They got together. They broke up. They reconciled.
The story may be a common one for couples, but not necessarily for hospitals and construction companies working on projects together. But that's exactly what happened between Santa Clara County, Calif., and Turner Construction Co. recently when the county terminated its work with Turner to build a 366,000-square-foot inpatient building for Santa Clara Valley Medical Center in San Jose, sued the construction company and then re-hired Turner in January to finish the project.
Experts say hospitals and builders can dampen such disputes by considering alternate project delivery models, discussing labor with subcontractors before promising deadlines, and ensuring good communication, among other things.
“It's all about relationships and communication,” said Carl Nelson, a managing partner with Phoenix-based architecture and interior design firm Orcutt/Winslow.
Now, Santa Clara County and Turner, the nation's largest construction company in healthcare, have a good relationship, said Rene Santiago, deputy county executive and director for the Santa Clara Valley Health and Hospital System. But that's been a relatively recent development.
In September, the county accused Turner of failing to supply enough workers for what has become a $425 million project, which included construction of central support services and upgrades to a power plant. The company was also accused of failing to do the work necessary to complete it on time. Turner denied the allegations and said the county's many change orders had impeded its progress, according to news reports. Ultimately, the county agreed to pay Turner $85 million to finish the project, which it now expects will be done in the fall. Turner promised that its CEO would be directly involved in the project and new on-site managers would be appointed.
The original project was supposed to cost $380 million and be finished in 2013. The county decided to go back to Turner after an independent analysis found that completing the project without Turner could add another $126 million to the costs incurred already, not including potential litigation expenses. “Turner already had relationships with the subcontractors and were obviously very familiar with the project,” Santiago said.
Turner said it was pleased to resume construction. “Turner and the county are fully committed to completing the medical center as safely, expeditiously and economically as possible,” according to a Turner statement.
Construction experts say it's unusual for disputes to rise to the level they did in Santa Clara, but not unheard of.
Labor can often be a sore spot when it comes to hospital construction, said Coker Barton, a senior vice president for healthcare with Hoar Construction. It can sometimes be difficult to find enough workers and experienced craftsmen. That's why it's important to sit down with subcontractors early on to see how they plan to address any labor shortages. “There are all kinds of solutions, but it has be a joint decision with trust and commitment upfront,” Barton said.
Another way to prevent some common disputes may be to use an integrated project delivery approach rather than a more traditional delivery model, Nelson said. In integrated project delivery models, the general contractor, the designers and the project owner are all contracted with one another and all share some of the potential risk and reward in the form of financial incentives and disincentives, Nelson said.
“The perception is integrated project delivery is perhaps more expensive, but is it really if it has a much higher success rate?” Nelson said.
He said such models are becoming more common in hospital construction and are now used in about one-fourth to one-third of such projects.
