LEAN, Collaborative, and Integrated Construction Delivery

LEAN, Collaborative, and Integrated Construction Delivery

The project delivery method ultimately determines the outcomes of renovation, repair, maintenance, sustainability and new construction activities more so than than any other single factor.

It is the project delivery approach that outlines how people, systems, business processes, and specialized knowledge domains are integrated to optimize value for real property stakeholders – real property owners, building/physical infrastructure users, architects, engineers, contractors, business product manufactures, oversight groups, and the community.

Regardless of the LEAN construction method selected – for example Integrated Project Delivery, IPD for major new construction, or Job Order Contracting, JOC for renovation, repair, maintenance, or minor new construction –  the primary focus is uopn highly effective collaboration between the owner, the architect, and contractor(s), etc. from conceptualization/early design through project handover and beyond.

2015 optimized facility renovation and repair

BEST VALUE procurement, shared RISK/REWARD, MUTUAL TRUST/RESPECT, and LONGER TERM RELATIONSHIPS are additional areas that differentiate LEAN collaborative construction delivery form tradition design-bid-build or even design-build, CM@R, etc.

job order contracting

Minimum levels of owner CAPABILITY and LEADERSHIP, however, are required in order to implement LEAN collaborative construction delivery methods and achieve the associated benefits completing a significantly higher percentage of quality projects on-time and on-budget.

Properly created and implemented LEAN collaborative construction delivery methods REQUIRE  the owner, designers, engineers, and contractors to work  collaboratively from project inception, to mutually establish the performance, budget and schedule within the constraints of the owner’s business model, and to TRANSPARENTLY share ALL information using common standardized terms and data architectures.

While the Owner is providing LEADERSHIP and ultimate responsibility, the team is working together to manage efforts.

Team are built and grow based upon Best Value, Qualifications, and demonstrated Success.

Collaborative LEAN construction delivery method require partnering and collaboration contractually.   Associated contracts and programs create incentives and consequences for collaborative participation or lack thereof.  Joint decision-making with appropriate allocation and understanding of liabilities and impacts increase the likelihood of successful goal accomplishment.

Key performance indicators, KPIs for LEAN construction delivery not only take into account progress of each party and/or competency (design, construction, engineering, procurement, etc.) but associated interactions.

Many owners, architects, engineers and contractors do not fully understand LEAN collaborative construction delivery methods, or their specific implementation such as IPD or JOC.   Since any implementation of LEAN construction delivery is fundamentally different than traditional processes, attempting to implement LEAN without making internal business process changes commonly leads to failure.  For example, some owners or JOC consultants/cooperatives implement JOC to simply bypass procurement and speed project delivery times.   This is first and foremost typically against rules and/or legislation, but more importantly doesn’t afford  program participants with JOC’s potential major benefits.

Without   1) mutual respect and trust 2) mutual risk and reward 3) collaborative innovation 5.) team decision making 4) early and ongoing  involvement of all key participants, standardized term, definitions, and data architectures, 6.) financial transparency, and  5) open and enhanced communication, LEAN construction delivery is not present.

Certification, or at least ongoing education and training for LEAN collaborative construction delivery and dedicated implementation methods such as IPD and JOC should be practiced.   While every Owner implementation has its areas of specialization, core processes remain constant.

The success of LEAN construction delivery (IPD/JOC…) is ultimately based upon  individual team member’s ability to make decisions collaboratively, Their ability to apply associated and supporting workflows, tools, data sets, and technology,  and in general align the participating organizational cultures and business models of project/program participants.

strategic facility management and BIM

Of special note is the fact the teamwork should replace excessive management and control.  It is the combined experience of the individuals and entities on the team that is important.   The Owner is a key LEADER, a COACH, and a FACILITATOR with respect to the LEAN construction delivery process.   This role can temporarily be fill by a consultant, however, for efficient and larger LEAN construction implementations, direct Owner participation is a REQUIREMENT.

LEAN construction delivery is proven to be more productive and less costly than traditional construction methods.   The perceived higher cost is a falsehood.   Cost metrics should be focus upon total life-cycle returns and NOT first costs.  Once change orders, legals disputes, and unacceptable quality  levels are considered, LEAN construction can be 30% – 60% more efficient.

Complete More Construction Project … Faster, On-Budget, and with Higher Quality

  1. Eliminate bid solicitation for each project.
  2. Eliminate detailed plans for each project.
  3. Develop work scope jointly — user and contractor.
  4. Clearly have project described by  tasks, quantities, and unit prices… all in a standard format with a unit price book (UPB).
  5. Fixed fee project proposals generated applying the contractor’s adjustment factor (coefficient) to the unit price estimate.
  6. User accepts, modifies, or rejects contractor proposal upon review.
  7. Project start in days versus months or years.

Welcome to job order contracting…

OpenJOCcycle

job order contracting

 

5S for LEAN Construction / Job Order Contracting / IPD

5S for LEAN Construction / Job Order Contracting / IPD

5S

  1. Stewardship – Practice best value life-cycle management of the built environment.
  2. Share – Enable transparent and open communications among all stakeholders, beginning with initial concept and continuing thru end-of-life.
  3. Standardize – Use common terms, definitions, & data architectures.
  4. Sustain – Practice environmentally sound strategies
  5. Secure – Maintain and monitor life/safety issues

job order contracting

BEST VALUE

OUTCOME-BASED STRATEGIES

CLEARLY DEFINE & DOCUMENT DESIRED OUTCOMES

PRACTICE TEAMWORK & LEADERSHIP

 

Evaluate necessary tasks and items with regard to maximizing VALUE.

Eliminate unnecessary processes, tasks, and or control… eliminate obstacles.

Remove excessive command and control.

Remove and properly store all parts or tools that are not in use.

Segregate unwanted / unneeded material from the work site.

Maximize use of skilled personnel.

Seek continuous improvement.

Reward ideas.

Require collaboration.

Practice mutual trust & respect.

Prevent loss and waste of time by planning and staging work to assure availablity of materials, equipment, and labor.

Provide on-demand services.

Regularly monitor progress and employ key performance metrics.’

Keep the work site safe.

Require ongoing training.

Standardize and share best practices and processes.

Support creativity and effort.

Perform regular audits

http://www.jobordercontracting.org

2014 – Top Ten Reasons – Why C-Level Execs Don’t Listen to Facility Managers / Facility Management

  1. Not speaking the right language.
  2. Failure to quantify risk, opportunities, productivity, linkages of built environment to organization success/failure.
  3. First-cost vs. life-cycle cost approach.
  4. Inability to collaborate internally and externally with services providers, stakeholders.
  5. Lack of standardized terms, metrics, robust and proven business processes and metrics.
  6. Following the “traditional/safe” path, i.e. existing legacy technology and/or data project delivery methods (design-bid-build, design-build), vs. integrated project delivery and/or job order contracting).
  7. Failure to compare in-house and service provider material, equipment, and labor costs with standards such as RSMeans Cost Data.
  8. Reactionary vs. pro-active approach and methods.
  9. Failure to adopt agile and continuous improve approaches
  10. Lack of relevancy.

Top Ten Considerations for a Business Strategy for The Life-cycle Management of the Built Environment – BLM, LMB

Current Business Environment – Deconstruction of the AECOO Sector (Architecture, Engineering, Construction, Operations, Owner)

  1. Falling Transaction Costs
  2. Falling Computing Costs
  3. Falling Communication Costs
  4. Increasing Collaboration and Communication
  5. Over half of All Information is Digital… has and IP Address
  6. Patterns are Now Transparent – Cost, Function, Productivity, …
  7. Computer Software Applications and Traditional Databases are Dead – Being Replaced by Plug-ins and On-demand Data
  8. Life-cycle Cost vs. First-Cost Focus
  9. Propriety Information is contrary to Scale, Growth, Collaboration
  10. Small/Local Action with Global Oversight Driving Horizontal vs. Vertical Value Chains

Business strategy is driven by our environment and associated demands and fundamental change is upon all of us.

Big Data - BIM

 

 

What is the Single Most Disruptive Force in Construction? and why BIM won’t solve it.

Simple answer…  an industry-wide lack of collaboration, transparency, and shared risk/reward.

Change however is possible IF and ONLY IF Owners, Contractors, and AE’s take the time to understand and implement collaborative construction delivery methods correctly.   Job Order Contracting (for renovation, repair, sustainability, and minor new construction projects) and Integrated Project Delivery (for major new construction), are examples of readily available, proven solutions to the construction sectors lack of productivity and legacy of legal disputes.

Fundamental change in how construction industry players perform business must occur.  That said, not everyone will be able to, or wish to, participate.   Excellence in both education and execution are requirements for the transition.

JOC and IPD share the following characteristics:

– Parties that understand and “buy-in” to the processes (not everyone will be up for the task)
– Robust, well-organized cost data (enhanced RSMeans line item cost data with full material, labor, material, and equipment breakdown, supplemented as needed for localized requirements, see http://www.4Clicks.com)
– Shared risk-reward
– Supporting software to assure consistency and reduce deployment costs

Design-Bid-Build, DBB and even Design-Build, DB can’t resolve our industry’s problems. We MUST change.

“Many/most projects are currently done with low bidders, ill prepared, with parties being dragged through the project just to try to get the work done with some reasonable quality. People’s actions are driven in two ways, reward or punishment. There is too much punishment and not enough reward. How many jobs have liquidated damages for delays but how many have you seen that gives a reward for finishing on time or early? We all know that construction is a “risk” business the question is how much risk are we willing to accept for little reward? The issue is achieving and “all for one and one for all” mentality.””  – quoted from a Linked-In discussion

BIM is supposed to be the “life-cycle management of the built environment supported by digital technology”.  Unfortunately, far too much emphasis is being spend on 3D visualization and low level technical “mumbo jumbo”, vs. defining core processes, a robust onology/glossary, and associated sharing of rich information.

Learn or Retire?

BIM, Productivity, Architecture, Engineering, and Construction.

Albert E. was right…it’s all relative.

Stress and lack of productivity  are largely related to several factors: uncertainty, poor communication/collaboration, improperly assigned time factors, etc., and thus can only be mitigated.  Some us actually are cursed to love the associated  challenges and thrive on the unknown facing each new renovation, repair, or new construction project.

Can undue stress, uncertainty, risk, etc.  be minimized? Can productivity and transparency be improved?  Absolutely!  Here’s a “short list” of some items for consideration;
1. The construction project delivery method/process is the single most important aspect that impacts the tone and ultimate success/failure.  Focus within our industry must be shifted to business processes that encourage collaboration and upfront planning/information sharing: integrated project delivery – IPD, job order contracting – JOC, public private partnerships – PPC, etc.
2. Technology is an enabler, not a solution.  Benefit is maximized by embedding robust business process into technology…. not enabling poor processes!!!! (review the history of ERP systems – enterprise resource planning,  for a primer on the failures associated with spending millions on automating poor business practices – “garbage in = garbage out”.  That said, cloud computing (vs. cloud-washing) is a disruptive technology that will act as a catalyst to accelerate change in our industry and general business/social environment.
3. Revit, Archicad et al… are NOT BIM, but rather 3D visualization components of BIM.  BIM is the life-cycle management of the built environment supported by digital technology.  Again, an instance of technology supporting a robust process.  Don’t even THINK about implementing BIM without an understanding of robust life-cycle management / total cost of ownership processes, ontology, metrics, etc.
4. Our educational system as well as our industry is at the threshold of fundamental change.  Focus upon individual domains or silos of information/work will shift to integration and collaborative techniques. Adapt or fail.

 

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Why is the Construction Industry so UnProductive?

I recently received a marketing email from a “nationally recognized” AEC software vendor that said that their product “works with any construction-estimating solution in the market” because it used MS SQL.

They went on to say that “We can compare project estimates from ….any other estimating package…”

Well, there it is… I leave it to you.

From my perspective, lack of proper education, awareness, and blatantly inaccurate marketing are just a few of several reasons why our industry is so unproductive.

The use of SQL, even with “attribute filters” does NOT mean anyone can compare estimates from any program. In fact, many/most experienced software engineers and/or cost estimators might just view this as a singularly silly thing to say.  Isn’t it the detailed data format that would enable of disable this ability…not to mention an associated robust cost data architecture and associated ontology?

Sure one attempt to parse information from different cost estimating programs and data sets, but truly compare estimates side by side, much less automatically… other than simple viewing and going thru each line item for material, equipment, labor and productivity factors manually… nope, nada, not going to happen.

Your thoughts?

Moving from Design-Build, DB, to Integrated Project Delivery, IPD

Providing the opportunity for the kind of collaboration that the construction industry so badly needs….

Design-Build has a spectrum, ranging from almost as dysfunctional …. all the way to almost as collaborative as Integrated Project Delivery.

Shifting Design-Build toward IPD

This blog entry was co-authored by Oscia Wilson and Lisa Dal Gallo

We are big proponents of Design-Build because it places designers and builders in the same room, thus providing the opportunity for the kind of collaboration that the construction industry so badly needs.  Opportunity for collaboration, however, is not the same as a guarantee of collaboration.  Design-Build has a spectrum, ranging from almost as dysfunctional as Design-Bid-Build all the way to almost as collaborative as Integrated Project Delivery.

Design Build continuum

Figure 1: Depending on how the Design-Build structure is implemented, a project can be nearly identical to an IPD structure or very dysfunctional

On the left of this spectrum, you have those Design-Build projects that use bridging documents, lowest bidder selection, and a team that doesn’t work well together.  Although the builders are contractually combined with the architect of record, these projects are not collaborative, let alone integrated.

Owners, this is bad for you.  The biggest problem with this model is that when you have an architect prepare bridging documents, you’ve just made all the big decisions without the input of the building team.  Since 80% of the cost decisions are made during the first 20% of the design, you’ve just cheated yourself out of the biggest source of potential savings that come from collaboration between the contractors and the designers.

On top of that, now you’ve divided your design team into two groups: the architects who did the bridging documents, and the architects who finish the project.  This creates knowledge transfer loss, inefficiencies due to effort repetition, and prevents the second architect from holding a sense of ownership over the design.

In addition, if your selection is based solely on price, the Design-Build team will price exactly what is on the bridging documents; there is no incentive for the team to engage in target value design.  This situation could be improved by offering an incentive through savings participation, but that kind of aggressive innovation requires a high functioning team.  If the selection was based on lowest bid, the team may be too dysfunctional to achieve real gains because the lowest prices generally come from the least experienced and least savvy of the potential participants.  Often in these settings, cost savings are achieved at the expense of quality design, as general contractors under great pressure to achieve aggressive cost savings revert to treating architects and engineers as venders instead of partners.

For owners who want intimate involvement in the process, Design-Build based on low bidding offers another disadvantage.  In order for the Design-Build team to deliver for that low price you were so excited about, they have no choice but to ruthlessly cut you out of the process.  They are carrying so much risk that they can’t afford any of the potential interference, delay, or scope escalation that comes from involving a client in the back-room discussions.

If you have a team that works well together, you move farther to the right on the spectrum.

If you hire the design-build team based on good scoping documents instead of bridging documents, you move farther to the right on the spectrum.  (Partial bridging documents may be a good compromise for public owners whose process requires a bridging step.)

Starting somewhere in the middle of this spectrum, you start seeing successful projectsA successful, collaborative Design-Build project is light years ahead of Design-Bid-Build.

Some projects are pushing the envelope so far that their Design-Build projects look very similar to Integrated Project Delivery (IPD).  Lisa Dal Gallo, a partner at Hanson Bridgett is an expert in IPD and partially integrated projects, including how to modify a Design-Build structure to get very close to an IPD model.  She recently discussed this topic at both the San Diego and Sacramento chapters of the Design-Build Institute of America (DBIA). The discussion was mainly to assist public owners who have design-build capability to improve upon their delivery, but same principles apply to private owners who may not be in the position to engage in a fully integrated process through an IPD delivery method.

Several recent and current projects in California are operating on the far right side of this Design-Build collaboration spectrum, by crafting a custom version of Design-Build that uses IPD principles.  Here’s how they’re doing it:

  • Skipping the Bridging Documents. Instead of using bridging documents as the basis for bidding, owners are creating scoping criteria or partial bridging documents that provide performance and owner requirements, but allow the design team to collaborate on the design and present their own concept to achieve the owner’s goals. Under this type of scenario, the design-build teams would typically be prequalified and then no more than 3 teams would be solicited to participate in design competition.The team is usually selected based on best value.  After engagement, the owner and end users work with the team through the scoping phase and set the price.
  • Integrating the Design-Build entity internally
    • To assist in a change in behavior, the general contractor and major players like architect, engineers, MEP subs, and structural subs can pool a portion of their profit, proportionally, sharing in the gains or pains inflicted based on the project outcome.
    • Through downstream agreements, the major team players can also agree to waive certain liabilities against each other.
    • They enter into a BIM Agreement and share information freely, using BIM to facilitate target value design and a central server to allow full information transparency.
  • Partially integrating with the owner.  The owner can play an active role, participating in design and management meetings.

The extent to which the owner is integrated with the design/build team is a subtle—but crucial—point of differentiation between an extremely collaborative form of Design-Build (which I suggest we call “Integrated Design-Build”) and Integrated Project Delivery.

Here is the crux of the biscuit: Under an IPD model, the owner actually shares in the financial risks and rewards associated with meeting the budget and schedule[1].  Therefore, they are part of the team and get to fully participate in back-of-house discussions and see how the sausage is made.

Under Design-Build, even an Integrated version of Design-Build, the design-build entity is carrying all the financial risk for exceeding a Guaranteed Maximum Price (GMP) and/or schedule, so they deserve to collect all the potential reward if they can figure out how to bring it in faster and cheaper.  Since the owner’s risk for cost and schedule is substantially reduced when the project uses a GMP, the owner doesn’t really deserve a spot at the table once they’ve finished clearly communicating their design and performance criteria (which is what the scoping documents are for).

It can be an awkward thing trying to incorporate a client who wants to be involved, while making sure that client doesn’t request anything above and beyond what is strictly communicated in the scoping documents upon which the GMP is based.

So the key differences between this Integrated Design-Build and full Integrated Project Delivery are:

  • The contract model (a multi-party agreement between Owner, Architect and Contractor vs. an agreement between owner and usually the contractor)

  • The level of owner participation in the decision making process

  • The fee structure and certain waivers of liability (shared risk) between the owner and the other key project team members.

Delivery model diagrams

Figure 2: Traditional design-build is hierarchical in nature. An integrated design-build model is collaborative in nature (but only partially integrates with the owner). An IPD model is fully collaborative with the owner and may or may not include consultants and sub-contractors inside the circle of shared risk & reward, depending on the project.

The IPD contract form of agreement is aimed at changing behaviors, and its contractual structure exists to prompt, reward, and reinforce those behavior changes.  However, full scale IPD is not right for every owner or project; it is another tool in a team’s tool box.  The owner and its consultants and counsel should determine the best delivery method for the project and proceed accordingly.  The important thing to remember is that any delivery model can be adapted to be closer to the ideal collaborative model by making certain critical changes.  What is one thing you might change on your next project to prompt better collaboration?


[1] Under IPD, a Target Cost is set early (similar to a GMP).  If costs exceed that target, it comes out of the design & construction team’s profits.  But if costs go so high that the profit pool is exhausted, the owner picks up the rest of the costs.  If costs are lower than the target, the owner and the team split the savings.


Lisa Dal Gallo

Lisa Dal Gallo is a Partner at Hanson Bridgett, LLP, specializing in assisting clients in determining the best project delivery method to achieve the teams’ goals, developing creative deal structures that encourage use of collaborative and integrated delivery processes and drafting contracts in business English.  She is the founder of California Women in Design + Construction (“CWDC”), a member of the AIA Center for Integrated Practice and the AIA California Counsel IPD Steering Committee, and a LEED AP.  Lisa can be reached at 415-995-5188 or by email at ldalgallo@hansonbridgett.com.

 

 

 

Oscia Wilson headshotOscia Wilson, AIA, MBA is the founder of Boiled Architecture.  After working on complex healthcare facility projects, she became convinced that Integrated Project Delivery (IPD) was key to optimizing construction project delivery.  She founded Boiled Architecture to practice forms of Integrated and highly collaborative project delivery.  She serves on the AIA California Council’s committee on IPD.

via http://www.4Clicks.com – Premier cost estimating and efficient project delivery software ( JOC, SABER, IDIQ, MATOC, SATOC, MACC, POCA, BOA… featuring an exclusively enhanced 400,000 line RSMeans Cost database with line item modifiers and full descriptions and integrated visual estimating/QTO, contract/project/document management, and world class support and training!

Job Order Contracting – JOC – is a proven form of IPD which targets renovation, repair, sustainability, and minor new construction, while IPD targets major new construction.

IPD - Integrated Project Delivery and JOC - Job Order Contracting
IPD – Integrated Project Delivery and JOC – Job Order Contracting
JOC Process
JOC Process

BIM graphic #6

Collaboration, Transparency, Accuracy, Process, and supporting Technology – The Keys to Improved Productivity for Building Construction, Renovation, Repair, and Sustainability

Interoperability is a common “buzzword” used whenever you here a discussion about improving productivity with the AECOO (Architecture, Engineering, Construction, Owners, Operations) industry sector.  Unfortunately, it is a term associated with primarily with technology, and its usage implies that interoperability from a technology perspective is a major, if not THE major stumbling block to construction sector productivity improvement.  This “assumption” would be blatantly false.  Drastic culture and process are the requirements for mitigating waste within the AECOO sector.

The primary issue that dictates the tone and efficiency of any facility construction, renovation, repair, or sustainability project is process related… and is “the construction project delivery method”.  Assuming capable parties in each “knowledge domain” the delivery method must provide for, support, and monitor collaboration, transparency, and accuracy.   Common taxonomies, cost data bases, etc. play a role, as does supporting technology that embeds and distributes consistent processes.   While its true that cloud computing is an enabler, with its role to support the cost effective integration of various knowledge domains and technology silos; the underlies processes linked to a collaborative project delivery method focused upon life-cycle management is the critical aspect.

Integrated project delivery (IPD) and job order contracting (JOC) – the latter also referred to as IPD-lite as it target renovation, repair, and sustainability vs. new construction – are current examples of proven efficient construction approaches that dramatically alter the “status quo”.

Common taxonomy plays a key role and is also generally overlooked.   For example, cost estimators, even today, primarily rely upon spreadsheets and customized cost databases vs. integrating powerful software packages and standardized cost databases (ie RSMeans).   “Doing it my way” and exclusively using spreadsheets prohibits efficient information reuse, is prone to data and formula errors, and create largely unsupportable databases.   How can multiple cost estimators share information on a project, or communicate with Owners, Contractors, AE’s, Subs, etc… if they aren’t speaking the same language?  They can’t… and they don’t.  And this is just one example of many…across multiple knowledge domains whether it be capital planning and management, maintenance and repair management, building automation systems, procurement, bidding, project delivery, …..

(Figure Source – White Paper on IDDS “Integrated Design and Delivery Solutions”, CIB Publication 328.)

The AECOO sector can’t even begin a discussion about achieving higher levels of interoperability, exchanging BIM models and data, etc., until it shifts its focus exclusively to culture and process change.  We don’t even have a common understanding of BIM, let alone sharing BIM models.  Even today, many view BIM as 3D visualization, vs. life-cycle building management supported by technology!  We need to recognize that design-bid-build (DBB) and even design-build (DB) and the associated “accepted” practices of change orders and lawsuits are contrary to the basic tenants of productivity, collaboration, transparency, and accuracy.

Certainly it is true that our industry is fragmented and relatively slow at adoption of new technology, however, this is due to our culture, and our lack of efficient processes.

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