Target Value Design for Integrated Project Delivery

Target Value Design & Integrated Project Delivery Dr Glenn Ballard at Loughborough University 27 January 2010

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Target Value Design and Integrated Project Delivery

Glenn Ballard

Loughborough 01/27/2010

Topics

•  Review: – SuHer Health hospital projects – Target Value Design –  Integrated Project Delivery

•  Update – Progress on the SuHer Health hospital projects – What’s been learned? – A new challenge to be faced in complePng design

•  Whole Life Target Value Design


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2005 CURRENT Proposed Building Area: 1,298,500 BGSF 914,757 BGSF

Number of Stories (incl. below grade Parking and CUP):

21 18

Total No. of Beds: 620 555 Total No. of LDRs: 24 24 Total No. of ORs: 19 19 Total No. of ER Treatment Rms:

34 34

Loading Dock Location: Access off Post St. Access off Franklin St. Ambulance Location: Access off Franklin

St. Access off Post St.

Total No. of Parking Spaces: 620 555 2005 Design was $400 M over budget.

Current Design on budget moving towards surplus.

90% of the program in 70% of the space.


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Project Phases and Target CosPng

The ValidaGon Study

Establishing a Shared Understanding,

Basis of Design, Budget and Schedule.

The Star)ng Point for Target Value Design


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Target CosGng

• Integrated team validates facility can be built within the allowable cost • Sets target cost at or below allowable cost • Owner, architect and contractors work within market constraints

FEEDBACK LOOP

© Glenn Ballard, 2008

SeJng the target cost and project schedule

Target set 14% ‘below’ marketplace

Nine-‐project marketplace average


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IPD Target Value Design Clusters

M/E/P

Cluster Leaders

Structure

Landscape

Material Handling

VerPcal Transp.

Site Improvements

Interior/ Finishes

Building Envelope

Cluster Targets

Mechanical, Electrical, Structural, Enclosure, Interiors, Gen. CondiPons, Equipment, Furnishings, Technology


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Steel Structure

• ValidaPon ~ 22psf • Current Design ~ 20psf • Industry Standard ~ 30psf

Viscous Wall Dampers


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From Construc,on Industry Ins,tute research by Victor Sanvido

"Projects are built by people. Research into successful projects has shown that there are several criPcal keys to success. A knowledgeable, trustworthy, and decisive facility owner/developer.

A team with relevant experience and chemistry assembled as early as possible, but certainly before 25% of the project design is complete.

The contract encourages and rewards organizaPons for behaving as a team."

The 5 Big Ideas

Collaborate; Really Collaborate

Networks of Commitment

Tightly Couple Learning w/ AcGon

OpGmize The Whole

Increase Relatedness


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Our “Big Room”

Colloca)on An environment

of collabora)on, trust, and innova)on

Integrated Project Delivery

•  3 party contract between owner, architect and construcPon manager/general contractor.

•  A relaPonal as opposed to a transacPonal contract.

•  Engages downstream players in upstream processes and vice-‐versa.

•  Three Musketeer arrangements: one for all, all for one –  Shared risks and rewards – Money can move across organizaPonal boundaries in search of the best investments for the project


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Structure

•  One Agreement signed by O-‐A-‐C

•  “Joined” by jointly selected team members •  Provides for formaPon of:

–  Core Group –  Integrated Project Delivery Team –  Senior Management Group

Integrated Team Concepts

Owner Stakeholder

CM/GC’s PM Architect’s PM

Owner’s Rep

Core Group

Civil

Structural

Mechanical

Electrical

Plumbing

Site

Steel

Mechanical

Electrical

Plumbing

Framing

Landscape

Landscape

Other Other

Integrated Project Delivery Team


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ExecuPve Involvement

Owner Stakeholder

CM/GC PM Architect PM

Owner’s Rep

Senior Mgt.

Senior Mgt. Senior Mgt.

Senior Mgt.

Core Group/Senior Mgt.

SuHer Health’s IFOA requires

•  Last Planner •  Target Value Design •  5S Plan

– Site logisPcs using sort, set in order, shine, standardize, sustain

•  Zero RFI Goal – conversaPon first, pursue reliable promise for resoluPon

– RFI to confirm soluPon (not to iniPate inquiry)


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•  Built-‐In Quality Plan –  CII study suggests that up to 10% of construcPon cost is “rework”

–  “InspecPons” omen fail to improve quality at hand-‐off from trade to trade

–  Plan seeks to directly aHack root causes of quality failures –  P2SL is assisPng in developing BiQ for establishing standard work, tracking & improving


•  Payments within 10 days

•  Problem ResoluPon-‐-‐escalaPon –  ParPes negoPate –  Core Group –  Senior ExecuPves –  Independent Expert –  MediaPon


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The Role of TVD in IPD

TVD is a process for: •  Defining the project in terms of value to owner and stakeholders.

•  Seong targets for what is to be delivered (scope, level of quality), and the constraints within which it is to be delivered (cost, Pme, locaPon).

•  Determining the feasibility of the project: can what’s wanted be delivered within constraints?

•  Steering design and construcPon to targets.

Topics


•  Update – Progress on the Su^er Health hospital projects – What’s been learned? – A new challenge to be faced in compleGng design



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Target Cost & Weekly EsPmate Updates


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Choosing By Advantages Study of: Heating Hot Water SystemAlternative 1 Alternative 2

Central Plant Heating Hot Water System

Distributed Heating Hot Water

Factor: Square feet of Mechanical Space Required

Criteria: Attribute 3200 square feet5100 sq ft required/17

roomsAdvantage 1300 Sq Ft. 2

Factor: Access for MaintenanceCriteria: Attribute Outside secure perimeter Inside secure perimeter

Advantage Outside rather than in 4

Factor: Quantity of Boilers & StandbyCriteria: Attribute 3 duty plus 1 standby 20 duty +7 Standby

Advantage Less total boilers 5

Factor: Ability to do Boiler Stack Heat Recovery

Criteria: Attribute10% increase in boiler

efficeincy Not requiredAdvantage Reduction X therms 8

Factor: Pumping Energy

Criteria: AttributeMore required due to long distribution runs

Less required due to shorter piping runs

Advantage 500,000 KwH per year 10

Factor: Construction Schedule

Criteria: AttributeLonger due to site

distributionShorter - no site distribution

requiredAdvantage 2 weeks 1

Total Importance 19 11Capital Cos t


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Quality & Safety

VSM Trade Flow

???

Bid/Scope Allocation

Job-Site Environment

Construct’n Engineering

Estimate

Owner’s Reqrmnts.

AHJ

F.R.S.

Design Standards

VSM Design Info. Flow

BIM Standards

Budget

Work Packaging

Construction Standards

Materials & Suppliers Sequencing/

Scheduling

Quality Assurance

Supply-Chain Database

Lean Site Logistics

Strategic Sourcing

ConstrucPon Process Improvement Value Stream Mapping

3. Production Planning

•  Electrical: Light Fixture Install •  Ductwork: Complete Duct Install Process •  Fire ProtecPon: Sprinkler Install •  Plumbing: Toilet Install

Current State Future State


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BEFORE AFTER


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Eliminate Waste

ConPnuous

Improvement and Learning

Respect Challenge and Grow Them

Long-‐Term Thinking

Problem

Solving

People and Partners

Process

Philosophy

The Challenge: Crea,ng a Lean Culture in a Project Environment


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What has been learned? •  Building the culture is criPcal. One key is to change supervisory

behavior. Another is to redefine everyone’s role. Both are works in progress, but cultural shim in aotudes and behaviors has definitely been made.

•  Design can always be improved, but must be steered to the delivery of value within project constraints. In other words, you must know when to stop; the last responsible moment. Structuring design work could have been done beHer. Now experiencing refinements in design that seem trivial from the perspecPve of design intent but maHer a great deal to those who will use the design for purchasing, fabricaPon, installaPon, inspecPon, and commissioning.

•  The expected cost keeps falling. Process design may offer as much or more potenPal for savings than product design.

•  Choosing by Advantages is a powerful method for achieving consensus among stakeholders with different values.

•  It really is vital to design facility use before designing the facility.


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Lean in Healthcare OperaPons

Thedacare and Virginia Mason first applied lean to healthcare delivery, then later to the design and construcPon of healthcare faciliPes.

The opposite has happened at SuHer Health. The result: a challenge for Cathedral Hill as they prepare for construcPon—how to handle the inevitable demand for changes in building design to facilitate a lean approach to faciliPes management and healthcare delivery?

Topics


•  Update – Progress on the SuHer Health hospital projects – What’s been learned? – A new challenge to be faced in complePng design



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If It Were To Be Budgeted TradiPonally


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Overview of Target Value Design •  Values are developed from purposes and design criteria from

values •  Design begins with how the facility will be used before

designing the facility •  Key members of the project team are engaged to help

validate and improve project business plans •  Clients tell the project team what they are able and willing

to spend to get what they want-‐their allowable cost •  Targets are set as stretch goals to spur innovaGon •  Design is steered toward targets using a set based approach

in which alternaGves are evaluated against values and decisions are made at the last responsible moment

Two outcomes of TVD that look to be repeatable (at least within the healthcare and educaPon

sectors)

1.  Projects are completed below market cost—so far as much as 19% below.

2.  Expected cost falls as design develops.


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For those who only buy and do not produce (design or make), cost is driven by market pricing.

Target Value Design treats cost as an outcome of producPon system design, operaPon and improvement.

Why?

Why?

•  ProacPve value engineering; e.g., viscous wall dampers

•  Scope control – Scope grounded in business purpose – Steering design to targets

•  Scope refinement –  involvement of specialists in designing improves buildability and reduces conPngency


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Whole Life Target Value Design

Why Change a Winning Game? •  To enable beHer investment of cost savings—to deliver greater value to owner and stakeholders.

RelaPve Costs


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What Changes?

•  Give the design team a tool to calculate the impact of design alternaPves on facility whole life costs and benefits.

•  Keep the budget alive during design, recalculaPng the allowable and target cost based on the anPcipated impact of design alternaPves on whole life costs and benefits.

Challenges 1.  Persuade clients to develop an operaPons cost model

and use it to calculate their return on investment, and hence what they are willing to invest to get that return.

2.  Persuade clients to give the operaPons cost model to the design team.

3.  Learn how to link the product and operaPons models so changes in the former are reflected in the laHer.

4.  Persuade financiers to allow a floaPng budget during design.

5.  Learn how to design to a moving target.


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What limits customer value?

•  The extent to which design and construcPon enables realizaPon of purpose. Forecast the impact of design alterna,ves on whole life costs and benefits.

•  Ability to fund the investment required in design and construcPon. Adjust allowable and target costs to forecast benefits.

•  The extent to which the facility’s potenPal is realized in use. Consider a project complete only when the facility is opera,ng to target performance.

Comments? QuesGons?

Target Value Design for Integrated Project Delivery

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