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Reprinted Reprinted with with permission permission of of The The Design-Build Design-Build Institute Institute of of America America (DBIA) (DBIA) Design-Build DATELINE — December 2004

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DESIGN-BUILD

DATELINE

December 2004, Vol. 11, No. 12

The Journal of the Design-Build Institute of America

www.dbia.org 5 Editor’s Notes 6 President’s Message 7 Chairman’s Message 13 Editorial Calendar 18 Calendar of Events 53 Editorial Forum 54 Publication Focus 55 Speaking of Safety 56 Members in the News 57 Projects to Watch 58 New Members

Cover Story 8 Design-Build Delivers Biotech Facilities By Ron Nichols A commitment to product consistency and a high level of facility sterility is essential to the biotech process. How can one control the cost and schedule for bio-processing facility construction? An approach that integrates design, procurement, construction, commissioning, and validation activities may be part of the answer.

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DBIA N EWS 27 February 2005 is Water/ Wastewater Month

14 Design-Build: Helping Pharma Deliver Affordable Innovation By Andrew A. Signore, P.E., DBIA

28 DBIA Puts Finishing Touches on 2005 Water/Wastewater Conference

19 Making Design-Build Work Well for Process Facilities By Bill Wakefield, DBIA

2004 P ROFESSIONAL D ESIGN -B UILD C ONFERENCE

23 Integrating Design and Construction of the Building and the Process in Manufacturing Projects By Donald C. Oberlies, P.E., and Victoria Fleddermann 33 How to Procure a DesignBuilder for Process Work ... and Know What You Are Getting By Mark P. Shambaugh, P.E., DBIA

43 Annual Meeting Raises Bar for Future Conferences 44 DBIA Ushers in Class of 2004 45 DBIA Salutes 2004 Design-Build Awards Competition Winners 51 Annual Conference Honors 2004 Distinguished Leadership, Press, and Service Award Winners

35 How to Overcome the Paradox of “Subcontracting” an Integrated Project By Dave Crumrine

photo On the cover: A manufacturing space within the Abgenix facility, completed by CRB Builders in 2004. The stringent highly-controlled process and environmental systems are standard within the bio-processing industry.

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Design-Build DATELINE has been honored with an APEX 2004 Award of Excellence Design-Build DATELINE is the monthly journal of the Design-Build Institute of America, 1010 Massachuetts Avenue, NW, Third Floor, Washington, DC 20001-5402 ◆ (202) 682-0110 ◆ (202) 682-5877 (fax) ◆ dbia@dbiaorg ◆ www.dbia.org. All questions and comments should be directed to Richard A. Belle, DBIA vice president of public affairs/information and editor of DATELINE , at rbelle@ dbia.org. Additional layout and design by Todd Rich and Larry Williamson.

Design-Build DATELINE — December 2004

FEATURE STORY

H OW TO OVERCOME THE PARADOX INTEGRATED P ROJECT

OF

“SUBCONTRACTING ”

AN

By Dave Crumrine As design-builders, we at DBIA are a group of committed practitioners passionate about offering options to our clients and bringing more value to their projects. Yet we struggle when it comes to delivering a truly integrated project delivery process, top to bottom. Capital projects in the process industry marketplace have enormous potential to leverage the power of integrated project delivery. Perhaps no other type of project can equally expose the tangible benefits of schedule savings, life cycle cost savings, and good old fashioned “get it done” performance. The cost of running and maintaining a facility can be ten or more times its initial cost, and processing facilities sit at the top of this reality. This provides a huge opportunity for us to demonstrate the added value of our project delivery method. Yet, within the hallowed membership ranks of our industry cling the legacies of the past that our organization publicly decries — bidding, low first cost decisions, and traditional project delivery with some fancy “integrated” window dressing — which have not turned out to be the extinct dinosaurs we had hoped they would be by now. In fact, within the process industries

The use of intrinsically safe instrumentation and control hardware minimized the use of explosion-proof control conduit and wiring (similar to that above), thereby reducing capital costs.

Paradox — A seemingly contradictory statement that may nonetheless be true we can find a full spectrum of examples with the best of highly integrated project delivery on one end to some of the least integrated projects on the other, all dressed up in “integrated” clothing. Change is hard, and everything worthwhile takes time. Let’s take a look inside this paradox and see if a deeper understanding of our choices can help drive the change needed. It may make us all more successful at delivering truly integrated projects and providing the full promise of value that genuine integration can bring. It’s no secret to most design-build practitioners that it is far from easy to offer a truly integrated project. An integrated project requires that the best team be assembled, selected on qualifications, and built around the challenges of each particular client. A real team must be forged with lots of communication. This takes time, travel, and personal commitment. It requires that we maintain long term relationships with a network of specialty firms so that we’re ready when the opportunity arises. It demands systems to enable the integration, many of which can’t be developed and deployed on just one project, but must be built and nourished over multiple projects. And more than anything, it calls for a belief and a drive to offer true value through this integration. This process needs to be a passionate culture of value discovery rather than “knock it out” project delivery under a “should add value” flag. It may not be an easy mission, but it is being done, and when it is, the results speak for themselves.

Design-Build DATELINE — December 2004

The “paradox of subcontracting” we refer to is happening several tiers down in our project delivery system. We often look at the top, where the owner gets one contract with a design-builder, but not below that level, where we start sorting out how “integrated project delivery” will really get done. We live in a fragmented industry. This is the most fundamental element that drives our common decisions. The concept of a fully integrated project is great to think about and sell on presentation day, but is another thing to deliver right down to the door hardware. At some point in the process, decisions must be made about whether or not to buck the traditional project delivery culture and infrastructure that our industry offers. Perhaps you have found yourself in one of these paradoxes, either orchestrating a less than fully integrated process or being asked to support one as a subcontractor in a traditional project delivery method under someone else’s “integrated” flag. This is commonplace in our market and is part of the spectrum of integration. Our fragmented AEC market has a long history of being independent, specialized, and small. Unfortunately, it has an equally strong track record of problem project delivery, resulting in litigation, poor project results, and frustration. Our own association is really the manifestation of solving these problems and the drive for something better — integrated project delivery. To better articulate the value of integrated project delivery, I have begun to use the term “white space 35

FEATURE STORY

H OW TO O VERCOME THE P ARADOX OF “S UBCONTRACTING ” AN I NTEGRATED P ROJECT

chaos. Any one of these components could be decided first and the others could follow. Without leadership, this can evolve into a “safe,” “standard,” or “lowest common denominator” solution. Obviously, that may not bring the best results. On the other hand, if we manage and navigate this chaos well, there can be a giant performance and value opportunity for our clients. Issues like reliability, upgradeability, change readiness, operation costs, process flexibility, uptime, recovery time, energy savings, and many others are achievable.

value” to explain the power of integration. For instance, the white space value on a process project between electrical engineering and electrical construction is partially demonstrated in Figure 1. White space value is uncovered by asking the question “what benefits are produced when these two services are purchased and provided by an integrated team compared to when they are bought and delivered by separate entities?” Note that many of the values listed are the issues that have historically caused pain in the traditional project delivery system. The paradox manifests itself when a design-builder offers a client a design-build contract, meeting the single source criteria, but then proceeds to do the design themselves while leveraging the specialty construction through a traditional project delivery process. Perhaps they hire or do the electrical engineering and then “bid package” the design out to the marketplace in a traditional way. There is nothing wrong with this methodology since the owner has clearly benefited from risk shifting. However, the owner has not benefited from the additional

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value a truly integrated team can deliver. In the process industries, this value compounds quickly. Many parts of a process plant must interface or other components will be negatively affected. By definition, this provides a white space value opportunity. A common integration challenge in process facilities is found in the electrical discipline when putting together: •

Electrical Engineering

•

Automation Engineering

•

Automation Programming

•

Instrumentation Engineering

•

Electrical Construction

Each of these disciplines interfaces with each other (and others outside the electrical specialty). It is entirely possible to design and build these work items in a traditional way, but unfortunately, what should come first in driving these decisions is neither industry standard nor common practice. Quite frankly, in this era of widely changing instrumentation and automation technology, it can be

These are core issues to our process industry clients. Relegating them to a “lowest common denominator” decision because of the fragmentation in our industry is simply not being responsible. Unfortunately, our clients won’t realize they’re missing out unless we discuss and display this value to them. It is truly a huge opportunity to make our clients more successful, and in a way that is crystal clear — their pocketbooks. To represent the complexity of the white space value opportunity discussed, see Figure 2. This small network of White Space Opportunities in electrical work could grow very complex as it is scaled up to a full project. Simply adding the equipment and piping design and installation would increase the number of white space interface opportunities substantially. Full integration is not for the faint of heart, however. It takes a lot of thought, work, and execution. Interstates recently participated in a project for Minnesota Soybean Processors, Inc. (MNSP) that was faced with both budgetary and technical challenges. By controlling all of the above components, we were able to devise a solution that simply would not have been available in non-integrated delivery. Our approach was to use intrinsically safe instrumentation and control

Design-Build DATELINE — December 2004

FEATURE STORY

H OW TO O VERCOME THE P ARADOX OF “S UBCONTRACTING ” AN I NTEGRATED P ROJECT hardware in a hazardous (explosion risk) area. Normally, this hardware would have been specified or purchased by the owner or a process consultant and then purchased based on the needed function and then the lowest cost. In this case, we spent more on these initial devices but the reduced wiring costs that resulted (conventional instead of classified) not only compensated for the additional hardware cost but resulted in overall savings on the project. On top of that, our solution allowed MNSP to maintain the equipment during operations in the sensitive area. Equipment shutdowns, necessary for the related gas purging, required an entire shift of downtime for even minor maintenance work. Our solution reduced first costs (overall), reduced life cycle costs, and enhanced MNSP’s ability to run the plant (their core business). This solution resulted from taking a keen look at many of the white space value opportunities shown above. Doing this requires expertise, team

culture, the nimbleness to get together and look creatively at problems, and the raw commitment to actually do it. Many firms have been delivering in a certain way for decades (in a few cases, centuries). Beginning already in the industrial revolution, we have been encouraged to subdivide the task and optimize each piece in order to get the best results. You may note that by combining these two words you get sub–optimize. This is exactly the opposite of our intended result. The best control system, connected to the best instrumentation, using the best fieldbus wiring system will almost certainly not produce the best overall process control results. If you substitute the word “lowest cost” for “best,” it is equally true that you will not get the lowest cost result, especially if you consider the process facility’s real cost of performance. We struggle to compare the simplicity and apparent elegance of subdividing into specialties versus the messy, yet apparently promising,

value of integration — a sliding scale of choices. True integrated project delivery promises to manage the complexity for the client while providing the simplicity of a great solution. This paradox can also be exhibited in the field of medicine, namely, when dealing with specialty physicians. This can be very challenging for someone with a complex medical condition. Each specialty physician involved may be at the peak of his or her profession — a true expert — yet unable to collaborate and come to a consensus on the best action to take for a patient. The cardiac surgeon comes by the room and changes a medication to increase circulation (and decrease fluids), the renal specialist stops by later and instructs the nurse to modify the medication because the patient needs more fluids for her kidneys, and so on. There can easily be six to 10 physicians involved with a critical patient. Structural barriers, such as their inability to collaborate, a culture that discourages meetings, uncoordinated “rounds” schedules, etc. can prevent them from providing an integrated solution for the patient. It is also challenging for the patient to expect “high performance” from this system. The family practitioner, however, demands a coordinated effort and looks at the big picture as the patient’s advocate. The family practitioner is willing to facilitate coordination, make the calls, and be the catalyst for a more collaborative solution. This presents a much higher value proposition for the patient, one not always rewarded in the current medical system. In world class medical delivery (Mayo, Cleveland Clinic, etc.), this coordination is planned into the system and physicians who have a more global outlook are assigned to lead. CII (Construction Industry Institute) research conducted in 1996 supports the idea of specialty contractor integra-

Design-Build DATELINE — December 2004

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FEATURE STORY

H OW TO O VERCOME THE P ARADOX OF “S UBCONTRACTING ” AN I NTEGRATED P ROJECT tion, showing that excellent project results are highly correlated with: •

Early specialty contractor involvement (including the proposal), especially before 20 percent of the design is complete.

•

Negotiated and sole source procurement of specialty contractors.

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Team building and collaboration cultures.

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Using specialty contractors experienced in the type of project being developed.

In 2001, Penn State researcher Chris Taylor revealed additional key insights: •

•

•

Projects are more successful when key specialty contractors do their own design. Projects in the study which were deemed excellent never selected specialty contractors on a low bid basis. Partnering with specialty contractors was again shown to be a key differentiator in excellent projects over average and below average projects

DBIA chose to include this information in its Design-Build Manual of Practice as Document 309 — Selecting Specialty Contractors. This is an important document to use in our efforts to step up specialty contractor integration.

Some of the barriers to offering truly integrated projects are the same cultural barriers that design-build has faced from the beginning. Have you ever heard versions of the following comments?

“Good engineering doesn’t really need construction input to be successful — we’ll just put together packages and bid them out.” Or, on the other side of the fence (that shouldn’t exist):

“Engineers never cover the real world. We always just let them draw up what they think and then clean up the constructability mess for them. That’s the way it is.” Here’s one we don’t say out loud much, but instead use it in the quiet of our minds to rationalize.

“I don’t have time to really integrate this project, get people together, sit in endless meetings, and talk. We need to get this done now and we have all the expertise we need right here.” And finally, this one:

“The owner is expecting me to get as many bids as possible to justify my fee. How can I tell him that this is a poor decision. This is how he wants it done.”

These feelings are out there. Some practitioners and owners have strong opinions about how things should be done based on their experience, just like we all have. But why is it worthwhile for DBIA to lobby state and federal bodies to allow design-build, but it isn’t worthwhile to have a serious conversation with our clients about the power and need of doing things differently? The truth is, we have been doing a great job making the design-build system available to our clients. Now we must identify the barriers to delivering true integrated project value to our clients. The good news is that true design-build systems can be a huge competitive advantage for our process clients. The bad news is that in order to provide it we need to do some self-evaluation and change. When an owner writes a designbuild contract, he may have prevented some of our industry’s traditional project delivery nightmares. However, it does not automatically guarantee him the promise of white-space value. In fact, after that contract is written, it can all depend on who he has retained, how much time he has allowed, and how he has “set it up” by nature of his own project delivery performance to date. The contract step is a risk management tool — a tool DBIA has fought hard for. As it becomes common, it allows us to start looking inside at more and deeper integration rather than fighting for the right to simply contract design-build. So what must we do to overcome this paradox and truly deliver in an integrated fashion?

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•

Educate our customers — go out on a limb. Take a risk and give our customers the chance to have more. Become skilled at explaining the advantages of true integration — with passion. Owners need our expertise and counsel. We must get better at offering it!

•

Acknowledge the importance of the issue and realistically assess

Design-Build DATELINE — December 2004

FEATURE STORY

H OW TO O VERCOME THE P ARADOX OF “S UBCONTRACTING ” AN I NTEGRATED P ROJECT

•

•

•

the level at which we, our clients, and our business partners understand these concepts. We can’t accept “lowest common denominator” delivery. We must watch out for it. Call it out when we see it. Ask for more. Re-examine our own processes. If I lead design-build, have I addressed the sub-optimization issues above? Am I committed to collaborating? As a specialty engineer or constructor supporting integrated projects, am I prepared to step up and participate with my expertise? Am I prepared to provide the resources to uncover solutions early or am I sitting back, waiting for the bid packages to show up. Am I willing to share the risk on proposals and projects?

•

As an owner, am I willing to look deeper, ask for more and set the project up to allow for this collaboration? This could mean a tradeoff — giving up some planning time in exchange for increased value. It could also mean looking at my own organization’s expectations for bidding. Do I really believe I will get more results for less money by having more people on the bid list?

The paradox of subcontracting an integrated project is the result of project delivery “purgatory.” We hang between traditional project delivery and truly integrated project delivery. Organizational and industry forces tug us both ways. To overcome, we must understand the issues keeping us from stepping up and then provide the energy to move the industry forward toward true

Design-Build DATELINE — December 2004

integration. We have seen the results of making design-build available to our clients. We must now use that momentum to overcome the hurdles to truly integrated project delivery within our organizations and offer the next generation of value to our clients. ◆ Dave Crumrine is President of Interstates Construction Services. Interstates is a full service electrical provider for industrial process facilities. Interstates Engineering and Interstates Control Systems are sister companies of Interstates Construction Services. Together, they offer full service, design-build electrical contracting, engineering, instrumentation, and automation on a worldwide basis. Mr. Crumrine is responsible for strategic integration of services within the Interstates Companies. Dave may be reached at [email protected].

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