Achieve optimal cost and flexibility through an integrated approach

By: Mike Duffey and John Gill

Birmingham, Alabama - As they set about the task of locating production facilities in the right places at the right times, they need to approach the delivery of these facilities carefully with a trusted professional resource that offers strict quality compliant and safety focused services. Using an integrated approach, these companies can create more predictable project designs, and at a lower overall cost, than in the past. Already a world leader in the auto industry, SSOE is spearheading this effort. Design leaders are translating SSOE’s implementation of an integrated approach into the aerospace industry.  Engineering, Procurement, and Construction Management (EPCM) is the preferred method, whereby the designer and construction manager are parts of a single entity that brings all the information to the table from the beginning. For the client, it offers a straightforward project delivery solution. 

Integrated Approach. An integrated approach entails a formal commitment by both parties—owner and design/construction—to be closely involved in planning a project and sharing the risks. An integrated approach, which is an outgrowth of earlier frameworks such as lean product development, offers key competitive advantages in the areas of cost and agility.  The concept of integrating the client, engineering, and production (construction) into design was borrowed from aerospace processes (known as concurrent engineering) as recently as 10 years ago and applied to the construction process. The objective is to get all players to work together before, during, and after the construction phase.

As an example of how an integrated approach looks, the project manager convenes a meeting with facility and operations representatives from an owner, the design team, cost estimator, and a procurement specialist from the construction team. Together, they plan the design phase of the project. It’s as basic as a group of people collaboratively writing on sticky notes and pressing them onto the wall. The meeting establishes many aspects such as which phases must be scheduled sequentially and which ones could happen concurrently or be accelerated by offsite fabrication. The key is having all parties in the same room at the same time, working toward a common goal, contributing their expertise to optimize the process.

The VDC Advantage. By establishing a collaborative virtual environment, Virtual Design and Construction (VDC) transforms the sequential work processes of designing, constructing, and operating a facility into a concurrent, more transparent and fluid process. Rework and waste that stem from the handoffs of 2D drawings from one party to another are substantially reduced. Giving construction partners real-time access to the design model shifts critical path activities forward, which can significantly shorten the schedule. VDC can be executed in varying degrees under any kind of delivery model (EPCM, design-build, and design-bid-build). However, because design is the single biggest factor impacting construction cost, functionality, and usability of a facility or process, VDC is most valuable when there is early collaboration between parties through a highly integrated delivery method.

Conditions for Success. For an integrated approach to function healthily, the following conditions must be satisfied: First, the people who are running the process must be willing to facilitate a larger group of players than just those within their own company. Also, the players themselves must be prepared to participate. Because the participants in the design meetings must devote extra upfront time investment, an integrated approach appears at first to increase cost. One quickly realizes that the old-style project delivery fee structures do not cover such costs. However, for owners, the requirement to make this investment and participate in the early effort is motivated by the promise of a much more significant downstream reward. Everyone gets paid for their raw cost to participate; costs are tracked, and the budget is adjusted accordingly.

An integrated approach sets the table for VDC techniques that are difficult to use otherwise. Combining the integrated approach with VDC allows design models to flow directly into fabrication. The upfront integration allows for thorough examination—which brings the confidence needed to pass design over to fabrication earlier in the overall project development life cycle. 

The second condition for success is doing design and construction planning with 3D modeled data—the platform on which all of these processes build.

As an example, in a recent SSOE project, the upfront integrated approach investment was able to cut the schedule from 23 to 13 weeks—a 40% reduction in the schedule—which translated into a giant step in time to market for the client and increased revenue that more than paid for the investment. A similar project saved $300,000 in scope items, which accounted for up to 19% of the original budget. That savings was then rolled into other scope items.

With an integrated approach, the owner's commitment changes from looking at the model just a few times—typically, at milestone meetings—to every other week (sometimes weekly) throughout the process. Because engagement is more robust, the client becomes more familiar with the project and has correspondingly more opportunities to provide input. This, in turn, enables the client’s input to occur earlier in the project development life cycle.  It makes the client’s input richer. It becomes more detailed and impactful and less likely to change during construction.

An integrated approach demands a more transparent and collaborative teaming environment, which consequently demands more trained and sophisticated team members. This becomes increasingly difficult because of the scarcity of skilled labor currently impacting the construction industry. An integrated approach with a single entity addresses the collaboration and personnel challenges better than one in which all the parties are from separate organizations. 

An integrated approach allows the project team to adapt more easily to the reality that the owners don't have an adequately detailed scope when they launch the project. Because scope is not fixed and detailed at the beginning, the team faces a quandary of how to accommodate to a changing scope as the owner's process requirements become more established. An integrated approach increases visibility and allows the team to adapt with markedly less conflict than that which usually arises with the negotiation of change orders midstream.

Agility and Flexibility for Better Quality, Accuracy, and Lower Cost. An integrated approach increases agility and flexibility by increasing efficiency and effectiveness. The project team relies on the 3D model and the ability to quickly adapt as the project develops through stages in the virtual world. In non-integrated approach projects, contractors often do laser scanning after the design is done to validate the constraints by which they are going to construct the design. By contrast, SSOE teams utilize front-load laser scanning so it is available to all parties earlier. This eliminates the design-related rework, post-design detailing, and even construction layout, which would have been necessary if the team waits to validate conditions downstream.

Using prefabrication and modularization, the team can buy time to respond to unforeseen circumstances. Prefabrication has improved the efficiency of construction sequencing. In the old system, most of the components were stick-built on-site. This meant the project had to wait for a procession of tradesmen to go through the area: pipe hangers, followed by piping, the ductwork specialist, the electrician—essentially a parade of waiting. However, if you prefabricate these components as a module, more of the work that used to require sequential steps can be done in parallel. It especially speeds up the projects that require considerable overhead work, which by their inherent nature can  be very slow. More of that type of work is done at benchtop level in the shop, where it is not saddled by the field constraints. In a safer and more controlled development environment, it has a smaller impact on existing business operations. Getting more people involved in designing these phases reduces the number of sequential handoffs. It also eliminates gaps between senders and receivers of information, which is often where problems occur.

Cost. With respect to cost in today’s market, clients look at construction the same way they look at personal computers. Each new project should cost less and do more. A rise in cost is startling unless accompanied by improved features and performance. Manufacturers building new facilities expect every project to cost less and do more. Inflation continually drives up cost.  SSOE is driven to counteract potential increased costs by delivering increased value via a better project solution while focusing on achieving  breakthroughs in performance and  eliminating waste in the schedule.

An integrated approach helps to minimize request for information (RFI) surprises by eliminating many issues that would have normally become RFIs. A 2012 study of the impact of RFIs estimated the cost to the project team of administering a single RFI ranged from $1000 to $1500, not including any embedded costs of corrective action. Construction projects typically incur 15 to 20 RFIs per million dollars of execution cost—essentially a built-in penalty cost. By eliminating the causes of RFIs—misunderstanding, and poor communication—you can see a cost benefit in six figures. The Lean Construction Institute (LCI) with Dodge Data & Analytics conducted a research study with 32 owners. Analyzing the responses, the two groups concluded the following: “For a typical project, most key stakeholders are not engaged until the design development stage or later. For best performing projects, most key stakeholders are engaged during the conceptualization stage or beforehand.” Furthermore, “most typical projects complete behind schedule (53%), over budget (66%),” whereas on best performing projects, “cost is improved even more than schedule.”

Applications to Aerospace. Historically speaking, VDC originated in the aerospace industry. The product design process for aircraft and spacecraft employed by aerospace companies for more than 20 years—such as virtual prototyping and detailed 3D modeling prior to fabrication—was borrowed as a model for improving the design process for construction. As mentioned earlier, this is known as concurrent engineering in the product design world. SSOE takes concurrent engineering principles and translates them to the construction project team environment, where it is now known as an integrated approach. In the aerospace world, the people side of the process, i.e., stakeholder engagement, is always coupled with the virtual modeling of the product. An integrated approach covers half of the equation. The other half is the VDC piece. This is why SSOE always folds the two together. The highest success formula is to pair an integrated approach with VDC.

Finally, aerospace manufacturers are like auto producers in seeking greater schedule and cost certainty. Their emphasis is even higher when it comes to safety because, as one official pointed out, “once you deliver an aircraft, it is not as if you get a second try at anything.” This concern is an invitation to use the collaborative integrated approach. Because of its insistence on early collaboration, an integrated approach helps the owner pull investments forward to make sound strategic decisions on how to execute the project. This ultimately brings more surety to schedule, cost, quality and safety.

John Gill, PE, PMP, LEED AP, is Director of Virtual Design and Construction (VDC) at SSOE Group (www.ssoe.com), a global engineering, procurement, and construction management firm. John has over 20 years of experience and is responsible for the implementation of SSOE’s VDC program. John recently completed the VDC Certificate Program at Stanford University’s Center for Integrated Facility Engineering (CIFE). Prior to his VDC role, John was a Senior Project Manager. John can be reached in SSOE’s Birmingham, Alabama office at 205.397.2322 or by email at john.gill@ssoe.com. 

Mike Duffey, PE, is Principal Account Executive with SSOE Group (www.ssoe.com), a global engineering, procurement, and construction management firm. He has 33 years of experience in facility and site planning, design, and construction. A retired U.S. Air Force Commander (Lieutenant Colonel) and former Base Civil Engineer at the Toledo Air National Guard Base, he has a diverse background in senior project and operations management in the areas of budgeting, scheduling, quality assurance, and regulatory compliance. Mike can be reached in SSOE’s Toledo, Ohio office at 419.255.3830 or by email at mike.duffey@ssoe.com. 

Source: SSOE Group