Akron Children’s Hospital: Success Achieved through REAL Integrated Project Delivery

Clifford Greive, PETim ZigaMarge Zezulewicz, AIA

April 21st, 2016

Provider # A217

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Akron Children’s used a non-traditional Integrated Project Delivery (IPD) approach for the design and construction of the new Kay Jewelers Pavilion, a six-story, 360,000-SF tower. The project allowed patients and staff to participate in the design. This collaborative approach brought everyone involved in the project together to provide input during design in an effort to eliminate waste, cut costs, improve productivity, and create positive outcomes. Join this presentation to learn how the composition of this IPD team—extending well beyond the owner, architect, and contractor—benefited from Lean Process Improvement principles to reduce waste and translate direct value back to the project. This methodology will continue to contribute to Akron Children’s success and ensure better quality and efficiency of the spaces within. Presenters also will discuss the importance of IPD as an extensive data-driven process and share the lessons learned from this recent journey where these newer approaches to design and construction were utilized.

CourseDescription

LearningObjectives

1. Understand the Lean Process Improvement principals as applied to this project in order to reduce waste, cut costs, improve productivity, and create positive outcomes.

2. Identify the IPD team and the importance of the entire team’s input through the design and construction process.

3. Understand IPD as a data-driven process.

4. Explain the lessons learned from this case study in order to make more informed decisions during projects that utilize the IPD approach.

At the end of the this course, participants will be able to:

Akron Children’s Lean Building ProjectApril 21, 2016

About Akron Children’s

•Ranked a Best Children’s Hospital by U.S. News & World Report

•8th largest children’s hospital in country*

•Magnet® Recognition for Nursing Excellence

•Health Care’s Most Wired Hospital Award

•Largest pediatric provider in NE Ohio

2 hospital campuses

20+ primary care locations

60+ specialty location

•Nearly 4,500 employees

•750+ medical staff

*Source: 2012 Becker's Hospital Review

WINNER 2013

Akron Children’s Hospital Service Locations

Akron Children’s Lean Six Sigma is a Journey…

ToolsA3 Projects,Belt Projects(2008-onward)

PrinciplesA3 ProjectsBelt ProjectsKaizensBlue Belt (2010- onward)

SystemsStrategy Deployment,Belt Projects,A3 Projects,Kaizen(2011- onward)

True North

Akron Children’s Hospital’sHouse of Improvement

Lean Operations

Integrated project delivery (IPD), is a collaborative alliance of people, systems, business structures and practices into a process that harnesses the talents and insights of all participants to optimize project results, increase value to the owner, reduce waste, and maximize efficiency through all phases of design, fabrication, and construction.

From Wikipedia

Design facilities “through the eyes of a child” in order to create a uniquely satisfying patient and family experience

Assure improved ease of access for all families and children to both the ACH “system of care” and the physical facilities of the Akron Campus

Driven by the success of our regional growth and outreach strategies, provide an opportunity to expand the breadth, depth and volume of services delivered at the Akron Campus

Enhance ACH’s ability to recruit and retain the highest quality physicians and staff by creating state-of-the-art work environments in which the ACH culture can be preserved.

Develop a project that achieves an appropriate return on investment to ensure the long-term

financial viability and autonomy of ACH.

As a valued community asset, create a positive economic impact for the local community by providing related jobs during the life of the project and giving local contractors and vendors opportunities for involvement.

Operational excellence, efficiency and sustainability will be the foundations upon which we design our new facilities.

Provide ample and appropriate communication to, and the opportunity for input from, key constituent groups and the community during the life of the project.

Guiding Principals

Team

Introduction to the Project

New Ambulatory Surgery Center/Critical Care Towerwith connectors to the new parking deck and Main Hospital

New Amphitheater adjacent to Perkins Square and Main Entrance

------- Emergency Department Lobby

Main Entrance/ Lobby-----

------- Ambulatory Surgery Lobby

Building Section

The COE staff members worked with the three areas of NICU, ASC, and ED to create an understanding of the current state.

Value Stream Analysis

All members of the team are required to have Lean education Includes architects, interior designers, construction, all trades

Lean Boot Camp – 2 full days of learning, collaboration and fun Concepts include one piece flow vs batching, “fresh eyes”, 5S, Visioning, Value Stream Mapping

Lean Education for the Team

Full Scale Mock Ups

Scenario Testing During Detailed

Design Workshop

Big Room Concept

• Co-Location• Pull Planning • Reliable Promising - LRM• Improving team communication through structured and

improvised meetings• Report Outs – Allows all partners to see where we are on the

Schedule, Scope and Target Budget• Transparent Decision Making – A3• Video Conferencing• WebEx & Join.Me

Big Room Concept

Transparency of Information

A3/CBA Decision Making

Target Value Management

5-Party Agreement

Owner Children’s Hospital Medical Center of

Akron(Akron Children’s Hospital)

Architectural Team Construction Management Team

Hasenstab Architects, IncAkron, OH.

HKS, Inc.Dallas, TX.

Welty Building Company, LLCAkron, OH.

The Boldt CompanyAppleton, WI.

•Party commits to becoming a member of the IPD Team

•Party agrees to be bound by the contract documents

•Party agrees to participate fully and openly in all IPD Team functions

•Party agrees to participate in the risk sharing and incentive compensation plan if invited

•Party agrees to abide by determinations made by PLT

•Party agrees to adhere to the principles of collaboration based on mutual trust, confidence, good faith and fair dealing

•Party agrees to utilize lean project principles and methods

Joining Agreements

• SET- Senior Executive Team ACH, Welty, Boldt, HAI, HKS

• PLT - Project Leadership Team ACH, Welty, Boldt, HAI, HKS, CBRE

• PIT - Project Implementation/Innovation Teams Architects, Designers, Engineers, Trade-Partners

Project Leadership

• Reliable Promising• Big Room Collaboration• Pull Planning/Scheduling• Pooled Contingency Fund• Measures of Success Scorecard• Incentive Compensation Plan• Lean Principles • BIM

IALPD Principles and Tools

•Waive liability and claims against each other•Indemnify each other against a limited number of acts or omissions•Have profit for Project fixed•Place 100% of profit at risk•Participate in the Incentive Compensation Plan, if invited•Are covered by a Project specific insurance program•Agree to a binding dispute resolution process

All IPD Team Members

InsuranceProject specific policies put in place to support the Integrated Lean Project Delivery method• All IPD team members covered• Allows team members to think outside their expertise• No-fault approach to problem solving • Permits smaller companies to participate in project who may

not be insurable at the higher limits the project requires• Owner sets the types of coverages on the project and the

team inputs on coverage limits and SRI/deductibles• Owner knows that all parties have appropriate insurance

coverage with appropriate limits

•Reimbursable Costs Owner’s right to audit•Project Contingency Shared pool of funds•Project Profit fixed and tied to Target Cost

Target Costs

Target Cost$180,000,000

Profit @ Risk$9,000,000

Contingency Pool$10,000,000

Reimbursable CostsApprox

$160,000,000

Incentive Compensation

Profit @ Risk = $1,000,000+

Preserved Contingency

Total Profit$10,000,000

Allocation of Savings Incentive Compensation Component

Owner

$2,000,000 or less 50% 50%

More than $2,000,000 but less than or equal to $7,000,000

100% 0%

More than $7,000,000 10% 90%

If the total Reimbursable Costs plus the total Profit-at-Risk component (the “Actual cost”) is less than the Target Cost, then a part of that difference between the Target cost and the Actual cost (the “Savings”) shall be used to fund the Incentive Compensation component of the Project provided for in Section 8 of the IALPD. The Savings will be allocated between the Owner and the Incentive Compensation component as follows:

TABLE 1

Incentive Compensation Component

Target Cost$180,000,000

Profit @ Risk$9,000,000

Reimbursable Costs

$170,000,000

Incentive Compensation$1,000,000

Scenario 1: Total Project Cost equals Target Cost

Incentive CompensationUp to $1,000,000 – 50/50$500,000 to Owner$500,000 to Team

Target Cost$180,000,000

Profit @ Risk$9,000,000

Reimbursable Costs

$163,000,000

Incentive Compensation

$8,000,000

Scenario 2: Total Project Cost equals $163,000,000

Incentive CompensationUp to $2,000,000

•ACH 50% - $1,000,000•Team 50% - $1,000,000

$2,000,000 to $7,000,000• $5,000,000 to TeamAbove $7,000,000• ACH 90% - $900,000• Team 10% - $100,000

*All Incentive Compensation subject to meeting Measures of Success

Reimbursable Costs

$195,000,000

Target Cost $180,000,000

Scenario 3: Actual Cost Exceeds Target Cost

Actual Cost $195,000,000

-----------------------

•Owner Pays all Reimbursable Costs•All contingency used•No Profit-at-Risk Paid

- ICL Participants return any Milestone Distributions paid out by owner

•No Incentive Compensation Paid

ProfitIncentive

Compensation- 0 -

Project Success Matrix

1. Safety2. Local Participation3. Energy Efficiency4. Team Performance5. Schedule6. Quality7. LEED8. Staff and Family Satisfaction

Maximum points are 100.

Mission Control

This concludes The American Institute of Architects Continuing Education Systems Course

Clifford H. Greive PEDirector of Planning, Design & Constructioncgreive@chmca.org