Capital Project Solutions – September 2010
Integrated Project Delivery – Case Study Owensboro Medical Health System Tim McCurley, Senior Consultant 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 three (3) IPD projects currently underway, we will share case studies and lessons learned throughout the series. Last month, we discussed developing an incentive plan to accompany the IPD integrated form of agreement. This month, we will share lessons learned from the IPD team at Owensboro Medical Health System (OMHS). If you have missed any of the previous articles or to learn more about other strategies to ensure your project’s success, visit KLMK Group at www.klmkgroup.com.
Recently, comments have been made regarding Integrated Project Delivery (IPD). Some say that it is the future of project delivery, yet others think it is merely a “here today, gone tomorrow” fad, one that will soon be replaced with the next big idea. For the team created to deliver the new $385M hospital for Owensboro Medical Health System (OMHS), we are living it, breathing it and making it work. This case study examines the OMHS IPD team – its dynamics, integration and functionality. Rendering by: HGA Architects & Engineers
The Facts OMHS determined that, in order to meet the needs of their expanding community, they would need a new healthcare campus.
The new
campus includes a 477 bed, 780,000 square foot replacement hospital and a Medical Office Building. The campus is being built on a 160-acre green field site that is located on the east side of the city of Owensboro, Kentucky. In planning for the new facility, the OMHS leadership team evaluated numerous capital project delivery options. It was determined that IPD would provide the greatest return on investment while avoiding the challenges that often plague a project of this size. 1
Capital Project Solutions – September 2010
The Process The first step in the process was for the OMHS leadership team to select the IPD participates. Being unfamiliar with the IPD process, Owensboro followed a more traditional approach to selecting the team. Each company was identified individually as opposed to following the process that we identified in our April issue of Capital Project Solutions and thus the process took a bit longer than would be expected. In fact, it was not until after the teams were chosen that KLMK was actually hired. The IPD team at Owensboro now consists of the following: Owner - Owensboro Medical Health System Architect - HGA Architects and Engineers Construction Manager – Turner Universal MEPT Engineer - Smith, Seckman, Reid, Inc. Project Manager - KLMK Group The next step was to develop an Integrated Form of Agreement (IFOA) that bound the group into a single, cohesive team. Each signing member of the IFOA was provided with one vote in making decisions regarding the project. KLMK, which acts as an unbiased facilitator and advisor for the group, does not have a vote. A representative from each firm makes up what is known as the Core Team. The Core Team is responsible for the general governance and direction of the project. Its main responsibilities are to identify the most advantageous way to deliver the new facility and to advise hospital leadership on key project issues. After setting the target budget and schedule, the Core Team established six Component Teams and assigned a target budget for each of these team. The Component Teams are cross-functional and are responsible for developing major elements of the design that adhere to the proposed target budget and schedule. Each team includes representatives from the architect; mechanical, electrical, plumbing, technology (MEPT) engineer; civil engineer: construction manager; major subcontractors; and specialty consultants. The six Component Teams are: Site Structure Envelope Interiors 2
Capital Project Solutions – September 2010
Thermal comfort Power and Technology It was necessary to cross-pollinate the component teams in order to avoid situations where decisions made by one group may unknowingly affect another group. For example, in our Envelope Component Team, HGA and the envelope design assist partner were finalizing details for patient room windows when it was decided that the windows should be made a bit larger. Since the structural engineer was involved in the process, it was immediately identified that this change would require additional bracing to the structure, which meant additional steel would be needed. And, since the mechanical engineer was also on team, he was able to evaluate whether the heat load of the additional glass would affect the mechanical system. By having cross functional members on the component team, the implications of such a change were brought forward and evaluated and thus the team was able to make a thoughtful decision based on the impact to cost and schedule. In a traditional delivery model, the architect would have decided to change the detail and would have issued the drawing package, prior to addressing the implications to the other members of the team and the project as a whole. It could have been months before the team realized the impact to the structure and cooling system as well as whether the additional cost of the change would even be beneficial to the project. Utilizing an IPD approach allowed the team to make an informed decision within a couple weeks and indeed determined it was beneficial to the project with full confidence that all of the implications of the issue had been addressed.
Trust There is indeed something to be said regarding the trust that team members must place in one another. It is one of those circular references that always seem to pop up similar to what you see in an excel spreadsheet. However, in this case, it is a good thing, a very good thing. Under the traditional project delivery method, there always seems to be an inherit distrust between designers, contractors and owners. Designers spend endless hours creating unique and inviting designs that are good enough to be built. Yet, as soon as a contractor gets his hands on the documents, the first thing he does is review them 3
Capital Project Solutions – September 2010
for inaccuracies, mistakes, and inconsistencies. Having identified issues, the contractor submits the first change order, and now the owner no longer trusts his architect and is skeptical if his contractor is out to change order the project to death. At OMHS, the mentality is quite different. During design, the contractor’s Senior Project Manager is at the table advising the team of cost issues, constructability issues, schedule issues, etc. Additionally, the CM typically includes his subcontractor that will be completing the work. Therefore, when these documents are printed, there should be very few surprises. The pricing, for the most part, should be known. With this type of process and its associated result, one can only attribute it to the trust that was established between the team members. The architect trusts that his contractor partner is giving him the best pricing information available in order to ensure the design will meet the project budget. The contractor trusts that his architect and engineering partners will not go beyond the means of the project limits. All of this results in the owner trusting that the team is acting in the best interest of the project. In Owensboro, as with any project, trust in your partners is the key to the success. And, it has proven to be extremely beneficial for this team. The OMHS project is not perfect and no one expected it to be. What the team is striving for is a more efficient process, with fewer changes orders, and no finger pointing. As with any dynamic working environment, from time to time, the Core Team has to analyze how things are being done, and tweak the process to better accommodate the ever-changing project. There have been several instances at Owensboro, where the Core Team met to evaluate how the project was progressing, what is working, what is not working and what could be improved. In one instance, the Core Team realized the team was getting bogged down in a multitude of minor project issues. While trying to keep track of every issue and give an update on a weekly basis, it was apparent the process was not as efficient as it should have been. All the while major issues were not given the attention they deserved. The team decided to take a lean approach where we would identify the top four or five major issues and have the component teams focus on resolving those issues on a weekly basis, then move on to the next issue once the other issues were resolved. This approach makes the component teams much more efficient in managing the issues. Opportunities for process improvement are constantly being evaluated by the Core Team and will continue to occur until the project ends 4
Capital Project Solutions – September 2010
Incentive Plan As discussed in last month's issue, an appropriate incentive plan should inspire the team to collaborate in order to eliminate waste and duplication in cost and time; increase the quality of the final product; make the project safer; generate savings in final costs; optimize team cooperation and “global� outlook; and improve the quality of the project. Once the IFOA was in place, the Core Team quickly met to discuss and develop an incentive plan. The team insisted on including all members of the IFOA and additionally, major trade contractors who were integral participants in developing the current state of the project. The team worked together to challenge themselves to create a plan that would only provide incentives if they go above and beyond the status quo of delivering the project on budget and on schedule. The plan outlines the minimum requirements that must be met in order for the team to receive incentive pool funds as well as the distribution structure of the incentives to the various team members. The incentive package was designed to benefit the owner by delivering the project under budget and ahead of schedule. Incentive is only provided for: meeting minimum requirements outlined in the plan for creativity in problem solving innovation in design and construction achieving clearly defined stretch goals Currently, the Owensboro project is wrapping up design and has been under construction for five months. All indications show that the project is progressing under budget and on schedule. In addition, the Core Team is aiming to better the current scheduled completion date. OMHS leadership has been pleased with the IPD process and the team is confident that by utilizing this delivery method the team will be able to exceed expectations. If a team possesses all of the right dynamics, the IPD process offers them the best opportunity for success.
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