Integrated construction model may have saved $200 million on new UCSF complex

One of the largest healthcare projects ever built through the integrated-project-delivery approach opened last month. And project leaders in charge of building UCSF Medical Center's $1.5 billion, 289-bed Mission Bay complex in San Francisco say the collaborative IPD approach reduced the total cost by $200 million.

“When we were starting to set this project up, we set the business terms to make sure all the participants knew what they were accountable for and how to deal with it collaboratively,” said Stuart Eckblad, UCSF Medical Center's director of design and construction. “It wasn't just handing out the contract and saying, 'Here it is.' ”

The IPD approach allowed the project partners to absorb some $55 million in late-in-the-game changes without being thrown into turmoil, he said. For example, beams were already going up when it was discovered that the extra steel needed to support a rooftop garden would cut the required ceiling height for the operating and C-section rooms planned below it.

Laurel Harrison, who worked on the Mission Bay project as a principal in the San Francisco office of Stantec architects, said having everyone involved work on the problem together led to a satisfactory solution that involved just a slight shift of the rooms. “It was the kind of situation that could have resulted in a not-so-nice compromise,” she said.

Collaborators in hospital construction projects often say that after using the integrated-project-delivery method, they never want to go back to the traditional process because the new approach reduces the multiple rounds of designing, bidding, rejecting, revising and litigating.

But results of Modern Healthcare's 36th annual Construction & Design Survey suggest that interest in the IPD approach is flattening. Some experts speculate that this is because IPD is better-suited to bigger projects and healthcare is on a downsizing trend. But others say people are using IPD precepts even if they don't realize it.

In this year's survey, 49.6% of respondents reported working on an IPD project, down from 56.9% last year. The number of IPD projects reported for both years was 641.

The American Institute of Architects' California Council defined IPD in 2007 as an “approach that integrates people, systems, business structures and practices into a process that collaboratively harnesses the talents and insights of all participants to reduce waste and optimize efficiency through all phases of design, fabrication and construction.”

The traditional construction approach involves designers and contractors working in silos, heightening the risks of miscommunication and the need for revisions. In contrast, IPD pulls architects, contractors, subcontractors and hospital owners together from the start to quickly resolve conflicts and push projects forward under shared risk-and-reward financial arrangements.

About 56% of respondents who worked on an IPD project said the methodology saved time. But only 37.5% said all the IPD projects they worked on included a shared risk-and-reward contract, while 41.7% said none had shared risk and reward.

Henry Chao, principal and healthcare design director for HOK architects in New York City, said IPD's focus on shared risks and rewards had been gaining popularity until the 2008 financial crash. “Now, if you're the owner, why do I want to share anything?” he asked. “What's the incentive if you have hungry contractors out there?”

He added that project speed was more important when it was more expensive to borrow money. Now that the costs of borrowing are lower, Chao said, some of the incentive to build fast has also come down.

Still, Andrew Quirk, senior vice president and national director of Skanska USA's Healthcare Center of Excellence, said Skanska was pursuing three East Coast projects that were true IPDs with shared risk and reward.

Eckblad said projects have to be a certain scale for IPD to work, but no one knows yet what the minimum size is. “A one-year project probably can't bring people together to make this work,” he said. “It's a question of complexity and being able to respond to an unanticipated amount of change.”