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

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Presentation on theme: "Innovation in the Design and Construction Industry Led by Cleveland Clinic 1."— Presentation transcript:

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

2 Owner Controlled Team Project Delivery CMAA Introductory Discussion April 10,

3 Owner Controlled Team Project Delivery OCTPD Owner Controlled Team Project Delivery OCTPD Authors Stephen Lau Ronald J. Lawson Alan W. McKinney William R. Zollinger III 3

4 InterContinental Hotel InterContinental Hotel Broken schedule Broken schedule Busted budget Busted budget 4 18 Mos. 36 Mos. $85 Mil $125 Mil 100% Over Schedule 47% Over Budget 0% opportunity to recoup losses!

5 Industry Indicted Design – Bid – Build delivery model Design – Bid – Build delivery model - Near 100% use - Broken model - Replace it 5

6 Industry Indicted Failing performance Failing performance - Projects over budget 1 72% - Projects over schedule 1 70% Waste, waste, waste ($) Waste, waste, waste ($) - Material waste 1 30% - Rework 1 10% - Labor inefficiency 1 30% - 70% 6 1 The Commercial Real Estate Revolution – Copyright 2009

7 Construction productivity declined 20% Construction productivity seriously lags other industries by 138% 7

8 Innovation Wasteland Investment in R&D (of gross volume) - - Other industries 2.5% - - Construction industry only.5% (one fifth of others) Most of construction industry’s R&D investment relates to materials, not construction processes 8

9 2004 The Defining Moment InterContinental Hotel project a financial train wreck InterContinental Hotel project a financial train wreck Industry performance Industry performance - Highly inefficient - Dysfunctional - Results largely unpredictable 9

10 Unacceptable Risk Risk potential unacceptable on pending projects ( ) Risk potential unacceptable on pending projects ( ) $1 billion = $300 million at risk 10 Fundamental approach going forward required major change

11 2004 A Defining Moment $1 billion dollars lay ahead $1 billion dollars lay ahead The decision – begin looking for an alternative to the failed industry led approach The decision – begin looking for an alternative to the failed industry led approach 11

12 Owner Controlled Team Project Delivery Team Project Delivery New Approach Fundamental concepts Fundamental concepts - OWNER controls - OWNER fully engaged - OWNER leads decision making process - OWNER creates a TEAM - OWNER drives innovation 12

13 Logic of Fundamental Concept The OWNER shoulders the risk The OWNER shoulders the risk The OWNER ultimately pays The OWNER ultimately pays The OWNER has the power to bring order The OWNER has the power to bring order 13

14 2005 – 2010 InterContinental Hotel Contrasting Experiences Broken schedules Broken schedules Busted budgets Busted budgets Major litigation exposure Major litigation exposure Industry driven process Industry driven process On-time performance On-time performance Budgets met Budgets met Zero litigation Zero litigation Owner driven process Owner driven process 14

15 2010 Major Cleveland Clinic Innovation Announced The initial research, development and testing of the OCTPD process ended The initial research, development and testing of the OCTPD process ended Cleveland Clinic leadership fully briefed in 2010 Cleveland Clinic leadership fully briefed in $1 billion dollars in new projects successfully completed OCTPD recognized as a viable replacement for industry led approach OCTPD recognized as a viable replacement for industry led approach Additional 3 Year OCTPD research, development and testing process set in motion Additional 3 Year OCTPD research, development and testing process set in motion 15

16 OCTPD Year (2010 to 2013) OCTPD research, development and testing process completed 3 Year (2010 to 2013) OCTPD research, development and testing process completed - Another 5 large projects successfully executed Improved process and added to our knowledge of OCTPD Improved process and added to our knowledge of OCTPD Conclusion – belief in OCTPD concepts and logic strengthened Conclusion – belief in OCTPD concepts and logic strengthened 16

17 OCTPD Validated by 10 years of experimentation Validated by 10 years of experimentation - Fundamental concepts OWNER controls OWNER controls OWNER fully engaged OWNER fully engaged OWNER leads decision making process OWNER leads decision making process OWNER creates a TEAM OWNER creates a TEAM OWNER drives innovation OWNER drives innovation - Fundamental 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 pays OWNER ultimately pays 17

18 OCTPD Value Proposition Quality improvement Quality improvement Cost management Cost management Enhance risk management Enhance risk management Reduce delivery time Reduce delivery time Enhance transparency and collaboration Enhance transparency and collaboration Greater opportunity for diversity Greater opportunity for diversity Expand Cleveland Clinic’s bran Expand Cleveland Clinic’s brand 18

19 OCTPD Innovations 19

20 FundamentalRequirements SafetyScheduleBudgetQuality Diversity/ Participation LEED Innovation Awards Efficiency of Processes Change Management Dynamic Communication Teamwork Team Building Responsibility; Ownership of Process Customer Satisfaction Patients First User/Staff/ Physician Community Owner Administration Team Goals Hillcrest Team Purpose Statement A unified construction process enhancing the community’s best hospital…“Building Excellence” Team Environment 20

21 OCTPD Team Process Executive OCTPD Team Meetings Executive OCTPD Team Meetings -Invitees - Owner, A/E, CM, DA, Users -Agenda - team focus only -Team Purpose Statement -Team Measurable Goals 21

22 OCTPD 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 22

23 OCTPD Team Process Focused Task Teams Focused Task Teams -Change Management -Schedule -OFE Coordination -Building System Commissioning -Owner Activation -Project Close-Out -Tacklers 23

24 OCTPD Team Process Project Meetings Project Meetings -OAC Meetings -Trade Coordination Meeting -Trade Schedule Review -Facility Coordination -Exec Small Group (Owner/A/E/CM) -Trade Principals Meetings -Administration Reporting 24

25 Remove “Siloization” … misaligned interests! DesignersContractorsVendorsOwners 25

26 Selection of Team Experts (Architects/GC/CM) Creation of world class design team Creation of world class design team Repeat opportunity (“select group”) Repeat opportunity (“select group”) Benefits of lessons learned Benefits of lessons learned “Working as a Unit” “Working as a Unit” 26

27 Design-Assist Concept Early selection of critical trade contractors based on Early selection of critical trade contractors based on - Qualifications - Target budget price - Compensation framework accepted Intense collaboration and transparency between “knowers” and “doers” Intense collaboration and transparency between “knowers” and “doers” Team building environment Team building environment Owner “opt out” provision for construction phase Owner “opt out” provision for construction phase 27

28 Design-Assist Results Optimum value Optimum value Heightened quality Heightened quality Cost reduction Cost reduction Risk reduction Risk reduction Enhanced schedule management Enhanced schedule management Increased operational efficiencies of facilities Increased operational efficiencies of facilities 28

29 Evolution in Technologies / Processes 29 Nuclear MedicineX-RayCTMRI The Owner Controlled Team Project Delivery is an innovative evolution of technologies and processes akin to the innovative evolutions in health care

30 Electronic Construction Records “ECR” Project metrics Data-rich to information-rich - - Job data integrated analytics Quality information available timely Collected, organized, and distributed - - Via dashboards 30

31 31 Enhanced Information and Communication Enhanced Communication Schedule Driven by Model

32 32

33 33

34 OCTPD Evolution 34

35 Process Evolution Control group of 10 projects, $1+ billion Control group of 10 projects, $1+ billion Research / test / evaluate / publish Research / test / evaluate / publish - Team building - Business processes - Management tools - Electronic construction records - Contract format Industry mentor Industry mentor 35

36 Process Evolution Today OCTPD Research Project OCTPD Research Project - Central Question Reduce costs / maintain quality / reduce risk Reduce costs / maintain quality / reduce risk 36

37 OCTPD Research Focus OCTPD Research Project targets 7 subjects OCTPD Research Project targets 7 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 stakeholders 37

38 Process Evolution Today Cost Reduction Cost Reduction - Leveraged buy on multiple projects Major MEP equipment Major MEP equipment Trade material / labor purchases Trade material / labor purchases Design assist multiple project opportunity Design assist multiple project opportunity Non-construction Non-construction Medical equipment Medical equipment FF&A FF&A - Finance Initiatives Accelerated pay Accelerated pay Reduce retainage Reduce retainage 38

39 Process Evolution Today Lean Lean - Study Action Team (SAT) The Toyota Way The Toyota Way Use of A3s on critical issues Use of A3s on critical issues - Elimination of waste / efficiency - Last Planner / pull schedule - Big Room Mini Summit Mini Summit 39

40 Summit Discussion Topics Communication process Communication process Component Team DA process Component Team DA process LEAN LEAN 40

41 Cancer Building Mini Summit 41

42 Cancer Building Mini Summit 42

43 Discussion / Q&A 43

44 44


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