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Constructing integrated project delivery

By Peter G. Furst

Executive Summary
While project management is as old as civilization, improving productivity in construction projects has been difficult. Much of that comes from the adversarial relationship between the owners, designers and builders. Integrated project delivery overcomes these barriers by creating a system that integrates people, operational process, business practices and organizational systems into a collaborative framework.

Project delivery methods have been used since early civilization. The great cathedrals and castles of the Middle Ages were designed and built by master builders without complicated contracts or schedules. The project delivery method is a system used by owners to affect the design and construction of buildings and structures they may need. Before the 1930s, some major transportation and infrastructure projects in the United States were built using a more integrated approach than that used by some private and many public agencies today. The project delivery process commonly used is the design-bid-build method. There are a number of project delivery methods, and the choice of the method depends on the project owner’s sophistication, staff know-how, project management capabilities and desire to get involved in the building process.

Construction as an industry has not seen much in productivity improvement for at least half a century, and maybe longer. This can be attributed in some respects to the fact that an adversarial approach to relationships has developed between the key players in the field: the owners, designers and constructors. A key instrument in this process is the contract. Most contracts are written with the intent of transferring every possible risk to the other party. Though some efforts are made at cooperation, ultimately everyone is looking out for number one. This win-lose attitude creates inefficiencies, hinders cooperation, generates waste and hampers the creation of value. Searching for a win-win solution (Figure 1) is optimal.

The process generally starts with the owner determining the need for a building or structure. The owner often has a budget for the project and also a time for its completion in mind. The owner engages the service of an architect to design the facility and produce a set of documents (drawings and specifications) that a contractor can use to build it. After the documents are completed, the owner solicits bids from contractors to build the project. The owner receives the bids, makes a selection and executes a contract with the successful contractors for the construction of the project based on the plans, specifications, cost and schedule.

Project delivery methods

Over the years, various project delivery methods have been employed to facilitate the constructing of buildings. The method described above is design-bid-build and can be considered the traditional project delivery method.

Design-bid-build using construction management, design-bid-build fast track using construction management, and the design-build process are other project delivery methods (Figure 2).

Construction management has a number of variations such as pure construction management, construction management at risk, construction management at risk with design assist and more. Construction managers usually are engaged where the owner does not have the capability or desire to manage the construction process effectively. This company provides another layer of oversight. The construction manager may provide design estimates as the design develops to ensure that the project’s costs fall within the owner’s established budget. The construction manager may assist in reviewing the design details and making suggestions on the constructability of the design. The construction manager also will oversee the contractors to ensure that they are building the project in accordance with the contract requirements. There may be a general contractor involved or the construction manager may hold contracts with multiple prime contractors and subcontractors.

Design-bid-build fast track using construction management allows the construction process to start before the design is completed. This saves considerable time and has some potential to reduce costs. The process increases variability and uncertainty; as a result, it requires greater coordination and oversight of the design and construction process. The project budget requires contingency money to cover the development of the final design. This process also requires a greater amount of communication and cooperation to work through some of the issues that arise from the accelerated process. It also increases the potential for difficulties and possible claims.

Another project delivery method is the design-build process. This method of project delivery starts with the owner giving the contractor performance specifications or a conceptual design for its required facility. The contractor then hires an architect to design the facility for the contactor to build. This method has built-in efficiencies, the owner has little involvement, but the criteria for the final building must be well-thought-out and defined so that there are no misunderstandings down the road. There are some variations in the design-build concept, including design-build-operate and design-build-operate-maintain. Design-build-operate-maintain is used more extensively in Europe and other parts of the world and is in its infancy in the United States. It is also known as public-private partnerships (PPP or 3Ps).

Improvement evolution

Sometime in the 1980s, partnering was introduced to try to get the parties to work toward the common goal of cooperating and understanding each other’s needs and limitations so as to facilitate a smoother project delivery process. Owners did not change the contracts, thereby still transferring as much risk as possible. But the parties tried to work together more effectively by using partnering techniques to get the parties to cooperate and work toward improving communication and, ultimately, the project results. But the conflict between the contractual position and the desired cooperation did not work too well in practice, though there were examples of effective implementations.

In the early 1990s, thought leaders started exploring the application of lean thinking, which was very successful in the manufacturing arena, to construction practices. Lean thinking is about efficiency and waste minimization, and the construction process was rife for such improvement. Some of the more innovative construction firms started practicing lean construction. As a result, some construction operational inefficiencies were identified, addressed and minimized, resulting in more cost effective operations.

Large owners who built and maintained facilities started questioning the wisdom of the design-bid-build process and all the variations that were introduced during the last 50 years. In spite of best efforts, many projects experienced delays, budget overruns, less-than-stellar quality and friction between the three key parties. This sometimes led to emotional disagreements, and the parties resorted to arbitration or legal action. In those cases, no one really won as time and resources were expended in making their cases in court. Owners started looking for a process that consistently would produce buildings of higher quality within budget and on time with fewer disruptions and problems.

And so the integrated project delivery process (IPD) emerged as a way to organize the delivery of construction projects. IPD uses lean thinking and partnering concepts to improve communication, reduce variability, address participants’ expectations, eliminate waste, cut costs, improve productivity and generate value for all the participants through the design, procurement and construction process. IPD accomplishes this by integrating people and organizational systems as well as business procedures and operational practices into a collaborative framework, generating win-win results.

Project management

Project management involves the application of knowledge, skill, and the use of tools and know-how to lead, coordinate and control construction activities of a diverse group of entities and people with competing demands and expectations. The goal is to complete the project within the contract parameters. The contract parameters usually involve scope, time, cost and quality. In negotiated contacts, project participant relationships and owner satisfaction are also a key factor.

Traditionally, project management involves developing a project schedule, determining the activities, preparing a logistical plan, creating an estimate, resource loading the schedule and manipulating the logic ties to shorten the critical path and, therefore, the project duration. With this completed and accepted, the next step is to implement the plan and monitor its progress. Project managers must ensure that resources and information are available when needed and that activities start as required. They must deal with change, failure to meet promises, barriers to flow, revisions, requests and outside restraints.

Project management as traditionally defined is somewhat inadequate to meet the expectations of present-day owners. It will become increasingly inadequate due to increased acceleration of project schedules, complexity, variability and uncertainty. The traditional project management control resides with a central authority, is dependent on the schedule to manage resources and coordinates the construction effort. One of the key issues is that the project operations are driven by the contract and the schedule that is a part of the contract (Figure 3).

The information necessary to support the field operations is managed through an informal process because the contactor requiring the information does not have a contract with the designers who hold that information. This has to be managed at the owner, architect contractor weekly coordination meetings, and the contractor has to depend on the owner to motivate the designers to respond in a timely fashion (Figure 4).

The traditional project management process has a high level of uncertainty because of the contractual relationships. In addition, project delays will force overtime, and little or no analysis of its impact on complexity will be made. Another deficiency is that individual activities initiated to show progress may not have a direct link to efficient implementation with an eye on ultimate value creation. Traditional project management, like mass production in factories, focuses on speed of individual activities that convert inputs into outputs, which allows defects to move along the production line to keep production moving. To remedy some of these deficiencies, lean thinking in the form of a lean construction system is the solution.

Lean construction

The lean construction process is a production management approach to project delivery. When applied to construction, lean thinking changes the way work is done throughout the project delivery process. In construction, traditionally, the primary focus is on time (schedule) and money (budget), which are resources that are expended, while conversion is value generating. Lean construction utilizes the lean production system approach used successfully in manufacturing in order to maximize efficiency, flow and value while minimizing waste. Lean is about improving the whole system by optimizing design, supply and assembly (manufacturing) rather than individual activities and, as a result, generates superior value and exceeds customer expectations.

An element of manufacturing is conversion in order to create value. Besides the conversion process mentioned above, there is also a flow process that gets information and materials to where they are needed as well as the value creation process for the customer, owner or stakeholders. Traditionally, conversion has been the focus of construction management with little attention paid to flow. As a result, flow has not been managed or improved in an orderly fashion, which resulted in variability in the process, uncertainty in availability and delivery, as well as the utilization of non-value-adding activities, all leading to reduction of value creation. Lean construction addresses all three processes and, as a result, creates output more efficiently and with minimal waste. To date, in construction much of the lean thinking application has been in the waste reduction arena.

Lean construction requires the exchange and sharing of expertise and information between the owner, the designer and the contractor to identify the most effective means of producing the owner’s envisioned output. This process requires that the owner be informed of the consequences of its desired output within the given budget and time parameters. The designer and contractor share information that may result in the selection of different design elements or means and methods. All parties may make modifications after understanding the process constraints resulting in greater efficiency, less waste and the creation of “best” value.

There are two primary methods to manage flow: push or pull. In construction, flow is managed primarily through the schedule (push), with a focus on predetermined contractual obligations. Pull tends to be the more efficient method. In construction, there are some things that are “pulled” with ready-mix concrete being the most obvious, but generally push is the employed and preferred method. When the information required for timely conversion is available beforehand, designers and contractors can coordinate activities and tasks so as to do them more efficiently. Given complexity of the supply chain and the enormous amount of coordination required along with the readiness to accept material for installation, a combination of both push and pull makes sense for construction.

Partnering

Construction managers have been using a project team-building process called “partnering” for more than two decades. It is a method that provides a unique structured process for team building, working cooperatively, communicating needs and expectations as well as resolving conflicts and misunderstanding. It has been used with some success since the late 1980s. Both the Construction Industry Institute and the Associated General Contractors of America issued material on the partnering process. Many federal, state and public agencies as well as private parties have used the process with some success. Some of these agencies have tracked more than 1,700 projects in which partnering was implemented and have reported substantial time and money saved with fewer disputes and resulting claims. These results were achieved on contracts valued at more than $5.5 billion in cost.

As a result of reported success stories, many agencies have implemented strategies to utilize partnering on all projects over a certain budget threshold. Some have created steering committees to promote and guide the process. Some agencies have made partnering mandatory on all their larger projects; they have set up workshops to assist contractors and subcontractors to understand better how to use the partnering process successfully. It looks like partnering, as a means of cooperation between owners and contactors for improving project relationships and results, has some large governmental buyers of construction committed to its value and utility.

The focus of partnering is to reduce project cost and project duration. Partnering aims at improving the quality of the work. The partners strive to reduce claims, disputes and misunderstandings. The underlying goal is to improve end-user satisfaction and create value. Some additional benefits of partnering have been that such projects tend to be safer with fewer worker injuries reported. And there have been improved environmental results as well.

Any operation can be reduced to its most elemental state. Every organization produces a product or service. It has internal processes with which to produce the service or product. And it has people to run, manage and control the processes with which to produce the outputs. Lean is all about making the system efficient and reducing waste, but it does not do much about motivating people to contribute their discretionary effort to maximizing the value generated by the “whole” system. Partnering does some of that and as a result helps the process generate optimum value.

Integrated project delivery (IPD)

The traditional design and construction industry is flawed, fragmented and focused on transferring rather than sharing risk. It has many processes, procedures and practices that are outdated and breed a negative value for property owners, contractors and designers. In this state of affairs, liability is high, accountability is low and value is destroyed. IPD relies on careful participant selection and takes the best of project management, lean construction and partnering to create a system that integrates people, operational process, business practices and organizational systems into a collaborative framework that harnesses the talents and insights of all participants to optimize project results, increase value to the owner, reduce waste and maximize efficiency through the design, fabrication and construction process.

One of the key elements that allows IPD to function effectively is the multiparty agreement. Such projects have one contract for the entire project entered into by all the key parties (owner designers and contractors), unlike traditional construction contracts that try to transfer risk to the other party resulting in adversarial and fragmented relationships. The intent of this document is to maximize collaboration through risk and reward sharing, thereby encouraging collaborations in order to reach a common goal. The project has one contingency that is drawn down by mutual agreement, and savings are shared by all the parties.

The use of BIM (building information modeling) and other 3-D tools facilitates the visualization of the design intent as well as exploration of physical and functional characteristics. This facilitates accuracy, open communication and problem solving, reduces waste, and allows all team members to contribute to the project design. The contractor can utilize BIM to verify quantity surveys, visualize construction processes and detect clashes resulting in reduction of waste, greater productivity in the field, and potential overall cost lowering. The IPD process increases the level of effort during the design phases, resulting in reduced documentation time, improved cost controls and budget management, all of which increase the likelihood that project goals including schedule, life cycle costs, quality and sustainability will be achieved.

The IPD concept, if implemented with the intention of sharing risk, expertise, information, and working as a fully integrated team, should minimize or eliminate some of the typical problems and barriers encountered in the traditional construction process, such as cost overruns, schedule delays, conflicts, operational inefficiencies, quality issues, low productivity, adversarial relationships, etc. IPD should eliminate the two biggest forms of construction waste – work waiting for people and people waiting for materials.

Peter Furst is a registered architect, author, motivational speaker and university lecturer. He has consulted for about 10 years with architects and engineers as well as construction, service, retail and manufacturing organizations. Furst has more than 20 years of construction experience with a multinational general contractor, serving as estimator, superintendent and project manager. He earned a bachelor’s degree in construction engineering, a bachelor’s degree in architecture (professional degree), as well as an M.B.A. from California Polytechnic State University.

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