Improving Project Outcomes Through IPD
Over the course of the last half century, businesses and industry have made huge advances in improving the production process. Almost universally, our world today is typified by high speeds, low costs, and reliability in manufacturing. Yet it’s no secret that unlike manufacturing, the built environment in general continues to suffer from overruns related to cost and schedule, and the consistent need for rework. In fact, researchers have found that the average medium-sized construction project ($30 million – $300 million) will overrun its project budget by 8 – 15%, and that as much as 30% of all construction work is rework. Clearly the industry has an expensive problem; fortunately, forward-thinking construction management firms are taking lessons from other industries and developing innovative ways to accelerate schedules, reduce overall waste, improve quality, and drive costs down. Within the last 10 years, this has led to the increased adoption of Lean Construction, and by extension, a newer form of project delivery known as “Integrated Project Delivery,” or “IPD.”
Originally developed to increase efficiency and eliminate waste in manufacturing, innovative construction managers have brought Lean practices into the construction industry. Lean thinking is meant to challenge the notion that there must always be a trade between time, cost and quality, by rethinking how we deliver construction projects. In short, Lean thinking analyzes the processes used throughout all phases of construction, from preliminary design through completion, in order to root out inefficiencies and maximize resources. Instead of adopting a reactionary approach that simply measures production, Lean construction managers are proactive, adjusting the project approach in real-time. If the traditional approach is to wait until the boat is underwater to start bailing out, the Lean construction approach focuses on making small adjustments to keep the ship level at all times.
What is Integrated Project Delivery?
Integrated Project Delivery (IPD) is defined by the Lean Construction Institute (LCI) is “A project delivery approach that integrates people, systems, business structures and practices into a process that collaboratively harnesses the talents and insights of all participants to reduce waste and optimize efficiency through all phases of the project, from the early design through project handover.” (Don’t Conform, Transform! LCI 2018)
In more plain terms, with IPD it’s all for one, and one for all. IPD in the built environment brings together the owner, architect, contractor, and key skilled trades partners in a form of contract that creates a shared risk/reward, creating incentive for each part of the team to ensure the overall success of the project, not just their component. Because it’s designed with the specific goal of eliminating inefficiency and reducing waste, IPD is a natural extension of Lean Construction, and many of the principles of Lean Construction are the building blocks of IPD; in many circles, the two have become in some ways almost interchangeable in discussion, whether or not an official IPD contract is in place.
But IPD isn’t just a contract or even a methodology, it’s really more of a culture – a state of mind. It might sound obvious, but in order for Integrated Project Delivery to succeed, team members have to actually integrate as a team. This means putting aside ideas of narrowly-defined project roles (I design, you build), and collaborate from Day One.
“It’s no surprise that IPD scares a lot of contractors who have been comfortable for so long with the ‘business as usual’ approach of the traditional design-bid-build model. For a long time they’ve only had to worry about their own slice of the pie and not the overall success of the project,” says CG Schmidt Vice President Mark Lillesand. “Lot of firms don’t have the culture in place needed to handle that team-first thinking.”
Starting on the Right Foot: The Project Charter
Once a team representing the diverse disciplines is assembled, the next step is to align the team and form what’s known as a project charter. At its core, a project charter does two things. First, it answers the “Who/What/Why” of the project. Some of these questions include:
- Why is this project being undertaken?
- What does project success look like?
- What are the client’s values?
- Do we have the right people in place on the project?
- Do we have the right tools, software and systems in place to integrate the team?
- How can we enhance the project’s image? Quality?
- What typical activities don’t add value to this project?
- Where can we optimize the supply chain to enhance project value?
Secondly, the charter lays out the ground rules to govern how this team interacts, communicates, and resolves potential conflicts – including when and how a team member can be replaced. Once codified, the charter can be referred to throughout the project.
“Our focus on any Lean or IPD project we’ve been a part of has always been to start with the “Why” of the project. Understanding the client’s goals, whether they are related to safety, quality, budget and schedule, or even community engagement and operational efficiency, allows CG Schmidt, and the team as a whole, to define success and focus our resources accordingly,” says Mark Lillesand.
Defining Client Values: Aurora 84South Clinic
When CG Schmidt served as the Construction Manager for Aurora Healthcare’s new 84South Clinic, one of the first actions taken by the integrated project team was to clearly define the client’s key goals to determine how the team would measure success. As the conversation with the ownership team developed, it became clear that a primary concern for the client was being able to start seeing patients as soon as possible. Understanding this goal led the team to focus their efforts on using Lean Construction Methods to accelerate the project’s schedule. Without this clear understanding and alignment of goals, a well-intentioned team could focus on areas like reducing the budget, thinking they were achieving success, but only by their definition, not that of the client.
Target Value Design (TVD) – Continuous Estimating
The traditional design-bid-build is a strictly linear process where estimates are created for initial designs, requiring redesign to negate overruns. It’s an incredibly inefficient system and one notorious for design delays, excess cost, and frustration as valued design elements are “de-value-engineered” for the sake of cost. By contrast, Target Value Design is an iterative, collaborative system that brings together designers, builders, trade partners, and owners to develop a design that is focused on enhancing overall value.
The process itself is fairly simple to follow. The owner establishes an “Allowable Budget” for the project – the amount that cannot be exceeded. The team as a whole then formulates an “Expected Budget” based on team discussions, the goals outlined in the previous section, building system historical costs, and preliminary design concepts. Then the team comes together in a practice called “collocation,” which is another way of saying “sits in the same room at the same time to work on the project,” as design decisions are made and the program is defined.
Rather than estimate in isolation based on a detailed design, design is based on a detailed estimate and created as a group, face-to-face.
While designs are being made, the building team and trade partners provide continuous cost estimates for the designs and make suggestions on items like materials, systems, and project staffing/scheduling to maintain the overall budget without reducing value.
Trade Management Partners (TMP)
Trade Management Partners are key trade contractors and suppliers who are engaged early in a project and integrated into the design process on a Design-Build or Design-Assist basis. This replaces the typical approach of subcontracting, where skilled trades like Electricians and Plumbers are contractually subordinate and hired on a hard-bid basis after drawings are complete. Instead, TMP brings them to the table as valued experts and TMPs provide detailed information early in the project, enabling the team to make value-based decisions, maximize scheduling efficiency, and ensure that the systems are designed in a way to maximize value. Utilizing TMPs increases project quality, avoids expensive rework in the field, reduces schedules, and with BIM collaboration, increases communication and project understanding.
“I think the Trade Management Process is one that we will utilize for most projects moving forward. I can’t really imagine doing it any other way,” says EJ Herr of Advocate Aurora Health.
TMP: Prefabrication for a Safer, More Efficient Jobsite
At the Advocate Aurora Health Center – 84South project, our team included Staff Electric and JF Ahern as Trade Management Partners. Through the utilization of these TMPs in a collaborative and proactive approach, we were able to increase quality, reduce costs and increase safety through the use of prefabrication.
“The collaboration with the BIM team, engineering team and the contractors was fantastic. There’s absolutely no way we could have done prefabricated racks in this fashion, at this speed, without a TMP on board.” Cory Powers, Engineering Project Manager, HGA
How many times have you been stuck in a seemingly endless email chain or caught in a game of phone tag and thought “if I could just get everyone together for five minutes, we could easily figure this out.” Colocation – colloquially known as the “Big Room” approach – is just that. Colocation is the idea that when partners are in the same room, working collaboratively on a project, that communication is enhanced, potential issues are spotted and addressed faster, and creativity is improved. And because decisions happen in real-time, with all members physically in the room, accountability between stakeholders improves.
At the Uline H2 project in Pleasant Prairie, the team made the commitment to colocate for key project meetings. Being in the same room when decisions were made, being able to ask and answer questions face to face, and diverse expertise led to a 30% reduction in RFIs, accelerating the schedule, and allowing the team to put in place over $3.9 M of construction per month.
Last Planner System
Unlike the previous Lean concepts, the Last Planner System is a little more complex but it has extraordinary potential to uncover potential roadblocks to efficiency. The Last Planner System (LPS) is a means of production control, designed to make workflow more predictable and effective by flipping the typical approach to scheduling on its head. The Last Planner System itself is organized into five sections: Master Planning, Phase Planning, Make-Ready Planning, Weekly Work Planning, and Learning. In order to work, each step of the system must be followed precisely.
1) Master Plan
The Master Plan identifies major milestones, usually completion dates and release dates for the purchase of long-lead-time items, that need to be hit in order to have a successful project. Once these major project milestones are in place, Phase Planning begins.
2) Phase Planning
During Phase Planning, Last Planners take two milestones established in the Master Planning phase, and using a series of “Pull Sessions,” begin to develop a plan for scheduling the work between those two points. With every trade and partner represented in the same room during these exercises, the group methodically builds the project backwards, making promises to each other on the time that it will take to complete each activity.
3) Make-Ready Planning
As the project goes on the sessions get into more detail, constraints are revealed. “Constraints” are any condition that will prevent a planned task from being completed. This could be a lack of material, labor shortages, permits needed, or even weather. As a team, Last Planners log each potential conflict, or constraint, and develop plans to mitigate it, with the understanding that, like dominos, each activity is dependent on the one before it.
4) Weekly Work Planning
Like the name suggests, in this phase each Last Planner develops a plan of the activities their team will complete for the following week. Having this level of micro-planning and tracking in place for the entire Last Planning Team allows them to quickly assess potential roadblocks or constraints, and adjust to keep the flow of the project even and reliable, something that is critical for maximizing cost and efficiency.
Using the Last Planner System, our teams are regularly able to uncover and eliminate potential roadblocks and inefficiencies, reducing traditional schedules by up to 20%
BIM and the One-Model Approach
One of the most innovative and exciting realms of the built environment in the last ten years, and even the last five, has been in Building Information Modeling (BIM). Largely gone are the days of 2D paper blueprints and drawings, replaced with digital drawing sets and 3D models, often incorporated into 4D, 5D or even 6D schedules. This technology enables designers, engineers, and builders to reach new levels of precision, more easily share information, and detect potential flaws in drawings well before they would become costly issues in the field. It’s a perfect example of IPD and Lean Construction in action.
However, with each trade and discipline developing their own model in-house, not only is there the potential for a great deal of waste as models are redesigned or reworked, often each firm will have multiple versions of each model. Project teams can quickly find themselves with too many models, and mistakes and miscommunication can easily happen.
In response, innovative IPD teams are more and more utilizing a “One-Model Approach” to Building Information Modeling. Rather than the “federated model” approach, where individual models are developed separately, then imported into a single piece of software, with “One-Model” each trade’s model is set up as a workset within a shared model. This ensures version control, enhances communication, eliminates wasteful rework, and gives each team member access to rich data.
Mark Lillesand states, “We’ve seen amazing results simply by working within 1 BIM model with our entire project team. These results include reducing RFI’s, shortening the schedule timeframe from design to fabrication, therefore saving money.” Before the project even begins, BIM standards are established, along with a collaborative approach for design coordination including subcontractor prepared shop drawings.
IPD: Is It Right for Us?
As you can undoubtedly see, Lean and an Integrated Project Delivery has enormous potential to revolutionize the built environment, reducing waste, shortening schedules, enhancing quality, and maintaining budgets. BUT, as we said in the beginning, IPD is not without risks. With traditional designer/builder/subcontractor/owner contractual arrangements, each party has a certain amount of insulation from the other parties and can potentially succeed or fail on their own regardless of how well the project goes as a whole, similar to receiving an individual grade on a group project in school versus being graded as a group. Giving up that kind of control and the comfort that goes with it in exchange for the potential to improve the overall project is daunting, especially if you haven’t worked with the rest of the IPD team before. This is truly an environment where trust between team members is paramount.
And ultimately, the inherent risk may not always equal the potential for reward or the time and effort that goes into the planning stages, especially on small, relatively simple projects, like small remodels, where there may just not be much that can be done to drastically improve the project. With that in mind, what projects do lend themselves well for Integrated Project Delivery? In our experience, projects that can derive the most benefit share these characteristics:
- Projects that are large or technically complex
- Projects that are high-profile in nature
- Projects that have high risk for occupancy dates
If your project falls under one of these categories, there’s a good chance that Integrated Project Delivery can yield substantial benefits. Still unsure if IPD is right for you, or where to start? Contact one of our IPD experts today and have your questions answered.