PROJECT DELIVERY METHODS OF THE

FUTURE

Lisa Cooley, LEED APLisa Cooley Associates, LLC

Peter Cholakis4Clicks Solutions, LLC

In the long history of humankind, those who learned to collaborate and improvise most effectively have prevailed.

– Charles Darwin

MANAGING CEUs AND CFM® MAINTENANCE POINTS

You are eligible to receive Continuing Education Units and Certified Facility Manager® maintenance points for attending sessions at IFMA's World Workplace.

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To receive CEUs:Pay the US$12 processing fee when you register for the conference.Visit the CEU Kiosks at registration or log on to http://ceu.experient-inc.com/WWC121 and pass a five-question assessment developed by the speaker. CEUs can only be earned upon successful completion of the assessment. Your transcript will be emailed to you.

Individuals seeking CEUs or LUs from other organizations must contact those organizations for instructions on self-reporting credit hours.

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Take Assessments & Log CEUs (no more CEU codes)

Visit the registration kiosks or go online at

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Meet Our Presenter(s):Lisa Cooley, LEEP APOwner/PrincipalLisa Cooley Associates, LLC

• Born- and-bred construction industry veteran

• Expert in Job Order Contracting and small projects solutions

• Passionate about evolving delivery methods

Peter CholakisChief Marketing Officer4 Clicks Solutions, LLC

• Career defining capital planning and management solutions

• Expert on facility lifecycle and Total Cost of Ownership

• Passionate about leveraging technology to foster collaboration

Looking to the Past:

Owner

DesignerBuilder

72% of projects over budget

70% of projects over schedule

5% of project costs spent in bidding

Rex Miller, Commercial Real Estate Revolution

price based selection

qualifications based selection

knowledgegap

Fracturing of the Industry and its Results:

Adapted, HOK Architects

Owner

Builder 3

Subcontractors

Supply Chain Barriers:

Builder 1 Builder 5

Builder 2 Builder 4

PROJECT

Technology Barriers

Technology Barriers

Owner

AE

Contractor

Subs

Technology Barriers– Speed vs. Flexibility

Owner

AE

Contractor

Subs

??

?

?

!! !!!!

?@#!*

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Excel Spreadsheets

Relational Database

Cloud Computing

Flexibility

Collaboration

Technology Barriers

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Catalysts of Change

Disruptiv

e Technologies

Economic

Environmental

Big data

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Environmental:1. Recognition of building’s role in climate change2. Challenge of meeting rising Energy Needs and paying for it3. Government mandates

Altered Environmental Landscape

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Economic:1. Fallout from of a building boom followed by recession2. Reduced capital expenditures at a time when monumental change to the built environment is needed3. World economy becoming “flat”

Altered Economic Landscape

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Resulting in a fundamental cultural shift?Driven by Millennial sensibilities and valuesThe built environment is transforming to meet efficiency needsThere is a need for responsive project delivery methods to facilitate these changes

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Big Data:BIM and sophisticated energy modeling for new constructionAbility to collect building performance metrics for existing buildingsChallenge:1. How to process it for decisionmaking and 2. How to leverage team expertise to effect productive changeNeed for delivery methods to quickly respond to urgency created by transparent data

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=Disruptive technology is a term coined by Harvard Business School professor Clayton M.

Christensen to describe a new technology that unexpectedly displaces an established technology.

Disruptive Technologies:

BIM Cloud Computing

A disruptive technology changes/overturns traditional business methods and practices.

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BIM is the life-cycle management of the built environment supported by digital technology.(adapted from NIBS)

BIM – The “Simple Definition”

People

ProcessInformation

BIM&

Cloud Computing

OWNERS

AE’s

CONTRACTORS

SUB-CONTRACT

ORS

Cloud Computing

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Cloud Computing

Speed of Deployment

TransparencyBig Data

Convergence

Flat World Economy

Constrained Capital Dollars

Refocus on O&M

Carbon Footprint

Government Mandates

Rising Energy

Costs

New Project Delivery

Methods to Meet New Demands Energy Modeling

Benchmarking

Altered Environmental

Landscape

Altered Economic Landscape

Disruptive Technology

BIM

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Key Characteristicsof Emergent Project

Delivery Methods

Qualifications Based or Best Value SelectionSome form of pricing transparencyEarly and ongoing information-sharing among project stakeholdersAppropriate distribution of riskSome form of financial incentive to drive performance

Integrated Project Delivery Energy Performance Contracts

Job Order ContractingPublic Private Partnerships

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Design-Build• Single Source Responsibility• Shifts risk of design errors from Owner to Contractor• Maximizing construction dollars—Design-to-Budget• Faster Delivery• Can be commoditized as low bid, but can be innovative with performance-

based measures

From Scherer Construction, www.scherercfl.com

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Design-Build Case StudyAwarded September 11, 2001

Schedule, budget and scope completely changed from original bid

Completed 14 months ahead of schedule and $100 million under budgetPerformance-based, flexible contract allowed for innovationIncentives:

Award fee allowed profit margins up to 10% if project goals were metCost incentive allowed design/builder to share percentage of cost savings—30-50%Subjective evaluations every 90 days—feedback loop

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Integrated Project Delivery

Est. Max Price

Actual Cost

Shar

ed

Con

tinge

ncy

Cos

t of t

he W

ork

Incentive Pool

Owner Cost

Savings

Savings$$$

Target Cost

• Alliance Contracts create shared Risk and Reward—shared contingency and shared incentive pool. Liability Waivers mean no ability to sue.

• Entire team on board before design starts—requires Qualifications Based Selection and Full Pricing Transparency

• Deep involvement of key subcontractors and suppliers in design process• Goal is to reduce duplication of design efforts--shop drawings serve design

development• Utilization of BIM and other forward-thinking technologies to enable

collaboration among team members

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IPD

JOC DBB

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Job Order Contracting “IPD Lite” for Existing Buildings Consolidates procurement to shorten

Project Timelines and reduce procurement costs

Transparency of pricing and procurement compliance through Unit Price Book

Long Term Facility Relationship increases productivity and enables reiterative process improvements

Quality and performance incentivized through IDIQ form of contract with minimal guarantee and clear maximum volume

Shorter Project Timelines

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• Fast and timely delivery of projects.• Consolidation of procurement creates lower overhead cost and procurement

cost• Contractor and owner efficiencies in prosecution of the work. Development

of a partner relationship based on work performance.• Virtual elimination of legal disputes, claims and change orders.• Standard pricing and specification utilizing a published unit price book (UPB),

resulting in efficient and effective estimating, design, and fixed price construction.

Advantages of JOC for Owners

How OWNERS Use JOC & Technology

Programming Estimate

Estimates from Each Design Stage

Final Detailed Cost Estimate

Initial Contractor Proposals

Technically Evaluated Proposals

Final Revised Contractor Proposals

Modifications & Changes Orders

Track & Manage each project from inception to completion.

Manage a single project, your entire contract, or multiple contracts.

All project milestones, thru warranty period.

Display status of each project. Maintain a complete cost history Record all estimates associated

with a project. Review value of all projects

awarded on a specific contract, or to a specific contractor.

Reports show pre-negotiation strategies and post-negotiation summaries.

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Job Order ContractingCase StudyJOC in place since 1999Completing $2.5-$3m annuallyAverage project size about $20,000

Examples of JOC projects:• Office and classroom renovations• Laboratory renovations• Installation of varies mechanical equipment and associated

work• Road and parking lot improvements• Interior finish-out projects for commercial spaces• ADA modifications• Mold and bird remediation• Waterproofing projects• Sports courts and recreational facilities• Food service renovations• Signage installation• Sidewalks

Starbucks$208,841Coordination of university requirements with concessionaire

Bio Safety Level 3 Laboratory$443,650Rapid deployment of grant funds for anti-terrorism research

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Public Private Partnerships• Finds fullest expression as Design-Build-Own-Operate• Takes advantage of the same team innovations as Design-

Build and IPD—contract includes design and construction.• Added benefit of private financing for upfront cost. Funding

through toll concessions or availability payments.• Some may be during the course of design/construction• After completion, typically receive a regular (e.g. annual)

payment – similar to a lease payment• Added component of ongoing operation/maintenance.• Allows owners to incentivize ongoing building performance

• Size of ongoing payments is contingent on the performance of the asset

• Drives performance and lifecycle decisions. Ultimate accountability for building systems.

• Originally focused on transportation. Now expanding into “social infrastructure” projects.

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PPP Case StudyLong Beach CourthouseDevelopment Cost: $490M Lease-back period: 35 yearsPerformance Based Contract: Lease payments will be reduced if the private sector underperforms

Extensive list of property management requirementsExact formulas for decreasing lease payments if

requirements are not metInnovative Approach: Integrated design approach includes operations staff in design and construction decisions

Process

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Energy Performance Contracts• Usually includes financing—

paid off with energy savings• Payment based on anticipated

energy savings, or contingent on actual savings

• Well-established in public sector, challenges in private sector

• Variation: Energy Services Agreement. New business models to address challenges: Managed Utility Service Agreements, Property Assessed Clean Energy (PACE), On-bill financing

• Drivers: benchmarking laws creating transparency in building energy costs for tenants and buyers, C-Suite lens into facility costs

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ESPC Case StudyState of Pennsylvania Department of General Services• Guaranteed Energy Savings Act• Strategic program approach• Integrated approach with PPAs• Small projects element• Standardized contracts

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Supporting Software Technology

Integration of Proven Construction Delivery Methods / Project Management

Standardized Cost Data Architectures / Taxonomies (i.e. RSMeansTM – 400,000 line items)

Comprehensive Document Management

Electronic Visualization / QTO

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A Common LanguageMasterFormat2010, Uniformat II – Reference Cost Databases (aka RSMeans)

COBIE, OMNICLASS

IFC

Metrics: FCI, SCI, Cost/GSF, Cost/NSF, Utilization Rates, ….

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“Facebook” for the Built Environment 1

Project Collaboration

Real Time Collaboration via Web Meetings

“Facebook” for the Built Environment 2

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Convergence

Energy modeling for new construction

Crystal Ball: What does the future hold?

1. Christian and Pandaya, 1997. Cost Prediction of Facilities.

2. NIBS 1998. Excellence in Facility Managment

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Energy modeling for new construction

Crystal Ball: What does the future hold?

Increased energy efficiencyEducational outcomes

Healthcare outcomes

Increased worker productivityPerformance

Specs

Sophisticated Data Analysis

Compensation Structure

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Contact and Other Info

Lisa Cooley, LEED APLisa Cooley Associates, LLCwww.lisacooleyassociates.com505-239-3446lisa@lisacooleyassociates.com

Peter Cholakis4Clicks, LLCwww.4clicks.com 781-983-1128pcholakis@4clicks.com

Presentation will be posted at www.lisacooleyassociates.comSources/Bibliography at: http://www.scoop.it/t/betterbuilding

For attending this educational offering at

IFMA’s World Workplace.

Be sure to evaluate the session at the registration kiosk or online at

http://ceu.experient-inc.com/WWC121

Thank You!