PHOTO COURTESY OF THE BOLDT COMPANY |
Alternative project delivery models have been the talk of the health care construction industry over the past decade. Integrated project delivery and its variants have occupied speaker time in all of the premier conferences and academic circles while demonstrating positive outcomes in the field.
As the industry continues to seek the ideal project delivery method, however, has it lost focus on fundamental success factors in capital project delivery? Experience allows health facilities professionals to understand which factors equate to project success.
Seven key elements
As health care planning design and construction professionals embrace new models of delivery for capital projects and utilize new tools that can enhance collaboration, there still remain seven foundational elements that are key to project success.
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1 Ensure that the capital project is part of the strategic plan. One of the encouraging outcomes of health care reform is that there is much more scrutiny over the deployment of capital than ever before. Perhaps at times, there is a tilt on the scale toward more planning than doing, but gone are the days when projects lacked any proven connection to a health care system’s strategic plan. The question now becomes, “How do you know that a project is truly connected to a strategic plan?”
All professionals engaged in the capital project delivery process have a responsibility to ask questions at the beginning of any project. Is there a master facility plan that identified this project as a priority? What was the process that resulted in that master facility plan? These questions can provide an indication that the project has a connection to the organization’s strategy. Despite its seeming like a no-brainer, some organizations still restrict certain information to only those that they feel “need to know.”
While it has never been good practice to have a project that is not clearly connected to a health care system’s strategic plan, the stakes are much higher today. Professionals who recognize this stand a greater chance of becoming trusted advisers. This sometimes means telling leadership that they are better served to spend capital on other system priorities.
For instance, a health system recently purchased a hospital and in the agreement included a $50 million commitment for capital improvements. But, instead of tapping the money as improvements that were needed, the system and the hospital agreed to develop a strategic master facility plan that resulted in a scaled-down requirement of $25 million in capital improvements.
The balance of funds was set aside for physician practice integration in the market, which proved to be a much better long-term investment.
2 Understand that benchmarking is an art. The scariest position on the capital project delivery roller coaster is up front when early conceptual costs for an undefined project are needed. The Internet has compounded the fear factor by providing easily accessible information to untrained individuals who mean well, but can create more work for everyone involved in the process. Project teams that clearly convey the process of developing conceptual costs from benchmarks and understand that it is both an art and a science are much more successful.
Typical benchmarking mistakes are well-known. They start with a comparison of projects that may seem similar but have vastly different characteristics. One example recently encountered was the development of capital costs for a new hospital. The health system spoke to another system that had delivered a new hospital for a number that seemed too good to be true. After further investigation, it was.
On the surface, the two projects were similar in size and scope. They were new hospitals, each with fewer than 150 inpatient beds. But one was built in a state with low-cost labor and the other would be built in a state with some of the highest labor costs.
The real difference was noted when it was revealed that the space cost per patient bed was based on a future bed count complement that opened as shell space. While this seems like a simple example, it happens consistently across the country and causes much angst among professionals tasked with delivering the project. It is imperative to project success that a process for conceptual cost development be defined and proper use of benchmarks be implemented.
3 Avoid premature launch. The beauty of working on capital project delivery is the ability to see a tangible product at the end. However, health care systems often are in such a reactive rush to produce the tangible results that critical steps are missed and the process is not followed. This can lead to unmet expectations and/or delay or deferment of a project. Trying to take shortcuts can completely derail the project.
For instance, in a quest to start a design and show tangible results to its board, a hospital system launched a project without first considering all factors that could impact the program. By neglecting to understand the gaps in their planning, the hospital presented a plan that was not feasible and resulted in rework in planning and design that cost approximately $2 million and delayed the project for 18 months.
Teams that resist the urge to launch the design of a project prior to alignment of scope, schedule and budget can avoid expensive rework and potential delays. All project delivery teams should take part in an initiation process immediately upon coming together to deliver a project. Project initiation focuses on developing how the team plans to work and creates alignment on expectations for each member. It also ensures agreement on scope, schedule and budget targets for the project.
4 Develop a team-selection process. Success on any capital project is a direct result of the people on the team and the support they receive from their respective firms. However, the team selection process often is disjointed with a variety of firms based on classification of expertise hired using separate requests for proposals that may or may not be coordinated with the correct project details. Often, a mountain of responses is received, evaluations are made after reading only a portion of each proposal and a scripted interview is used to make the decision.
Despite this being one of the most important decisions a health care system will make on any given project, team selection is seldom given adequate investment in time and money. The root of all project problems begins with selecting the wrong team members. The most successful projects involve taking the time to develop a coordinated team selection process and investing time and possibly additional funds in that process [see sidebar below].
The ideal scenario is one in which the process allows for integrated teams to be selected vs. one in which firms are selected individually, thus resulting in a “forced marriage.” Though this concept may seem foreign, it provides owners with confidence that their team has a history of working together, is aligned along common goals and has a culture conducive to collaboration.
In comparing two recent projects, one using a traditional team selection approach and one using an integrated model, the integrated model saved three months over the life of the project and resulted in a more collaborative and aligned team upon selection.
5 Communicate across party lines. A project organizational chart typically predicts the communication flow. In the push to allocate risk, the common response is to bundle services primarily under the architect and construction manager. At first blush, this practice appears to increase coordination by making one entity responsible for the communication among many. However, the results can be quite different.
The silos created by this model often stifle creativity and create a bureaucratic decision-making process. To manage the risk, architects and construction managers often act as communicator in chief but things often get lost in translation. Owners' representatives and project managers can exacerbate the problem by setting the expectation that they are holding the architect and construction manager fully responsible for any errors their subcontractors may make.
Fostering an environment and organizational structure that allows for communication across party lines can allow professionals to meet at the intersections where value is created.
6 Create team accountability for the budget, scope and schedule. People typically embrace accountability. However, the process and structure of capital projects often does not afford individuals that opportunity. Owner’s representatives and project managers often assume they know which information and responsibilities everyone else should have to complete their tasks but creating accountability and sharing information across the project delivery team will drive project success.
Dictating a budget instead of collaboratively developing it creates an opportunity for gamesmanship among the team members and typically provides no motivation for high performance. Similarly, the same type of approach to a schedule likely will get the answer the organization wants to hear, but the results can be far different from the plan. A successful project harnesses the innovation and experience of the team to develop and validate the schedule and budget in alignment with the scope desired by the health care system.
For example, leadership within one health care system recently developed a project budget based on fragmented input from industry professionals and peers. Instead of informing the project team on all elements of the budget, scope and schedule, the leadership team felt it should control the information flow according to its own guidelines. The result was a lack of accountability among the team and it was discovered that required elements for the project were projected to cost $40 million over the established budget.
To gain alignment and create an accountable project delivery team, the development of the budget and schedule should be a team sport. Processes like target value design and pull planning are built around this concept and can yield benefits. Early involvement by the construction manager, architect, engineer and key trade partners can pay dividends on the back end of the project.
7 Plan for facility activation in advance. With health care systems focused on cost-containment, there has been more emphasis on workflow design influencing space requirements and adjacencies. This requires all team members to think with the end in mind. With an ever-increasing use of virtual design tools and 3P (production, preparation, process) events during the design process, hospital system stakeholders are able to see the end clearer than before and become comfortable with the model.
The emphasis on operational improvements to align with the final design should not end once design is complete. Successful projects create a structure and process to manage this effort throughout the life of the project through activation. Failure to prepare operationally, prior to moving into a space designed for a set workflow, can upset the financial parameters on which the project was approved. It also can create a negative perception of the project delivery team’s performance even if all building systems are functioning properly.
Successful project delivery teams start the capital project delivery process with the end in mind. They not only focus on integrating operations into the design process, but also ensure that the facility is prepared for its intended use. Understanding all the requirements from authorities having jurisdiction for inspections and certifications from the various accrediting bodies is necessary to develop a responsible schedule.
Creating an integration strategy up front in the project with health care system support teams such as biomedical, facilities, information systems, procurement, environmental services and others cannot be overlooked. Successful projects recognize that facility and operational readiness must be aligned and a focused structure and process should be developed.
Foundational to success
The challenge for health facility planning, design and construction professionals is not to get caught up in the delivery models or the tools as an end. Instead, develop a delivery model that will support these factors and others that are foundational to the success of a capital project.
Patrick Duke is managing director at CBRE Healthcare, Richmond, Va. He can be reached at Patrick.Duke@cbre.com
Team selection as opposed to team formation
Hurley Medical Center, Flint, Mich., completed a master plan for its campus that identified needs greater than the ability for Hurley to fund them.
After prioritizing the emergency department (ED) for funding, Hurley officials knew the $30 million they had to spend must achieve maximum value for the dollar. Not only was an expanded ED required, but Hurley also wanted to create a better patient experience when entering the facility as well as enhance its pediatric care offerings by dedicating a portion of the new ED to that patient population.
With an old physical plant, there was a high risk that unforeseen conditions and infrastructure renewal that previously had been deferred could take capital away from the desired clinical programs. Realizing this, Hurley officials were determined to utilize integrated project delivery (IPD) to foster the required collaboration to get the greatest return on their investment. They took the time to develop an IPD educational program for their board, organized labor and the community. This paid off given their decision on how to engage a project delivery team.
An integrated team selection process was developed as opposed to a traditional team formation. Hurley officials determined that they wanted to hire not only the construction manager, architect and engineer, but also trade partners and specialty consultants. Hurley officials created an interdisciplinary committee to lead a selection process during which every interaction with each team was measured, including their conversations with administrative assistants who were helping to organize the effort. There were two workshops with each team and the selection committee. These were followed by a formal presentation of the team’s implementation plan for the project.
The early engagement of the integrated team provided for more due diligence on existing conditions that allowed for discovery and solutions that minimized dollars being diverted to replace aging infrastructure. The team completed the project as programmed on schedule and 2 percent under budget.
As a result of the incentive clause adopted on the project, Hurley and the integrated team shared savings at the conclusion of the project.