Companies need to get more product out of the capital they invest to stay competitive. One of the ways they can significantly increase the effectiveness of their limited capital spending budgets is by changing the project delivery method. In traditional forms of project delivery, the stakeholder has little influence. There are flaws with many of the traditional practices that often go unnoticed because each project is different and there is no “one size fits all” solution. Early adopters of new concepts, such as Collaborative Project Delivery (CPD), see trends playing out across multiple projects and can recognize opportunities to become more efficient and effective.
The CPD approach is a lean concept including seven essential elements that reduce waste, compress schedules, lower costs, and improve satisfaction for team members and clients. There can sometimes be challenges to getting stakeholders on board with a methodology that is unfamiliar. Providing leaders with measurements they can use to validate costs and prove success demonstrates the efficacy of the CPD process. Here are insights into four of the seven elements to optimize project success.
1. Early Selection of Partners
Some stakeholders are reticent to engage in early selection of partners because they struggle to quantify value without a traditional bid. The value of early partnering is expertise, and professionals with insight to project goals provide input that can help inform the design and avoid later rework, adding considerable value to the project.
Team members are selected based on their ability to come together to achieve the shared goals of the project — often called “Conditions of Satisfaction.” There is a behavioral aspect to selecting construction partners: Excellent communication skills are essential to fostering successful collaboration. A willingness to explore new concepts establishes flexibility. And, selection should be based on the ability to share information rather than horde, as well as the ability to fully utilize the power of BIM and Virtual Design & Construction (VDC).
Key questions and insight can include: Has the potential partner tried alternate delivery methods in the past? Awareness of the principles of Integrated Project Delivery (IPD), the Lean Construction Institute (LCI), and other innovative models indicates that the potential partner is looking for new approaches as well.
These factors play a vital role in the success of the project. Therefore, partner selection must reflect these criteria. And, one way for project stakeholders to do this is to write the RFP and evaluation scorecards to emphasize these factors.
Even more effective: Pre-qualify a team of partners who meet these criteria to regularly work together over a series of projects to enhance their ability to collaborate on a foundation of increased trust. This method can work most effectively through IFOA contracts, but also through more traditional master services agreements with pre-qualified firms.
One of the earliest challenges is assuaging the understandable concerns of owners who want to know they are getting a fair value without a traditional bid process. A common approach is to involve a third-party cost consultant who can use historical construction cost data to ensure that project estimates are in line with expected norms for similar projects. Breaking down project costs into quantifiable pieces, such as cost per square foot, or units of materials, demonstrates this succinctly. Once there is a process in place to ensure costs are in line with construction norms and the other essential elements are in place, the focus of the team can shift from risk and profit margin protection to delivering improved performance.
2. Target Value Design
Target Value Design (TVD) leverages the early collaboration of design, construction, and ownership to integrate budget and constructability requirements as the project is designed rather than waiting for a bid meeting or, worse, change orders. Without the discipline that comes with TVD, project leaders are often “flying blind” with long time periods between the time design decisions are being made and insight into the costs related to those design decisions.
Early adopters of new concepts, such as Collaborative Project Delivery (CPD), see trends playing out across multiple projects and can recognize opportunities to become more efficient and effective.
Ultimately, design is only valuable insofar as it can actually be built. TVD inherently links design with constructability rather than designing in a vacuum and then reverting to review to make sure it is constructible. At the same time, TVD recognizes that the key to successfully incorporating budget and constructability into the initial design is collaboration — getting the right people in the room to make decisions as design takes place.
This stands in opposition to the industry standard of waiting on review milestones to get input. Rather than being worried about the “wasted” time of bringing all stakeholders in to get input — TVD understands that the wasted time of uninformed design and wasted opportunities for a better outcome have a much more significant impact overall.
The biggest challenge with TVD is the gap that can exist between design development and the speed at which estimating can follow. The overall project targets are set, and design may be under way, but as design progresses through the natural iterative process, there must also be a smooth process for validating the results of those design changes against the project targets. Reducing the lag time means estimators can have more influence on the cost factors associated with proposed design changes, avoiding later rework. This is a nuanced process because designers need space to do their work, but building an open line of communication with contractors, and engaging early with the design, is critical.
In one example project, the team integrated their workflow with a trade contractor in a BIM2Fab® process. Instead of doing the full design and sending it out for iterative reviews before they could start building, they worked with the contractor early to streamline the process. The design team and contractors shared information. The field data collected by the contracting team informed the design work and removed the typical downstream negotiations with both the design and estimating being updated in real time. This is a simple change that requires more upfront collaboration but adds substantial value.
3. Shared Risk/Reward Contracting
One of the most concrete ways to ensure all team members are motivated by the success of the project is by aligning the interests of the various parties engaged in the project. The most effective approach is to set up a contractual agreement that ensures that the team is rewarded based on its ability to deliver value as defined in the Conditions of Satisfaction. The way value is measured will vary from project to project but will typically be heavily weighted to elements of cost, schedule, and quality management.
IFOA contracts can establish a formal partnership between all parties of the project — including the client and trades partners with strategic roles to play — with formal budgets, contingencies, and sharing of project risks and profit. According to “The Business Case for Lean” — a joint study by the Lean Construction Institute — projects with high lean intensity are three times more likely to come in ahead of schedule and two times more likely to come in under budget. This means that not only do clients save money, but the architects, engineers, GC, and trades all profit from the success — making this a very sustainable partnership.
In another example, a project for a client in the technology sector utilized a shared risk/reward type of agreement. Working together toward fiscal responsibility, the team chose a modular solution and worked collaboratively to design the structure. When they entered the build planning phase, they decided the best solution was to build the module on the ground and lift it into place versus the traditional approach of stick building it in place. With a shared incentive, the team worked together to make a mutually beneficial decision quickly and achieve savings across the board. Once project teams start to think and work in this way, it prompts behavioral changes, and subsequent projects begin to naturally follow this pattern.
4. Conditions of Satisfaction
To create a clear vision of success for all team members, Conditions of Satisfaction are formalized and clearly articulated. This is especially important to avoid cutting corners when financial incentives reward coming in under budget. In any project, the owners have certain objectives they need to meet, and the project team also has objectives that are not commonly shared with the owners and considered when developing project goals. By considering the objectives of all of the project stakeholders, the conditions of satisfaction result in aligned stakeholder goals, which greatly increase the likelihood of project success and decrease the likelihood of litigation.
While elements of CPD can be utilized on any project, the benefits are directly related to delivery methods that allow design and construction teams and owners to work together toward common goals starting as early in the project as possible.
In another example, the stakeholder asked for a traditional design-bid-build delivery, but the design team proposed an alternate design-build solution with a pre-selected team of construction partners. Immediately after being awarded the contract, the team developed Conditions of Satisfaction. There were traditional conditions but also a set of conditions that were a give-and-take between the owner and the design-build team. One of the owner’s primary goals was to bring costs down by removing the waste in their general requirements. The team examined what was driving costs up and collaboratively developed the Conditions of Satisfaction with the owner. Team members showed how, if the owner met certain Conditions of Satisfaction, the work could be more efficient, and the team could deliver the desired quality while still meeting cost targets.
This could be something as simple as a lunch tent being closer to the site to cut down on the travel time for contractors to walk out to lunch and return. To demonstrate the point, the team set a distance criterion that translated into productivity, assigned a dollar value, and stakeholders agreed to move the lunch tent or allow contractors to eat on the job site. Through team collaboration and insights to the day-to-day work on site, many opportunities to increase efficiency and drive down costs are revealed that might not otherwise be immediately evident to stakeholders.
Creating a Culture of Collaboration
When a project team adopts a more open, collaborative model, partnering early, incentivizing the goals, and coordinating those goals between the client leadership and the project team over a series of projects, the ultimate goal is creating a culture change.
A common approach, especially in the early stages of implementing more collaborative approaches, is to use outside facilitators to help the team understand their roles within the CPD process. As project teams learn and evolve, it helps to choose a facilitator from within the project team. When the team sees that the facilitator is an insider with a vested interest in the success of the project, they are more receptive. When trying to change behaviors on a large and ongoing scale, it’s more complex than simply implementing a few best practices. It is important to follow through and keep the energy constant until the project is complete and the results demonstrate success. Even better results come when the team is able to work together on subsequent projects and continue to improve.
As they adopt the CPD philosophy and begin to work as a cohesive unit, project teams and leaders alike find that this is a better, more efficient way to work. Teams adopt these behaviors and the result is lower costs, higher efficiency, and smoother workflows. Companies that are willing to try new things and follow through — recognizing that change takes time — often adapt their entire philosophy as a result. While elements of CPD can be utilized on any project, the benefits are directly related to delivery methods that allow design and construction teams and owners to work together toward common goals starting as early in the project as possible.