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Lessons Learned in the
Development of a Framework
Funded By:
AIA Academy of Architecture for Health Foundation
HKS
Boldt
Supported by:
Akron Children’s Hospital
Value Analysis of Lean IPD and TVD
Di Ai, MS (Estimation)
John Bienko, AIA (Project Management and Design)
Upali Nanda, PhD (Design Research)
Zofia Rybkowski, PhD (Construction Management)
Funded By:
AIA Academy of Architecture for Health Foundation
HKS
Boldt
• TVD (Target Value Design) and Lean
approaches to IPD (Integrated Project Delivery)
• Advantages and challenges of using Lean
thinking in the IPD process.
• Definition of “value” and quality metrics.
• Framework for cost/benefit assessment based
on metrics currently tracked.
• Exploration of implicit costs and benefits
• Extensive documentation
• Transparency
• Input from multiple stakeholders
• Advantages and the challenges of lean thinking
• Definition of “value”
– explicit benefits and costs that are currently reported/ tracked?
– What are the benefits and costs that are currently implicit (not
measured/reported)
• Framework for benefit-cost (B/C) and/or Return On
Investment (ROI) calculations
• Tracking the benefits/costs related to design decision
making to enable an ROI for both first costs and
operational costs?
• Archival Data via E-Builder
• Site Visit
• Interviews (7)
• Focus groups (16 + 4)
• Survey (49 of 79)
OAEC*
Current state 2P
D
C
A
Current state 1
Future state 2
Current state 3P
D
C
A
Future state 3
Current state 4P
D
C
A
Future state 4
P
D
C
A
Future state n+1
Future state nCurrent state n
OAEC
OAEC
OAEC
Time à
C U L T U R E o f R E S P E C T
waste value
*OAEC: Owner Architect Engineer Constructor (collaborative)% o
f C
AP
ITA
L
CO
ST
Tim
eC
ost
Qu
alit
yS
afet
yM
ora
le
Min
imum
Max
imum
Min
imum
Max
imum
Min
imum
Max
imum
Min
imum
Max
imum
Min
imum
Max
imum
Lean Construction reduces waste and adds value using continuous improvement in
a culture of respect
Adapted from Rybkowski, Z. K., Abdelhamid, T., and Forbes, L. (2013). “On the back of a cocktail napkin: An exploration of
graphic definitions of lean construction," Proceedings of the 21th annual conference for the International Group for Lean
Construction; July 31-August 2, 2013: Fortaleza, Brazil, 83-92.
VALUE = What you get (benefit)
What you give (cost)
Saxon (2005)
Value is greater than 1 when Benefits exceed Cost and less than 1 when
Costs exceed Benefits. We need to consider time value of money.
Target costing as “a system of profit planning and cost management that ensures that new products and services meet market determined price and financial return.” (Ansari, 1997)
Allowable Cost
Target Cost
Est
imat
ed C
ost
Time
Progressive reduction of estimated first cost during Target Value Design
after Rybkowski (2009)
Movement of funds across system boundaries during Target Value Design
after Rybkowski (2009)
Example of movement of funds across system boundaries during Target
Value Design, Cathedral Hill Hospital, Sutter Health, after Rybkowski (2009)
TVD is a management practice that
motivates designers to deliver customer
value and develops design within project
constraints (Ballard, 2009)
All Projects
Non TVD Projects
TVD Projects
Profit
Contingency
Cost of work
UncertainityMiscommunicationMissing DetailMiscoordinationChange OrdersLack of TrustLitigation
UncertainityMiscommunicationMiscoordination
TrustCollaborationAligned IncentivesEarly involvementCoordination with BIMCross d isciplinary problem solvingProject GovernanceSteering design to target valueCo-locationPrior working relationshipsLearning as a teamTransparency
Total Project Budget
Cost Control Mechanism Adapted from Do, 2014
But how is “value” assessed?
Predesign Schematic Design Construction Agency Permit/ Construction
Design Development Documents Bidding
Conceptualization Criteria Detailed Implementation Agency Coord/ Construction
Design Design Documents Final Buyout
1
2
4
3
1
2
4
3
Ability to impact cost and function
Cost of design changes
Traditional Design-Bid-Build process
Integrated Project Delivery Process
TRADITIONAL
DESIGN-BID BUILD
INTEGRATED DESIGN
DELIVERY
P R E – C O N S T R U C T I O N S E R V I C E Sco
mm
on
un
der
sta
nd
ing
SD DD CD
Architect hired
Engineers hired
CM/GC hired
time
CONSTRUCTION
Major trades hired
Government review
≤ 100%
P R E – C O N S T R U C T I O N S E R V I C E S
com
mo
n u
nd
erst
an
din
g
SD DD CD
Architect hired
time
CONSTRUCTION
Government review
100%
Engineers hired
CM/GC hired
Major trades hired
Reprinted with Permission: Will Lichtig
• Akron, OH
• 4,619 employees
• 780 Medical Staff
• Gold Seal of Approval from the Joint
Commission
• Magnet Recognition Status from
American Nurses Credentialing Center
• 2,854 transports/509 air in 2012
• 20 Primary Care office network
Innovation
production
workshops
TEAM STRUCTUREOwner
Owners Representative
Architect
Construction Manager Partnership
368,000SQUARE
FEET
39ROOM PEDS
ED
6OPERATING
ROOMS
75BED NICU
Lot of scope for small budget
PROJECT SCOPE
the old way versus the new way
DESIGN PROCESS
Predesign Schematic Design Construction Agency Permit/ Construction
Design Development Documents Bidding
Conceptualization Criteria Detailed Implementation Agency Coord/ Construction
Design Design Documents Final Buyout
1
2
4
3
1
2
4
3
Ability to impact cost and function
Cost of design changes
Traditional Design-Bid-Build process
Integrated Project Delivery Process
TRADITIONAL
DESIGN-BID BUILD
INTEGRATED DESIGN
DELIVERY
TEAM STRUCTURESometimes you have to plan innovation
•
•
•
•
•
•
•
DECISION MAKING
STRUCTURE
Ambulatory Care Center and Critical Care Tower
BACKGROUND
CURRENT STATE
ANALYSIS
GOAL
FUTURE STATE
IMPLEMENTATION PLANUNRESOLVED ISSUES IM
PA
CTS
PLAN
AC/DECIDE
Ambulatory Care Center and Critical Care Tower
BACKGROUND
CURRENT STATE
ANALYSIS
GOAL
FUTURE STATE
IMPLEMENTATION PLANUNRESOLVED ISSUES IM
PA
CTS
PLAN
AC/DECIDE
Ambulatory Care Center and Critical Care Tower
BACKGROUND
CURRENT STATE
ANALYSIS
GOAL
FUTURE STATE
IMPLEMENTATION PLANUNRESOLVED ISSUES IM
PA
CTS
PLAN
Ambulatory Care Center and Critical Care Tower
BACKGROUND
CURRENT STATE
ANALYSIS
GOAL
FUTURE STATE
IMPLEMENTATION PLANUNRESOLVED ISSUES IM
PA
CTS
PLAN
PLAN
DO/RESEARCH
CHECK/CBA
AC/DECIDEAC/
DECIDE
ACT/DECIDE
ADVANTAGES
ADVANTAGES
ADVANTAGES
ADVANTAGES
ADVANTAGES ADVANTAGES ADVANTAGES ADVANTAGES
•
•
•
•
• Original Estimate at validation 211 million
• Target Cost 180 million
• Revised Target Cost (after scope change)
182.5 Million
• Current Target Cost 177 Million
• TOTAL PROJECTED SAVINGS: 5.5 Million
Allowable Cost
Target Cost
Est
imat
ed C
ost
Time
SAFETY
Goal: Deliver the project safely with 0 Lost
Time, 0 Days Restricted/ Transferred
(Based on the DART rate from the Bureau
of Labor Statistics). DART Rate 2.2 is the
National Average for the working trades
involved in healthcare projects.
LOCAL
PARTICIPATION
Goal: 85% of (ICL) project
team labor hours spent by
people living, as defined
by their W-2, in certain
counties. Participation is
considered for all workers,
not just ICL participants.
ENERGY EFFICIENCYGoal: Achieve top 10% hospital nationally.
LEED®
Goal: Achieve LEED Silver certification
TEAM PERFORMANCEGoal: Highly Effective Team –
Team Pulse Check
SCHEDULE
Goal: Turn-Over Building
50 Calendar Days Sooner
than 24 Month Schedule to
Owner for Move-In
QUALITY
Goal 1: Want Team Approach to Resolving
Project Issues Quickly & Efficiently Through
Collaboration
Goal 2: Want Project Team To Take Pride In
Producing Quality Work
Goal 3: Want Collaborative Team Approach
In Designing & Constructing the Project.
STAFF AND FAMILY
SATISFACTION
Goal 1: Staff and Family that have been integral
to the process and a driving force throughout the
project and a team that listens to their input.
Goal 2: Keep the Staff and family engaged and
informed throughout construction.
Goal 3: Post Construction Survey refer to the 9
Guiding Principles
SAFETY 18
LOCAL PARTICIPATION 11
ENERGY EFFICIENCY
12
TEAM Performance 9SCHEDULE
10
QUALITY11
LEED 6
STAFF ANDFAMILY
SATISFACTION 15
Unavailable Points 8
$160,826,326 $159,198,883
$5,926,335 $2,500,000
$8,683,557 $8,683,557
$5,789,038 $5,789,038
$1,000,000 $1,000,000 $- $505,378
ICL Tracking (Target vs. CWE)
Direct Costs Total Project Contingency
Base Profit (60% of Potential Profit (PP)) ICL Profit (40% of Potential Profit (PP))
Owner Profit Payment ($1M) ICL Profit (3rd Tier - 10% of Savings)
$182,225,256
Current Target
$177,676,855
Current
Working
Estimate
Project Cost Construction Cost
$165,000,000
$175,000,000
$185,000,000
$195,000,000
$205,000,000
$215,000,000
$225,000,000
$235,000,000
$245,000,000
$255,000,000
Estimated Projet Cost Initial Project Target Cost Project Target Cost adjust A Project Target Cost adjust B Current Project Target Cost
Gap to Target =
apprx. - $5 million
AS OF DEC 2013
Team Week Meeting and
Co-locationMock-up
Labor X X
Material X X
Equipment X X
Location
CostX X
Cost items
ITeam Week
Meetings and
Co-location1
A. Material
White board
Supplies (large Post-It® notes,
markers, flipcharts, push pins,
masking tape)
Floor plans of existing hospital
Rolls of paper
B. Labor
Owner and owner
representative
Architects
General contractors
Structural engineer
MEP engineer
Sub-contractors
Vendors
C. Equipment
Speakers
Projector
Conference call equipment
D. Location CostCo-location space rent or build
cost
IIFull Scale
Mock-up2A. Material
Cardboard
Tape and nail to fix cardboard
Furniture for mock-up scenario
Food and Warehouse Amenities
B. Labor
Lean facilitator
Architects
Healthcare administrators
Physicians
Nurses
Clinical Staff Costs
Former patients and their
parents
C. Equipment
Equipment for mock-up
scenario
Warehouse Rent
Warehouse Construction labor
D. Location Cost Utility
[.
Total Decision-Making Cost associated
with TVD, Lean IPD that happened until
Dec. 2013 was $7 Million
However, this does NOT take into
account the costs a typical DBB process
would have which also have extensive
meeting time.
Survey (49)
Interviews (9)
Focus groups (2)Respondent Profile (no. of respondents)
Plus-Delta
When asked to
construct a +/ Δ chart,
stakeholders listed
more Δ than +
for Design-Bid-Build
and more + than Δ
for Lean-IPD
Design-Bid BuildLean-IPD
Perception of Lean IPD over non-Lean IPD Perceived
by Different Stakeholders
LEARNING EMERGED AS
THE MOST “CONSISTENT”
IMPLICIT BENEFIT
ACROSS STAKEHOLDERS
Yet- we haven’t really
invested this as a metric
Significant Difference
Perception of Value of Different Lean
Strategies
FULL SCALE MOCK-UP RATED
HIGHER THAN ALL OTHER LEAN
STRATEGIES
Significant Difference
Compared to architects, general contractors’ belief that Target Value Design can add more value to the overall project was significantly higher.
For Architects & Engineers, GC is perceived as having more influence than the ownerAlthough theoretically an Integrated Project Team should have equitable influence, It is not perceived as such by all stakeholders.
Architects perceived themselves with lower levels of influence compared with owner and general contractors who perceived their own influences higher than average
Self-perception
Architects perceived themselves with lower levels of influence compared with owner and general contractors who perceived their own influences slightly higher than what others perceived.
2.54
3.50 3.50
2.60
2.33
3.24 3.273.47
2.96
2.48
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
Architects (13) General Contractors(6)
Owners (8) Engineers (5) Subcontractors (6)
Self perception Others' Perception
“what the client feels will improve their ability to deliver quality care”; “to provide the most appropriate building to meet the user’sneed without excess”; “exceeding the conditions of satisfaction from the owner”“Most benefit for the least cost”; “
higher quality, lower costs, and increased efficiency
Architect
Owner“Value is in the eyes of the customer. We were building this building for our patients, families but also our staff to provide the best care environment that allowed to staff to concentrate on care and not have the facility create barriers to that care”. “Adds quality to project and reduces cost to project”.
GC
“value for the client/ owner becomes value for the team and the project”“A benefit or enhancement that comes as part of a product or service or at a low cost”
Owner User
Who is the “customer” shifts- and thus value shifts as well
arrow
Plus (What Worked) Delta (What Can Be Improved)
Enhanced collaboration
Positive professional relationships
User engagement and buy-in
Learning and education (for team,
and larger community)
Successful Strategies
Mock-ups; Pull planning;
Co-location/Team Weeks to allow
more face time; Last Planner times,
Incremental decision-making;
Transparent pricing allowing for
more participative discussion on
reducing price without compromising
value
Estimation Accuracy
Wasted Time (time wasted in co-
location without clear tasks)
Perceived imbalance of
control/influence:
Equal Voice
Optimal use of lean strategies
Cultural adaptation
More early engagement
More quality metrics
Contract complexity
Technology
Tying success metrics to post-
occupancy benefits
Cost savings opportunities are present in three phases :
• Validation
• Innovation (design)
• Production
ROI Implication:
In order to calculate Return on Investment, incremental costs must be itemized and considered as well.
cost contributors include material (Lean facilitation in workshops and documentation, and mock-up
construction), labor (considerable additional time for all participants), equipment (mock-up support), and real
estate required for team week meetings and co-location, as well as a full scale cardboard mockup. There
are also indirect and overhead costs associated with these items.
Focus for this study
• Learning: A tremendous implicit benefit which is not tracked– Team, User and Community
– An implicit benefit that is not currently captured
• The cardboard mock-up workshop – the most successful lean strategy
• More accuracy needed in estimation
• Owner perceived as having the largest influence in the process, followed closely by the General Contractor.
• Quality is a key component of value but robust measures to access quality are lacking.
Greater value can be a result of greater/ same benefit with lower costs.
COST BENEFIT
TIME COST SAFETY
Of people
Involved in
Design +
Occupants of
the building
QUALITY
Of the project as it
relates to people,
the community
and the
organization
MORALE
of team
including
Design team/
Owner/ Family
representation
LEARNING
Of the team
and the
community
Production
time*
Decision
time**
First cost*
Lifecycle cost***
Decision making
cost** (labor+
materials)
Energy Cost
Operational
savings***
(note: use of
CBA- choosing
by advantage
tools does take
into account
lifecycle cost
and was used
for some key
design decisions
as documented
in A3s)
Construction
safety*
Post-occupancy
safety
(employee
injury, patient
harm (infections,
falls with injury,
errors)***
Efficiency of
project*
Benefit to patient
(clinical quality +
safety+ overall
satisfaction)***
Benefit to employee
(efficiency + safety
+ satisfaction)***
Benefit to
organization
(Community
goodwill, market
share, employee
loyalty, patient
loyalty etc., Energy
Efficiency*)***
Benefit to
community (local
participation*)
(Note: A3s currently
capture some of
these benefits but
lack of metrics is a
challenge)
Team
satisfaction*
Team
collaboration*
Employee
engagement /
satisfaction
during design,
construction,
and transition*
Family
engagement /
satisfaction
during design
and
construction*
Employee
satisfaction
post
occupancy*
Family
satisfaction
post
occupancy*
Team
learning***
Hospital
employee
learning
(relates to
change
engagement)*
**
Community
learning
(local
community
that supports
the
hospital)***
*Metrics Exist
**Metrics proposed in this study
***Metrics to be determined (a probabilistic model may be needed to link design decisions to occupancy
metrics- this has to be around the likelihood of certain outcomes based on current body of evidence. Existing
metrics currently captured by the organization should be taken into account. A comprehensive list is attached
Current Metrics List (*):
DART rate
Incentive Compensation,
Use of contingency funds
No. of working days to resolve project issues,
schedule increase of 2 weeks or more,
no. of calendar days sooner than scheduled time
Punch list items, LEED certification points,
Energy Efficiency, Local Participation
Team performance survey, Staff and Family
Satisfaction & Engagement Surveys with
Workshops participants
+ Benefits During Design + Post Occupancy (over the project lifecycle)
Defender (Traditional project delivery)
Challenger (Lean-IPD-TVD)
PERMITTING
PROJECT
DEFINITION
PRE-PROJECT
PLANNINGDESIGN
CONSTRUCTION
COMMISSIO
NING/
TURNOVER
SCHEMATIC
DESIGNPRE-DESIGN
DESIGN
DEVELOPMENT
CONSTRUCTION
DOCUMENTS
AGENCY
PERMIT/
BUILDING
CONSTRUCTION
Time
Additional cost for meetings + full-scale mock-up + co-location
Reduced cost of construction due to reduced errors and omissions, RFIs, shortened construction period
Δ = Challenger - Defender
Time
Time
To translate these success metrics into an ROI, three
additional components are needed, namely:
• A baseline of benefits and costs in comparable traditional Design
Bid Build projects to allow a benchmark for comparison
• A more thorough documentation of incremental (additional) costs
associated with the decision- making process involved in a Lean-
IPD project
• An assessment of the long-term/ occupancy implications of design
decisions. This links to the field of Evidence-based Design and must
be investigated further.
Questions?
Contact us,
• Upali Nanda, [email protected]
• John Bienko, [email protected]
• Zofia Rybkowski, [email protected]
• Di Ai, [email protected]
