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Value ManagementValue ManagementRedefining CM At RiskRedefining CM At Risk
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State of the IndustryState of the Industry
Increases in productivity lag far behindIncreases in productivity lag far behind
other industriesother industries Strained/ Limited ResourcesStrained/ Limited Resources
Traditional Lack of CommonTraditional Lack of CommonUnderstanding of the ProjectUnderstanding of the Project
Misalignment of Objectives among theMisalignment of Objectives among theProject Team membersProject Team members
Unsafe Construction EnvironmentsUnsafe Construction Environments
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NonNon--productive Time On J ob Sitesproductive Time On J ob Sites
Productive
Time
42%
Non-
Productive
Time
58%
UnnecessaryTravel & Movement
13%
UnnecessaryMaterial Handling
12%
Rework
8%
Waiting
25%
{ Information{ Prerequisite Work{ Materials{ Equipment & Tools
{ Low reliability
{ Big batch thinking
{ Individual interests notaligned with projectsuccess
{ Lack of formalproduction process
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State of the IndustryState of the Industry
Value managementValue management -- primary battlefront for yearsprimary battlefront for years--hashasrealized significant improvement in procedures andrealized significant improvement in procedures and
processesprocesses Improvements in Technology and CommunicationImprovements in Technology and Communication
Greater RiskGreater Risk Real and PerceivedReal and Perceived
Owners are smarter today and are demanding andOwners are smarter today and are demanding andrewarding better delivery methods that result in lowerrewarding better delivery methods that result in lowercosts, more predictable schedules, and safer projectscosts, more predictable schedules, and safer projects
Three new trends are emerging that will enhance ValueThree new trends are emerging that will enhance ValueManagement and improve productivity significantlyManagement and improve productivity significantly
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Traditional CM at RiskTraditional CM at Risk
Qualifications/Fee based CM SelectionQualifications/Fee based CM Selection
Separate agreement between Owner and AE andSeparate agreement between Owner and AE andOwner and CMOwner and CM CM provides budgeting, scheduling,CM provides budgeting, scheduling,
constructability studies, VE at design intervalsconstructability studies, VE at design intervals
Design to budget instead of budgeting a designDesign to budget instead of budgeting a design Partnering Sessions improve communication andPartnering Sessions improve communication and
collaborationcollaboration
Subs may or may not be on board duringSubs may or may not be on board during preconpreconphasephase
Better job of risk sharing than Design Bid BuildBetter job of risk sharing than Design Bid Build
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Major Industry TrendsMajor Industry Trends
Building Information Modeling (BIM)Building Information Modeling (BIM)
Better Visualization, Clash DetectionBetter Visualization, Clash Detection
LeanLean
Improves Value, Reduces WasteImproves Value, Reduces Waste Integrated Project DeliveryIntegrated Project Delivery
Risk and Reward Sharing, Better CollaborationRisk and Reward Sharing, Better Collaboration
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BIMBIM
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BIM During DesignBIM During Design
More than 3More than 3 -- DD
Imbedded with specs and dataImbedded with specs and data 33--D = DesignD = Design
44--D = Design + ScheduleD = Design + Schedule
55--D = Design + Schedule + CostD = Design + Schedule + Cost Better VisualizationBetter Visualization
Excellent Tool to Test conceptsExcellent Tool to Test concepts Clash DetectionClash Detection
Staging and LayoutStaging and Layout
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BIM During ConstructionBIM During Construction
Better visualization increases productivityBetter visualization increases productivity Clash detection for changes producesClash detection for changes produces
more accurate pricing and increasesmore accurate pricing and increasesproductivityproductivity
Excellent tool to develop project stagingExcellent tool to develop project stagingplansplans
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BIM for Building ManagementBIM for Building Management
AsAs--builtsbuilts MaintenanceMaintenance
Parts and repairParts and repair
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{ Detecting constraints and clashes
{ Designing operations{ Optimizing preassembly
{ Pulling value to the jobsite
Better Visualization
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{ Detecting constraints and clashes
{ Designing operations{ Optimizing preassembly
{ Pulling value to the jobsite
Staging
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Clash Detection/Layout
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LeanLean
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Lean isLean is
A systematic approach and commitment toA systematic approach and commitment to
customer value that identifies andcustomer value that identifies andeliminates waste by making work floweliminates waste by making work flow
across the entire value stream, at the pullacross the entire value stream, at the pull
of the customer, with an unwaveringof the customer, with an unwavering
commitment to the continuous pursuit ofcommitment to the continuous pursuit of
perfectionperfection
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Lean Project DeliveryLean Project Delivery
Toyota transformed manufacturing withToyota transformed manufacturing with
Lean philosophy and principlesLean philosophy and principles Lean is a cultural change, not a set ofLean is a cultural change, not a set of
toolstoolsApplication to the design and constructionApplication to the design and construction
industry is in itindustry is in its infancy, although hass infancy, although has
produced exciting resultsproduced exciting results
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What are the BenefitsWhat are the Benefits
Creates stability/predictability on ourCreates stability/predictability on our
projectsprojects Removes waste in current design andRemoves waste in current design and
construction practice thus improvingconstruction practice thus improving
productivity and reducing cost and time toproductivity and reducing cost and time tobuildbuild
Results in safer projectsResults in safer projects Makes the building process fun againMakes the building process fun again
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Lean ToolsLean Tools
Target Value DesignTarget Value Design
Value Stream MappingValue Stream Mapping Lean Construction Planning & SchedulingLean Construction Planning & Scheduling
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Target Value DesignTarget Value Design
Th C di lTh C di l
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The CardinalThe Cardinal
Rule ofRule ofTarget ValueTarget Value
DesignDesign
The target cost of a projectThe target cost of a project
can never be exceeded.can never be exceeded.
Target Value DesignTarget Value Design
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Target Value DesignTarget Value Design
GoalGoal
Deliver the project at or below the target cost, and withDeliver the project at or below the target cost, and withincreased value to the customer.increased value to the customer.
ObjectiveObjective
Weekly estimate trends that represent savings by design andWeekly estimate trends that represent savings by design andinnovation.innovation.
Uncompromised value & quality in functional program &Uncompromised value & quality in functional program &
facility design.facility design.TasksTasks
Daily sharing of design and budget information.Daily sharing of design and budget information.
Set based design practice.Set based design practice.Weekly Target Cost status updates.Weekly Target Cost status updates.
Weekly or daily update of cluster group progress reports.Weekly or daily update of cluster group progress reports.
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Creating Target Cost Teams andCreating Target Cost Teams and
Systems AllocationSystems Allocation
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Target Value DesignTarget Value Design
Starts with better definition of project objectivesStarts with better definition of project objectives creates Common Understanding of the Projectcreates Common Understanding of the Project
Early creation of Project TeamEarly creation of Project Team
Definition of Roles/AccountabilitiesDefinition of Roles/Accountabilities
Highly Collaborative, Open and TrustHighly Collaborative, Open and Trust--BasedBasedProcessProcess
Utilization of Relational Contract that supportsUtilization of Relational Contract that supports
this approach. Integrated Form of Agreementthis approach. Integrated Form of Agreement Better Understanding and Balance of Risk andBetter Understanding and Balance of Risk and
RewardReward
CoCo--located owner, designer, and contractorlocated owner, designer, and contractorteamsteams
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TheThe Big RoomBig Room
OO Bi RBi R
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OurOur Big RoomBig Room CoCo--location of cross functional team memberslocation of cross functional team members
DesignersDesigners
ProgrammersProgrammers
EstimatorsEstimators
ConstructorsConstructors
SuppliersSuppliers
Target Costing / Target Value DesignTarget Costing / Target Value Design
CoCo--location in Cluster Groupslocation in Cluster Groups
Combination of Small Group and Large GroupCombination of Small Group and Large GroupMeetingsMeetings
Sharing Incomplete Information OftenSharing Incomplete Information Often
Set Based DesignSet Based Design
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Set Based Concurrent Design
Create a broadrange ofpossibilities fromthe outset
Evaluate conceptsagainst risk.Resolve conflictsutilizing customercriteria.
Combine piecesfrom differentconcepts andconverge upon afinal solution.
The final conceptis frozen muchlater in theprocess butemerges almostrisk free andrequires fewchanges.
Concept Selected
i l k lVi l W k l
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DesignDesign EstimateEstimate
ScheduleSchedule Last Planner including PPC andLast Planner including PPC and
Reasons for VarianceReasons for Variance A3 ReportsA3 Reports
Innovation InformationInnovation Information Multiple LocationsMultiple Locations
Updated weekly, sometimes dailyUpdated weekly, sometimes daily
Visual WorkplaceVisual Workplace
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Visual WorkplaceVisual Workplace
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Set Based DesignSet Based Design
An iterative process of developing sets of solutions that satisfAn iterative process of developing sets of solutions that satisfy cost,y cost,
function and quality.function and quality. Sets of solutions are advanced until the last responsible momentSets of solutions are advanced until the last responsible moment
Sharing Incomplete Information OftenSharing Incomplete Information Often
Willingness of team members to continuously share incomplete infWillingness of team members to continuously share incomplete information.ormation.
Daily or at least weekly sharing of design and budget informatioDaily or at least weekly sharing of design and budget information.n. Design and budget evolve simultaneouslyDesign and budget evolve simultaneously
Simultaneous design of Product and ProcessSimultaneous design of Product and Process
Product and process design decisions are made simultaneously.Product and process design decisions are made simultaneously.
3D Design / Modeling, and Digital Prototyping3D Design / Modeling, and Digital Prototyping
Use digital prototyping to integrate design and cost characterisUse digital prototyping to integrate design and cost characteristics.tics.
An integrated product and process design including real time budAn integrated product and process design including real time budgetget
updates as design changes.updates as design changes. Provide widespread access to the design model as it evolves.Provide widespread access to the design model as it evolves.
Lean Design PrinciplesLean Design Principles
Lean Design PrinciplesLean Design Principles
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Detailed design by specialty contractors and vendorsDetailed design by specialty contractors and vendors
Designers and engineers produce only thoseDesigners and engineers produce only those
deliverables needed for permitting and needed bydeliverables needed for permitting and needed by
specialty contractors or other suppliers for detailing.specialty contractors or other suppliers for detailing.
Production Planning and ManagementProduction Planning and Management
Production Planning and Management is applied duringProduction Planning and Management is applied during
the Design phase using Constraints Analysis, andthe Design phase using Constraints Analysis, and
Weekly Work Plans.Weekly Work Plans.
Design and budget production is planned and managedDesign and budget production is planned and managed
to emulate a continuous flow process.to emulate a continuous flow process.
Project Based Production Management is formallyProject Based Production Management is formally
applied using standard Lean Processes and Principlesapplied using standard Lean Processes and Principles
Lean Design PrinciplesLean Design Principles
L D i P i i lL D i P i i l
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Multidisciplinary Design Teams workMultidisciplinary Design Teams worktogether early in Design totogether early in Design to
simultaneously develop the design andsimultaneously develop the design andbudget.budget. Major specialty contractors and suppliers are contractedMajor specialty contractors and suppliers are contracted
earlyearly Value based proposal process.Value based proposal process.
Multidisciplinary teams meet at least weekly.Multidisciplinary teams meet at least weekly.
Lean Design PrinciplesLean Design Principles
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Lean Design PrinciplesLean Design Principles
Target Costing Systems, Components, andTarget Costing Systems, Components, andSubcomponentsSubcomponents Distribute the project target cost.Distribute the project target cost. Form Target Cost TeamsForm Target Cost Teams
Use Value Engineering to assist with evaluation of solutions.Use Value Engineering to assist with evaluation of solutions.
Design to budgetDesign to budget The budget as an influence on design andThe budget as an influence on design anddecisiondecision--making, rather than an outcome.making, rather than an outcome.
Negotiate cost/value trade off occurs to ensure the ProjectNegotiate cost/value trade off occurs to ensure the ProjectTarget Cost .Target Cost .
Value EngineeringValue Engineering Structured methodology.Structured methodology. Function AnalysisFunction Analysis
Life Cycle CostingLife Cycle Costing
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Implementation
Target Value DesignTarget Value Design
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Continuous Tracking &Continuous Tracking &
ReportingReporting
The Weekly Target Value Design CycleThe Weekly Target Value Design Cycle
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The Weekly Target Value Design CycleThe Weekly Target Value Design Cycle WednesdayWednesday
AMAM Target Cost Team MeetingsTarget Cost Team Meetings Designing & BudgetingDesigning & Budgeting PMPM Core Team MeetingCore Team Meeting
ThursdayThursday
Design and ongoing communicationDesign and ongoing communication
FridayFriday
Design and ongoing communicationDesign and ongoing communication
MondayMonday
Design and ongoing communicationDesign and ongoing communication End of DayEnd of Day Design Updates DistributedDesign Updates Distributed
TuesdayTuesday
Pricing/Cost ModelingPricing/Cost Modeling
Design and ongoing communicationDesign and ongoing communication
WednesdayWednesday
AMAM Target Cost Team MeetingsTarget Cost Team Meetings Designing & BudgetingDesigning & Budgeting
PMPM Core Team MeetingCore Team Meeting
Features and Benefits of TargetFeatures and Benefits of Target
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gg
CostingCosting
Scope of Work Document based on Quantity, Quality, and CostScope of Work Document based on Quantity, Quality, and Cost
Commitment from the entire project team to design and buildCommitment from the entire project team to design and buildaccording to the scope and budgetaccording to the scope and budget
Committed Target Cost for design and constructionCommitted Target Cost for design and construction
Clear translation of the Voice of the Customer into technicalClear translation of the Voice of the Customer into technical
design, and ultimatelydesign, and ultimately to product deliveryto product delivery
The basis of Financial Management and Investment DecisionThe basis of Financial Management and Investment DecisionMaking throughout the projectMaking throughout the project
The assurance of Lowest Product Cost and HighestThe assurance of Lowest Product Cost and Highest
Customer ValueCustomer Value
What Target Value Design AvoidsWhat Target Value Design Avoids
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What Target Value Design AvoidsWhat Target Value Design Avoids
Waiting for the bids to come in to know theWaiting for the bids to come in to know the
cost of the projectcost of the project
VE options arriving late disrupting designVE options arriving late disrupting design
Waiting for design batchesWaiting for design batches
Waiting for budget batchesWaiting for budget batches
Design schedule defined by arbitraryDesign schedule defined by arbitrarymilestonesmilestones
SurprisesSurprises
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Pull SchedulingPull Scheduling
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P ll S h d li O iP ll S h d li O i
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Pull Scheduling OverviewPull Scheduling Overview
Work tasks, information flow, andWork tasks, information flow, and
material deliveries are planned basedmaterial deliveries are planned based
on the request (oron the request (orpullpull) of) ofdownstream customers.downstream customers.
Pull scheduling will often expose thePull scheduling will often expose the
need for smaller batches, just in timeneed for smaller batches, just in timedelivery, improved leveling ofdelivery, improved leveling of
resources, and reduced lead times.resources, and reduced lead times.
Workflow becomes more reliable andWorkflow becomes more reliable andefficient as the waste of waiting,efficient as the waste of waiting,
redundancy, and overredundancy, and over--processing areprocessing are
eliminated.eliminated.
P ll S h d li StP ll S h d li St
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1.1. Define the phasing of the work.Define the phasing of the work.
2.2. Determine completion dates for the phases.Determine completion dates for the phases.
3.3. Using team scheduling andUsing team scheduling and stickiesstickies on a wall,on a wall,develop the network of activities required todevelop the network of activities required to
complete the phase working backward fromcomplete the phase working backward from
the completion date.the completion date.4.4. Apply durations to each activity with noApply durations to each activity with no
contingency or float in the estimates.contingency or float in the estimates.
5.5. ReRe--examine logic to try to shorten theexamine logic to try to shorten theduration.duration.
6.6. Determine the earliest practical start date.Determine the earliest practical start date.
Pull Scheduling StepsPull Scheduling Steps
P ll S h d li StP ll S h d li St
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7.7. Decide what activities to buffer or pad withDecide what activities to buffer or pad with
time contingency.time contingency.
Which activity durations are most fragile?Which activity durations are most fragile? Rank order by degree of uncertainty.Rank order by degree of uncertainty.
Allocate available time to the fragileAllocate available time to the fragile
activities in rank order.activities in rank order.
8.8. Is the team comfortable that the availableIs the team comfortable that the available
buffers are sufficient to assure completionbuffers are sufficient to assure completion
within the milestone? If not, either rewithin the milestone? If not, either re--planplanor shift milestone as needed and possible.or shift milestone as needed and possible.
Pull Scheduling StepsPull Scheduling Steps
Pull SchedulingPull Scheduling Setting a World Record in
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Pull SchedulingPull Scheduling gPaper Machine Rebuilds
Safety
Speed of Delivery
Cost
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Last PlannerLast Planner
Last PlannerLast Planner
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Last PlannerLast Planner
Foreman/Superintendents are the closest to the workForeman/Superintendents are the closest to the work
and are the Last Plannersand are the Last Planners
WeeklyWeeklyStand and DeliverStand and Deliverplanning sessions buildplanning sessions buildaccountability and reliabilityaccountability and reliability
Commitments orCommitments orReliable PromisesReliable Promisesare made duringare made during
the Last Planner Sessionsthe Last Planner Sessions
Weekly Work Plans and Six Week Look Ahead schedulesWeekly Work Plans and Six Week Look Ahead schedules
are prepared and inserted into master scheduleare prepared and inserted into master schedule
Extremely effective in improving productivityExtremely effective in improving productivity
The difference betweenThe difference between WeWe
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already do thisalready do this and makingand makingthe Lean transformationthe Lean transformation..
The industry is trying to work betterThe industry is trying to work betterwithin an existing environmentwithin an existing environment
and set of rules.and set of rules.Lean gives us the opportunity toLean gives us the opportunity to
significantly changesignificantly change
how wehow we
deliver value.deliver value.
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SuccessesSuccesses
Target Value DesignTarget Value Design
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153155148
180
202
251
280
100
120
140
160
180
200
220
240
260
280
300
Shawano Clinic &
Surgery Center
75,362 s.f. with
Med Gas &
Imaging -Actual
Utilizing Lean
Project Delivery
Process
Shawano Clinic &
Surgery Center
BENCHMARK with
Med Gas &
Imaging -
Projected Based
on Traditional Past
Projects
Medical Clinic
Wood Frame
18,182 s.f. (No
Med Gas, No
Imaging)
Traditional Project
Delivery Process
Medical Clinic,
Architectural
Enhancements,
12,177 s.f. (No
Med Gas, No
Imaging)
Traditional Project
Delivery Process
Heart Institute,
45,645 s.f.
Traditional Project
Delivery Process
Surgical Center
13,000 s.f.
Traditional Project
Delivery Process
Oncology Center
12,178 s.f.
Traditional Project
Delivery Process
$/S.F.
Benchmark
Target Value DesignTarget Value Design
Ongoing Implementation, Development & SuccessOngoing Implementation, Development & Success
Benchmarking
Results of Lean Design, Target Costing, and
Production Management
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Lean ProjectLean Project Non LeanNon LeanProjectProject
Completion DateCompletion Date August 2002August 2002
Project DurationProject Duration 14 months14 months
Gross Square FeetGross Square Feet 114,000114,000
Total Cost (incl. A/ETotal Cost (incl. A/E
& CM fees)& CM fees) $11,716,836$11,716,836
Cost per squareCost per square
footfoot$102.79$102.79
g
April 2000April 2000
24 months24 months
85,41485,414
$13,533,179$13,533,179
$158.44$158.44
Target Value DesignTarget Value Design
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3.5 months ahead of schedule3.5 months ahead of schedule
70 additional days of clinic revenue translating70 additional days of clinic revenue translatinginto nearly $1 mil. in the expanded imaginginto nearly $1 mil. in the expanded imagingservice line functions and additional revenue inservice line functions and additional revenue in
the first year.the first year. Under the Target CostUnder the Target Cost
in spite of additional equipment costs and addedin spite of additional equipment costs and added
service lineservice line
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Measuring ProductivityMeasuring Productivity
0
0.5
1
1.5
2
2.5
3
3.5
4
Productivity(HRS/C
Y)
Lean Projects Non-Lean)Projects
Hours per cubic yardHours per cubic yard
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IntegratedIntegratedForm ofForm of
AgreementAgreement
IFOAIFOA
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IFOAIFOA
Integrated Form of Agreement created byIntegrated Form of Agreement created bySutter Health Counsel WillSutter Health Counsel Will LichtigLichtig & Sutter& SutterDirector of Project Management DaveDirector of Project Management DavePixleyPixley
AGC TriAGC Tri--Party Collaborative AgreementParty Collaborative AgreementConsensusDocsConsensusDocs
Integrated Project DeliveryIntegrated Project DeliveryA WorkingA WorkingDefinition AIADefinition AIA
Fundamental Change in Business ModelFundamental Change in Business Model
IFOAIFOA
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IFOAIFOA
Relational ContractingRelational Contracting
Sets Performance and ResultsSets Performance and ResultsExpectationsExpectations
Creates a Collaborative EnvironmentCreates a Collaborative Environment Creates an Integrated TeamCreates an Integrated Team
Optimizes the ProjectOptimizes the Project
Superior Risk ManagementSuperior Risk Management
Integrated AgreementsIntegrated Agreements
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Integrated AgreementsIntegrated Agreements
Sutter Fairfield MOB $22 millionSutter Fairfield MOB $22 million
Sutter Cathedral Hill Hospital $920 millionSutter Cathedral Hill Hospital $920 million California Prison Healthcare $4.5 billionCalifornia Prison Healthcare $4.5 billion
IFOAIFOA
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OwnerOwners Business Plan as the basic designs Business Plan as the basic designcriteriacriteria
Incorporates Lean Project DeliveryIncorporates Lean Project Delivery
Incorporates language of Reliable Promising/Incorporates language of Reliable Promising/CommitmentsCommitments
Establishes a Collaborative Governance StructureEstablishes a Collaborative Governance Structure
IFOA StructureIFOA Structure
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IFOA StructureIFOA Structure
One Agreement signed by OwnerOne Agreement signed by Owner--ArchitectArchitect--
CM/GCCM/GC
Joined byJoined byjointlyjointly selected Team Membersselected Team Members
Integrates General ConditionsIntegrates General Conditions
Provides for formation of:Provides for formation of: Core GroupCore Group
Senior Management GroupSenior Management Group
Integrated Project Delivery TeamIntegrated Project Delivery Team
Project Team OrganizationProject Team Organization
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Project Team OrganizationProject Team Organization
Owner Rep
CM/GC PMArch. PM
User Rep
Core Group
Civil
Structural
Mechanical
Electrical
Plumbing
Site
Steel
Mechanical
Electrical
Plumbing
Framing
Landscape
Landscape
OtherOther
Integrated Project Delivery
Team
Core Group DeliverablesCore Group Deliverables
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Core Group DeliverablesCore Group Deliverables
Communication ProtocolsCommunication Protocols
BIM StrategyBIM Strategy
Commitment Management ProcessCommitment Management Process Validated Budget (Basis for Target Value Design)Validated Budget (Basis for Target Value Design)
Target Value Design PlanTarget Value Design Plan
JointJoint Site Investigation PlanSite Investigation Plan Incentive Sharing PlanIncentive Sharing Plan
BuiltBuilt--In Quality PlanIn Quality Plan
Create CollaborativeCreate Collaborative
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Design EnvironmentDesign Environment CM/GC and Trade Contractors have a seat at designCM/GC and Trade Contractors have a seat at design
tabletable IPD Team has a Common Understanding of ProjectIPD Team has a Common Understanding of Project
Parameters, Objectives and ConstraintsParameters, Objectives and Constraints
Constant sharing of intermediate, incompleteConstant sharing of intermediate, incompletedesign documentsdesign documents
Collaboratively createCollaboratively createInstallInstall--LevelLevel3D Model3D Model
Value analysis throughout design process, not atValue analysis throughout design process, not at
the end!the end! DesignDesign--toto--budget: Design and Cost stay in balancebudget: Design and Cost stay in balance
Real TimeReal Time
New Financial ProvisionsNew Financial Provisions
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New Financial Provisions
A/E Compensation/RiskA/E Compensation/Risk
Fees developed from Resource Loaded WorkFees developed from Resource Loaded WorkPlan (fees to support quality effort)Plan (fees to support quality effort)
Identify andIdentify andfixfixprofit componentprofit component
ShiftShiftWorking DrawingWorking Drawingproduction toproduction toconstruction partnersconstruction partners
Some A/E fees will be GMP rather than fixed feeSome A/E fees will be GMP rather than fixed fee(e.g.: CA Phase)(e.g.: CA Phase)
NegotiatedNegotiatedstandard of qualitystandard of qualityrather thanrather thannegligencenegligence
New Financial ProvisionsNew Financial Provisions
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e a c a o s o s
CM/GC Risk MitigationCM/GC Risk Mitigation
CM/GC/ participating trades on Cost Plus with Fixed Fee,CM/GC/ participating trades on Cost Plus with Fixed Fee,with or without GMPwith or without GMP
Risk reduced by IPD Contingency during ConstructionRisk reduced by IPD Contingency during ConstructionPhasePhase -- access based upon recoverableaccess based upon recoverableextra costextra costforfor
which change order not available (e.g. buywhich change order not available (e.g. buy--out gap,out gap,missed coordination)missed coordination)
New Financial ProvisionsNew Financial Provisions
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CM/GC Cash Flow risk mitigations:CM/GC Cash Flow risk mitigations:
Pencil DrawPencil Drawprocessprocess review by Core Groupreview by Core Group BiBi--weekly or 36 hour turnaroundweekly or 36 hour turnaround
Lower retainage and/or early releaseLower retainage and/or early release
New Financial ProvisionsNew Financial Provisions
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Reward:Reward:
Incentive Sharing Pool funded by ContingencyIncentive Sharing Pool funded by Contingencypreservation and Costpreservation and Cost--ofof--Work savingsWork savings
IPD Team collectively participates in Pool withIPD Team collectively participates in Pool with
Owner (typically 50/50)Owner (typically 50/50) IPD Team determines participationIPD Team determines participation
New Financial ProvisionsNew Financial Provisions
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PartyParty--controlled dispute resolution (hierarchy)controlled dispute resolution (hierarchy)
Parties negotiateParties negotiate Core GroupCore Group
Senior Management GroupSenior Management Group
Independent Expert appointmentIndependent Expert appointment
DRBDRBss
MediationMediation
New Construction ProvisionsNew Construction Provisions
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Requires the Implementation of LeanRequires the Implementation of Lean
5S Plan5S Plan Site logistics using sort, set in order, shine,Site logistics using sort, set in order, shine,
standardize, sustainstandardize, sustain
Zero RFI GoalZero RFI Goal conversation first, pursue reliable promise forconversation first, pursue reliable promise for
resolutionresolution
RFI toRFI to confirmconfirm solution (not to initiate inquiry)solution (not to initiate inquiry)
New Construction ProvisionsNew Construction Provisions
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BuiltBuilt--In Quality PlanIn Quality Plan
CII study suggests that up to 10% of constructionCII study suggests that up to 10% of construction
cost iscost isreworkrework
InspectionsInspectionsoften fail to improve quality at handoften fail to improve quality at hand--offoff
from trade to tradefrom trade to trade
Plan seeks to directly attack root causes of qualityPlan seeks to directly attack root causes of quality
failuresfailures
Capture experience for tracking & improvementCapture experience for tracking & improvement
Benefits: Anticipated andBenefits: Anticipated and
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ObservedObserved Reduce Waste! Measured by CII at 57%!Reduce Waste! Measured by CII at 57%!
Lower cost, higher value projectsLower cost, higher value projects
Higher profitability for our design andHigher profitability for our design andconstruction partnersconstruction partners
Safer projectsSafer projects Higher productivity in design and constructionHigher productivity in design and construction
less negative iterationless negative iteration
Less tension = more fun!Less tension = more fun!
What will challengeWhat will challenge
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success?success? Gravitational Pull of TraditionalGravitational Pull of Traditional
PracticePractice Lack of Lean LeadershipLack of Lean Leadership
Lack of Lean Knowledge and SkillsLack of Lean Knowledge and Skills Organizational Systems andOrganizational Systems and
ProcessesProcesses
In ConclusionIn Conclusion
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BIM is here to stayBIM is here to stay
Lean improves productivity, shortens schedules, and weLean improves productivity, shortens schedules, and we
see no end to our journey.see no end to our journey.
IFOA More testing in the market place will be requiredIFOA More testing in the market place will be requiredto prove it as a successful delivery method. It will taketo prove it as a successful delivery method. It will takecourageous owners willing to shoulder some of the riskcourageous owners willing to shoulder some of the riskand financial burden to help drive innovation andand financial burden to help drive innovation andincrease value in our industry.increase value in our industry.
Contact InformationContact Information
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Jay HarrisJay Harris
[email protected]@boldt.com916916--583583--56005600
Lean Principles in ConstructionLean Principles in Construction
http://http://www.leanconstruction.orgwww.leanconstruction.org//
mailto:[email protected]:[email protected]:[email protected]Top Related