Sunday, December 15, 2013

Lessons Learned from 3 Years of Research

On Friday December 13, 2013 the P2SL Target Value Design Research Group met at DPR's headquarters in Redwood City. In attendance were 14 industry professionals including an architect, structural engineers, mechanical subcontractors, electrical subcontractors, electrical engineers, general contractor, and researchers from UC Berkeley's Project Production Systems Laboratory.

The group was formed in the fall of 2010 to study Target Value Design and Integrated Project Delivery on three large scale hospital projects. At the time, TVD and IPD were fairly new concepts and the initial goals for the research were:

1) Improve the target value design (TVD) process when applied in Lean/IPD projects.

2) Adapt the target value design process to other applications; e.g., proposal and bid development, design-build projects.

During the meeting Dr. Glenn Ballard, who had been one of the founders of the Lean Construction movement and the principal investigator for the P2SL TVD Research Group, presented the lesson learned from the first three years of research. Some of these lessons include:

1) TVD works.

2) We can do better by pursuing the following opportunities:
  • Alignment of interests
  • Organizational integration and culture
  • Create two design stages: design for use and facility design
  • Better use of tools, both technologies, and management practices
  • On-boarding team members

TVD Works

Since 2004, Universal Health Services has used TVD on around 50 construction projects that range in value from $500,000 to $215 million. Within the same time span, Sutter Health completed over 20 capital delivery projects using the TVD and IPD. The results from UHS and Sutter Health's projects were compared with the Construction Industry Institute (CII) data of healthcare and laboratory construction projects. The preliminary data analysis shows that there is a strong statistical significance between TVD projects and the industry benchmark in terms of controlling project cost overruns. TVD and IPD projects have also had less contingency than the industry average which might suggests that collaboration is a better way of managing project risks -- reducing both the likelihood and consequences of project failures. The final results will be published in the upcoming conference of International Group of Lean Construction (IGLC) in 2014.

Alignment of interests

  • Exclude from the risk pool only companies whose scope of work can be fixed and whose interdependence with others is negligible
  • Structure commercial terms to reduce temptation; e.g., avoid imbalanced overhead vs profit rates; make sure everyone has the potential to make adequate profit.
  • Assess potential risks as financial conditions change.
  • Educate senior managers of risk pool companies about risks and rewards in the contracting process. Don’t neglect CFOs.

Organizational and Culture Integration

  • Educate team members about the importance of speaking up—e.g., 1) raise your hand the moment you lose confidence that you can deliver on your commitment. 2) When you have a question or a concern, say so.

  • Manage meetings as recommended in “How to Make Meetings Work”.

  • Make sure TVD ‘clusters’ don’t get isolated; move money across boundaries.

Create Two Design Stages: Design For Use And Facility Design

  • Don’t start designing the building until you understand how the building will be used to deliver its business purpose; e.g., to deliver healthcare.

  • Ask how the project’s target cost is related to the client’s allowable cost-what they are willing and able to spend.
  • Progressive specification is the typical architectural design strategy. Its challenge is that nothing is complete until everything is complete—the ultimate big batch. OSHPD’s phased plan review implies a different strategy; one that requires learning how to design functions and components in such a way as to leave room for functions and components not yet fully designed. This flexibility looks to be achieved through buffering (e.g., leave additional space, provide additional bearing capacity, etc.) but perhaps also through standardization of interfaces, which is linked to modularization.

On-boarding team members

  • Discuss and prepare for differences in roles
  • Now everyone is responsible for project governance
  • How to assure that all firms have needed management systems and skills?
  • Educate in lean thinking and problem solving
  • What does collaboration really mean?

Better use of tools, both technologies and management practices

  • Use CBA, Set-base Design, Design Structure Matrix, Last Planner to manage the target value design process.
  • Rethink the purpose and role of co-location by leveraging tele-conference technologies for communication.
  • Use a distributive version control system such as Git to keep version history, document changes, and share documents with the IPD team.
  • Use monitors to display Key Performance Indicators (KPIs) rather than print them out to ensure that the most updated information is on the walls.