Case study: Using IPD to fast-track a hospital
Bayhealth Hospital, Sussex Campus is a 440,000-square-foot replacement hospital serving a rapidly growing population in southern Delaware. The hospital’s previous location was landlocked with no room to grow without disrupting the residential communities that surround it. By moving its main campus to a 165-acre greenfield site, the hospital was able to gain seven times more space than its previous 22-acre location, giving it ample room to grow along with its community.
Although every building designed today requires collaboration among partners, Bayhealth Hospital took collaboration to new heights by employing a contractually binding integrated project delivery model. The decision to pursue this method was introduced by Bayhealth Hospital, which, on a previous project, dealt with more than 2,000 change orders. At the start of the project, the client made its expectations clear: no change orders.
Key to IPD is the contract, which clearly establishes the expectations for what the team will deliver within a set budget and schedule. In the case of Bayhealth Hospital, the team agreed to a tri-party contract between the architect, construction manager and owner. The subcontractors or trade partners were adjuncts to the tri-party contract and adhered to the provisions within the contract, as well as shared in the risks and incentives. Whereas in a typical delivery model most of the project partners are concerned with their individual success, on this project, the team was focused on each other’s success — recognizing that nobody would succeed unless all of us succeeded.
This collaboration paid off. The hospital opened Feb. 5, 2019, five months faster than comparable replacement hospitals delivered via traditional design-bid-build. The project was delivered on budget with only a few change orders due to client-led scope additions.
Some of the strategies employed to make the team’s performance and the project a success were: project team assembly, organizing the project team’s structure, creating a playbook, defining the contract and setting incentives.
Once the project team was assembled, a significant amount of time was spent building relationships before designing and building the hospital. Using an outside consultant specializing in IPD collaboration, the first few weeks were focused on organizing the governing structure for the project, creating a project playbook that introduced our agreed-upon processes and standards, developing the contract and determining an incentive plan.
The incentive plan was especially critical; it acted as the “rulebook” for how the project team could achieve increased profit. The only ways to do so were to keep the final project costs below an agreed-upon threshold (dubbed the “neutral zone,” which was anywhere within a $3.5 million band around the project target cost) and to achieve set goals for 10 key performance indicators (related to safety, Delaware labor/material participation, quality control, energy efficiency, schedule, punch list, resolving and avoiding issues and conditions of satisfaction).
Success was scored throughout the project, which continually encouraged each firm to find the most cost-effective way to complete or purchase work. Whereas at one point during preconstruction project the estimate was trending toward $20 million over target, the team was able to work closely together during preconstruction and construction to drive the costs back down to within the projected neutral zone.