Advantages of IFOA for lean IPD construction projects

IFOA and the Advantages of Bringing People Together Faster

Building complex capital projects with Lean Integrated Project Delivery has many advantages. Choosing the best contract to encourage a collaborative team right from the start is crucial for a successful outcome.

How can you go about this? How can you ensure that the owner, design partners, and builders are collaborating right from the start?

One option is the Integrated Form of Agreement (IFOA) where the owner, designer, and primary builder execute a three-party agreement in a single contract for the delivery of the project.

Unfortunately, the IFOA is still not mainstream in the US. Most people don't go with this type of contract where the three parties enter into a Shared Savings Program, which means that all trade partners share risks but also profit if the project goes well.

Some of the reasons why most companies don't consider IFOAs may be that

a) their projects are smaller and they don’t see the value of a shared agreement, or

b) they may not understand the advantages from an owner standpoint.

Many owners feel that their involvement in the project will require more time than they are willing to commit. At Sutter Health, we're very involved in the entire process and want to make sure that it runs smoothly and successfully while being collaborative and transparent.

The following questions spur conversations to make sure that things are going in the right direction:

How do you make sure that the contract and the project are on track?

How do you establish visibility and transparency?

How are you continuously improving?

One of the advantages of a multi-party agreement is that it brings organizations and people together faster than a traditional contract would. Using separate contracts for design and construction does not encourage collaboration and communication, which means that the owner risks not getting what they want. Using an IFOA, all parties are tied to the contract and share risk and reward.

Here are some tools to predict and drive a successful outcome for your IPD project.

 

1. Co-Location

To have the team working in the same location has proven to boost productivity, collaboration, and communication. Sharing is caring, and even simple, low-tech solutions can make a big difference to the success of your project.

Despite the fact that COVID_19 has forced us to go online, we are still able to have regular check-ins on Zoom. Of course, with the online version, you have to do things a little differently and be creative. First of all, we ask people to have their cameras on. Seeing each other’s faces keeps people engaged and active in the conversation. I think it's really important to make sure that the team is checking in with each other. We even managed online icebreaker exercises for lunches and team-building events.

For example, we had a scavenger hunt in people’s homes. We had different point systems set up for each thing that people could find. It was just random stuff, and everyone was running around their houses trying to find the objects. It was a lot of fun to start our meeting that way.

In our open-plan office, we live and breathe co-location every day. You can overhear conversations and know what other team members are discussing. Of course, this can also be challenging because you hear everything! Sometimes it's hard to concentrate but so many important things have come up in conversations that would have probably been neglected otherwise.

Let’s say, for instance, our electricians are trying to solve an issue. They may not think it is important to communicate it to the rest of the team for whatever reason. With our co-location, though, the team may hear that conversation and can help. That’s what’s great about our culture, no one's looking down on you, everyone wants to help.

Additionally to the online catchups, we meet every Friday with the entire design and construction team in our office to go through all of our constraints, any of our concerns, the schedule, what's coming up, what's happening.

Co-location in LeanIPD

Image: Tim Gouw via Unsplash

 

2. Target Value Design

With an IFOA, it is particularly important to figure out the most economical and fastest way to get things done while still having great quality and still maintaining our focus and goals. Therefore, we have site cluster meetings to optimize our target value design. All cluster groups, including design, electrical, mechanical, and plumbing, bounce ideas off each other on how to drive down costs, mitigate risk, and determine the most efficient way to build.

To give you an example:

As part of a big hospital project, the client requested a bigger waiting room for inpatient surgeries. When our team looked at it, we figured out that they probably didn’t need a bigger waiting room but a redesign of the existing lobby. By finding a better way to go about their request, we were able to save over a million dollars. Plus, we saved time from a design and construction point of view.

What we are basically doing is to look at every opportunity to improve the process, to save as much as we can, and to do it as fast as we can. These cluster groups may vary depending on the size of the project.

 

3. Building Information Modelling (BIM)

The biggest thing from an owner standpoint is to make sure that the team is thinking through all the obstacles and eventualities. That’s why we are designing the building in 3D. BIM ensures that the project is laid out before we actually go out and do the work. This allows us to make sure that everything is going to fit the way it is planned. But what’s even more important is that BIM facilitates prefabrication, which not only reduces installation time significantly, but also waste onsite. Plus, we can deliver better quality while our speed to market improves. Especially in places like California where you have so many third party inspections, these inspections can be done in a warehouse in one place.

For the owner, BIM provides reliability.

 

4. Risk & Opportunity Tracking

Risk & Opportunity Tracking is a critical item for the entire team.  It always to allows us clearly see our financial and schedule risk.  Every process that we look at has a risk and an opportunity. The goal is to assign a dollar value to each risk and each opportunity so that we know how much savings or how much of a shortfall we are going to have.

Then, we collect all the data in a spreadsheet, which is called the RO Log. This document will tell us how the team is doing, whether we are on track to deliver our target or not. The RO Log helps us identify budget shortfalls when risks outweigh opportunities, for example.

RO Tracking can come from the cluster groups, but also from the field and will be ongoing throughout the life of the project even when the cluster groups finish at some point.  Generally by the end of the job, your opportunities are less, and your risk increases.

 

5. Cost-to-Complete Forecasting & Billing Review

Cost-to-Complete Forecasting allows the Owner, AE, and Construction team to estimate fairly accurately how the team is going to finish at the end of the day and how much they are going to come in at. This tool reveals pretty quickly whether people and organizations know how to project their costs during a project. Basically, you shouldn’t have large fluctuations from month to month.

What you want to avoid is a situation where any party has huge swings from month to month.  The goal is to project what the job will finish at.  We should be projecting the cost at the end of the job from the start of the job.

The owner can also ask for a resource-loaded work plan to see how much time they have allocated to different phases of the project. From an owner standpoint, you'll be able to look at it and determine whether the team has done a good job of projecting what their cost will be throughout different phases of the project.

Another important tool is Billing Review, which goes hand in hand with Cost-to-Complete Forecasting.

As a project owner, you want to make sure that you're meeting with the team on a monthly basis to review their current invoices.  The owner needs to ensure that they are not being invoiced for anything that wasn't agreed to, and the team is including all necessary backup in their invoices.

This is especially important in long-term projects. You should be able to track spend with the overall schedule. For example, if you have a 12-month project budgeted at $12 million, you would want to average a million dollars a month give and take the ebb and flow of work.  It’s a simple thing but very important to keep track off.

 

6. Dashboarding / Visual Management

A picture says more than a thousand words. Dashboards or visualizing the data collected in cluster groups, report outs, and daily check in’s allows everyone to see how the project is tracking and trending and to identify PPC (planning percent complete). For example, if your schedule lists ten items to do and you have ticked off eight, you’re at 80% complete.

A visual tool provides important data for the team to answer questions from management and other stakeholders of large corporations. Visualizing data can be as simple as a spreadsheet that you put up in the Big Room.

 

7. Continuous Improvement

Continuous Improvement or learning implies that the team should always push and improve the learnings from one project.

At Sutter Health, we talk of lessons applied rather than lessons learned. After each project we have a debrief meeting where we determine what went right and what went wrong. We examine everything that has an opportunity to improve.  The team brainstorms what we can do differently and how we are going to apply this to our workflow next time. Which means we take those lessons and apply them. Then we re-evaluate and the process starts all over again. It’s constant. There was nothing that we ever became complacent on.  The question that everyone needs to ask themselves is being good good enough?  Why not be great?

The challenge lies in taking the learnings from your current project to a brand new team on your next project and have them implement those learnings right away. This implies openness to change, which we know is not easy. People are often change-resistant because they have done things for years successfully and doing it differently requires courage. That’s why from time to time, we have external consultants come in to help the team improve its current workflow, this gives team members the opportunity to learn and grow.

Which will in turn improve the delivery of the next IPD project for all parties.

 

Read more on how to empower your lean project team for success on the LeanIPD blog:

 

Sharing is Caring (Part 1)

Where Attention Goes, Energy Flows (Part 2)

Create a Space to Play (Part 3)

What Every Lean Project Team Should Know About Scrum 

Building Complex Capital Projects with LeanIPD

 

 

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