Learning objectives

• Understand the details of a basic integrated project delivery partner agreement. 
• Identify project delivery practices developed through IPD that have been adopted within other delivery models. 
• Learn the kinds of efficiencies and savings made possible by IPD collaborative practices. 

Cone Health has the enviable reputation of a health care system that does not shy from innovation. In 2014, its Moses Cone Hospital North Tower expansion opened, becoming the first hospital in the U.S. to use active chilled beams in patient rooms, realizing significant energy savings while improving patient comfort. Cone continues to set precedent, becoming the first hospital system on the East Coast to deliver a major project under a true integrated lean project delivery method for the Women’s Hospital expansion on its main campus in Greensboro, North Carolina. 

Cone had operated a dedicated women’s hospital across town in Greensboro, serving the community well for decades, but it had aged to the point of needing facility refurbishment or replacement. Following a study of multiple renovation options, Cone decided to move the Women’s Hospital to the main campus, giving these patients easier access to the greater resources of Cone’s flagship hospital.  

The expansion comprises approximately 150,000 square feet of new space and 40,000 square feet of interior renovation that bridges new and existing. Spaces include: three dedicated cesarean section rooms; 18 labor, delivery and recovery rooms; fully private neonatal intensive care unit rooms with dedicated family space and private restrooms; and dedicated rooms for high-risk mothers. 

Structure 

The ILPD project team partners consisted of architect HKS; general contractor Brasfield & Gorrie; mechanical, electrical and plumbing engineer Affiliated Engineers Inc.; major MEP trade contractors McKenney’s, Adams Electric and Precision Plumbing; structural engineer Fitzpatrick; drywall subcontractor Shields; site contractor Faulkner; and low–voltage engineer IC Thomasson.  

Under the ILPD agreement, all partners agreed to perform the base contract at cost, without profit. All project profit was put at risk based on the team’s ability to deliver the project under budget. At the end of the project, each partner received the exact same percentage of the firm’s allocation of the profit pool, whether that be 0%, 50% or 150%. (At the time of this writing the number stands at 105%.)  

This created an environment where each firm truly either won together or lost together. Each team member worked “open book” and all direct costs were published. The team reviewed all partner invoices each month, with all partners able to scrutinize and evaluate each other’s efficiency.  

While several of the ILPD partnership’s firms had completed ILPD contracts in other parts of the country, this was the first for every individual representing each firm, requiring a high degree of trust among these firms. Fortunately, much of that trust had been established over the past decade, as many of these same firms and individuals together had successfully built the last major project on campus, the North Tower expansion, under a traditional construction manager at risk delivery method. 

Behavior change 

This ILPD process was successful primarily because the win or lose together dynamic fundamentally changed behavior. On a traditional project, team members often have conflicting interests due to the nature of their contracts. Change orders can drive revenue and profitability for contractors. If there is a design problem or a difficult unforeseen existing condition, the contractor can benefit by rework created by such change orders. On a traditional project, the design team has no financial incentive to work with the contractors to explore cost-saving initiatives in the field. It’s far easier to simply enforce the contract documents as law.  

The owner is the real party that suffers in this traditional arrangement, because the full financial burden is on them. None of this implies any dishonesty on the part of design or construction teams under a construction manager at risk project, only that it’s difficult to deny that financial incentive drives behavior.  

On this ILPD project, the entire team’s profit was at risk, so when the inevitable design issues, unforeseen conditions and cost saving installation strategies emerged, all parties looked at them with a team mentality: these were “our” issues to solve, not “theirs.” This isn’t to say that under a traditional contracting method these team members wouldn’t have delivered an excellent project to be proud of; the owner simply would have paid more and each firm would have made smaller profits. 

While certainly less quantifiable, the project was significantly more enjoyable to be a part of than a traditional project. Arguments and finger-pointing over scope, responsibility, design errors and site challenges were eliminated. In their place were collaboration, teamwork and the celebration of shared success. 

Strategies 

Each partner agreed to be responsible for its proportional share of the cost savings (called a “stretch goal”) required to get the project sufficiently under budget to realize the full profit pool. This led to the following innovative strategies, new to many of the team members: 

Big room: While on-site co–located design production was not part of this project, the entire ILPD team met for two full days every other week during design to update everyone on design progress, solicit efficiency advice from the construction team and brainstorm construction savings ideas that would benefit from thoughtful incorporation into the design documents. Everyone was fully informed and engaged throughout the entire design process. On a traditional project, the construction team reviews progress only at major milestones, if at all. 

Mobile prefabrication shop: Space was available on campus for the major MEP subcontractors to maintain a mobile prefabrication shop within the adjacent central energy plant. Plumbing racks, overhead corridor MEP assemblies and other items were built and tested in this shop in large pieces and craned into the building. This resulted in such benefits as increased quality control, a decrease in manpower congestion within the construction zone and, most importantly, manpower leveling.  

Without this prefab shop, all work would have been concentrated in specific areas of the building as it went up, with manpower increases as new areas were ready. Multiple subcontractors would compete concurrently for the same space. Instead, prefabrication was able to occur early and evenly, with manpower spread out over time. This greatly reduced temporary manpower spikes, which are extremely inefficient due to training and onboarding. 

Colocation of major building trades: All major subcontractors had construction offices within the same building or immediately adjacent to one another. This made multidiscipline coordination and scheduling as seamless as possible. 

Standardization of pipe sizes: The traditional design assumption is that all pipe sizes should be no larger than required to efficiently supply the required amount of domestic water, chilled water, heating water, etc. In this ILPD environment, the contractor studied progress drawings during early phases of design. Their analysis showed that standardizing on certain pipe sizes (never smaller than required), saved enough field labor and additional pipe fittings to more than outweigh the increased cost of oversized piping. The project savings was a six-figure number. 

Everything on wheels: An early decision made by the construction team was that all materials and tools used for construction by each discipline would be mobile. Most projects lose construction efficiency due to site congestion and certain trades being in other trades’ way. The first subcontractor in an area blocks physical access to others needing to work in the same area or needing to pass through these areas.  

While it required an investment in carts and wheels, site congestion became a significantly smaller concern. Fewer lost manhours led to advancement toward the entire team’s profit pool. Team members were incentivized to make each other’s work easier. 

Access to the owner: Traditional projects often have pyramid structures, where the architect has primary interface with the owner on the design side and the general contractor has primary interface on the construction side. All other consultants and subconsultants are to some extent a step removed. With ILPD, all partners are part of the same agreement and no one has to go through an intermediary to have their concerns and ideas heard by the owner. Fortunately, Cone also desired that engagement. 

MEP drawing sizes: Several converging trends led the team to question allegiance to the traditional drawing sizes of 40×32 inches, 48×36 inches or 24×36 inches: 

• Contractors have gone digital. Many projects are not built from physical drawings any longer. Contractors are using flat screens and tablets.  
• Construction software advances allow immediate access to the most recent version of each drawing. 
• Many permitting agencies are accepting — even demanding — digital plans. 
• MEP information at one-eighth scale is cluttered in Autodesk Revit, leading the ILPD team to use ¼-inch scale. These ¼-inch scale plans must be completely fragmented and broken up at traditional drawing sizes, which creates a maze of matchlines and obfuscates MEP intent. 
• Bluebeam is being used much more often for both internal and external quality control. The days of multiple hard copies of QC redlines are nearing an end. 

Responding to these factors, Affiliated Engineers committed to issuing its MEP plans at 60×84 inches, at ¼-inch scale. The engineering team chose this size because it can be printed at half–size on a traditional sheet for anyone uncomfortable with the large sheets and because it aligned particularly well with the size of our building at ¼-inch scale. Benefits included: 

• With entire floors on a single page, MEP intent is extremely easy to follow; there are no matchlines. 
• The 120 drawings at 60×84 inches took the place of approximately 500 drawings at traditional sizes.  
• The owner only wanted MEP as-builts in digital form, making the physical drawing size irrelevant.  
• The permitting agency and the contractor are both fully digital; a single full-size hard copy was printed only for display on the wall of the contractor’s trailer.  

This strategy significantly reduced production and internal review time, providing a clear understanding of design intent to everyone responsible for building the systems. Most importantly, it will leave the owner with a very clear set of floor plans for staff education and future renovations. 

Challenges 

None of this should imply that the project was perfect or without challenges. The specifics aren’t appropriate in this format, but there were times when one partner or another was not carrying its weight. Because this was an ILPD contract, the rest of the partners intervened, picked up the slack and encouraged each other to improve. In several cases, qualified partners took on the scope of other parties. If one partner failed, all would. 

Metrics 

The project will need to be complete by October 2019 to meet the owner’s financial and organizational move requirements. Substantial completion was delivered in July — four months early. The initially approved project budget for a construction manager at risk contracting method, before Cone initiated the ILPD process, was approximately $126 million. The ILPD process drove out almost all traditional fat: contingencies, the contingencies of other parties on top of those contingencies, rework, change orders, independent and inefficient labor management, etc.  

By the time final target cost was set, the project budget was $99 million, including $4 million in shared profit pool. In the end, each partner received 105% of the goal profit and the owner received a project that exceeded their expectations.  

ILPD is not the perfect solution for every organization’s culture. This project team firmly believes, however, that with the right partners and the right attitude, every project of this scale can be delivered in less time, for less money and with happier team members when everyone wins or loses together under a true ILPD contract. 

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