Innovation in the Design and Construction Industry Led by Cleveland Clinic 1

Innovation in the Design and Innovation in the Design and Construction Industry Construction Industry

Led by Cleveland ClinicLed by Cleveland Clinic

Innovation in the Design and Innovation in the Design and Construction Industry Construction Industry

Led by Cleveland ClinicLed by Cleveland Clinic

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Owner Controlled Owner Controlled Team Project DeliveryTeam Project Delivery

CMAA Introductory DiscussionCMAA Introductory Discussion

April 10, 2015April 10, 2015

Owner Controlled Owner Controlled Team Project DeliveryTeam Project Delivery

CMAA Introductory DiscussionCMAA Introductory Discussion

April 10, 2015April 10, 2015

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Owner Controlled Owner Controlled Team Project Delivery Team Project Delivery

OCTPDOCTPD

Owner Controlled Owner Controlled Team Project Delivery Team Project Delivery

OCTPDOCTPD

AuthorsAuthorsStephen LauStephen Lau

Ronald J. LawsonRonald J. LawsonAlan W. McKinneyAlan W. McKinney

William R. Zollinger IIIWilliam R. Zollinger III

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2000 - 20042000 - 2004InterContinental HotelInterContinental Hotel

2000 - 20042000 - 2004InterContinental HotelInterContinental Hotel

• Broken scheduleBroken schedule

• Busted budgetBusted budget

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18 Mos.

36 Mos.

$85 Mil

$125 Mil

100% Over Schedule

47% Over Budget

0% opportunity to recoup losses!

Industry IndictedIndustry IndictedIndustry IndictedIndustry Indicted

• Design – Bid – Build delivery modelDesign – Bid – Build delivery model- Near 100% useNear 100% use

- Broken modelBroken model

- Replace itReplace it

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Industry IndictedIndustry IndictedIndustry IndictedIndustry Indicted

• Failing performance Failing performance - Projects over budget Projects over budget 11 72%72%

- Projects over schedule Projects over schedule 11 70%70%

• Waste, waste, waste ($)Waste, waste, waste ($)- Material waste Material waste 11 30%30%

- Rework Rework 11 10%10%

- Labor inefficiency Labor inefficiency 11 30% - 70%30% - 70%

61 The Commercial Real Estate Revolution – Copyright 2009

Construction productivity

declined20%

Constructionproductivity

seriously lagsother

industriesby

138%

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Innovation WastelandInnovation WastelandInnovation WastelandInnovation Wasteland

• Investment in R&D (of gross volume)

- Other industries2.5%

- Construction industryonly .5% (one fifth of others)

• Most of construction industry’s R&D investment relates to materials, not construction processes

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2004 The Defining Moment2004 The Defining Moment2004 The Defining Moment2004 The Defining Moment

• InterContinental Hotel project a financial InterContinental Hotel project a financial train wrecktrain wreck

• Industry performanceIndustry performance- Highly inefficientHighly inefficient

- DysfunctionalDysfunctional

- Results largely unpredictableResults largely unpredictable

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Unacceptable RiskUnacceptable RiskUnacceptable RiskUnacceptable Risk

• Risk potential unacceptable on Risk potential unacceptable on pending projects (2005-2010)pending projects (2005-2010)

$1 billion = $1 billion = $300 million $300 million at riskat risk

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Fundamental approach going Fundamental approach going forward required major forward required major

changechange

2004 A Defining Moment2004 A Defining Moment2004 A Defining Moment2004 A Defining Moment

• $1 billion dollars lay ahead$1 billion dollars lay ahead

• The decision – begin looking for an The decision – begin looking for an alternative to the failed industry led alternative to the failed industry led approach approach

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Owner Controlled Owner Controlled Team Project DeliveryTeam Project Delivery

New ApproachNew ApproachNew ApproachNew Approach

• Fundamental conceptsFundamental concepts- OWNER controlsOWNER controls

- OWNER fully engagedOWNER fully engaged

- OWNER leads decision making processOWNER leads decision making process

- OWNER creates a TEAMOWNER creates a TEAM

- OWNER drives innovationOWNER drives innovation12

Logic of Fundamental ConceptLogic of Fundamental ConceptLogic of Fundamental ConceptLogic of Fundamental Concept

• The OWNER shoulders the risk The OWNER shoulders the risk

• The OWNER ultimately paysThe OWNER ultimately pays

• The OWNER has the power to bring order The OWNER has the power to bring order

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2005 – 20102005 – 2010InterContinental InterContinental

HotelHotel

Contrasting ExperiencesContrasting ExperiencesContrasting ExperiencesContrasting Experiences

• Broken schedulesBroken schedules

• Busted budgetsBusted budgets

• Major litigation Major litigation exposureexposure

• Industry driven Industry driven processprocess

• On-time performanceOn-time performance

• Budgets metBudgets met

• Zero litigationZero litigation

• Owner driven Owner driven processprocess

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2010 Major Cleveland Clinic2010 Major Cleveland ClinicInnovation AnnouncedInnovation Announced

2010 Major Cleveland Clinic2010 Major Cleveland ClinicInnovation AnnouncedInnovation Announced

• The initial research, development and The initial research, development and testing of the OCTPD process endedtesting of the OCTPD process ended

• Cleveland Clinic leadership fully briefed in Cleveland Clinic leadership fully briefed in 20102010- $1 billion dollars in new projects successfully $1 billion dollars in new projects successfully

completed completed

• OCTPD recognized as a viable replacement OCTPD recognized as a viable replacement for industry led approachfor industry led approach

• Additional 3 Year OCTPD research, Additional 3 Year OCTPD research, development and testing process set in development and testing process set in motionmotion

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OCTPD 2013OCTPD 2013OCTPD 2013OCTPD 2013

• 3 Year (2010 to 2013) OCTPD 3 Year (2010 to 2013) OCTPD research, development and testing research, development and testing process completedprocess completed

- Another 5 large projects successfully Another 5 large projects successfully executedexecuted

• Improved process and added to our Improved process and added to our knowledge of OCTPDknowledge of OCTPD

• Conclusion – belief in OCTPD Conclusion – belief in OCTPD concepts and logic strengthenedconcepts and logic strengthened

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OCTPD 2004 -2014 OCTPD 2004 -2014 OCTPD 2004 -2014 OCTPD 2004 -2014

• Validated by 10 years of experimentationValidated by 10 years of experimentation- Fundamental conceptsFundamental concepts

• OWNER controlsOWNER controls

• OWNER fully engagedOWNER fully engaged

• OWNER leads decision making processOWNER leads decision making process

• OWNER creates a TEAMOWNER creates a TEAM

• OWNER drives innovationOWNER drives innovation

- Fundamental logic of conceptFundamental logic of concept• OWNER has the power to bring order OWNER has the power to bring order

• OWNER shoulders the risk OWNER shoulders the risk

• OWNER ultimately paysOWNER ultimately pays17

OCTPD Value PropositionOCTPD Value PropositionOCTPD Value PropositionOCTPD Value Proposition

• Quality improvementQuality improvement

• Cost managementCost management

• Enhance risk managementEnhance risk management

• Reduce delivery timeReduce delivery time

• Enhance transparency and Enhance transparency and collaborationcollaboration

• Greater opportunity for diversityGreater opportunity for diversity

• Expand Cleveland Clinic’s branExpand Cleveland Clinic’s brand

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OCTPD InnovationsOCTPD InnovationsOCTPD InnovationsOCTPD Innovations

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Team GoalsTeam Goals

Hillcrest Team Purpose Statement Hillcrest Team Purpose Statement A unified construction process enhancing the community’s best hospital…“Building Excellence”A unified construction process enhancing the community’s best hospital…“Building Excellence”

Team EnvironmentTeam EnvironmentTeam EnvironmentTeam Environment

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OCTPD Team ProcessOCTPD Team ProcessOCTPD Team ProcessOCTPD Team Process

• Executive Executive OCTPD Team MeetingsOCTPD Team Meetings

- Invitees - Owner, A/E, CM, DA, UsersInvitees - Owner, A/E, CM, DA, Users

- Agenda - team focus only Agenda - team focus only

- Team Purpose StatementTeam Purpose Statement

- Team Measurable GoalsTeam Measurable Goals

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OCTPD Team ProcessOCTPD Team ProcessOCTPD Team ProcessOCTPD Team Process

• OCTPD Core Team Meeting- Day to day project leadership- Reports to Executive OCTPD Team- Establishes and meets with Task Teams

- Keeping ourselves oriented- Attitude- Consistent - Our process for keeping eyes on the compass

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OCTPD Team ProcessOCTPD Team ProcessOCTPD Team ProcessOCTPD Team Process

• Focused Focused Task TeamsTask Teams

- Change ManagementChange Management

- ScheduleSchedule

- OFE CoordinationOFE Coordination

- Building System CommissioningBuilding System Commissioning

- Owner ActivationOwner Activation

- Project Close-OutProject Close-Out

- TacklersTacklers23

OCTPD Team ProcessOCTPD Team ProcessOCTPD Team ProcessOCTPD Team Process

• Project Project MeetingsMeetings

- OAC MeetingsOAC Meetings

- Trade Coordination MeetingTrade Coordination Meeting

- Trade Schedule ReviewTrade Schedule Review

- Facility CoordinationFacility Coordination

- Exec Small Group (Owner/A/E/CM)Exec Small Group (Owner/A/E/CM)

- Trade Principals MeetingsTrade Principals Meetings

- Administration ReportingAdministration Reporting24

Remove “Siloization”Remove “Siloization”Remove “Siloization”Remove “Siloization”

… … misaligned interests!misaligned interests!

DesignersDesigners ContractorsContractors VendorsVendors OwnersOwners

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Selection of Team ExpertsSelection of Team Experts(Architects/GC/CM)(Architects/GC/CM)

Selection of Team ExpertsSelection of Team Experts(Architects/GC/CM)(Architects/GC/CM)

• Creation of world class design teamCreation of world class design team

• Repeat opportunity (“select group”)Repeat opportunity (“select group”)

• Benefits of lessons learnedBenefits of lessons learned

• ““Working as a Unit”Working as a Unit”26

Design-Assist ConceptDesign-Assist ConceptDesign-Assist ConceptDesign-Assist Concept

• Early selection of critical trade Early selection of critical trade contractors based oncontractors based on- QualificationsQualifications

- Target budget priceTarget budget price

- Compensation framework acceptedCompensation framework accepted

• Intense collaboration and transparency Intense collaboration and transparency between “knowers” and “doers”between “knowers” and “doers”

• Team building environmentTeam building environment

• Owner “opt out” provision for Owner “opt out” provision for construction phaseconstruction phase

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Design-Assist ResultsDesign-Assist ResultsDesign-Assist ResultsDesign-Assist Results

• Optimum valueOptimum value

• Heightened qualityHeightened quality

• Cost reductionCost reduction

• Risk reductionRisk reduction

• Enhanced schedule managementEnhanced schedule management

• Increased operational efficiencies of facilitiesIncreased operational efficiencies of facilities

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Evolution in Technologies / ProcessesEvolution in Technologies / ProcessesEvolution in Technologies / ProcessesEvolution in Technologies / Processes

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Nuclear MedicineX-Ray CT MRI

The Owner Controlled Team Project Delivery The Owner Controlled Team Project Delivery is an innovative evolution of technologies is an innovative evolution of technologies

and processes akin to the innovative and processes akin to the innovative evolutions in health care evolutions in health care

Electronic Construction RecordsElectronic Construction Records“ECR”“ECR”

Electronic Construction RecordsElectronic Construction Records“ECR”“ECR”

• Project metrics

• Data-rich to information-rich- Job data integrated analytics

• Quality information available timely

• Collected, organized, and distributed- Via dashboards

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Enhanced Information and Enhanced Information and CommunicationCommunication

Enhanced Information and Enhanced Information and CommunicationCommunication

Enhanced Enhanced CommunicationCommunication

Schedule Driven by Schedule Driven by ModelModel

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OCTPD EvolutionOCTPD EvolutionOCTPD EvolutionOCTPD Evolution

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Process Evolution 2004-2012Process Evolution 2004-2012Process Evolution 2004-2012Process Evolution 2004-2012

• Control group of 10 projects, $1+ billionControl group of 10 projects, $1+ billion

• Research / test / evaluate / publishResearch / test / evaluate / publish- Team buildingTeam building

- Business processesBusiness processes

- Management toolsManagement tools

- Electronic construction recordsElectronic construction records

- Contract formatContract format

• Industry mentorIndustry mentor

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Process Evolution 2013 - TodayProcess Evolution 2013 - TodayProcess Evolution 2013 - TodayProcess Evolution 2013 - Today

• OCTPD Research ProjectOCTPD Research Project- Central QuestionCentral Question

• Reduce costs / maintain quality / reduce Reduce costs / maintain quality / reduce risk risk

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OCTPD Research FocusOCTPD Research FocusOCTPD Research FocusOCTPD Research Focus

• OCTPD Research Project targets OCTPD Research Project targets 7 subjects7 subjects

- Costs - understand, define, search, identify and reduce cost

- Teams - organizing, behavior and performance

- Metrics - understand, identify, create, enhance and apply

- Quality

• Physical building components

• Processes with continuous improvement

- Risks - understand, define, identify and reduce

- Trust - understand, define, identify, and enhance

- Experience - for all stakeholders37

Process Evolution 2013 - TodayProcess Evolution 2013 - TodayProcess Evolution 2013 - TodayProcess Evolution 2013 - Today

• Cost ReductionCost Reduction- Leveraged buy on multiple projectsLeveraged buy on multiple projects

• Major MEP equipmentMajor MEP equipment

• Trade material / labor purchases Trade material / labor purchases

• Design assist multiple project opportunity Design assist multiple project opportunity

• Non-constructionNon-construction• Medical equipmentMedical equipment

• FF&AFF&A

- Finance InitiativesFinance Initiatives• Accelerated payAccelerated pay

• Reduce retainageReduce retainage

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Process Evolution 2013 - TodayProcess Evolution 2013 - TodayProcess Evolution 2013 - TodayProcess Evolution 2013 - Today

• LeanLean- Study Action Team (SAT)Study Action Team (SAT)

• The Toyota WayThe Toyota Way

• Use of A3s on critical issues Use of A3s on critical issues

- Elimination of waste / efficiencyElimination of waste / efficiency

- Last Planner / pull scheduleLast Planner / pull schedule

- Big RoomBig Room• Mini Summit Mini Summit

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Summit Discussion TopicsSummit Discussion TopicsSummit Discussion TopicsSummit Discussion Topics

• Communication processCommunication process

• Component Team DA processComponent Team DA process

• LEANLEAN

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Cancer Building Mini SummitCancer Building Mini SummitCancer Building Mini SummitCancer Building Mini Summit

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Cancer Building Mini SummitCancer Building Mini SummitCancer Building Mini SummitCancer Building Mini Summit

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Discussion / Q&ADiscussion / Q&ADiscussion / Q&ADiscussion / Q&A

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