Capital Project Solutions – March 2010
Is Integrated Project Delivery Right For My Project? Patrick Duke, SVP Throughout 2010, Capital Project Solutions will run a series of articles dedicated to Integrated Project Delivery (IPD). We will explore all issues related to IPD, from project identification to team selection to contract and incentive development. With four (4) IPD projects underway, we will share case studies and lessons learned throughout the series. Last month’s issue defined Integrated Project Delivery. This month, we will explore “Why IPD?” If you should miss any of the articles or to learn more about other strategies to ensure your project’s success, visit KLMK Group at www.klmkgroup.com.
Last month, we defined IPD as “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 the phases of design, fabrication, construction and occupancy.” But how do you determine whether it is right for you? If you are not considering a new capital project then IPD is probably not even on your radar screen. You are more likely concerned with the impact of healthcare reform, the upcoming Joint Commission visit, enforcing HIPAA regulations, quality assurance issues, physician acquisitions, patient satisfaction, staff turnover, infection control issues, census, and the list goes on. But, maybe you are one of the CEOs that struggles daily with an aging facility, overcrowding and lack of sufficient space. To top it all off, you now have to figure out how you are going to care for your share of the additional 32 million uninsured patients that will be coming through your door. One of the solutions to these issues may be a new capital facility project. If that is the case, you will need to choose a project delivery model that allocates risk effectively and ensures the most value for your hard to come by capital dollars. We believe IPD is a delivery model that you
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Capital Project Solutions – March 2010 should explore, but it should only be chosen after thoroughly evaluating whether it is your best option. To answer the question, “Why should I choose Integrated Project Delivery for my project?” you must first determine if IPD is a good fit for your organizational culture and then develop your value equation. The fit test begins with asking yourself and your key leaders the following questions: 1. Are my top leaders (CEO, COO, CFO…) ready to embrace the ideals of IPD and be the champions of the effort? Any successfully project starts with leadership from the top levels in an organization. If these individuals are not prepared to be champions of IPD then it is not likely to be successful. 2. Am I willing to trust my team? Trust must be earned over time. However, to start the process you must inherently have trust in the expertise and knowledge of each project partner. If that is something that is more difficult for you early in the project delivery process, IPD is likely not a good fit. 3. Does my organization have a culture of continuous improvement? This is a core value of an IPD project. If your organization embraces positive change and evaluates and learns from it over time, then IPD will be a better fit. 4. Am I willing to take measured risks for the potential of more reward? On paper, your risks in an IPD project may be more than you find in traditional contract forms. However, we believe that in reality your risks are lower using IPD because of the process and behaviors that are contracted in the Integrated Form of Agreement. 5. Is there anyone internally that will try to sabotage the IPD process? You must evaluate all levels of your organization and determine if there are those that may resist a paradigm shift and positive change. They could prove to be detrimental later in the project life cycle. 6. Am I considering IPD as a competitive advantage because of the buzz it might create, or because I am committed to improving the performance of the industry? If your goal is to improve the delivery of capital projects to continuously strive for better performance that provides a higher value, then IPD will be a good fit. 7. Am I soley focused on the bottom line at all cost? IPD is not cheap. In most cases, it will not result in the lowest first cost. 2
Capital Project Solutions – March 2010 However, it has the ability to eliminate waste from protective risk shelters and deliver more scope for your dollar. 8. Do I have the patience to trust the process and allow it to work? IPD is not a visit to the Town of Utopia. Changing behaviors that have been formed over decades does not happen overnight. You must work at the relationships of the team and be committed to the established ideals. 9. Do I have a collaborative organization or are we really fragmented? If you operate out of silo’s and have little cross collaboration, then IPD is likely not the best fit for you organization’s culture. 10. Do I and my internal team truly understand IPD and the ideals that surround it? It is important to understand how IPD works in practice as well as the ideals it embodies prior to determining if it is a fit for you. If you go through the fit test and find that IPD seems to align with your organization, you should next determine your value equation and measure IPD’s ability to meet it. If lowest cost is the primary driver that determines value, then IPD is not suited well for your organization. If your goal is to realize the maximum amount of value from each dollar spent, then IPD can help. Also of importance, is the value you place on collaboration and harnessing the collective talents of specialists at a project’s onset. A good comparison is with care delivery models such as “integrative cancer treatment”. No longer do patients visit with physicians individually; they now have a comprehensive and integrative team approach to fighting their illness. This integrative approach expands the boundaries of conventional care by bringing together traditional tools for fighting cancer, such as surgery, radiation, chemotherapy, and immunotherapy, with complementary therapies, including nutritional support, naturopathic medicine, mind-body medicine, oncology rehabilitation, pain management, and spiritual support. The patient now has an entire team working together as one unit to provide the optimal solution to their problem. IPD works in much the same way for your capital project. Instead of the owner meeting with the architect, who will design a visually pleasing facility; and then with the construction manager, who wants to build a structurally sound facility yet sees issues in the 3
Capital Project Solutions – March 2010 design; then with the engineers, who recognize issues in the mechanics of the design…and on and on. The team is brought together at the onset and they work collaboratively as one unit to identify the optimal solution to the owner’s problem – which is the need for a new facility that can be completed in the shortest amount of time possible, on budget, with limited change orders, and provide operational efficiences that deliver the utmost in patient care and experience. And, even more importantly, can limit the possibility of lawsuits at the conclusion of the project. By coming together as one cohesive unit most of the potential issues and problems can be identified, long before they become critical, and solutions implemented. If you happen to be, or know of, a CEO/COO that is faced with an upcoming capital project, do yourself a favor, and allow yourself to concentrate on what is truly important – optimal patient care. With the increasing complexity of regulations and limited access to capital, it is necessary to choose a project delivery model that can effectively allocate risk and deliver the most value for each and every dollar you commit. IPD has the ability to do just that and we recommend that you invest the time to determine if it is right for your organization. To learn more about Integrated Project Delivery, please visit our website and download our recently released white paper Integrated Project Delivery: “The Value Proposition” An Owner’s Guide for Launching a Healthcare Capital Project via IPD.
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