is likely that some aspects of the project can completed in parallel. In addition, it is extremely important to have a fully evaluated budget that quantifies exposures. Take the time to conduct a thorough review of the existing infrastructure services. Capacity upgrades and coordination with the local service providers may be necessary which will take considerable time and can be costly. In the event that a project moves forward to quickly, an Owner will likely find further delays and increased costs due to change orders and resubmission for new designs.

Community Involvement When coordinating the overall approval process, do not underestimate the impact of community involvement. A hospital is an integral part of its 1

Capital Project Solutions – February 2012

community and the surrounding areas. As a hospital grows, it can often become larger than intended and impact the surrounding areas. This impact can come in many forms: Building Size Light Pollution Noise Pollution Traffic Due to these factors, it is imperative for hospitals to maintain good community relations, even in cases where no large projects are planned. A great way to begin the communication process is to have a Community Advocate. Once a hospital project is planned, the Advocate should meet with residents to solicit their input and share information such as: Project Intent Size Location Services Offered Amenities Process Updates Traffic Patterns and Delays Noise Issues Community Impact During and After Construction Parking The community can either aid or hinder Regulatory Approvals. A perfect example is parking. For a hospital struggling with a land locked site that has limited options for parking, residents need to be informed as to the potential impact. Develop a plan to address contractor, employee, patient and community parking. Be sure to factor this into your Master Program Budget.

An offsite parking scenario, for employees or contractors, can become very expensive and should be appropriately evaluated. Proactively addressing potential issues and communicating a plan of action, will assist in gaining community support for the project.

Construction Process and Scheduling In creating the overall Master Facilities Plan, there is more to consideration then just the building location, massing and connectivity to the existing facilities.

The phasing of the project can have a domino effect on service lines, impact the cost and alter the timing of construction itself. Some of the questions that must be answered early on are as follows: Are there limitations to staging material on-site?

How does construction traffic impact patient and visitor access along with daily hospital deliveries?

Is there any interference with emergency services?

2

Capital Project Solutions – February 2012

In addition, time must be allocated to investigate the subsurface area that is to be disturbed. This includes environmental testing, utility location and geotechnical reviews. Existing soil may contain hazardous materials, abandoned utility lines, construction debris or undocumented fill that could have negative impacts on the construction process. Identify all unknowns and proactively manage issues well ahead of design completion as they may dramatically influence the location and foundation costs as well as the permitting process.

The exterior impact is only half the battle when connecting to an existing facility. When establishing construction phasing, evaluate the need to shutdown active corridors and the impact it may have on adjacent departments and services. This would include Code Blue teams, Trauma teams, ICU transports, dietary deliveries, etc. The development of the contractor schedule should be fully reviewed with the clinical departments.

Noise and vibration tends to travel and can impact sensitive instruments, effect on-going procedures and disrupt patients. Set realistic expectations on the construction process and work hours. Open and clear communication will ensure that the highest level of staff and patient satisfaction is maintained.

The effectiveness of the construction process inside / adjacent to an existing facility is directly correlated to the understanding of the existing conditions by the Design Team and that these are properly translated to the Construction Documents. It is important to identify and show on the drawings how much of the existing conditions will be corrected as well as where finishes and upgrades will stop. Updated building codes may require correction to deficiencies in fire rating of existing walls and doors, replacement of existing mechanical systems that are not part of the project, replacement of ceiling tiles adjacent to the work areas and flooring tie-ins. The boundary lines need to be strictly outlined, properly coordinated, and considered during the budgeting process.

Beyond aesthetics infrastructure work and tie-ins to existing services must be reviewed. This would include emergency and normal power; steam, medical gas, sanitary, domestic water (hot & cold loops), heating hot water, nurse call systems, network infrastructure. Review of the existing MEP and telecom utilities is very critical during the construction means and method planning. If at all possible, the design team and the contractor should locate all isolation 3

Capital Project Solutions – February 2012

valves, zone valves and identify what risers serve which areas of the hospital, including low voltage systems. For example, the loss of domestic water to a unit can have a tremendous impact on potable water for ingestion, hand washing and toilet/ shower operations. The inability to phase or isolate areas for work may require temporary provisions and can result in extended shutdowns in clinical operations, increased operational costs, lost revenue.

Infection control is a huge aspect of a renovation / expansion project and can greatly impact the schedule. It is critical that all team members are fully aware of the risk level to areas adjacent to the construction site. It is also extremely important to understand the infection control department’s interpretation of the hospital policy regarding construction adjacent to certain service lines.

Delivery and removal routes through the occupied sections of the hospital as well as work above and below occupied areas must be taken into account. The ability to gain access to an occupied space below the construction site can be hindered by the time of year or patient census. Allocate appropriate time to account for service lines that may need to be temporarily relocated or displaced. The construction schedule should indicate ideal building times and account for afterhours work that may be necessary.

Owner Directed Changes Once the design has been established and the User process completed, it is the Owner’s responsibility to make as few changes as possible. Any changes made at this point can be costly and delay the project. Ultimately, it would be ideal if hospital leadership would agree that no changes can be made during construction and for a short period after occupancy. The use of mockups and 3-D renderings during design can ensure that clinical staff is able to visualize the end product and determine if the design will function to meet their needs.

Additional planning and contingency allocation for appropriate changes can be accommodated and will more than likely reside in Medical or Technology Equipment modifications.

As the planning and associated construction for

facility upgrades can take place three to five years in advance, the rapidly changing technologies should be planned in as flexible a fashion as possible to allow the Owner to open a new facility that is competitive and timely.

Conclusion Time spent evaluating exposures and uncertainty in the project scope, will allow the Owner to accommodate most issues that may be encountered during a Campus Revitalization project. This investment will pay dividends and help to ensure that the project achieves its vision on time and within budget.

4

MARCH

COMMITTED TO HEALTHCARE, FOCUSED ON YOU

TRUST, INTEGRITY, RESPECT, COLLABORATION

Capital Project Solutions – March 2012 The Final Countdown: Project Launch Curtis Skolnick, Vice President As anyone who has ever seen a space shuttle or rocket lift off into space can attest, the National Aeronautics and Space Administration, NASA as we know it, is an expert in launch.

The iconic video images of the Saturn V rocket blasting Apollo 11 and her crew into space across our TV screens on that July day in 1969 for the sole purpose of landing on the moon, truly represents the point of no return. Once that massive vehicle rumbled off of the Florida coast, there was no turning back.

The launch in and of itself is an event, but not the goal of the mission. Not executed properly, the launch can be disastrous and prohibit reaching the goal of the mission. Thinking back to that day, and many other space missions since then, a simple question can be asked: “What kind of preparation does it take to successfully launch a space craft and her crew into space?”

Do we think NASA engineers, scientists, and astronauts woke up one morning thinking it would be a neat idea to walk on the moon and then a few months later merely leapt into space? Of course not. Only after years of study and preparation, involving teams of experts working together as a cohesive group towards one goal – one vision – set by President John F. Kennedy in 1961, did that momentous day come. So what on earth does this have to do with a major healthcare capital facility project?

It Starts With a Vision Typically, as with JFK, the decision to embark on a large building project (such as the addition of a new patient tower, the construction of a new ambulatory “healthplex”, or the replacement of an existing, outdated hospital) starts with a vision from organizational leadership. In today’s healthcare environment, the vision typically involves improving the physical environment as an enabler to meet the healthcare needs of a population, achieve higher quality at a lower overall cost and deliver care in an efficient manner, in a patient-focused environment. The vision of the project can usually be clearly articulated and rallied around by everyone in the organization.

What is typically less clear is the path and preparation it takes to actually launch a project.

1

Capital Project Solutions – March 2012 The End Depends on the Beginning Much like lift-off and then lunar landing, everyone will remember the ground-breaking, topping-out, and grand opening ceremonies of a construction project as these are the public examples of years of hard work conducted behind the scenes by a dedicated team of individuals. No one gets to these points without properly launching projects. Launch can simply be defined as “To start on a course” or “To get going; initiate”.

Without properly launching a project in the beginning, can a successful result be expected in the end?

The Launch Phase of a facility project is the most critical part of the delivery process, but it is also the least understood.

During this Phase, the project delivery team is formed; the scope, budget, and schedule are defined, and the project implementation plan—the foundation on which the project will be planned, designed and constructed—is established.

Healthcare Owners must allocate sufficient time for the Launch Phase and ensure that the Design Phase does not begin before the Launch Phase is complete. This will increase the likelihood of success, especially from the cost and schedule perspective. A successfully completed Launch Phase makes the design, construction, and transition and occupancy phases pleasant and collaborative rather than adversarial, unnecessarily costly, and frustrating.

The Launch Phase focuses on organization and planning. It sets the project expectations and defines the “Big Three”: project scope, budget, and schedule. Organizational leadership, typically the Chief Executive Officer (CEO) should drive this phase, assembling and preparing the internal and external delivery teams. Early in the Phase, the CEO and key team members solidify a project vision and guiding principles that serve as “guardrails and touchstones” for the project.

Team members establish a system of checks and balances that ensure that the strategic master facilities plan and project vision are transformed into a solid project implementation plan.

Critical decisions on project scope, budget, and schedule should be made during this phase, because changes at this early stage will have less effect on costs.

2

Capital Project Solutions – March 2012 The importance of properly launching a project cannot be overstated. Some benefits include: The likelihood of project success is greatly increased if Launch is executed before the Design Phase begins.

Project goals, expectations, and conditions of satisfaction are defined and team members and key constituent groups are aligned.

Changes to the project can be made early, prior to design and construction. Changes at this time are less costly in terms of both money and time.

A collaborative and creative team environment for internal and external project members is created, thus making the whole greater than the sum of its individual parts.

Elements of Project Launch Setting the scope, schedule, and budget are essential but Launch also establishes project controls and defines key project parameters prior to design. So what are the major elements of Launch and what needs to be contemplated, considered, discussed and defined prior to design and construction?

Strategic Master Facilities Plan: A Strategic Master Facilities Plan should be completed that addresses market need, workload and capacity projections, operating parameters, and facility requirements (e.g. master space plan, organizing concepts, master site plan, etc.). The facility plan should be a tactical element that helps an organization meet a specific strategic objective.

Project Vision & Guiding Principles: A common vision and set of guiding principles should be established. The vision should state the overall goals of the project and the guiding principles should summarize major operational and design goals (e.g Evidence Based Design, Sustainability, flexibility, safety, efficiency, etc.)

Site Analysis & Land Acquisition: Investigate and complete necessary “due diligence� on any new site (e.g.

3

Capital Project Solutions – March 2012 ALTA surveys, environmental assessments, wetlands studies, etc.). Ensure that all land encumbrances are known, the site is zoned properly, and under proper ownership control.

Project Delivery Approach: Define the approach you will utilize to deliver the project whether it be design-build, CM at-Risk, or an Integrated Project Delivery (IPD) approach.

Establishing this approach early will ensure a smooth selection of external project delivery team members later.

Project Delivery Team Organization: Make sure your internal leadership team is invested, educated, and organized.

Once the internal team is ready to go, they should then develop a structured and logical approach for external team member selection (e.g. design team, construction manager, and project manager).

Alternative Financing Opportunities: How are you planning to fund this capital investment? Will the project be financed through operating reserves, bond issuance, philanthropic funds or some other delivery method? Make sure you know where every dollar is coming from and the potential non-traditional alternative funding sources that may be available to you.

Integrated Process Planning: Develop a detailed roomby-room space program based on scope, efficient operational assumptions, and clinical strategy / future care model. Ensure that all internal users have provided input and accepted the program plan.

Master Program Budget: Develop a realistic total project budget that is fully vetted internally and externally. The budget should match the project scope, financial ROI targets, and available funds. The budget should include not only construction cost, but the cost of furnishings, equipment, technology, consultant and design fees, site work, escalation, and contingency.

Master Program Schedule: Similarly develop a realistic detailed schedule that includes all project elements including launch, planning, design, regulatory approvals, construction, activation and post-occupancy activities.

4

Capital Project Solutions – March 2012 Medical Technology & Equipment Strategy: Define your technology and equipment strategy. Will you be re-using equipment or purchasing new? What type of technology platform will you be using and how will IT be incorporated into operations and design?

Medical technology and equipment are major budget elements, so leave yourself ample time to discuss and define your approach.

Regulatory Approval Process: Make sure you comprehensively understand regulatory approvals such as zoning and Certificate of Need requirements. Develop a strategy to address these and other approvals as they will definitely impact your project scope, schedule, and cost.

Adequately define the project needs prior to gaining regulatory approvals as you will want the project to define the approval approach, not the other way around.

Activation & Occupancy Strategy: It may seem like Launch is an odd time to discuss occupancy, however, begin discussing how you plan to operate in the new space and ultimately move in. Developing a basic Facility Activation strategy early on will ensure that enough time and resources are allocated to this important project element – start strong, finish strong.

Are you ready to Launch?

Finally, if you are certain that you are ready to launch, conduct a Launch Gap Analysis (LGA) that assesses the elements above.

Project Launch and a LGA align expectations with project objectives while validating the plan of action to get everyone moving in the same direction prior to design and construction.

With so many things on the plate of busy executives, this type of due diligence can help to avoid distractions that may derail a project and hinder meeting important strategic objectives. In reviewing this information you found yourself scratching your head and thinking “Hmm, I hadn't thought of that", do yourself a favor, as there is no turning back - proceed only once you are truly prepared to Launch.

For more information on Project Launch and other Capital Facility topics, visit KLMK’s Educational Insights.

5

APRIL

COMMITTED TO HEALTHCARE, FOCUSED ON YOU

TRUST, INTEGRITY, RESPECT, COLLABORATION

Capital Project Solutions – April 2012 Options for Managing FFE&T on a Capital Facility Project Rick Hood, Vice President Activating and opening a renovated or new healthcare space can be a monumental challenge few people have had the pleasure to experience. Planning to relocate existing services and patients presents a unique challenge that many healthcare organizations have not had the opportunity to confront on a daily basis. In addition to planning for relocated items, an organization must also plan for the activation of the renovated or new space which can include receiving thousands of new items during a short period of time on larger projects.

In the current facility activation planning world Furniture, Fixtures, Equipment, and Technology (FFE&T) is managed in one of three ways: FFE&T is managed internally in silos with little discussion between planning teams on the best approach to manage information and activate the new facility.

FFE&T is managed internally in an efficient manner and relevant planning teams communicate through a facility activation steering committee.

The healthcare organization manages the receiving, warehousing, placement, and installation process by their in-house facilities team through an onsite storage facility.

FFE&T is managed by various third party vendors such as medical equipment planners, interiors firms, lowvoltage/IT consultants, etc. A third party warehouse is selected to manage the receiving process for all new FFE&T to ensure an orderly delivery and installation process. The healthcare organization may coordinate the overall schedule internally or they may look to an outside consulting firm or Activation Consultant to manage all of the vendors as well as the entire process to ensure an efficient and cost effective transition.

www.klmkgroup.com

1

Capital Project Solutions – April 2012

Ideal Scenario In a perfect world, the activation of renovated or new healthcare space follows a seamless path from construction substantial completion through first move. The client and third party vendors work in harmony to develop a comprehensive facility activation plan, all FFE&T deliveries arrive at their scheduled times, all items fit neatly in their pre-determined locations, a thorough infection prevention program has been implemented and followed, and all FFE&T is accounted for in mint condition.

However, the perfect activation scenario is rarely experienced for a host of reasons. FFE&T may arrive days early and/or late causing confusion at the loading dock. In-house facilities teams must then juggle their day-to-day responsibilities with receiving and placing all Owner Furnished Owner Installed (OFOI) items associated with the project. This can be a significant burden and cause operational disruption to core business functions.

Experience has also proven that this added responsibility may inhibit the ability to properly train staff in the new space and on the new systems. The improper allocation of key resources can result in stress on the activation schedule and increase the cost of activation. A balanced FFE&T process is one where the client and the project manager develop a comprehensive planning process well in advance of construction substantial completion.

This process includes the procurement manager(s), finance, medical equipment planner, IT/Telecom consultant, interiors firm, facilities manager, security, infection prevention, and the Activation Consultant (if managed externally). A process will be developed to manage all items from the creation of the initial purchase order through final sign-off in the new facility. This process will include the selection of a third party warehouse to receive, verify, warehouse, deliver, install, and sign off on all OFOI purchased to complete the new space.

A thorough process will include the following steps: Develop comprehensive facility activation schedule Establish warehouse controls and client access

www.klmkgroup.com

2

Capital Project Solutions – April 2012 Establish inventory control system Receipt and delivery reporting Determine FFE&T insurance requirements Item and piece count verification Delivery examination Develop reporting of goods damaged in transit and project claims process Develop delivery schedule for all FFE&T Conduct regular procurement planning meetings Develop an Owner’s manuals Remove debris Develop a vendor and facility access and security plan Coordinate BioMed and Infection Prevention Room-by-room sign off sheets Owner acceptance of all OFOI Project closeout Additional Procurement Planning Factors Warehousing options should also be considered well in advance of the move. Which is best for your organization - Just It Time (JIT) or third party warehousing? In the world of Six Sigma, LEAN, and ongoing process improvement, many organizations have moved the management of supplies and equipment to a JIT process. The JIT process saves organizations valuable resources through more effective use of space by limiting storage needs, reducing staff, and creating a more efficient process to move materials throughout the organization.

However, JIT is not as effective during the activation of a new or major hospital addition. This process includes the receipt, verification, placement, and installation of thousands of pieces of new FFE&T. Much of the new equipment requires assembly, BioMed testing, IT set-up, etc. Receiving space for the thousands of items is often limited which requires receiving staff to quickly move items into a temporary holding area or deliver direct to the final location.

Utilizing a third party warehouse allows for all items to be received and inspected in an orderly process. The warehouse company assumes the risk and liability for inspecting all items for damage and contents.

Furthermore, the warehouse

www.klmkgroup.com

3

Capital Project Solutions – April 2012 company will assemble most items ahead of delivery and will remove all packaging and debris, saving the hospital time and money. The hospital or its planning consultant will coordinate all deliveries from the warehouse to the new facility to ensure all items have been received and installed to meet the overall facility activation schedule.

Finish Strong As hospitals plan for a new facility, FFE&T is often overlooked and delegated to a small in-house facilities team to manage without appropriate consideration of backfilling their day-to-day responsibilities. The success of activating renovated or new healthcare space will always be judged based upon how it finished. Was the building activated according to plan? Was everything in its proper place? Did all the new equipment work?

Did the patient move go smoothly? Was the stress level on the organization acceptable? What additional dollars were spent to make up for the inefficiencies in execution? These final activities are the things that all personnel, patients and the public will remember as they begin experiencing the new space. Properly planning the management of the FFE&T will impact the success of staff training, final licensing, start date of the move schedule as well as the patient experience. Therefore, it is imperative for any healthcare organization involved in a capital facility project to begin development of a comprehensive FFE&T plan at inception of the project to maximize success.

www.klmkgroup.com

4

MAY

COMMITTED TO HEALTHCARE, FOCUSED ON YOU

TRUST, INTEGRITY, RESPECT, COLLABORATION

Capital Project Solutions – May 2012 The Challenges of Launching an IPD Project Steve Higgs, Senior Vice President Regardless of the delivey model used when launching a major Capital Project, there will be a myriad of strategic and tactical decisions required in order for the outcome of the project to be considered a success.

Developing a

realistic scope, schedule and budget should be the result of these varied and often iterative decisions. With a traditional methodology, these decisions are typically made in a more siloed manner and are often largely dependent on the culture of the organization and the structure of the project delivery team.

“Form follows

function” is as applicable to people systems as it is to the facility solutions that are the output of the very Capital Projects we aspire to complete on time and on budget.

While the Architecture, Engineering and Construction (AEC) industry continues to define the Integrated Project Delivery (IPD) Model, the promise of more value and better outcomes continues to lure healthcare owners to test the IPD waters.

Since IPD is not utopia, focusing on the

challenges of launching an IPD Project can provide an elightening and realistic road map for those considering this approach.

The Speed of Trust “The dynamism of trust is to act as a mediator, combining past evidence and feeling in moving the individual or organization towards a willingness to pursue a trusting form of behavior towards another party,” stated Dr. Hedley Smyth in his book Developing Client-Contractor Trust: A Conceptual Framework for Management in Project Working Environments.

1

Capital Project Solutions – May 2012 While trust is the basis for any successful project, it is absolutely paramount for an IPD project. Since a higher level of trust is required, the first step in launching an IPD project is mostly introspective. Tough questions must be asked of your leadership and board members to ensure that IPD is a good fit.

Begin by asking yourself the

following questions: •

Will IPD receive a warm embrace from the leadership team?

•

Are trust and patience a part of our organization’s DNA?

•

Is there a focus on continuous improvement across the organization?

•

Are we truly committed to improving processes or following the buzz?

•

Is the definition of project success a low bid?

•

Are we siloed or collaborative?

•

Do we fully understand and embrace IPD ideals as a part of our organization’s values?

•

Are we totally risk averse even when the reward can be greater?

•

Are there influencers in the organization that my act as impediments?

Your answers to these questions should reveal your level of readiness and willingess to move forward with an IPD approach. If you are not ready to continue, “Stop, Do Not Pass Go, Do Not Collect $200!” and proceed with your typical delivery method.

2

Capital Project Solutions – May 2012 How to Select the Team Team dynamics and the cohesiveness of organizational cultures are crtitical to harnessing success. Setting the proper structure begins with the team selection process.

Hiring the right team is the most important step you will take!

Traditional methods of selecting a team are often fragmented and inadequate. The decision to hire an architect or construction manager is often based on a response to an RFP (Request For Proposal) followed by an hour long interview. Additionally, the team is usually hired sequentionally, across the continuum of the project, and molded into a team by virtue of the process. While this process has become the norm, we should be asking ourselves whether it acutally leads to the selection of the most effective team?

The challenge of hiring the right team to administer, design and construct a new facility utilizing an IPD approach

can

be

even

more daunting and thus requires a shift in thinking.

In

IPD,

the

“team”

is

selected as opposed to being formed over time.

Instead of issuing an RFP to individual firms, a Request for Integrated Team (RFIT) is issued that includes design services (architectural, engineering, civil, medical equipment, technology) and construction management. Within the RFIT, the goals and conditions of satisfaction, along with the behaviors that must be met and displayed by the integrated team are defined. The participants responding to the RFIT should be allowed to “self select” in order to provide a joint and

3

Capital Project Solutions – May 2012 unified response.

After narrowing the list or RFIT

responses to two or three Integrated Teams, consider conducting a series of interactive workshops. This will enable you to see the integrated team dynamics in action, observe their chemistry and behaviors, as well as understand if they would be a good cultural fit for the organization.

Selecting a Contract Developing the right contractual and risk model will go a long way to undergirding the tenants of IPD and the appropriate team dynamics. An Integrated Form of Agreement (IFOA) can be the right platform, but it is much different

than

a

traditional

AIA

Architectural

Construction Management Agreement.

and

Getting through

the differences in contracting models will take time and involve critical input from those in risk management, legal, opertations, insurance, project managenent as well as the integrated team themselves. Note that the IFOA intent is to change the risk model, truly influence team behavior and focus efforts toward the project outcomes as defined by the owner. Listed here are a few model examples: •

Traditional Project Risk Model  “Conduit approach”  Push risk down

•

IPD Approach to Risk  Mutual Waiver of Consequential Damages  Full Waiver of Subrogation  Mutual Indemnification and Hold Harmless

•

Collaborative Risk Allocation  Development of risk sharing agreement early  Limits risk and provides upside to maximize the potential on the project

4

Capital Project Solutions – May 2012 Often, the very form of agreement is what stumps an owner from moving fully forward with an integrated model.

If your organization wants to implement this type of approach, but an IFOA is not an option, consider the following: •

Collaborative

language

for

standard

contract vehicles •

Add relational and process language to standard contract vehicles

Always keep in mind that while an IFOA is powerful, trust can never be contracted!

How to Maximize the Integrated Team Hiring the right team is invaluable, but maximing the team is even more important. Ultimately, the processes, norms and behaviors outlined in the IFOA will create a platform for the teams effectivenes.

An investment in a robust

Project Initiation Process will yield great dividends. This crucial phase should include the following major elements: 

Establishment of the Project Governing Structure



Completion of a Team Alignment Workshop



Risk and Incentive session



o

Determine final IFOA vehicle

o

Evaluate and establish risk equations

o

Determine incentive structure

Detailed Project Gap Analyis and Implementation Plan

The implementation plan should include methods for maximizing the use of lean tools and principles.

These

tools should include 3D Modeling or BIM (Building Information Modeling), Centralized Project Management software, Last Planner Scheduling methods and a process for measuring the project Conditions of Satisfaction.

5

Capital Project Solutions – May 2012 Through deliberate and periodic review, the baseline tools and processes should be evaluated for their effectiveness, making adjustments when necessary Are You Ready to Launch an IPD Project?

The answer to that question obviously depends greatly on your experience and comfort level with IPD? By starting with trust and working in a methodical manner toward an implementation plan developed by the right integrated team, the initial challenges of an IPD project can prove to be opportunities for success.

For more information on Project Launch and other Capital Facility topics, visit KLMK’s Educational Insights.

6

JUNE

COMMITTED TO HEALTHCARE, FOCUSED ON YOU

TRUST, INTEGRITY, RESPECT, COLLABORATION

Capital Project Solutions – June 2012 Financing Healthcare's Future Patrick E. Duke, SVP "Long term structural change in the sector has favored a minority of larger, well managed hospitals and systems, while creating ever tighter competitive conditions for the majority of smaller, especially free�standing, hospitals. While some years of robust economic growth have stabilized the outlook for the sector, credit trends have been negative and will remain so until the next wave of regulatory and business model changes are more clearly established in the coming years"1 In January 2012, Moody's provided the above assessment of the healthcare market. With the need for capital not waning in order to meet meaningful use requirements, replace aging infrastructure, acquire new partners and develop a more robust ambulatory care network, healthcare organizations must develop a flexible financing strategy that utilizes all sources available.

The lack of a strategic financial plan and swift execution to enable growth and improve defensive position in the market will put an organization in a perilous position. While capital markets have become a club for those "AA" and "A" rated healthcare organizations that enjoy more financing options and some very low tax exempt debt at today’s rates, it is not totally exclusive. All investment grade healthcare organizations have a myriad of options available, but some take more time than others to syndicate. In this issue of Capital Project Solutions we will briefly explore strategies and options to ensure your organization can access the widest range of lower cost capital.

Leading Versus Lagging More often than not, healthcare organizations let the development of capital needs lead while the development of a plan to finance them lags behind. Given the sensitivity of time to market in such a tightly competitive and

1

Capital Project Solutions – June 2012 regulatory environment, alternative financing strategies are often abandoned and perhaps opportunity lost due to the lack of time to perform due diligence. In order to position your organization to be able to access the lowest cost options for capital we recommend the following: 





Monitor and Measure – Set up tools and account code in order to closely monitor financial performance at a service line level and measure that against available benchmarks. The ability to get good data from within your organization can allow you to maintain and strengthen your financial position. While this sounds simple, we see situations everyday where good internal data is not available and thus impedes the ability to provide sufficient analysis and recommendations.

Open Up to Alternatives - There are many alternatives that can be syndicated together and provide capital to address current needs. Identify one person within the organization to be responsible for identifying all options within your jurisdiction and developing a decision matrix to evaluate options as needs arise. It is imperative to continuously update this decision matrix as local, state and federal funding grants can have a shelf life.

Think About Partnerships Differently - The past featured a majority of partnerships between hospitals, physician groups, long term care providers and the like. The future will feature partnerships with insurance companies, private equity groups, large corporations, research and pharmaceutical companies, technology firms and academic institutions at all levels. This transition seems logical as healthcare affects the lives and balance sheets of our entire population.

As healthcare continues to transform, partnerships that never would have been considered in the past will arise. These new options can help to increase available capital and improve an organization’s long term financial position.

While there are many details surrounding these three strategies that remain to be completed by a healthcare 2

Capital Project Solutions – June 2012 organization, following this approach will ensure that the financial plan is leading the development of capital needs.

Financing Options to Consider There are many options available to healthcare organizations as they look to develop sources for capital uses. The feasibility of each of these varies based on credit rating, tax treatment, timing and type of capital need. It is difficult to provide an all encompassing list due to local, state and federal programs that are ever changing. The list below provides useful guidance on the more prevalent options. 





Tax Exempt Debt - Organizations that enjoy tax exempt status may access variable and fixed rate debt on the capital markets. Today's rates are low and the expectation is the flight from Europe combined with the Federal Reserve's monetary policy will continue to provide a favorable rate environment. However, the reserve requirements and origination costs for fixed rate tax exempt debt can make this option less attractive for organizations with lower credit ratings. The Federal Housing Administration's 242 program is offered to acute care providers as a means to enhance credit ratings and access lower rates.

Taxable Debt - Tax exempt as well as taxable organizations have favorably viewed taxable debt.

Recently, there have been articles published on larger tax exempt academic institutions, such as Harvard and Columbia, turning to taxable debt given its favorable rate spreads and limited restrictions on use. In an environment where healthcare organizations need flexibility and credit spreads that are favorable, taxable debt may be an option. Typically, taxable debt does not make sense for needs under $250M, but is an alternative that should be investigated.

Derivatives - This option has certainly gotten everyone's attention. Interest rate swaps, in part, led to many problems for healthcare organizations

3

Capital Project Solutions – June 2012







during the 2008 market collapse. After working to refinance and pick up the pieces, interest in derivative markets could be hard to generate.

However, changes in the market that may mitigate past issues and favorable rates suggest that derivatives should remain an option. But be aware of the challenges that may be faced upon presenting this option to the hospital Board.

Third Party Capital - For years, healthcare organizations have primarily worked with medical real estate developers to provide turn-key solutions for medical office and ambulatory care facilities.

While this is still a viable option, analysis needs to align with the changing accounting rules that govern operating and capital leases. Third party capital does not need to be restricted to medical real estate developers. There are partnerships with insurance companies, private equity groups, large corporations, research and pharmaceutical companies, technology firms and academic institutions at all levels that can provide third party capital as well.

EB-5 - The EB-5 Immigrant Investor Program is a federal program establishing a fifth employmentbased preference immigrant visa category.

Administered by the U.S. Citizenship and Immigration Service (USCIS), it provides 10,000 visas per year for qualified foreign investors and their immediate families. Their investment must result in a commercial enterprise that benefits the U.S. economy and creates new jobs or preserves existing jobs for American citizens or legal residents. The program is open through September 2012 and will likely be extended. Healthcare organizations have successfully applied for financing from the program and it can be a source of low cost capital.

Local, State and Federal Grants - Numerous local, state and federal grants exist, but typically have restricted use requirements and a limited shelf life.

Therefore, a resource must exist within the organization to remain current on existing grants and include them in the decision matrix in order to

4

Capital Project Solutions – June 2012



move quickly when warranted. For example, Build America Bonds were part of the Stimulus Act, but some healthcare organizations were able to access them in a small window from 2009 through 2011.

Other agencies such as the Maryland Hospital Association offer annual grants to members that can be useful in purchasing new diagnostic equipment or for small projects.

Performance Guaranteed Facilities - For projects in value of $50M and above, the Performance Guaranteed Facility (PGF) delivery model may be utilized. The PGF model is about more than just financing, although that is a major part of it. This model can achieve 15%-20% average lower life cycle costs over a 30 year partnership with a third party. The third party brings a project delivery and facility maintenance team to the table and finances, designs, builds and maintains a facility for the return of an availability payment from an organization if the facility is able to be utilized for its intended purpose. Healthcare organizations that choose this model have no out of pocket development costs and make their first payment upon initial use of the facility. This approach has been utilized successfully in other parts of the world and may be an attractive model for US healthcare facilities.

There are many options available to the healthcare organization looking to provide for their ever growing capital needs. Those listed above are just a sampling of what is available. Assign someone within your organization to be responsible for maintaining a current list that can be referred to on a continuous basis.

Conclusion Capital needs have not waned in recent years and will not in the future. While the financial well-being of our nation's healthcare organizations is under stress due to disruptions in the capital markets, worldwide economy and new regulatory restrictions, there are a myriad of options available to organizations looking to syndicate capital sources. It is imperative strategic financial planning leads

5

Capital Project Solutions – June 2012 and not lags the planning for capital deployment. Getting ahead of the curve gives the organization time and leverage to access more capital at lower costs and with less restriction.

For more information on Financing Healthcare’s Future other Capital Facility topics, visit KLMK’s Educational Insights.

6

JULY

COMMITTED TO HEALTHCARE, FOCUSED ON YOU

TRUST, INTEGRITY, RESPECT, COLLABORATION

Capital Project Solutions – July 2012 Capital Facility Project Delivery Methodologies Steve Higgs, Senior Vice President One of the most important decisions facing any healthcare provider as they embark on a major capital project, is which project delivery method should be utilized. Just as there is no “one size fits all� healthcare facility, there is not one single Project Delivery Methodology. The fact that there are multiple project delivery options increases the chances that a project can be successfully delivered to the healthcare

providers

needs.

The

Project

Delivery

Methodology can vary within a given institution based on the scope and complexity of a project.

The key is

determining the right fit for the organization and the goals of the project.

What Are My Delivery Options?

There are several methods to choose from but those that

CM @ Risk

Design Build

are most often considered and debated are: 1) Design/Build Delivery Method 2) Preconstruction-Construction Manager at Risk Delivery Method

IPD

3) Integrated Project Delivery Model All methods bring their own set of advantages and disadvantages but any could be successful under the right set of circumstances. In order to fully appreciate all of the

Ideal Option?

benefits and challenges associated with each, we must do a deeper dive.

In the Design-Build delivery method, the owner contracts with a single entity for both design and construction management services. The owner has one contract assigning single-point responsibility for the project. The Design-Build entity may be a single organization with both 1

Capital Project Solutions – July 2012 architectural and construction staffs, or a construction organization that hires or affiliates with an architect as part of a Design-Build team.

In this delivery method the

architect is part of the Design-Build entity and not the agent of the owner. Therefore, unique to the Design-Build system, there is no one individual or company in an agency relationship with the owner who is obligated to work in the owner’s best interests. As is the case with the construction manager delivery method, the design-build delivery method can be very conducive to a phased construction schedule.

Under a typical PreconstructionConstruction Manager at Risk project delivery method (CM at Risk), the owner contracts with an architect/engineer services

and

for

separately

design with

a

preconstruction-construction manager for construction services.

The objective of this approach is to treat project planning, design, and construction as integrated tasks within a construction system. The team, by working together from project

inception

to

project

completion attempts to serve the owner’s best interests. By striking a balance between construction

cost,

project

quality,

and

completion

schedule, the team strives to produce a project of maximum value to the owner within the most economic time frame. Typically, a phased construction approach is applied. The prime responsibility of the construction manager is to adhere to the established time schedule and construction budget.

2

Capital Project Solutions – July 2012 With a basic understanding of the first two project delivery methods, it is important for a healthcare owner to analyze the complexities of their capital project and their “inhouse” abilities in order to successfully manage the entire project delivery process. An owner must also be honest with themselves on what their decision making process is relative to the project and how committed they will be to abiding by decisions and assumptions made early in the design process. The answers to those two considerations are critical in determining which project delivery method is most appropriate.

According to AIA’s Integrated Project Delivery: A Guide, “Integrated Project Delivery (IPD) is a project delivery approach

that

integrates

people,

systems,

business

structures and practices into a process that collaboratively harnesses the talents and insights of all participants to optimize project results, increase value to the owner, reduce waste and maximize efficiency through all phases of design, fabrication and construction.”

“IPD principles can be applied to a variety of contractual arrangements and IPD teams can include members well beyond the basic triad of owner, architect and contractor.

In all cases, integrated projects are uniquely distinguished by highly effective collaboration among the owner, prime designer and the prime constructor, commencing at early design and continuing through to project handover.”

The accompanying graphic illustrates the team’s level of understanding earlier in the project when the opportunity to influence positive outcomes is maximized and the cost of changes minimized. Engineering News Record, a McGraw-Hill Construction publication, November 21, 2007.

Does this approach sound too good to be true? The truth is it can and has worked; however, IPD requires a high level 3

Capital Project Solutions – July 2012 of trust for the team members to focus on project outcomes rather than their individual goals. As outlined by AIA’s Guide, achieving the benefits of IPD requires that all participants embrace the following Principles of Integrated Project Delivery: 

Mutual Respect and TrustIn

an

integrated

consultants,

project,

constructor,

owner,

designer,

subcontractors

and

suppliers understand the value of collaboration and are committed to working as a team in the best interests of the project. 

Mutual Benefit and RewardAll team members benefit from IPD. Because the integrated process requires early involvement by more

parties,

recognizes

and

IPD

compensation

rewards

early

structures involvement.

Compensation is based on the value added by an organization and it rewards behaviors based on what’s best for the project. A reward example could be providing incentives tied to achieving project goals. Integrated projects use innovative business models to support collaboration and efficiency. 

Collaborative Innovation and Decision MakingInnovation is stimulated when ideas are freely exchanged among all participants. In an integrated project, ideas are judged on their merits, not on the author’s role or status. Key decisions are evaluated by the project team and, to the greatest practical extent, made unanimously.



Early Involvement of Key ParticipantsIn an integrated project, the key participants are involved from the earliest practical moment.

Decision making is improved by the influx of knowledge and expertise of all key participants.

Their combined knowledge and expertise is more 4

Capital Project Solutions – July 2012 powerful during the project’s early stages where informed decisions have the greatest effect. 

Early Goal DefinitionProject goals are developed early, agreed upon and respected by all participants. Insight from each participant is valued in a culture that promotes and drives innovation and outstanding performance, holding project outcomes at the center within a framework of individual participant objectives and values.



Intensified PlanningThe IPD approach recognizes that increased effort in planning results in increased efficiency and savings during execution. Thus the thrust of the integrated approach is not to reduce design effort, but rather to greatly improve the design results, streamlining and shortening the much more expensive construction effort.



Open CommunicationIPD’s focus on team performance is based on open, direct and honest communication among all participants. Responsibilities are clearly defined in a no-blame culture leading to identification and resolution of problems, not determination of liability. Disputes are recognized as they occur and promptly resolved.



Appropriate TechnologyIntegrated projects often rely on cutting edge technologies. Technologies are specified at project initiation to maximize functionality, generality and interoperability.

Open

and

interoperable

data

exchanges based on disciplined and transparent data structures are essential to support IPD. Because

open

standards

best

enable

communications among all participants, technology 5

Capital Project Solutions – July 2012 that is compliant with open standards is used whenever available. 

Organization and LeadershipThe project team is an organization in its own right and all team members are committed to the project team’s goals and values. Leadership is taken by the team member most capable with regard to specific work and services. Often, design professionals and contractors lead in areas of their traditional competence with support from the entire team; however specific roles are necessarily determined on a project-by-project basis. Roles are clearly defined, without creating artificial barriers that chill open communication and risk taking.

Which Project Delivery Option Should I Choose?

In the healthcare sector the design-build project delivery method is the most conducive to projects that are easily defined and have a low risk for significant scope revisions over the course of the design and construction process.

Parking garages, medical office buildings and outpatient care buildings would be examples of such projects that would fall within that criterion. For those types of projects there is typically minimal involvement from a multidisciplinary group of end users that will be prone to change their opinion of what the most effective design is over a lengthy design period. Once the guiding principles for the project, such as the number of parking spaces in a garage, the number of square feet in a medical office building or the number of operating rooms in an outpatient

surgery

center,

are

established

by

the

healthcare owner, it is easy for the design-build entity to provide the owner with a total project cost that can be reviewed and approved.

In fact, in most instances the

owner utilizes these guiding principles to define the 6

Capital Project Solutions – July 2012 building scope in order to solicit competitive bids from design-build entities. With this selection process, the final construction cost is known sooner in the overall design and construction process.

One of the biggest and most

attractive aspects of this delivery model is that change orders to the owner related to design errors and omissions are non-existent. With the design professional being on the same team as the contractor they are both accountable for errors and discrepancies on the drawings and costs associated with those items. It is not the obligation of the owner.

Conversely, the CM at Risk project delivery method is heavily utilized by healthcare owners on their most complex and challenging projects. This delivery method recognizes that the design and decision making process is an interactive process that may involve decisions and design concepts being revisited as the clinical operations of the facility are being analyzed.

Under this delivery

method the owner will expend a significant amount of design fees in order to understand the final construction cost. It is also incumbent on the owner to be the leader of this process and be able to make timely decisions. Should the owner lack sufficient expertise of capacity “in house� to manage the overall process, it will greatly impact the design process and lead to project delays before construction is even initiated. However, by going through this process the owner will have significantly more control over the design and specifications of the systems that will ultimately be a part of their new facility. See the Appendix for a comparison of Characteristics, Pros and Cons of each project delivery approach.

Conclusion Depending on the type of project being contemplated, any of the project delivery method can be successful. Careful 7

Capital Project Solutions – July 2012 consideration should be given to the complexity of the project and the “in-house” capabilities to deliver the project successfully.

If considering IPD, your experience and comfort level must be taken into consideration. By starting with trust and working

in

a

methodical

manner

toward

an

implementation plan developed by the right integrated team, the initial challenges of an IPD project can prove to be opportunities for success.

For more information on Capital Facility Project Delivery Methodologies and other Capital Facility topics, visit KLMK’s Educational Insights.

8

Capital Project Solutions – July 2012 Appendix:

9

AUGUST

COMMITTED TO HEALTHCARE, FOCUSED ON YOU

TRUST, INTEGRITY, RESPECT, COLLABORATION

Capital Project Solutions – August 2012 The Power of Pull Planning

Ray Walker, Vice President Today

more

than

ever,

healthcare

challenged to do more with less.

executives

are

Health systems are

managing tighter margins thus forcing leadership teams to look for more resourceful and innovative ways to manage their capital dollars. Inevitably this emphasis has trickled down to the design and construction industry. Healthcare administrators are forcing their project delivery partners (program managers, architect and construction managers) to deliver capital projects in a more economical and efficient manner.

Given the recent environment, it is no wonder that we are seeing more articles, webinars and presentations on “Lean” - Healthcare Construction - It's the process. How Lean Strategies Can Streamline Hospital Design; Integrated Lean Project Delivery Flips the Design Process; 7 Best Qualities of Healthcare's Lean Leaders; Webinar: Lean Construction from a Specialty Contractors’ Perspective. But just what is it that all of these “Lean” concepts are trying to deliver? In short, they are attempting to reduce waste - in terms of material, time, or effort - which can drive up the cost of construction or lengthen the duration of a capital project.

How to Implement a “Lean” Processes The first and possibly most important step when implementing a Lean process is for the integrated project team to produce a realistic schedule. Traditionally, teams would discuss the activities necessary in order to start a project and then progress in a sequential manner until they 1

Capital Project Solutions – August 2012 finally land on a completion date. This scheduling process is driven by start dates for individual tasks which “push” the schedule to its ultimate completion.

Unfortunately, task

based plans often break down which can lead to micromanagement. But keep in mind, these break-downs are seldom a result of poor management but more likely the result of skipping tasks or underestimating the resources or time it takes to complete the task.

What is Pull Planning?

By contrast, Pull Planning offers a dramatically different approach. Using a Pull Planning process to create a schedule starts with the end in mind. Instead of focusing on the tasks, it focuses in the desired results. A project delivery team will begin by determining when they want to move into the new building and then working backwards, they

would

identify

the

milestones

and

objectives

necessary to achieve the desired outcome. In essence, the scheduled activities are being “pulled” by the completion date in lieu of being “pushed” by the start date.

The Pull Planning Process In order to develop a schedule utilizing Pull Planning, the following must be met: 1. Pre-Work a. Ensure the proper people attend the meetings b. Establish clear goals for success that include everyone involved c. Establish appropriate milestones 2. Facilitate the Conversation a. Get everyone engaged b. Secure commitments from all sides when “promises” are made c. Eliminate ambiguity: clarity = quality 2

Capital Project Solutions – August 2012 d. Gain consensus on the best strategy e. Discuss all possible contingency strategies early on and eliminate them 3. Follow-Up a. Document all commitments b. Monitor effort and deliverables to ensure redundancy is eliminated 4. Measure and Evaluate a. Identify reasons milestones are missed – put corrective measures in action b. Identify unplanned tasks c. Measure percentages completed

3

Capital Project Solutions – August 2012 Tools of Pull Planning Pull Planning employs a three-level hierarchy of schedules.

These schedules look similar to others commonly used in the industry. Each schedule contains only the degree of detail appropriate for the length of time it represents. The three types of schedules are: 1. Master Schedule a. Set high level milestones b. Set schedule strategy c. Identify long lead items or activities 2. Phase Schedule a. An intermediate level of planning b. Identifies major work activities that must be completed to meet the milestone dates established in the Master Schedule 3. Near Term Schedule a. An “assignment� level schedule or action log b. All pre-requisite work is completed thus eliminating all constraints on the assignments c. Assignments are made by the manager most heavily involved with the task Conclusion While Pull Planning does not require industry professionals to gain new knowledge of how to complete tasks, it does require rethinking how to plan and schedule for them. It is no longer acceptable to simply blow the whistle and begin working, moving from one activity to the next. In order to be successful, a project delivery team should map their work effort beginning with the end in mind. The process must be efficient and ensure that tasks are completed when required in order to reduce waste and eliminate redundancy.

4

Capital Project Solutions – August 2012 For more information on The Power of Pull Scheduling & Planning along with other Capital Facility topics, visit KLMK’s Educational Insights.

5

SEPTEMBER

COMMITTED TO HEALTHCARE, FOCUSED ON YOU

TRUST, INTEGRITY, RESPECT, COLLABORATION

Capital Project Solutions – September 2012 All Theory Aside – What is an IPD Project Really Like?

Steven Donnelly, Vice President Patrick Duke, Senior Vice President The July issue of Capital Project Solutions covered the different facility project delivery methodologies, touching lightly on Integrated Project Delivery (IPD). If your team is willing to venture into new territory, deciding that IPD is the way to go, will it really make a difference in the journey to achieve your capital facility project goals? The AIA’s Integrated Project Delivery: A Guide states that "Integrated Project Delivery (IPD) is a project delivery approach that integrates people, systems, business structures and practices into a process that collaboratively harnesses the talents and insights of all participants to optimize project results, increase value to the owner, reduce waste and maximize efficiency through all phases of design, fabrication and construction." According to this definition, in theory, choosing IPD will make a difference in your journey to achieve your goals. However, there are many factors at play in order to meet the results the owner and team are trying to achieve.

Together, let’s explore an IPD team’s expectations and what an IPD project is really like.

Understanding Your Project 40 Year Facility Cost of Operations It has been documented that only 13% of the healthcare facility life cycle cost is spent on planning, design and construction. Out of that cost, approximately 1% is spent on planning and design alone. 1 Many organizations are hesitant to use IPD believing that it From July 2010 Healthcare BIM Consortium, An Organization consisting of Department of Defense Military Health System (DoD MHS), Department of Veterans Affairs (DVA), Kaiser Permanente (KP), and Sutter Health, representing $26B of Healthcare construction.

1

Capital Project Solutions – September 2012 will be more expensive, especially when considering the involvement of the entire team at such an early stage. In reality, while the cost is higher in the front end, this upfront investment has more opportunity to reduce costs down the road. The ability to make changes with greater value and truly bend the whole life cycle cost curve is highest prior to the traditional Design Development Document Phase. Therefore, we believe it is good practice to harness the collective intellectual capital the combined team provides from the onset of the project.

For example, on a recent $28 million project using IPD, the team met before planning even began to discuss team dynamics, interactions, expectations and collaboration. A teamwork exercise, consisting of about 40-50 people involved in the project planning, was conducted. In theory, this made sense given what we know as to when value is truly created in the project life cycle. However, in practice you must be prepared to justify the time spent by so many individuals as this is certainly not considered the "norm".

All theory aside, when pressed for commitment of time and money towards a process far different than what most people are used to, you should anticipate there will be pushback. Our advice is for the owner and the team to lay out all the pros and cons and to establish expectations early on to ensure there is truly collaborative buy in.

Owner Commitment Without complete commitment on the owner’s part, IPD will never stand a chance. Owner commitment is required on two levels. First, the owner must be willing to accept and adapt the delivery model concepts proposed by IPD, as discussed in the July 2012 issue of Capital Project Solutions. Our experience demonstrates that owner’s often express commitment to this approach prior to understanding its true meaning. It is important to evaluate not only the individuals involved but also to understand their organizational culture and decision making structure.

If there is not a culture of collaboration and continuous 2

Capital Project Solutions – September 2012 improvement evident from their day to day work, it will be extremely difficult to execute IPD. If the owner is a good candidate and IPD is accepted, the owner’s second commitment must be to remain fully engaged in the project from initial stages through occupancy. The owner’s internal team must be multidisciplinary including administration, physicians, support services and clinical staff. Since all of these individuals have “day jobs”, the time commitment on their part will be the most difficult challenge for the healthcare organization to enforce. Without the active involvement of the owner, the IPD team can only assume it is achieving project criteria and goals. This is the main area where team efforts and owner expectations fail in most traditional models. IPD is only successful when you equally work on the process as much as working within it.

To achieve success based on our experience, the owner must clearly understand these expectations as well as the good, the bad and the ugly, prior to determining if IPD is the right fit.

Team Selection The number one most important decision that an owner will make when implementing IPD is in team selection.

While true with any model of delivery, an IPD team can absolutely make or break a project. Serious consideration of how the selection process will be organized and who will participate is critical.

First and foremost, IPD team selection requires a complete paradigm shift from traditional models. Utilizing the Request for Integrated team (RFIT) process, which allows teams to self select and then collaborate with the owner's internal team in order to better evaluate the cohesiveness, collaboration and integration amongst the group, is recommended. Selecting an IPD team is more about forming a relationship to achieve a common goal than to hammering vendors to secure the lowest bid.

3

Capital Project Solutions – September 2012

Once the team is selected, these members will become part of the IPD Core Group. This Group includes the owner, architect and contractor at a minimum, but may include additional members (such as engineers or mechanical, electric and plumbing).

Typically, members that will have the greatest impact on project outcomes should be included.

But be aware, the RFIT approach and collaborative work sessions can cause downstream issues for some owners.

To truly complete the Integrated Team, trade contractors that are qualified to collaborate on a different level than is typical must be on board. This often can eliminate local subcontractors that may be supportive of the hospital on an annual basis philanthropically and as customers.

However, the owner must recognize this reality and determine the best solution for communicating this potential. In addition, the Board must fully understand and be aware of any implications and give explicit approval to the process prior to launch.

The Business Structure “IPD Lite” is a very common term floating around today. It refers to a project utilizing a collaborative approach without a contract known as an Integrated Form of Agreement (IFOA). In all honesty, most projects that claim to be IPD are of this model and we see nothing wrong with that if the team agrees it is the best approach for the project. Very few healthcare organizations, design professionals and construction firms have ever used an IFOA and actually question its necessity and 4

Capital Project Solutions – September 2012 appropriateness for smaller projects. This is in large part due to the lack of economical insurance products that can protect the team and allow for a higher level of collaboration when a project is smaller than $100M in construction value. While trust is at the core of the IPD relationship, the contract truly holds the team accountable and establishes clear guidelines and expectations by which to operate. Based on our experience, we have found that the IFOA is the structure that can best support and truly align the risk/reward equation on a project by requiring consensus.

The AIA and Consensus Docs have standard forms of agreement from which to choose or an organization may decide to draft their own. Either way, all contracts should be based on project goals, conditions of satisfaction and unifying the team into a single entity that has the project success at its core interest.

Don’t ever underestimate the lack of buy-in to an IFOA from all participants. This is a major shift for all parties and most likely something they will be reviewing and considering accepting for the first time. Design and construction firms operate within a process that is highly variable and with great risk. The owner, acting as Master Developer, takes on the most risk in an area that is not even their core business. There is nothing that can change these realities. Our experience has taught that time should be taken up front to familiarize the team with the IFOA prior to moving forward into an IPD project. If the decision is made to forego the IFOA, there are options to gain some additional efficiency from an "IPD Lite" model.

As a matter of fact, we recently had a client that was committed to IPD for a new renovation project. However, they were unable to get an integrated contract through their legal department. The team, consisting of the owner, architect, contractor and MEP (mechanical, electrical and plumbing) subcontractors embraced the collaborative nature of IPD and found significant improvements in the 5

Capital Project Solutions – September 2012 results when compared to the previously utilized project approach. To date, the renovation is 95% completed, four (4) months ahead of traditional schedule and $1.5 million under the expected budget. The process has been extremely well received and has changed the way this client will approach all future projects.

Design and Construction Processes Prior to beginning design, the decision must be made as to whether the team will co-locate. The size of the project and proximity of participants will play a major role in making this decision. For true efficiency and production, colocation makes sense. However, rules must be established to clearly identify how the space will be used and when production time is necessary.

The design process, under the IPD model, may seem foreign to owners. Terms and processes vary and may be significantly different from what they are used to with traditional delivery models. The IPD team will focus on being Lean. Lean, as defined by Wikipedia, “is a practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination.”

The phases for design and construction under IPD are broken down into the following: • Conceptualization Phase – determining what will be built • Criteria Design Phase – testing options of what will be built • Detailed Design Phase – shaping what will be built • Implementation Documents Phase – identifying how it will be built • Construction Phase – build it These phases will all be based on the use of Target Value Design (TVD). TVD is the management system used on the project to deliver customer value within project constraints including time, budget and quality. Prior to construction, 6

Capital Project Solutions – September 2012 the IPD team will design, model and plan all at the same time. So what does all this mean?

Operational planning and architectural design will happen simultaneously. While designs are being considered, live mock-ups modeling actual circumstances can test expected scenarios. All the while, teams are considering innovative and efficient ways to implement construction.

This can only be achieved if the entire team is assembled early in the process as suggested by IPD. The TVD process allows for budgets to be updated and measured against project goals which tie directly to the business structure and risk/reward equation identified earlier.

During construction, the team will continue to implement lean concepts in order to improve production on the work site. Lean tools, such as pull planning, the last planner system, and building information modeling (BIM), if implemented properly, will improve scheduling, measure production and avoid construction conflicts.

Many of the Lean concepts are foreign to the industry as a whole when it comes to actual implementation. As much as we believe in their ability to truly create value on a level not experienced before, you cannot force these concepts on a team and except quality outcomes. There is a healthy balance in what the team uses from the available processes and tools and this must be determined by the team prior to launch.

Conclusion There are numerous project delivery models to choose from and IPD is just one of them. The main advantage of this method, theoretically speaking, is the opportunity for different disciplines to join together to eliminate the silos and agendas commonly found with traditional models. All theory aside, before you truly launch into IPD, it is important to understand the following: 7

Capital Project Solutions – September 2012 •

•

•

•

The high level of involvement up front is a major departure from the norm. It is necessary to truly explore what that means and what the benefit can be. Expect pushback and even if you do not get it invite it.

The owner is not one or two people, but is defined as the entire organization. If the organization is not collaborative and focused on continuous improvement as part of their culture, it is likely they are not a good candidate for IPD despite some well intended individuals. Speaking from experience, our advice would be to pursue another delivery model.

IPD requires all team Members to work on the process as much as in it. Everyone, including the owner, needs to understand the level of commitment to work on a process that a majority, if not all participants, may be going through for the first time.

The hesitancy for team Members to accept an IFOA cannot be underestimated. It is such a shift in approach for parties already taking major risks, that time needs to be spent on thoroughly understanding it. If it becomes a barrier, suggest a delivery model such as "IPD Lite".

For more information on IPD and with other Capital Facility topics, visit KLMK’s Educational Insights.

8

OCTOBER

COMMITTED TO HEALTHCARE, FOCUSED ON YOU

TRUST, INTEGRITY, RESPECT, COLLABORATION

Capital Project Solutions – October 2012 Are You Ready to Move?

Rick Hood, Vice President Over the past ten years, healthcare facility transition planning has been referred to under many different names. This is not surprising, as every provider and healthcare organization seems to have a different opinion of what exactly “transition planning” means. Historically, when healthcare organizations planned for the transition to a new facility, they were focused primarily on relocating patients from the existing hospital to a new addition or replacement facility. Today however, transition planning has taken on a whole new meaning. While safely transporting patients remains a critical component of the comprehensive transition plan, most organizations now require the development of a thorough operational plan and training program to successfully integrate staff and activate a new facility.

A successful “transition plan” has moved from a single event (patient move) to a three part approach (operational readiness, facility readiness and move logistics) that encompasses everything necessary to open a new facility.

This issue of Capital Project Solutions will provide the roadmap for planning the activation of a new facility. Ideally, preparation should begin shortly after design documents are complete. The teams that participated in the planning and design of the facility should remain engaged since they were responsible for identifying the new model. Their input was critical in the beginning and remains so through opening.

Operational Readiness Often, the impetus for a new or expanded facility project is to alter and/or provide care in a new or innovative manner. To bring about this change, the inclusion of the operational staff in the planning and design is a necessity. This remains true for the activation process. Whether changes impact staffing, workflows, new systems and/or equipment, something about the way care is being delivered will change and staff must be prepared.

1

Capital Project Solutions – October 2012 In preparing an Activation Plan, the first step is to identify the changes from current to future state of care and document them. To evaluate and identify the ideal scenario for functioning in the new facility, an Operational Workflow & Education Committee should be established. The responsibilities of this group are as follows: Model Flow – How will patients, staff, visitors and materials move through the new facility?

Model the Experience & Interaction Evaluate Current vs. Future State Eliminate Non Value Added Work Staffing - Will the new facility require additional staff? If so, what positions and volumes?

Prepare the Operation Plan Train & Orientate Staff Once the changes are identified and documented a process must be developed to understand the impact of each change and create a strategy to train staff to implement each change.

Through this process a comprehensive training plan and schedule should be developed to understand the cost and time associated with preparing staff to administer care in the new facility.

Facility orientation often takes place throughout the construction process by touring department leaders or super users through the facility as the construction schedule reaches certain milestones. However, the majority of staff training takes place much closer to the opening of the new facility and typically within the last two months of the Activation Schedule.

Training too early can be counterproductive as much of the information may be forgotten which then creates the need for retraining. Additionally, truly effective staff training occurs when the space is as close to patient ready as possible.

Facility Readiness KLMK defines the Facility Readiness Phase of the process as the period between the contractor’s substantial completion date and the opening date of the new hospital. To evaluate all aspects 2

Capital Project Solutions – October 2012 related to the physical plant, a Facility Readiness Team should be assembled that consists of the following: Procurement IT EVS Maintenance Materials Management Artwork Infection Prevention Preparing a facility to receive patients requires the development of a detailed Activation Schedule. The Facility Readiness Committee will assist in identifying the chain of events that must occur in order to successfully get to move day. Activities that must be considered in the Activation Schedule are as follows: Initial, periodic, and final cleaning Stocking supplies Placement and installation of Owner Furnished Owner Installed (OFOI) equipment Coordination of IT and Telecommunications Furniture & Artwork Security Final licensing and Certificate of Occupancy (CO) Staff training Grand opening events During the Activation Phase, a host of vendors must be coordinated to support the readiness of the new facility and staff training for specific systems and equipment. The planning process leading up to the Activation Phase should account for vendor access to hospital systems to properly install, test, and train on new equipment. Vendors may need access to servers, IP addresses, print capabilities, etc. and these needs should be well documented and accounted for ahead of initial vendor installation so as not to hinder the process. Additional vendors required to support the activation and move process include third party warehouse companies to receive, place, and install new equipment; select vendors to relocate equipment; and move vendors to manage the physical relocation.

3

Capital Project Solutions – October 2012 Move Logistics As the building activation work draws to a close the relocation process begins. Often some support services and ancillary departments may relocate to the new facility weeks or months ahead of the actual opening to support the activation process.

However, the movement of patients and all furniture, fixtures, equipment and technology (FFE&T) will take place after the Certificate of Occupancy has been received. While the move activities are the final piece of the activation puzzle, the planning process to develop a successful relocation plan will have taken many months to develop, test, and complete.

To coordinate the patient move, a separate Patient Move/Patient Care Committee is required to develop a safe and comprehensive plan. The team typically consists of Support Services representatives for the various units relocating patients such as: Respiratory Pharmacy Nutrition Services Patient Transport Security Ambulance Services - if patients are moving externally Various vendor representatives to support critical equipment such as patient monitoring This team is responsible for identifying the following: The best day(s) to relocate patients, interim care and staffing model to support patient move day activities The best routes to move patients and equipment A patient and family communication plan A security plan to ensure the safety of patients and staff during the relocation process Planning assumptions will be tested during a series of patient mock move activities which will determine the final move plan and sequence.

Simultaneous to creating the Patient Move Plan is the development of a detailed FFE&T Move Plan. Early in the process, an Operational Move Sequence will have been 4

Capital Project Solutions – October 2012 developed and approved by the organization's Senior Leadership Team. This Operational Move Sequence will serve as the foundation for the development of a day-by-day move schedule.

The goal of the overall move plan is to relocate as many departments or partial departments ahead of patient move day as possible. This will allow for everyone to focus squarely on the safe relocation of patients on the actual move day.

Typically, an organization will begin transitioning items and setting up departments in the new facility two weeks prior to the patient move. Any equipment, furniture and materials that have not been transferred in advance of patients will be relocated for a period of days following the patient.

Command Center In order to properly support the activation of a new hospital and subsequent relocation activities, a Command Center Process should be developed to manage issues that arise during the final weeks of the project as the building prepares for opening and move activities commence. Organizations may implement a Command Center Process supported by a work order system to track all facility and move related issues that arise. These issues may include computers that are not functioning properly, outlets without power, items lost or damaged in the move process or any number of other issues.

Other organizations establish a Command Center to focus on the patient move process and model their center structure around the Hospital Incident Command System or H.I.C.S. A patient move is the closet activity that mirrors an actual facility evacuation and as such many organizations will structure their patient move process as an evacuation drill to test readiness plans. Finally, some healthcare organizations will develop a hybrid Command Center Process to track activation and move issues as well as the patient move process to measure the success of the activation and move plan.

5

Capital Project Solutions – October 2012 Conclusion The goal in any transition plan is to effectively manage the opening of the new facility and ensure a safe and efficient patient relocation process. All of the years of hard work will be quickly forgotten if things don’t run smoothly. Early preparation and planning will allow time to evaluate and address all possible issues and scenarios. Though it typically is the last thing people think about, comprehensive facility activation planning should begin early in the planning and development life cycle. Save yourself the headache and don’t put activation activities off until the last minute.

6

NOVEMBER

COMMITTED TO HEALTHCARE, FOCUSED ON YOU

TRUST, INTEGRITY, RESPECT, COLLABORATION

Capital Project Solutions – November 2012 Leveraging In-House Planning, Design and Construction Team in an Evolving Healthcare System Steve Higgs, Senior Vice President Ask a dozen healthcare professionals to describe the current state of the US Healthcare System and you will likely get a dozen different descriptions. While most won’t agree on “what” is wrong or “how” we Overall Healthcare Ranking should move forward, most will agree on the need for a change. Our current healthcare system is expensive, fragmented, complex, highly regulated and capital intensive. For the highest spending per capita on our healthcare, the US has some of the lowest outcomes. The Commonwealth Fund 2010 Report, How the Performance of the U.S. Health Care System Compares Internationally, ranked the U.S. health care system at the bottom of the list.

I’m sure we can all agree that our current system is not a sustainable financial model. With our healthcare system clearly focused on doing more with less, finding leverage at all levels of an organization is paramount.

So What Does Leverage Really Mean?

In the physical world, leverage can be defined as the action of a lever, a rigid bar that pivots about one point and that is used to move an object at a second point by a force applied at a third.

It is further defined as a mechanical advantage or power gained by using a lever.

Moving from the physical definition to the intellectual output of leverage, we introduce a potential power over the intangibles: A power or ability to act or to influence people, events, and decisions.

Some might equate leverage as a small investment, credit or borrowed funds to gain a very high return in relation to one's investment, to control a much larger investment, or to reduce one's own 1

Capital Project Solutions – November 2012 liability for any loss. In a changing healthcare environment, caregivers are required to do more with less and thus leverage is a term likely to be used by providers, Boards of Trustees and Chief Executive Officers.

Ultimately, any leveraging opportunity must provide demonstrable stakeholder value. And, this value must be clearly described by the organization’s Mission and Vision Statement.

Leveraging Opportunities An internal Planning, Design and Construction (PDC) team should understand the mission and vision of the institution and seek to support and propel both. Akin to developing a strategic plan, understanding the external market conditions is a good first step toward identifying internal leveraging opportunities. As the market continues to consolidate and evolve, the team must Sample Internal PDC Organizational Structure be prepared to evolve with it.

Internal leveraging opportunities typically come in three forms: structure, systems and tools. The successful output of these can provide power to the team’s most valuable asset – its people.

As it is often said, form should always follow function. So having a structure that meets the needs of the institution is critical.

This structure will be influenced by many factors. The major driver is often the volume and type of projects currently managed or forecasted.

The proximity of the facilities is another influence. For owner’s with facilities located in disparate locations (i.e. multiple states), the structure may differ from that of a sole community provider.

This structure is often developed around the services the team 2

Capital Project Solutions – November 2012 will provide and the value the institution places on these services. For instance, a PDC team often focuses on managing the scope, schedule, budget and risk associated with the projects they manage. Allocating sufficient time at the beginning of a project can yield significant benefits to controlling these elements. Additionally, predicting project volume should be keenly managed internally. For owners with a sustainable building program, consideration should also be given to which services can be managed internally and which could potentially be outsourced.

Finally, for owners with facilities that are geographically distributed, having a centralized project planning and development operation and the ability to implement the plans at each location, might be considered. There are many services that could be provided by an internal team: 

Preplanning and Scope Development



Project Controls & Project Support



Programming & Design Management



Cost Estimating



Infection Control Planning & Management



Interior Design



Signage & Wayfinding



IT/Telecommunication Management



Equipment Planning



Commissioning



Facility Activation



Program & Project Support

Planning

&

Design

All the above could be leveraged either internally or also provided externally. Since many of the decisions on structure and services will be based on anticipated volume, the mix of services provided internally will vary. By 3

Capital Project Solutions – November 2012 focusing on core competencies and remaining flexible based on volume drivers, it is feasible to end up with the best of both worlds.

Additionally, focusing on the individuals within the team and aligning their strengths with the needs of the department or institution are critical. Jim Collins in his book, Good to Great, brings great clarity to this need when he states “They start by getting the right people on the bus, the wrong people off the bus, and the right people in the right seats.”

To meet the needs of the market, sometimes it takes an introspective look at the organization and the people providing these services. Some key questions to ask are as follows: 

Do I have a clear understanding of the vision of my institution and how my departmental services apply to that vision?



Do the new models of care delivery and project delivery require a different approach for the organization of my team?



What are the required staffing ratios based on my current and projected capital volume?



For my “normal” capital project load, do I have a good handle on the core services I need to provide?



Which services should my team provide and which should I outsource and why?

By defining the core team structure and services to be provided internally, as well as those that should be outsourced, a team can look to leverage their processes and tools. Often, teams will first look to technology to provide this leverage and seek comprehensive and integrated Project Management software. While many options exist in the commercial market, all are likely to disappoint if the focus does not start with the process.

4

Capital Project Solutions – November 2012 Again, how the team intends to function should drive your decision on tools.

The Pareto Principle states that for many events, roughly 80% of the effects come from 20% of the cause. In business, this is often equated to focusing on the 20% that usually brings us the 80% results. Much like a Balanced Scorecard, the following focus areas can often bring the greatest results: 

Scope Management



Schedule Control



Financial Control & Transparency



Communication Effectiveness



Risk Management

The team should take the time to define the value and thus value stream the services it provides. In line with today’s more transparent management style, developing processes and value streams based on the customer’s “Conditions of Satisfaction” will allow for a better understanding of the voice of the customer. In healthcare, there are likely many customers that must be satisfied. These likely include representatives from engineering, supply chain, finance, clinical, etc. By establishing processes and metrics, the team can respond to customer feedback and adjust more rapidly. Developing a culture of Continuous Improvement enables the team to be leveraged to capacity.

The final leverage opportunity is the actual tools themselves. Since the function (structure and processes) has been defined, developing the tools will flow naturally.

Having the right centralized data base can begin to leverage knowledge and information in order to save time.

In addition, developing reports and tracking mechanisms that are specific to customer’s needs will streamline efforts.

5

Capital Project Solutions – November 2012 Conclusion Leveraging any team takes time and forethought. Often, the right leader can begin the journey of improvement and by providing a clear vision that gives team members the direction needed to make a difference. While this is just the beginning, real leverage comes from defining the scope of services that match customer needs and remaining committed to continuous improvement.

6

DECEMBER

COMMITTED TO HEALTHCARE, FOCUSED ON YOU

TRUST, INTEGRITY, RESPECT, COLLABORATION

Capital Project Solutions – December 2012 The Power of Integrated Process Planning

Curtis Skolnick, Vice President Form follows function – the 3F theory, it rolls off the tongues of many healthcare administrators, planners, and architects. Unfortunately, under the traditional design phase of a project the simple 3F theory is not always followed. This happens because disciplines of process design / redesign, programming and schematic design are poorly aligned at the outset of the design phase. Often the traditional approach to space programming and design is based on siloed user groups determining the space needs for the facility. This segregated decision making can lead to “Form Follows Familiarity” instead of “Form Follows Function.”

User groups generally meet over the course of weeks and months to discuss operations and necessary room elements for their specific departments. While this activity ensures user input and ultimately yields a room-by-room space listing based on operations, the isolated nature of this approach does not typically stimulate process improvement discussions on a multi-disciplinary level.

Instead these groups tend to design space around the current departmental processes with which they are familiar, rather than at a more appropriate cross-functional level.

Integrated Process Planning The traditional model of engaging separate, non-related parties has changed. A new paradigm has evolved in which an integrated design and project delivery team is developed early in the process to tackle process flow, value stream mapping, space programming, and design all at the same time. These processes are inextricably linked and a 1

Capital Project Solutions – December 2012 team approach ensures that all parties are working toward achieving a common goal. This method known as Integrated Process Planning (IPP) is transforming the approach to healthcare design by dissecting the patient experience and the direct and indirect care delivery elements in order to define value and eliminate waste.

Following this model in the initial stages of the planning and

conceptual

design

process

will

lead

to

the

development of a more operationally efficient and cost effective design.

It is imperative that the right resources are dedicated to this process during the Launch Phase. With the increased emphasis on improved operations to control the cost side of the revenue equation and increase throughputs; whether it is through Lean Processing, Six Sigma, or other similar

approaches;

the

best

method

to

space

programming and design is to first value stream map the processes, get rid of the waste and then program and design the facility based on the developed strategic scope and operational redesign. This requires participation from a multi-disciplinary group of end users including clinical, administrative, support and ancillary services departments.

The project delivery team must collaborate with and creatively challenge the internal users to define a program that is designed around needs and improved functions, not wants and outdated delivery models.

Consider Processes for Effectiveness When designing a facility there are many clinical and operational processes that should be considered by the user groups.

Taking these process considerations into

account at an early stage during the Launch Phase will help ensure that the facility is designed in the most effective way to enable growth, flexibility and productivity.

2

Capital Project Solutions – December 2012 Many key considerations are noted below with details about their affect on operational and clinical process.        

Patient Access Wayfinding and Entry Points Utilization Efficiencies Bed Allocation and Aggregation Care Delivery Models Adjacencies Supply Chain Management Utilization of Tools and Technology

If the key operational and clinical process considerations are part of the Launch Phase this will lead to a better user group team design and will ultimately lead to a stronger space program.

Furthermore, now is the time to make

changes early where it is much easier and less costly to modify plans on paper, than it is deep in the design phase or once construction has begun.

Additionally,

The

Facility

Guidelines

Institute

2010

Guidelines for Design and Construction of Healthcare Facilities clearly take into account that functionality and environment of care are often overlooked. Sections 1.2-1 & 1.2-2 specifically cite the need to include and address the

planning,

“Environment

design, of

and

Care

implementation and

Facility

process; Functions

Considerations”; and to develop functional programs.

Within the Guidelines there is recognition of a multidisciplinary process including both internal users and external experts - architects and design professionals, and those with knowledge of the organization’s functional goals.

Space Programming Once the key operational and clinical processes are mapped and agreed upon then each user group will create the ideal space and process relationships to achieve the 3

Capital Project Solutions – December 2012 ultimate patient, staff, and physician experience. These “future state” flows will be used by the planners to develop an accurate space program that lists all the required physical spaces and spatial relationships for facility design.

Each group will identify space program needs and desired adjacencies based on the outcomes of the previous steps.

This initial integrated process planning sessions will form the bases for additional departmental space programming meetings. It should take no more than three meetings to gain concurrence on the space programs. This information is then “tested” against project budget guidelines to ensure a balance of program and funding.

Once the space program is developed, the design team then develops a conceptual design plan to match process flows and programs.

The team is tasked with finalizing

what amounts to schematic design. The process teams are involved to ensure value-stream and programmatic goals are met and adhered to. Many times, physical “mock-ups” and / or computer simulation models of certain functional areas are created to further test operational assumptions.

Concurrently,

other

team

members

will

discuss

infrastructure design in order to create the “behind the walls” and site elements of the design team’s schematic product. This is compared to the programs and process maps in an effort to avoid “scope creep”. Since the design team is involved in the previous steps, the risk of awkward handoffs and translation issues is significantly minimized.

At the conclusion of this phase, the design is again “tested” against project budget guidelines to ensure a balance with funding.

A major by product of the traditional approach to programming and design is “scope creep”. Scope creep occurs when the scope is not managed by the same integrated team from start to finish.

Controlling scope

during the integrated process planning and design phases 4

Capital Project Solutions – December 2012 is critical to the financial success of the project delivery.

Controlling scope begins in the early stages of Project Launch. A scope control model should be developed by the integrated team and that model should feed directly into the cost control model. The typical time line for an Integrated Process Planning Phase is four to six months. An equal amount of time will be shaved off of the traditional programming and design approach resulting in a better product, in a shorter time, that minimizes re-work in later phases.

Conclusion The primary benefits of the IPP process are: 

SME input: Gains input from a multi-disciplinary team of internal and external subject matter experts (SME) to drive an accurate project



Positive Team Dynamic: Fosters a collaborative team atmosphere



“Scope creep” avoidance:

By developing a more

accurate scope and program early, later project phase rework and “scope creep” is minimized thereby saving overall project time and money 

Forward thinking program: Creates a program that is based on “future state” function



Early

design

and

budget

test:

Allows

for

early

conceptual designed and budget testing to confirm a realistic program 

Eliminates “hand offs”: All members of the project team have first-hand knowledge of process and program intent avoiding translation issues

5

Capital Project Solutions – December 2012 Simply stated, IPP establishes an agreed upon scope and the foundation for further detailed operational and physical design ensuring that informed form follows function.

6

CORPORATE OFFICE 7130 Glen Forest Drive, Suite 305, Richmond, VA 23226 • 804.343.0161 • fax 804.343.0170

REGIONAL OFFICES 2090 Columbiana Road, Suite 3500, Birmingham, AL 35216 • 205.259.1940 • fax 205.259.1941 8117 Preston Road, Suite 300, Dallas, TX 75225 • 214.706.9339 • fax 214.706.9341 401 Westpark Court, Suite 200, Peachtree City, GA 30269 • 678.783.1077 • fax 678.783.0120 1400 Broadfield Blvd, Suite 200, Houston, Texas 77084 • 281.994.7822 • fax 281.994.7801

www.klmkgroup.com

4643 S. Ulster Street, Suite 800, Denver, CO 80237 • 720.228.4038