Owners Seek Cure For Projects
by Paul Rosta
The author is a correspondent for The McGraw
-Hill Cos. He lives and works in Los Angeles,
where he reports on industry issues in California.
varied health-care institutions are caught in a competitive
vise as they struggle to expand
facilities, keep up with new technology and still contain
costs. A small but growing number of owners are breaking
with traditional project delivery and are using design-build
to address their needs.
has been around for years in the health-care community,
but primarily for medical office buildings and other relatively
small facilities. When it comes to hospitals, design-build
is still relatively new. "The larger, more sophisticated
hospitals, particularly major urban or suburban facilities
and teaching hospitals, have not been quick to grab the
design-build approach," says Bud Guest, senior vice
president for St. Louis-based McCarthy Building Companies,
Inc. "So major projects have been few and far between."
or not, design-build is winning enthusiastic supporters.
"I think design-build is the up-and-coming change as
more and more owners become knowledgeable of its benefits,"
says John Carter, a longtime construction executive and
now director of construction for Phoenix-based Banner Health
System. "If I had my druthers, I would go with design-build
first, then design-bid-build."
overseeing construction of a 60,000-sq-ft regional hospital
in rural Susanville, Calif., by St. Louis-based HBE Corp.,
Carter gladly reports: "This is just great for me.
I haven't had to sweat bullets on anything."
M.D. Anderson Cancer Center is using design-build for
the first phase of a campus development.
design-build's role in health care may still be limited
largely because hospital owners tend to stick with tradition.
"I just don't think that the health- care industry
has reached the point where they're comfortable using design-build
across the board," says Dan Johnson, senior vice president
for Minneapolis-based M.A. Mortenson Co. Owners seem to
feel more comfortable trying design-build on smaller, less
complex projects like medical office buildings or ambulatory
care centers. "The biggest hurdle that design-build
has to get over in health care is the general feeling [among
owners] that what they have is working fine," Johnson
is another problem. "I think a lot of owners are confused
about design-build, linking it with lower quality or higher
costs," says Bill Daigneau, vice president for operations
and facilities management at the University of Texas' M.D.
Anderson Cancer Center in Houston. Some owners feel uncomfortable
without a low bid. But Daigneau counters, "You get
a very low bid at the front end [with conventional design-bid-build],
but you're not getting a low bid on change orders."
misconception is "that you can use design-build only
for the plain-Jane" projects, but not for large, complex
facilities, says Tim Hess, director of preconstruction services
in the Houston office of Hensel Phelps Construction Co.
Belying that point, the firm currently is teaming with Houston-based
FKP Architects on the Anderson Center's $347-million, 746,000-sq-ft
ambulatory clinical building. The building is part of a
development that ultimately may include 2 million sq ft
of space in four clinical buildings and two parking garages.
and consultants most often place schedule at the top of
their list of reasons for using design-build. Hospitals
"have a revenue stream that's waiting to happen and
it can't start until that facility opens," says Doug
Wignall, vice president and principal for health care with
Omaha-based HDR Inc. Hess estimates that design-build can
cut the usual 6 to 10-year lead time for major medical facilities
by up to 50%.
thought led the University of Colorado Hospital to switch
gears and choose design-build for it's new $110-million
Anschutz Outpatient Pavilion, part of a $744-million development
in Aurora at the site of the old Fitzsimmons Army Medical
Center. The new facility includes primary and secondary
ambulatory care, 180 exam rooms, outpatient surgery and
recovery rooms, and diagnostic facilities. The hospital
selected a team led by McCarthy that included Denver-based
contractor Gerald H. Phipps Inc., HDR and Denver-based H+L
Architecture. The project could have taken anywhere from
38 to 45 months to complete, but design-build allowed occupancy
in just 24 months and final completion of the 476,000-sq-ft
facility in March 2001, only 27 months after contract award,
and building each type of medical facility presents a unique
challenge. "There's a tremendous difference between
a medical office building and a tertiary or primary medical
facility," says David A. Reece, vice president at Etkin
Skanska Design-Build Inc., Farmington Hills, Mich.
hospital is "a very complex building type," with
a bewildering variety of systems and spaces, says Jim Young,
partner in charge for integrated delivery in the Columbus,
Ohio office of NBBJ Inc. And the design itself has long-term
implications. With nurses and other staff at a premium,
"operational efficiency has to be built into the facility,
because staffing is so hard to come by," notes HBE's
Steve Cobb, regional vice president for business development
at St. Louis-based HBE Corp.
purchases complicate project process. (Photo
courtesy of HBE Corp.)
variety of functions and services within a hospital requires
the design-build team to absorb extensive input from hospital
staff. That interaction requires the design-builder to perform
a delicate balancing act, incorporating recommendations
and requests without compromising quality of care or busting
work is demanding. HBE's Cobb, who spent 25 years working
as a health-care administrator and consultant, says that
many health-care executives "really don't have a good
comfort level for what they're planning. Their goals may
not be as realistic as they should be."
40 different user groups at the Anderson Center, three to
four sessions per group are "what it takes to get where
you're headed, and that's a lot of meetings," Hess
challenges also impact team leadership. Some contractors
say that perhaps 60% of hospital projects tend to be contractor-led.
Yet the complexity of hospital projects, and design's traditional
preeminence with owners, has encouraged an unusual number
of designer-led design-build projects.
still has a very strong focus in terms of patient care and
how the facility functions," says Mortenson's Johnson.
"Rather than have the contractor leading the effort,
the owner is more interested in stronger design input,"
says Jim Pine, HDR's national director for health care.
Wignall contends that "your typical builder, and even
your atypical builder, doesn't have the ability to do the
[design] complexity required" for a big medical center.
In contractor-led design-build, "the owner doesn't
get to pick his architect. The building is really the commodity,"
claims NBBJ's Young. As a result of these and other issues,
"I think designer-led design-build is probably better
positioned to have that comfort level of trust within the
industry," says Betsy Downs, president of design-build
practice for Chicago-based OWP/P Inc. As team leader, OWP/P
holds the contract with the owner and assumes the risk for
construction and design. "We have to be very careful
about teaming with a contractor we know and we trust,"
says Downs. But the increased risk usually turns out to
be more benefit than burden: "We actually like it because
it puts us back in the master builder position," Downs
scientific advances also add to the challenges of the design-build
process. "The technology changes every day," says
Anderson's Daigneau. A leader in both research and patient
care, the institution offers what Daigneau calls the "bench
to bedside" approach, giving its patients the benefits
of its latest research. But rapidly changing technology
compels designs that are both flexible and forward-looking.
Complicating the task, Hess finds that "institutions
want to delay programming decisions as long as they can
so they can fit new facilities with state-of-the-art equipment."
For example, "we find that our clients don't want to
make their major equipment decisions until less than a year
before completion," he says. NBBJ's Young says that
owners "are continually making really significant decisions
all the way to the end of the project," a practice
that makes completing the project "really tough in
the traditional design-build mode," Young says.
At Anschutz, like many other facilities,
the solution turned out to be a change-friendly, highly
adaptable modular design, says Guest. And, the team of LCF/Etkin
Skanska is going to great lengths to guarantee easy future
expansion of William Beaumont Hospital's $70-million, six-story
west wing in the Detroit suburb of Troy. The entire third
floor is dedicated to mechanical systems, a strategy that
will make for easier expansion of the 240,000-sq-ft facility.
Waterproof floor slabs protect the noise and leak sensitive
surgical suites that will be directly below, Reece says.
fast pace of many hospital projects raises both pressure
and productivity issues. For the Anschutz project, "the
front end was critical. We had to get a lot figured out
fast because ordering structural steel depends on completion
of the basic grid. We went from a blank sheet of paper to
a steel mill order in a little over three months, and a
schematic design for the entire 476,000-sq-ft facility in
six months," says HDR's Wignall.
say owners also must step up to the plate to assure a project's
success "If time is of the essence, the owner has to
be prepared to make decisions quickly and stick with the
decisions that are made," says Downs.
designers and contractors all agree on the importance of
having at least one seasoned construction pro on the staff.
"My personal opinion is that you need more knowledgeable
staff to do design-build than to do CM-at- risk," says
Bruce Ringwald, general manager of construction for the
Arizona Dept. of Adminstration. "If you have a design-build
company doing work for your hospital, you should probably
have an experienced construction professional on the staff,"
says Banner's John Carter, a construction industry veteran
before he joined the health-care company.
Health used hybrid design-build to have maximum design
input on its Del. E. Webb Memorial Hospital in Arizona.
(Photo courtesy of McCarthy
Building Co Inc.)
projects in Arizona, both of similar contract value, suggest
the varieties of design-build in play in health care. This
fall, the Arizona Dept. of Administration is overseeing
completion of its first-ever design-build projecta
$34.5-million mental health facility in Phoenix built by
a team led by McCarthy that includes local architect Gould
Evans Associates, and Los Angeles-based Cannon & Associates.
Ringwald says that "we signed a contract for the full
amount of the project before we started the design."
Arizona owner wanting a strong say in design took a much
different approach. After selecting McCarthy, Dallas-based
HKS Inc. and Stein/Cox of Phoenix for an expansion and renovation
project at its Del E. Webb Memorial Hospital in Sun City
West, locally based Sun Health essentially told the team:
"We'd like you to proceed but not take risks."
Health used what Richard M. Crowley Jr., McCarthy's project
director, calls an unusual hybrid approachto accept
a guaranteed maximum price only after completion of design.
Only then did the firm take subcontractor bids. This approach
resulted in a $34.5-million price and "gave the owner
maximum input in design," says Crowley. And because
delaying the GMP reduced risk to the design-build team,
the contingency could be reduced accordingly, says Crowley.
"We were able to offer the owner a GMP with low risk
to us," he says. "It's a new twist."
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