Category Archives: Budget

What Project Delivery Method is the Right One for Your Project?

There are many ways to deliver a project but the most widely used methods are (in alphabetical order):

Construction Manager – Agency Services (CMa)

Construction Manager at Risk (CMaR)

Design/Bid/Build (D/B/B)

Design/Build (D/B)

Integrated Project Delivery (IPD)

In many instances, there are variants of these delivery systems. There is no one approach for all projects, so it is critical that the Owner’s team thoughtfully considers the various delivery methods and determines which one will serve their best interest.

Please note that we have not covered all of the pros and cons for each of these delivery methods, so we invite our readers to share their thoughts and ideas and we will update this blog as we gather comments.

Construction Manager-Agency Services:  The CM acts as an agent/consultant for the Owner.  This is typically used when the Owner does not have the resources to handle the management of the development.  This delivery method will accommodate a wide range of project sizes.  This method is also used when the Owner wants a consultative arrangement only and accepts the risk of holding all construction contracts.

The advantages of the Construction Manager-Agency Services are:

  • The Owner has direct control of all contracts.
  • This method allows for accelerated construction.

The disadvantages of the Construction Manager-Agency Services are:

  • The Owner has direct control of all contracts, as well as the direct risk
  •  A CMa carries no risk, the Owner carries all risk.

Construction Manager at Risk:  The Contractor holds all the sub-contracts for the construction project.  This project method is used when the Owner needs budgeting, scheduling and constructability services in early phases. This method generally has some form of a negotiated basis in the selection.  It is used when the Owner wants to shed the construction risk or when the Owner wants the CMaR to drive the scope and cost in the early stages of development.  It may also be used when the Owner has an established relationship with the CMaR, for large,  complex multi phased projects.

The advantages of using the Construction Manager at Risk project delivery method are:

  • The contractual/financial risk for sub contractors is held by the CMaR.
  • There is a single point of responsibility for construction.
  • This project delivery method allows accelerated construction and start with early bid packages.

The disadvantages of using the Construction Manager at Risk project delivery method are:

  • There is an opportunity for adversarial relationships to develop ( Designer vs. Contractor).
  • The determination of the final price might be pushed out further into construction, since construction may start before a final Guaranteed Maximum Price is agreed upon. (This may be both a pro and con.)

Design/Bid/Build:  A familiar process in the market typically used in remodel/expansion or new development where the Owner generally takes a very active role in design and the Owner requires a hard bid process.

The advantages of the Design/Bid/Build project delivery are:

  • The Owner has substantial control.
  • The Owner has the ability to select all team members.
  • With a complete set of bid documents, there is a greater ability to competitively bid the project.

The disadvantages of the Design/Bid/Build project delivery are:

  • The process is sequentially “linear” and thus may take longer.
  • There is an even greater opportunity for adversarial relationships to develop.
  • This project delivery requires all construction documents to be complete prior to bidding and start of construction.

Design/Build:  A single point of responsibility and accountability for new “Greenfield” developments, and standardized building design, where a faster schedule/turnaround may be required or where the project might be a highly financial driven development.

The advantages of the Design/Build project delivery are:

  • There is a single point of contact.
  • The design and construction team have aligned incentives.
  • This project delivery will allow for accelerated construction
  • This is a cost driven model

The disadvantages of the Design/Build project delivery are:

  • The “checks and balances” within the team may not be as effective.
  • There is a perception that there may be a greater opportunity/incentive for the Design Build firm to “cut corners”, since it is a financially driven model.
  • The Owner may not have the ability to select what they believe to be the best team members from various firms.

Integrated Project Delivery (IPD):  This delivery system is where the Owner, Architect, and Contractor all enter into one contract and work as a collaborative team to complete the project.  The team as a whole shares the risks and rewards in the overall budget, schedule and quality of the project.  All parties involved in an IPD have an incentive to meet the target schedule and budget goals and in some cases an incentive approach is established to reinforce these goals.

The advantages of Integrated Project Delivery:

  • There can be cost savings to the Owner due to incentive programs to meet or exceed the established budget and/or schedule.
  • Transparency through the process.
  • Reduced risk of design and construction conflict and defects due to a teamwork approach.
  • Faster project completion time.

The disadvantages of Integrated Project Delivery:Owners, Architects, and Contractors might be unfamiliar with IPD approach and therefore reluctant to participate.

  • Owners, Architects, and Contractors might be unfamiliar with IPD approach and therefore reluctant to participate.
  • It might be difficult to get all of the parties involved to agree to the same contractual terms.
  • The Owner might have difficulty securing financing for the project because lenders might not be familiar with the IPD approach.




ACHA stands for American College of Healthcare Architects.

ACHA provides Board Certification for Architects who practice as healthcare specialists. Their membership includes healthcare architects throughout the United States and Canada with specialized skills and proven expertise in healthcare archtiecture.

Before earning the ACHA Board Certificate, healthcare architects must document their experience and demonstrate their skills through a computer-based examination. ACHA requires its Certificate Holders to work towards the improvement of healthcare architecture on behalf of the public, to practice in an ethical manner, to maintain high standards of specialized continuing education, and to add to the body of knowledge.  ( The above description retrieved from the website: date: 9-3-2015. )

The Architectural Selection Process

Aerial Photo of Silver Cross Hospital in New Lenox, IL

The process of selecting and hiring an architectural firm varies from project to project. Many healthcare projects are more complex and challenging than other building types, so prior experience is a must. The following provides some advice when selecting an architectural firm.

1)      Determine if there are any selection process or procurement requirements (do’s and don’ts) by the lender, regulatory authority or by the ownership structure (such as a municipality or district).

2)      Assemble a selection committee, with representation from the hospital leadership, board of directors, physicians, nursing and facility staff.

3)      Establish specific selection criteria.

4)      Determine if you will utilize a one-step or multi-step selection process. In a one-step process, the owner generally requests qualification-based information and may also request fee based information. In a multi-step process, typically a request for proposal is advertised or sent to a select long list of firms, a short list is determined, then a request for fee proposal is sent out, interviews are held and a final selection is made. There are also certain states that will only allow a qualification-based selection process.

5)      Determine a realistic timeframe based on the process that you utilize. The Architectural firms need approximately two weeks to respond to your request.

6)      Speak with fellow hospital executives who have hired architects and learn from their experience.

7)      If you go the route of a request for proposal (RFP), then work with your legal counsel to create an agreement that is sent out with the RFP. The AIA has template agreements that can provide a good starting point. I always like to provide the architects an agreement that properly states the terms and conditions and as well clearly states the scope of services that you expect the architect to provide. I cannot stress enough the importance of making sure your agreement includes a complete scope of services.

8)      Since you will be living with the architects for 2-4 years, your selection committee will want to meet them face to face to get a sense of their communication style, group presence, experience, sense of flexibility and chemistry with the hospital team and amongst themselves. What you read in their proposal and see in person can sometimes be vastly different.

9)      While this sounds self serving, I don’t mean it that way. To provide a properly articulated request for qualifications and/or request for proposal, I would suggest that you contact a firm that assists owners in hiring consultants, such as a project management firm. They can and should also assist you in defining the contractual scope of services.

10)   If you do nothing else, please check the firms’ references. You would think that they would only provide good references. That is not always the case. I have found that with 1 out of 10 references, there is a bad reference. Amazing, but true.


The term “lean” was coined to describe Toyota’s business processes during the late 1980s by a research team headed by Jim Womack, Ph.D., at MIT.  It refers to the perpetual reduction of waste (non-value adding goods and service) in processes by a highly disciplined approach to innovation, and in turn, deliver more value to the customer.   The characteristics of a lean organization are described in Lean Thinking, by Womack and Dan Jones.

Integrating Lean Planning With Your Project

lean fig3

As hospitals and clinics struggle to balance rising costs with revenue threatened by reform and changing payer mix, capital investments, such as building renovation and expansion, must bring tangible savings.

As never before, preparation prior to construction should include a deliberate assessment of operational efficiencies, throughput, and flexibility to be gained. Construction, either new or renovated, offers a rare opportunity to resolve chronic process “work-arounds” and poor space utilization. An examination of work-flow using Lean Principles, ahead of and during design, can be applied to effectively guide the development of improved processes, and in turn, a more durable facility. The facility design should support best practices, not vice versa, and avoid an awkward post-construction conversation with clinicians and staff, “why didn’t you consider…?”

As you look forward to an opportunity to make a transformational change with the project (large or small), consider the following:

  • Does your design team understand the opportunities in improved process flow? Have they examined how much “waste” in current processes hinders your staff from optimal performance?
  • Has a clear vision of expectations for the facility been developed? Beyond replacement, are the objectives for the new facility stated in very tangible ways, and how process flow will be improved?
  • Have you planned for “designated parking spaces” for movable equipment and Kanban for supplies to promote seamless transitions? These tools help prevent staff from searching for needed items and delays in care.
  • Is the concept of standard work or “the best and accepted practice” embraced, and considered in the design of the new facility? (This is a hurdle for some organizations, but pays remarkable benefits when achieved.)
  • Does the facility plan anticipate use of visual management tools and standard placement of supplies to promote, support and sustain process flow?
  • Is there deep and sustained involvement by the front line staff and clinicians who deliver the care and understand current defects?
  • Beyond the design process, is there a plan to operationalize the concepts imbedded into the design so the planned efficiencies are achieved?
  • Have you incorporated mock-ups and simulations to validate planning assumptions to deliver a more detailed and practical design?
  • Has the design anticipated evolving medical practice, technology and equipment change?

Borrowing from the success of other industries, health care organizations are leveraging these concepts to get the full yield of new construction, including:

  • Efficient and flexible use of space, and potentially less build out
  • Reduced change orders due to more rigorous and effective planning
  • Clarified processes, with reduced variation and greater support by the users
  • Improved satisfaction of staff and clinicians
  • Better service to your customers

By integrating these design techniques into your planning efforts and deliberately focusing on workflow, the full benefit of a new facility can be achieved.  
Assess the skills on your design team and determine if they should be augmented. 
Do not ignore this unique opportunity. Transformational improvement can be achieved with focus on workflow in the planning process, and without significant investment. Other health care organizations have done it. You can, too.

Dan Schowengerdt of Schowengerdt Consulting, located in Minneapolis authored this article on Integrating Lean Planning into your Project. He is LEAN certified, a former health care operations executive and now LEAN Consultant.  More information about his practice is available at

FF & E

This months Term is:  FF & E

The acronym FF&E stands for Furnishings, Fixtures, and Equipment.  While there is no hard and fast definition for what items are considered FF&E, generally in our industry these are items that the owner is expected to provide rather than the contractor.  These generally are movable items that do not have any permanent connection to the building.  Examples of FF&E items would be desks, chairs, sofas, tables, partitions, refrigerators, window coverings, soft goods, etc..  FF&E sometimes is also expressed as FF&A (Furnishings, Fixtures, and Artwork).  Medical Equipment and FF&E are considered two separate categories when planning and building healthcare facilities.  Medical Equipment can be larger, more expensive items that need to be designed and sometimes built around or smaller items such as stethoscopes.

Benefits of Building Mock Up Rooms

IMG_0248At the start of the design process, two of the very best things you and your staff can do is; 1) to tour other healthcare facilities that have similarities to your future hospital and 2) build mock-up’s of those rooms that will be repeated in your facility, are highly technical, or are undergoing significant changes in workflow processes; for example, patient rooms, ED exam rooms, trauma rooms,  clinic exam rooms, procedure rooms, ORs, PACU head walls, and pre-post rooms/recovery rooms.  One might also consider areas such as nursing cores, work stations, or touch down areas if they will be significantly different spaces than your staff is used to in your existing facility.

In this post, we will focus on the value and type of mock up rooms. The earlier the mock up rooms can be built in the design process, the better. So start looking early for space where the staff can have easy access and where the mock up rooms can stay standing during the design process, so refinements can continue to be made. It is important to document with notes and photos for future reference. Many healthcare organizations have taken the mock up rooms to the next stage by having actual simulations in the room. The healthcare staff determines the most repeated procedures and simulate them, including equipment, furniture, technology and supplies.

The level of “finish” of mock up rooms can vary from very basic; foam board walls, cabinetry, wall mounted items drawn on the wall to rooms that are finished out like the real room. The costs vary considerably, but whichever route your organization chooses, you will receive much greater value than you invested in building the room.

The benefits of a mockup:

  •  Rooms to be Duplicated – To make sure you get a room exactly how you want it before it is duplicated in construction a number of times, this is certainly beneficial the more repetition you have. IMG_0254
  • Confirm the Room Size – We were asked to reduce the space program to align with the budget.  As we worked through Design Development, we were testing the proposed size against the simulated processes by the staff, including cabinetry, equipment and furniture.  If the room size needs to be changed, then this is the stage where you should catch it.IMG_0258
  • Confirm the Room Layout – The hospital staff in many cases may find it difficult to understand floor plans.  Building a mock up rooms brings the scale, access, spatial relationships and “fit” of the room much clearer to everyone.IMG_0367
  •  Confirm power, switching, med gases and equipment locations – This is an added benefit at this stage.  The users can do simulations to nail down exactly where these items need to be mounted.  Yes, we can do this in the construction phase, but if these items have been located in the building under construction and the staff wants to change something, it could impact the schedule as well as costs if there are significant changes in the field.IMG_0275
  • Constructability Issues – Mock up rooms also allow the ability of the proposed design to be tested for constructability by the contractor. The designers can learn about potential design complexities and conflicts, so they can be modified and corrected in the drawings before the real rooms are built, saving potential change orders down the road.IMG_0249
  •  Practice Simulations- Have the staff simulate procedures and care routines.  This is also a time to have a Lean Planner involved, who can reduce steps, improve safety, and reduce the physical awkwardness for nurses and other staff while caring for a patient.IMG_0287

Physical mock-ups of a project’s most complex and repetitive spaces allow the staff, designers and builder to quickly analyze design alternatives, save time, reduce risk, and solve design and constructability issues prior to the start of construction. Room mock ups also allow the owner to ensure the best possible layout and space utilization. Room mock ups allows form a physical evaluation of a room to ensure it is the right answer by saving time, money, waste and aggravation.