BCPM 0044 UCL Procurement Methods on Modular Delivery and Capture Paper

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The Bartlett School of Construction & Project Management Term Paper BCPM0044: Capturing and Delivering Value (20/21) Dr Grant Mills Background Literature Healthcare infrastructure requires significant levels of capital and countries across the world are looking to deliver new infrastructure reconfigurations. Health infrastructure is a key resource that must be sustained (Cowie et al. 2020). Healthcare systems require constant reconfiguration to meet current and future health challenges and to build system and service resilience (Fallah-Aliabadi, et al. 2020). Yet, we do not yet have shared models for their modular delivery – that create and deliver value. There is increased recognition of the need to improve the efficiency and effectiveness of health systems across the continuum from prevention to palliation (Rechel et al., 2009). This often results in upward pressure on health expenditure. Within the UK, the government’s Health Infrastructure Plan (HIP) outlines a five-year rolling programme of investment. Central to this programme is modular hospital delivery (DHSC, 2019). Beyond the healthcare system, there are a series of organisations that see the value in modular construction. Firms are investing in new manufacturing processes such as Katerra (2019), Broad (2020a and 2020b), Mace (2018), Laing O'Rourke (2015 and 2018). Others are joining together to create a wider platform of design, manufacture and assembly solutions (MTC, 2020 and Construction Innovation Hub, 2021). The Brief In this assignment you should consider how a modular hospital can be developed to capture and deliver value. This will involve you: 1. Identifying a theory or theories that support modular hospital value capture and delivery. For example you may decide that you would like to use your understanding of supply chain management, procurement, alliances, requirements management or stakeholder engagement. Or you might like to consider how you would develop a new approach to systems integration or use advanced design tools such as DSM, DfMA or pDfMA 1. 2. Selecting and describing the specific characteristics of modular hospital manufacture. You might describe the nature of the industry, a specific case study and capability, or how a client or project-based organisation are innovating. You should remark on the specific characteristic that make it complex to capture and deliver value. 3. Making recommendations on how to design and implement a modular hospital concept and an evaluation of the benefits that it might deliver. You might describe what the next steps are and who should be involved to facilitate and orchestrate the capture and delivery of value. Taking your knowledge of the lectures and your private reading, contextualise and frame your use of theory to evaluate a practical modular hospital deployment situation. Think carefully about the focus (remember that it is expected that you do 60 hrs of private reading and 80 hours doing the writing). Use the assessment criteria below to guide you in writing your assignment. Assessment Criteria Statement of Problem /30 A descriptive account of how a specific country healthcare system captures and delivers value through its built assets. This should establish the need for an advanced modular hospital approach that increases value. Analysis /40 The critical evaluation of a new way(s) to capture and deliver value through a new modular hospital design. It will describe the approach (e.g. lean, off-site manufacture, systems integration, supply chain management, logistics, advanced configuration models). Your implementation of the approach should critically describe, justify and evaluate the benefits of the approach. There should also be a clear 1 Dependency structure Matrix (DSM), Design for Manufacture and Assembly (DfMA) or Platform Design for Manufacture and Assembly (PDfMA) The Bartlett School of Construction & Project Management theoretical framework that describes the effectiveness of the approach with a clear discussion that is supported by literature (within the healthcare sector, or a comparable sector). Conclusions /20 There should be a clear description of what you have done, what you have found and why it has relevance in terms of its implications and recommendations. Presentation /10 Tables/figures are used effectively and consistently. It should be clear when you are using descriptive, reflective and critical styles of writing. There should be correct referencing of literature. Word limit: 3,000 words Deadline: Monday 26th April 2021 at 3:00PM (UK Time). References Broad (2020a) BROAD Ships COVID Hospitals to South Korea Powered by Tele-construction Cloud (online). Available at URL: https://www.youtube.com/watch?v=zBVkEWvZ3r4 [Accessed 18 February 2021]. Broad (2020b) Can we build a hospital in 48 hours? (online). Available at URL: https://www.youtube.com/watch?v=jLYp7YUE9DE [Accessed 18 February 2021]. Construction innovation Hub (2021) Platform Design Programme: Defining the Need (Online). Available at URL: https://the-mtc.worldsecuresystems.com/Construction%20Innovation%20Hub/Construction%20Innovation%20Hub%20%20Defining%20the%20Need%202021.pdf [Accessed 18 February 2021]. Cowie, J., Nicoll, A., Dimova, E.D. et al. The barriers and facilitators influencing the sustainability of hospital-based interventions: a systematic review. BMC Health Serv Res 20, 588 (2020). Fallah-Aliabadi, S., Ostadtaghizadeh, A., Ardalan, A. et al. Towards developing a model for the evaluation of hospital disaster resilience: a systematic review. BMC Health Serv Res 20(64) (2020). Katerra (2019) Katerra | Reimagining the Construction Site (online). Available at URL: https://www.youtube.com/watch?v=4jkhwRCNXPo&feature=youtu.b [Accessed 18 February 2021]. Laing O'Rourke (2015) Design for Manufacture and Assembly (DfMA) at the upgrade of Blacktown Hospital (online). Avilable at URL: https://www.youtube.com/watch?v=c3UWHrhMk6M [Accessed 18 February 2021]. Laing O'Rourke (2018) Inside the Centre of Excellence for Modern Construction (online). Available at URL: https://www.youtube.com/watch?v=CvBUAL8uRDI [Accessed 18 February 2021]. Mace (2018) East Village N08 - The Jump Factory (online). Available at URL: https://www.youtube.com/watch?v=xx7CMoSDUzs [Accessed 18 February 2021]. MTC (2020) Our Platform Design Programme defines the need (online). Available: https://constructioninnovationhub.org.uk/platform-design-programme-defines-the-need/ [Accessed 18 February 2021]. Rechel, B., Wright, S., Edwards, N., Dowdeswell, B., McKee, M. Investing in hospitals of the future. Observatory Studies Series No. 16, World Health Organization on behalf of the European Observatory on Health Systems and Policies, Copenhagen, Denmark (2009). DHSC Health Infrastructure Plan: A New, Strategic Approach to Improving our Hospitals and Health Infrastructure. London: Department of Health and Social Care. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/835657/healthinfrastructure-plan.pdf (accessed 24 June 2020) (2019). LONDON’S GLOBAL UNIVERSITY Capturing and Delivering Value BCPM0044 (2020/21) School of Construction and Project Management Dr. Anne Symons Theoretical Foundations Business Model / Ecosystem Delivering Major Hospital Projects • • • • • Governance Requirements Stakeholders Delivery Models Systems Integration and Supply Chains Why are healthcare and hospitals different from other building types? • • • • • • • • • Large complex buildings with multiple departments Highly serviced Expensive equipment and medical infrastructure Advances in technology Many stakeholders Public funding Long design and construction periods Public sensitivity – NHS image Complex language not understood by all stakeholders Governance and Requirements • • • • Role of the Department of Health/ NHSI Standards and Guidance Mandatory Requirements Compliant and non-compliant Stakeholder Involvement • • • • • Client and users Designers Contractors Financiers Public Stakeholders - Tree Swing 1 : 1970s Stakeholders - Tree Swing 2: 2010 Stakeholders - Mock ups 1 Stakeholders - Mock ups 2 Stakeholders - Mock ups 3 Delivery Models • Capital Funded: Architect Led: Traditional Design Bid Build • Capital Funded: Contractor Led: Design and Build • Private Finance Initiative: Contractor Led: Design and Build Capital Funded: Architect Led 1975-1993 1. Nucleus : Systems Building Programme 2. Chelsea and Westminster: Conduit for change 3. Perth Royal Infirmary: Non- nucleus template 1. Nucleus Hospital Building System • • • • • • • • • • • • Fixed template for a ward or department Templates connected together with a ‘hospital street’ to create a hospital Optimum two floors on a flat site Standard departmental configuration of rooms (and sizes) within each template Structural frame (concrete) concealed within the external walls Standard structural grids Standard structural floor to floor heights Standard ceiling heights Separate zones within the ceiling for electrical services, drainage and mechanical services Designated services risers Designated electrical distribution cupboards Lifts and stair cores located on the hospital street 1. Hospital building quality system • Capable of expansion • It was one of the most comprehensive and integrated hospital design data bases • • • • • • • Activity Data Base (ADB) standard Room data sheets (RDS) and layout sheets (‘C’ sheets) Equipment categories Hospital Building Notes (HBN) Departmental requirements Hospital Technical Memoranda (HTM) Building component and Engineering standards Ready made briefing material for complete hospital departments The standard brief helped to restrain unrealistic demands Planning and design time could be reduced by up to 2 years Considerable cost savings could be made by reduction in fees to design consultants, reduction in involvement of NHS staff, reductions in capital cost and running costs 1. Typical Nucleus Layout : Plan 1.Typical Nucleus Layout : Section What went wrong? • 1993 the Chelsea and Westminster hospital on a site which could not accommodate nucleus • NHS Trusts replaced the Regional Health Authorities and in 1990 became self governing independent businesses • 2002 approval of business cases transferred to the new Strategic Health Authorities • Introduction of patient choice • Single rooms and infection control • Payment by results • Increasing sub specialisation – tertiary facilities 2. Chelsea and Westminster 2. Chelsea and Westminster • • • • • • Nucleus philosophy – non standard template Management Contracting Financed through sale of properties Negative equity of late 1980s – early 1990s Allowed freedom of choice Set the precedents for large public spaces and atria 3. Perth Royal Infirmary • • • • • • • Traditional architect led project Non- nucleus template Adoption of HTMs and HBNs Use of standard components Long user group consultation Client changes incorporated Architect Systems Integrator 3. Perth Royal Infirmary Capital Funded: Contractor Led • Design and Build • Architect and design team novated to the contractor • Early examples in the 1990s • West Fife District General • Oban Hospital • Children’s Surgical Unit 2012 Design & Build : Children’s Surgical Unit 2012 • • • • • • • Architect novated to contractor Trust appointed external Project Manager Trust appointed specialist equipment supplier Brief frozen at contract award Client changes discouraged Functionality issues at handover No evidence of systems integrator Design & Build :Children’s Surgical Unit Private Finance Initiative: Contractor Led Design and Build 1992-2018 • Architect and Design Team appointed by the contractor as ‘subcontractors’ • Competitive designs amongst bidders • Difficult user engagement dealing with different teams • Four generations of the initiative New Royal Infirmary of Edinburgh: First Generation Scheme: completed in 2000 Salford Royal: Third Generation Scheme: completed in 2012 Comparison of First and Third Generation PFI Royal Infirmary of Edinburgh • Steep ‘design’ learning curve for contractor • No architect in contractors’ organisation • Little user stakeholder involvement – no user group meetings • No ‘mock-ups’ • Functionality issues with completed project • No systems integrator Salford Royal • Second project for both the contractor and the client’s management team • Architect led design management • Well managed user groups • Mock ups of single and ITU beds • Site visits for users during construction • Contractor systems integrator Systems Integration and Supply Chains • • • • • • Client Organisation Design Team Construction Teams Subcontractors Suppliers Advisory Consultants Primary systems in healthcare construction Client organisation Design Team Building Contractor Client Organisation: Level 1 Management Staff Patients Client Organisation: Level 2 Trust capital project Team • Hard Facilities Management – building fabric – environmental services • Soft Facilities Management Hard FM Team Soft FM Team – catering – cleaning – porters Hospital System : Level 3 Project Stakeholder User Groups • Clinical user groups – departments – medical specialities Trust Project Manager Clinical user groups • Non-clinical groups Nonclinical user groups – – – – – – catering cleaning porters estates team engineering services equipment procurement Complexity • Hospitals have around 50 departments = 50 user groups • 50% of the construction cost relates to the provision of engineering services • Continuous clinical developments in terms of • Models of care • New technologies, equipment Building Design and Construction System Structure External envelope Services Internal Fit-out Building Design and Construction Internal Fit-out subsystem Partitions Fixtures and fittings Medical equipment Specialist Suppliers, Subcontractors and Advisory Consultants • Suppliers: • Robotics • Medical Gas pendants • Subcontractors: • Pneumatic Tube Systems • Advisory Consultants • Healthcare Planners • Fire Engineers Complexity of Systems Integrations • Integrating design with new technology • The development of medical and non medical infrastructure • Integrated equipment systems involving stakeholder groups across the principal system • Introduction of ‘experts’ Medical Technology: Pharmacy Robots Non-medical Technology/ Infrastructure: AGVs distributing bulk pharmaceuticals Medical Infrastructure: Pneumatic Tube Systems Medical Equipment Technology: Automatic Dispensing Cabinets (ADC) Nurse opening controlled drugs compartment Integration Issues • AGVs provide a complete materials management, waste collection and catering transport system • Overall hospital strategy – involves multiple stakeholders • Major impact on hospital design – basement required • Pneumatic Tube Systems can provide for both pharmacy and pathology • Need to agree this before the start of the project as a greater tube diameter is required for pathology • Major impact on service runs within the building • Locations of PTS stations • ADCs can reduce expenditure • Changes nurse working practices Integration of Robotics and Pneumatic Tube System: Swisslog: PillPick Integration Process Pneumatic tube system • Pharmacy • Pathology Infrastructure decision – hospital wide Location Installation • Clean utility • Staff base • Corridor • integrated • freestanding Clinical planning issue and infection control Design and construction issues Cost and control of infection An Example of Integrated Equipment Group 1: Medical Gas pendants • Definition of Group 1 Equipment: supplied and installed by the contractor • In the 1980s and 1990s pendants were simple and the designers specified them in accordance with HTMs (Hospital Technical Memoranda) • By the 2000s service delivery pendants have developed from a mechanical services item into medical equipment and the client wants to select model • Redefined as Group 1+ in the PFI agreement with a timescale for selection • Contractor sets up an approval process with a sub stakeholder group Development of Medical Gas Pendants 1980s • Flexible pendant • Medical gases • Group 1 • Single fix • Standard ADB code 1990s • Rigid pendant • Medical gases and electrical socket outlets • Group 1 • Minimal user involvement • Standard ADB code 2010 • Articulated pendant • Medical gases, data, electrical outlets and equipment • 4 phase fixing programme • Group 1, 2, 3 and 4 equipment • Multiple stakeholders • Bespoke ADB code Procurement of Medical Gas Pendants • Multiple stakeholders – up to 15 • Multiple stakeholder groups • Trust project team – decision makers • Trust clinicians – requirements specification • Trust facilities management – maintenance and servicing • Contractor – procurement and installation • Design team – spatial, environmental and structural Design and Installation Process Process Construction Stage Select manufacturer 1st fix steelwork support Select model 2nd fix base plate Select components 3rd fix ceiling grid and tiles 4th fix cover plate and pendant Stakeholders Trust : Clinicians Equipment Manager Trust FM and Medical Physics Architect Mechanical Services Engineer Electrical Services Structural Engineer Contractor: Construction Manager Commercial Manager Specialist Subcontractor Pendant Manufacturer Examination Light Manufacturer Installation of Medical Gas Pendants Stage 2: Fixing baseplate to structure Stage 4: Completed Installation: pendant & ceiling The Need for a Delivery Model which Supports Systems Integration Benefits of systems integration • ‘You cannot co-operate with somebody if you do not know him and do not know his outlook and how he thinks’ T.E. Chester, Professor of Social Administration, University of Manchester, 1960 How integrated are the projects? Who are the systems integrators in the delivery models? What can Integrated Project Delivery Offer? How Integrated are Projects? • The failure of the PFI process and the collapse of Carillion indicates a serious situation in the UK construction industry • There is no shared risk, the client transfers risk to the contractor who then transfers the risk to their subcontractors • No incentive to work together • Designers have become reactive rather than proactive Who are the Systems Integrators? • In the Architect led projects, only one person participates throughout the design and the delivery process – the architect. The contractor may integrate the subcontractors but the overall contract administration is carried out by the architect • In Design and Bid with novation of the architect, the role transfers to the contractor • In PFI Design and Build, the role lies with the contractor What can Integrated Project Delivery Offer? • A tripartite agreement where designers and contractor have a direct relationship with the client and each other. • Shared risk • Opportunity to integrate systems and supply chains • Lean approach to design and construction Integrated Project Delivery at Sutter Health • Cathedral Hill Project – a major hospital development in California • Based upon AIA (American Institute of Architects) form of Contract • Comparable in size and complexity to many recently completed UK hospital projects Reference: Lostuvali, B. Alves, T.C.L. and Modrich, R-U. (2014) Is Integrated Project Delivery the Answer? • Not tried in the UK • UK Government has issued documents in 2014 in relation to Integrated Project Insurance • Initiatives such as Project 13 – Alliance Based Projects have been used for major engineering project but they still exclude direct client access for designers • Hospital Projects are not infrastructure projects as in roads, railways, utilities References • • • • • • • • • • • • • Cacciatori, E. and Jacobides, M.G. (2005) Davies, A and Mackenzie. I. (2014) Den Otter, A. and Emmitt, S. (2007) Habraken, N.J. (2000) The Structure of the Ordinary Hansen, G.K. and Ollson, N.O.E. (2011) Jorgenson, B. and Emmitt, S. (2008) Lichtig, W.A. (2005) Sutter Health Locatelli,G., Mancini, M. and Romano, E. (2013) Lostuvali, B. Alves, T.C.L. and Modrich, R-U. (2014) Mesa, H.A., Molenaar, K.R. and Alarcon, L.F. (2016) Olsson, N.O.E. and Hansen, G.K. (2010) UK Cabinet Office (2014) The Integrated Project Insurance Model Zaitun, A.B., Noriati, B. and Yaacub, M. (2000) Systems Integration and Project Management LONDON’S GLOBAL UNIVERSITY Capturing and Delivering Value BCPM0044 (2020/21) School of Construction and Project Management, Room: 243a Dr. Grant Mills Tel: 41815, Email: g.mills@ucl.ac.uk Value(s) - Topical Value(s) in Hospital - Topical LONDON’S GLOBAL UNIVERSITY Structure - Recap on the Assignment Brief - Modular Construction - The Operating Theatre Example Assignment – The Brief In this assignment you should consider how a modular hospital can be developed to capture and deliver value. This will involve you: • Identifying a theory or theories that support modular hospital value capture and delivery. For example you may decide that you would like to use your understanding of supply chain management, procurement, alliances, requirements management or stakeholder engagement. Or you might like to consider how you would develop a new approach to systems integration or use advanced design tools such as DSM, DfMA or pDfMA1. • Selecting and describing the specific characteristics of modular hospital manufacture. You might describe the nature of the industry, a specific case study and capability, or how a client or project-based organisation are innovating. You should remark on the specific characteristic that make it complex to capture and deliver value. • Making recommendations on how to design and implement a modular hospital concept and an evaluation of the benefits that it might deliver. You might describe what the next steps are and who should be involved to facilitate and orchestrate the capture and delivery of value. 1 Dependency structure Matrix (DSM), Design for Manufacture and Assembly (DfMA) or Platform Design for Manufacture and Assembly (PDfMA). Assignment – The Brief Requirements management Health system Modular hospital Stakeholder engagement Manufacturing processes Systems Orchestration Platforms Supply chain management Procurement Systems integration Innovation Alliances DSM, DfMA or pDfMA Assignment – The Brief • Taking your knowledge of the lectures and your private reading, contextualise and frame your use of theory to evaluate a practical modular hospital deployment situation. Think carefully about the focus (remember that it is expected that you do 60 hrs of private reading and 80 hours doing the writing). Use the assessment criteria below to guide you in writing your assignment. Word limit: 3,000 words Deadline: Monday 26th April 2021 at 3:00PM (UK Time) Assignment – The Assessment Criteria Statement of Problem /30 A descriptive account of how a specific country healthcare system captures and delivers value through its built assets. This should establish the need for an advanced modular hospital approach that increases value. Analysis /40 The critical evaluation of a new way(s) to capture and deliver value through a new modular hospital design. It will describe the approach (e.g. lean, off-site manufacture, systems integration, supply chain management, logistics, advanced configuration models). Your implementation of the approach should critically describe, justify and evaluate the benefits of the approach. There should also be a clear theoretical framework that describes the effectiveness of the approach with a clear discussion that is supported by literature (within the healthcare sector, or a comparable sector). Conclusions /20 There should be a clear description of what you have done, what you have found and why it has relevance in terms of its implications and recommendations. Presentation /10 Tables/figures are used effectively and consistently. It should be clear when you are using descriptive, reflective and critical styles of writing. There should be correct referencing of literature. LONDON’S GLOBAL UNIVERSITY Structure - Recap on the Assignment Brief - Modular Construction - The Operating Theatre Example Questions How can we innovate to deliver value? What is modularity and what is its impact / benefits? How can an ecosystem be established that delivers value? How can we make decisions about what business model to apply? Modular Construction • • • • Modern Method of Construction is the broad term that encompasses the whole integrated process of smart construction, digital tools and techniques and offsite-construction (MHCLG, 2019). Design for Manufacture and Assembly (DfMA) is a system of process design that ensures that works as amenable as possible for downstream manufacturing and assembly (Boothroyd, 2005), which may include standardised component and reduced design variabilities (Goulding et al., 2015), integrating mechanical services installations (Pasquire and Connolly, 2003) and reducing the number of parts, complexity of assemblies and so costs (Gerth et al. 2013). Offsite manufacturing is where components, elements or modules are constructed away from the building site and then brought to site to be installed in position (Gibb and Pendlebury, 2013). Modern methods of construction (MMCs) is often used to characterise an innovation in offsite technologies, which move work from the construction site to the factory (Pan et al. 2007). Modular Construction Modular Construction • • • Rahman (2014) referred to a range of modular building, preassembly, prefabrication, offsite production, offsite manufacturing, industrialized building, and also a range of onsite and offsite construction methods (British Urban Regeneration Association, 2005; National Audit Office, 2005; National HouseBuilding Council, 2006; Building Research Establishment, 2007). More recent frameworks have been developed by I3P (2019) and Byden Wood (2017) and include delivery models, novel material specifications (NMS), modular and offsite manufacture, modern design optimisation, automation, site-based and advanced sensors and data. The Ministry of Housing, Communities & Local Government (MHCLG) have further standardises MMC terminology (MHCLG, 2019) into seven categories five are categorised as ‘pre-manufacturing’, the sixth is materials innovation and the seventh relates to site-based improvements. Modular Construction (Business Models) • • • Output per employee increased by 20% between 1968 and 1971 – due in large part to the substitution of new materials and offsite construction. Activities were project and sector focused without resource and capability backing. Diversification, particularly vertical diversification. Many major firms had developed or acquired companies up or down the supply chain. But, the management of the British-owned main contractor has not fundamentally changed since the Second World War. Smyth, 2018 Modular Construction (Business Models) • • • • • Every major review of the construction industry has in some way recommended a move towards offsite construction. Less than 5% of what we build in the UK utilises offsite methods. Clyde & Co’s report surveyed some 30 executives from the UK’s top 50 construction firms. Invited to nominate the biggest barriers to offsite, the top two – cost, and lack of relevant knowledge in their companies – are within their remit to influence. Other factors they listed signal the industry’s passivity. They are, in order: waiting for broader roll out across industry; increased risk; unavailable technology; and resistance from the board. What if main contractors, as they are currently constituted, have no obvious role in a future industry where houses, apartment blocks, schools and colleges, offices, healthcare buildings and prisons are delivered mainly by OSM? Fozard’s fear of a “Google of construction”, that could storm the stage with capital, technology and a business model that clients love, is not so implausible. Smyth, 2018 Modular Construction (Business Models) “…the traditional business model of major UK contractors will not exist in ten years’ time. What it will change into is not so clear, but if major contractors are embracing change it is clear that the design team and other stakeholders in the built environment value chain will need to adapt their own business models to respond to new ways of assembling and constructing buildings”. (Roger Bayliss - Senior Vice President Operational Efficiency at Skanska AB) Modular Construction (Business Models) “The government must address questions over intellectual property, pipeline and procurement… there is an arms race across the sector to develop commercially viable modular and component construction products for specific sectors without reference to open source standards”. (David Rumsey - Mace) Modular Construction (≠ What) Modular Construction (≠ When) DfMA issues must be considered before and during the development of the Concept Design at Stage 2 to achieve: • More efficient and collaborative working (e.g. reducing design rework / duplication through early integration) • More efficient component and solution selection (e.g. Reducing procurement waste and blending standardised, mass customised and bespoke elements) • Future flexibility of buildings (e.g. through the creation of standard components readily adapted to future changes) • Improved quality (e.g. Higher tolerances, accuracy, reduced error and component interface / airtightness). Modular Construction (≠ Why not) • Integrator of Manufactured solution 1. Lack of industry self-awareness 2. Skills and knowledge gaps at stage 2 (funders, enablers, advisors and gatekeepers) 3. Supply chain maturity, fragmentation, capacity and new market entrants 4. Incomplete feedback loop and uncertainty for investors (e.g. post occupancy evaluation for OSM) 5. Pipeline of work and market vulnerabilities. 6. In addition - Irrational barriers and OSM decision making Modular Construction (Investment) Investment in Industralised Construction (US) Perhaps the more telling growth statistic is the amount of venture capital (VC) attracted to many of the recent firms highlighted in the first trend. Katerra, a Californiabased firm, raised over $980 million in 2018 Pullen, T., Hall, D. M., & Lessing, J. (2019). A Preliminary Overview of Emerging Trends for Industrialized Construction in the United States (White Paper). Zurich, Switzerland: ETH Zurich Research Collection. https://doi.org/10.3929/ethz-b-000331901 Modular Construction (Investment) Mace Jump Factory Partnership with Australian firm Hickory Hall, 2019 ETH Zurich Modular Construction (Modular Clusters) Baldwin and Clark (2000) adaptation LONDON’S GLOBAL UNIVERSITY Structure - Recap on the Assignment Brief - Modular Construction - The Modular Operating Theatre Example The Problem • • • • • Need to develop capabilities to increase the productivity, scalability and faster delivery of hospital theatre projects. Existing manufactured, volumetric, component and traditional solutions are not being challenged. This project aims to make comparison with spacecraft system manufacture to advance understanding of fast-moving technologies, airtight assembly, logistics, innovation and integration. To research the presumption for offsite in healthcare building and advance DfMA To explore the capabilities, business models and incentives for accelerated pathways to offsite building manufacture and delivery To understand how manufactured, volumetric, component and traditional solutions can be found for this complex setting – then to deliver efficiencies and increased quality (Bryden Wood, 2017) To challenge existing frontiers by drawing a comparison with spacecraft system manufacture. Both use advanced fast-moving technologies, both require air tightness, both are spatially complex, and have challenging assemblies and logistics - requiring significant levels of building services innovation and integration The Problem Royal Shrewsbury Hospital (RSH), as part of a £1.7million investment during 2017/18 The Royal Liverpool hospital, £500million 2019 (following Carillion's Collapse) Advance client requirements, agree standards and develop capabilities for advanced hospital specific design platforms, kit of parts and configurators. Share innovative capabilities, stimulate open sourcing and establish supply network integration to reduce risk and increase innovation. Advanced design and modern methods of construction specialists Healthcare policy and hospital service users Advanced engineering, asset management and manufacturers Define capabilities and requirements for advanced hospital platform for DfMA. Economies of scale and scope, IP and open sourcing recommendations. Case study evidence showing existing capabilities and articulating of advanced challenges and opportunities. Attract investment for new customer-centric solutions and create a pipeline for repeatable projects. Define multi-generational innovation stretch targets. Grow the market with multiple manufacturer standardisation, simplified assembly and so reduced cost / waste. The Evidence Exit Lobby Preparation Utility Scrub Area Model of Care (n=25) Bariatric Surgery (1) Day Surgery (7) Future Trends (4) Theatre Use (2) Working Practices (11) Health & Safety (n=10) Surgical Site Infections (SSI) (6) Infection Control‐ Waste disposal and cleaning (1) Manual Handling (0) Fire Safety (1) Staff Safety (2) Design & Spatial Requirements (n=20) Room Adjacencies, layout and area (17) Ceilings: Layout, height, structure and finish (0) Walls ‐ anti bacterial coatings (1) Doors ‐ automatic, movement, laser/rad. Protection (1) Windows and glazed screens – observation (0) Floors ‐ finish and colour (1) Equipment (n=5) Fixed Equipment (1) Mobile Equipment (4) Environmental Services (n=17) Acoustics (7) Daylight (3) General Room Lighting (1) HVAC and Laminar Flow (6) Anaesthetic Room Search Categories (n= number of literature sources) Operating Theatre Suite Rooms Support Operating Room Surgical                                                                                                        • HBN 26 Published in 2004 and are somewhat outdated view of MMC. HBNs are used in 56 countries. • HFS NHS Repeatable Rooms Programme Published in UCL Evidence Report in 2018 • Now leveraging this evidence to make the Business Case for the SMARTEST theatre The Experience Workshops: 1) Components and sub assemblies 2) Design for manufacture process 3) Designing the cleanest theatre 4) Designing an advanced clinical care pathway 5) Design the greenest theatre 6) Learning from Space Engineering Enhancing interlinked business model value drivers Novelty, Lock-in, Complementarities, Efficiency The Supply Chain Combing open innovation with multi-centre business model resource-driven, offer-driven, customer, finance-driven innovation The Supply Chain – Open Innovation Relational-Approach to Open Innovation Healthcare policy and hospital service users Advanced design and modern methods of construction specialists Advanced engineering, asset management and manufacturers The Supply Chain Market Scale of the modular theatre design, manufacture and assembly market The Supply Chain Market Key parties involved in customising theatres and the existing cascading process of procurement that may reduce the opportunities for economies of modular theatre production scale and scope. The Business Model (Osterwalder and Pigneur, 2010) The Business Model The Business Model The Business Model The Platform The Platform The Findings • Healthcare programmes and projects have constrained MMC innovation - leading to sub-optimal business models, core rigidities and significant evidence gaps. • Space engineering programmes and projects by contrast create co-evolutionary dynamics, advanced modular clusters and digitally-enabled design integration. • Co-evolutionary dynamics (e.g. across business models, capabilities and evidence) must align government, capital and financial institutions, labour, organisational designs and scientific and technical knowledge networks. • An advanced modular cluster and advanced configurator must be developed for healthcare programmes and projects. • A new advanced operating theatre must be nested within a wider clinical service operation and clinical commission system (through planning, product development, design, construction and operation). If achieved, this could deliver significant productivity gains. LONDON’S GLOBAL UNIVERSITY Many thanks for your attention. Any Questions? Capturing andand Delivering Procurement Design Value: Procurement and Design Christopher Sherwood Contact email: c.sherwood@ucl.ac.uk 18 March 18 March 20212021 Procurement and Design 18 March 2021 I covered approximately half of the Week 4 material in the recorded presentation. Today I will present the other half, leaving time for discussion, questions, and answers. I will talk about: v Framework Contracts v How Value means different things in different contexts, and to different groups of people v Value in a Design Context v And I’ll be applying my subjective experience of the content in my presentation, in my analysis. Procurement and Design 18 March 2021 I’ll be utilising my experience as: q q q q q q q A Partner and Director for 17 years at Nightingale Associates, (now part of IBI), - which was one of the largest Architectural Practices in the UK at that time, Managing the London Office of Nightingale Associates, for 9 years, - during which it became the largest office within the practice, The leader of the architectural teams on 5 successful competitive Hospital PPP bids A member of both the NHS Design Review Panel, and the Architects for Health Executive Committee and (Currently), practising independently. Procurement and Design 18 March 2021 Elements of Framework Contracts Pre-selection process based on qualitative and/or quantitative criteria – results in a number of selected contractors or suppliers of services Established “framework” –hence the name – for individual contracts – ie an agreement about the terms and conditions that would apply to any order placed during its life. Individual contracts are made only when the order is placed Selection increases chances of securing work- reduces bidding costs Selection process for individual contracts usually streamlined Procurement and Design 18 March 2021 Elements of Framework Contracts Characterised by clients with large estates/development portfolios so that advantages of repeatability, continuous improvement and reduced costs through discounts for greater order certainty Not necessarily best procurement for smaller / one off projects Frameworks now being used by both Public Sector and Private Companies. Procurement and Design 18 March 2021 Rationale of Frameworks – UK Public Sector Frameworks Principles ● Replace adversarial culture with partnering/long term relationships ● Selection increases chances of securing work- reduces bidding costs ● ● ● Cost Plus Contracts with agreed profit margins - based on open book accounting – reduces disputes/protective measures over variations / delays Opportunities to add value by utilising repeatability, and feedback, in repeat work Consistency of work can generate discounts/lower costs Procurement and Design 18 March 2021 Rationale of Frameworks Advantages for Client: ● ● ● ● ● Reduced overall procurement and project cost, including internal resources used Capture of knowledge, feedback, best practice, and value engineering enhances design quality, value Ability to commence projects early on the basis of limited information Early involvement of Design Team – which is an integral part of Supply Chain Procurement and Design 18 March 2021 Rationale of Frameworks Advantages for Contractor/Supply Chain (including Design team): • Greater continuity of workload - ability to retain project teams and obtain discounts • Guaranteed Profit • • • Reduced cost of tenders, assuming that the framework delivers the promised workload, enabling management resource to be focused on value-adding rather than work-getting Access to opportunities to influence project outcomes due to an earlier appointment Active risk allocation Procurement and Design 18 March 2021 ProCure 21 Framework ● ● ● Preferred Supply Chain Partners (PSCPs), selected to carry out NHS schemes valued at more than £1billion for 5 year period PSCP Supply Chains contained design teams, sub contractors, suppliers All pricing at pre-agreed rates plus profit using “open book” accounting procedures, - eliminates tenders, claims etc. ● Contracts included Concept and Schematic Design ● Contracts awarded through competitive interviews, so low bid costs Procurement and Design 18 March 2021 ProCure 21 Framework ● ● ● ● ● Most contracts had a Guaranteed Maximum Price Design information, intellectual property, feedback to be shared, generating continuous improvement ie CO-CREATION OF VALUE Standardisation of some rooms, eg. ward bedrooms, and other components, - knowledge sharing through Projectshare Costs benchmarked, continuous savings targeted Procurement and Design 18 March 2021 ProCure 21+ Framework ● ProCure 21+ website stated: Since the start of the original ProCure21 framework in 2003, over 600 schemes (collectively worth £3.5bn) have been completed, with consistent time and budget compliance of over 90%. Client satisfaction has also been consistently over 80% and there has been no litigation on any ProCure21 or ProCure21+ scheme – saving the NHS over £100m. This represents a step-change for public sector construction, where in 2001 only 26% of schemes were delivered on time, and 28% on budget, with 3% of the NHS Capital programme being spent on litigation. ● ● = ADDED VALUE Procurement and Design 18 March 2021 ProCure 22 Now ProCure 22 is under way, and by early 2020, all three ProCure iterations had delivered over 900 projects with a total value of over £ 9 billion. Procurement and Design 18 March 2021 Examples of forms of Framework Contracts / Delivery Models Project 13 – developed by the Institute of Civil Engineers (ICE), - not a specific form of contract but a set of guiding principles: 1. Governance: Owner’s definition of value, Long-term relationships with suppliers, and Performance measurement 2. Organisation: Coalition of suppliers, Aligned commercial interests, and Effective organisation 3. Integration: Effective teamwork, Production management, and Health, safety and wellbeing 4. Capable Owner 5. Digital Transformation 6. Further Reading: “From Transactions to Enterprises”, ICE. Procurement and Design 18 March 2021 Examples of forms of Framework Contracts / Delivery Models Anglian Water – @one alliance Alliance with their consultants, 6 contractors and supply chain using Framework agreements to develop better solutions and improve project delivery performance Emphasis on Collaboration, shared efficiency savings and development of new/innovative products Has achieved significant improvements in project costs, carbon emissions and accidents. Procurement and Design 18 March 2021 So when the Contractor / Project Consortium is responsible for executing the Design, - and/or the Detailed Design, employing the architect for these stages, WHO CONTROLS DESIGN QUALITY IN A PROJECT? ● Procurement and Design 18 March 2021 So when the Contractor / Project Consortium is responsible for executing the Design, - and/or the Detailed Design, employing the architect for these stages, WHO CONTROLS DESIGN QUALITY IN A PROJECT? Many believe that it is the Contractor / Consortium, - and that the client loses control of the design. Procurement and Design But the answer is 18 March 2021 Procurement and Design 18 March 2021 But the answer is ● THE CLIENT. ● ● ● ● It is the CLIENT who ultimately controls what will be provided by the successful consortium, through the Brief, and the Contract. The CLIENT, and the Client’s advisers write the Contract, - and the contract can control the design, - eg. it can state that|: No design change and/or reduction in the scope and standard of the facility can take place without the client’s approval. Procurement and Design 18 March 2021 The Client can also prioritise design quality by: Selecting an appropriate advisory team ● Incorporating a design competition into the bid process, as in the UK ● Prioritising and measuring design in the assessment/selection criteria ● Enshrining design quality into the brief/programme documentation ● Working with the advisory team to create a Public Sector Comparator Design that sets a high benchmark for design ● ● ● Procurement and Design 18 March 2021 A Summary of my experience of Procurement Methods: ALL types of procurement can result in an adversarial culture on a project, - but some are more likely to than others. Traditional procurement is the most likely to, - though not automatically, - it depends on the profitability of the project for the players, - obviously particularly, the Contractor. A major factor is profit-related bonus payments by the Contractor to senior project staff – these incentivise the reduction of costs, encouraging the use of cheaper materials, and perhaps changing / omitting design features. Procurement and Design 18 March 2021 A Summary of my experience of Procurement Methods: PPP, on the projects on which I worked, worked well up to the completion of construction, - possibly because most of the Contractors I worked with were foreign! Those Contractors placed a high priority on Design at the bid stage, though sometimes there were arguments about specification during the construction stage. The design competitions generated long term solutions, and in some cases innovative thinking. Procurement and Design 18 March 2021 To Summarise: • Traditional procurement at best will maintain and deliver the value ● already embedded in a project ie the design process ● • Procurement that involves the Building Contractor may provide some added value, mainly from greater integration of construction and design • PPP, despite its faults, adds value to the process with emphasis on life cycle costs, long term value, and (in the UK), design competition. • Frameworks add value through reducing conflict, and enhancing feedback and longer term integration, of the supply chain Procurement and Design 18 March 2021 Procurement Elements that ADD VALUE: • ● Integration of Design and Construction Team ● • Design Competition • Whole Life Cycle Costing / ongoing responsibility for Operation • Partnering / Co-creation of Value • Continuity of work - ability to retain project teams and supply chains • Utilising repetition, standardisation and feedback, in repeat work Procurement and Design 18 March 2021 PROTECTING Value: Procurement and the Contracts should clearly define what Value means for the project, and actively ensure that Value cannot be eroded through loss of control of elements such as Design Quality. Develop the value assessment methodology and apply it Identify evaluation criteria for Value, not just of the final outcome but of the process itself eg. § Excellent Functionality § The Environment for Occupants / Users of the building / facility § High Life Cycle Cost performance § Architectural Distinction § Sustainability Procurement and Design 18 March 2021 Some Value Definitions VALUE IN BUILDINGS / INFRASTRUCTURE “EMPIRICAL” VALUE, FUNCTIONAL PERFORMANCE” VALUE. and “ABSTRACT” VALUE (my definitions): EMPIRICAL VALUE FUNCTIONAL VALUE ABSTRACT VALUE 25 Procurement and Design 18 March 2021 Some Value Definitions VALUE IN BUILDINGS / INFRASTRUCTURE “EMPIRICAL” VALUE, (my definition), is at least to some degree, measurable. It is usually associated with the economics of the construction project, including costs, and the project as a capital asset and/or income/profit generator, - from rental or sale, eg. offices, residential developments. Sustainability, too, if measurable. Procurement and Design 18 March 2021 Some Value Definitions VALUE IN BUILDINGS / INFRASTRUCTURE “FUNCTIONAL PERFORMANCE” VALUE is also to some degree measurable, if not empirically. It involves the performance of the project with reference to ● ● Its function eg. a dam or road, and/or Its users’ ability to carry out activities carried out within efficiently and well, - eg. a factory, shop, workshop, or warehouse, - or in the public sector, say a hospital or school. Many buildings, - especially in the Public Sector, - are not built for profit, but to discharge a public or community function. Procurement and Design 18 March 2021 Some Value Definitions VALUE IN BUILDINGS / INFRASTRUCTURE “ABSTRACT” VALUE is less measurable, it encompasses concepts such as ● User well being, ● Architectural and aesthetic quality, ● Value to the wider community, ● Status. Procurement and Design 18 March 2021 Value for the Wider Community “Abstract” Value The value of buildings like: • Sydney Opera House • Guggenheim Bilbao • Birmingham City library • a Village School, or shop, goes far beyond their financial value And factors such as Environmental concerns and Local Employment have become important, too. Procurement and Design 18 March 2021 Value for Client Owners/Occupiers “Status” Value Some buildings have a “status” element to their Value, that may or may not be integral to their Economic Value. Examples in the Private Sector include say a Company HQ for an international bank, “Designer” shops, “5 Star” hotels etc In these buildings, the “Status” Value of the building may affect customer perception of the company, influencing its performance Procurement and Design 18 March 2021 Some Value Definitions – The “Project Management Triangle” – Barnes, Lock. If one part of the triangle is fixed the other two points have to move, so if quality is fixed, time and/or cost may need to increase, - or a trade off has to be made in quality or cost to meet a fixed date. 31 Procurement and Design 18 March 2021 Some Value Definitions My “Project Desirables” Triangle Lowest Cost One can achieve two, but, usually, not all three variables. Cost Certainty Programme 32 Procurement and Design 18 March 2021 Project cost can be looked at incrementally, as: v Capital Cost – including any costs, - (when applicable), for § Finance, § Land and buildings, § Design § Building, vOperation including energy/utility costs vMaintenance including replacements, repairs, cleaning etc, vOr, - COLLECTIVELY, - as LIFE CYCLE COST. v There is also the ENVIRONMENTAL cost of a building or structure. And its RELATIVE COST – could the money be better used in another way? v • Procurement and Design 18 March 2021 Also, all these formulae and definitions are missing one very important element. TIME: THE LIFE OF A CONSTRUCTION PROJECT DOES NOT END AT CONTRACTION COMPLETION AND HANDOVER. 34 Procurement and Design 18 March 2021 Some Value Definitions What is good value when a building is completed, - eg. may not be good value in the longer term, - and vice versa. • Operational and Maintenance Cost • Future Value, - Capital and/or Rental – and • Long Term status / Reputation all affect perceptions Venezuela: 180% inflation in 2015, = >3%/week, so Value = Speed. Quick decision-making and action saves money. 35 Procurement and Design 18 March 2021 Value • On every construction project, there are different people/groups, each with differing interests, requirements, priorities and aspirations. • Therefore good value is variable, and depends the viewpoint of the “beholder”. • What constitutes good value for one, may not be good value for another. Procurement and Design 18 March 2021 Evaluating value in a construction project context Procurement and Design 18 March 2021 Evaluating value in a Design context – an Example: ● Attribute ● Weight ● Achieves Accommodation requirements of Brief (Areas) ● 4 ● ● Functionality including Access, Adjacencies, Flows ● 3 ● Environment/Wellbeing of occupants ● 3 ● Security ● 3 ● Flexibility – Change of Use / expansion ● 2 ● Architectural Distinction / Impact ● 2 ● Sustainability ● 2 ● Local/Planning/Community Context ● 2 Cost – Life Cycle ● 4 Programme ● 2 Procurement and Design The Process Peterborough City Hospital PPP : Existing hospital on site < 20 years old, but < half required area. PPP brief was for a 612 bed Acute Hospital, with dedicated Women’s and Children’s Hospital + 98 bed Mental Health Hospital 18 March 2021 Procurement and Design Strategic Option Appraisal 18 March 2021 Procurement and Design 18 March 2021 Procurement and Design 18 March 2021 In Germany, funding for Hospitals is per square metre of CLINICAL and OCCUPIED SPACE – ie circulation and atria/entrance concourses do not count in the funding formulae. This encourages efficient planning and maximising productive space. Atria: Do they justify their cost? Procurement and Design 18 March 2021 Herzberg’s Two Factor Hygiene / Motivation Theory ● ● ● ● ● ● ● Factors for Satisfaction Achievement Recognition The work itself Responsibility Advancement Growth ● ● ● ● ● ● ● ● Factors for Dissatisfaction Company policies Supervision Relationship with supervisor and peers Work conditions Salary Status Security Procurement and Design 18 March 2021 Sherwood’s Two Factor Satisfaction / Dissatisfaction Theory applied to Construction Projects: ● Factors for Satisfaction Increased Status ● Architectural Distinction ● Recognition ● Increased Staff/Occupier Wellbeing ● Good Functionality Increased Efficiency/Productivity ● Target Profit achieved/exceeded ● Growth =Asset ADDED VALUE ● ● ● ● ● ● ● ● ● Factors for Dissatisfaction Delays Increased Design and Build Costs – Poor Relationships eg. Design Team/Client, Design Team/Contractor Design Faults – eg. Leaks! Functional Derogations Target Profit not achieved High Maintenance/excessive cost in use AVOIDANCE = VALUE ADDED Procurement and Design 18 March 2021 Delivering value in a construction context: some pointers: Good Hygiene: • UNDERSTAND AND ESTABLISH THE PRIORITIES – ie. what will constitute good value in this project • DON’T MAKE MISTAKES and/ or cause DELAYS • DON’T SPEND / WASTE MONEY WHERE IT IS OF LITTLE BENEFIT • SPEND THE MONEY WHERE IT COUNTS – (Added Value) - Procurement and Design 18 March 2021 (Good “Hygiene”) – minimise mistakes by • Checking design (and area) against brief and Statutory regulations, - constantly. * Don’t forget the area occupied by internal walls, as well as by services, and vertical and horizontal circulation • Using tried and tested/standard details where possible • Utilising rigorous checking procedures for all drawings at every stage, and ENFORCE them. • Utilising appropriate resources - projects that are adequately resourced usually achieve the best results with the fewest crises Procurement and Design 18 March 2021 Good “Hygiene” – minimise waste, and save money where it is of little benefit: • Ensure rooms/spaces are not above briefed area • Minimise Circulation - Place large rooms in corners/at ends of circulation, it reduces the circulation area. (but NB circulation £/sqm cost is < occupied areas) • Save money in non-occupied/non-public areas – eg store rooms, • Save money where appropriate on repetitive items, - eg. doors, (>2,000 in Peterborough City Hospital), power sockets, skirtings • Minimise unnecessary corners in external walls • Select materials, fittings, equipment, engineering services etc., taking into account life-cycle costs Procurement and Design Flexibility 18 March 2021 Procurement and Design 18 March 2021 For example, - (Added Value) Spend the money where it counts • In areas where highest quality environment is desirable eg. Entrance Concourse/Atrium • On architectural features where impact is desired/greatest • On finishes/fittings where performance/durability is critical, eg. external fabric, windows , doors ….. • Maximise amenity – eg view outlook • Exceeding brief/expectations in selected areas - eg. Atrium, Landscaping, larger Operating Theatres, innovative design solutions - “New Nightingale Cruciform Ward” Procurement and Design 18 March 2021 Delivering value in a construction context: some pointers: Added Value: • DESIGN AN EFFICIENT BUILDING/PROJECT – EFFICIENT IN SPACE UTILISATION, USE AND LIFE CYCLE COST. • MAXIMISE THE AEStHETIC VALUE AND OPTIMISE USER WELL BEING WITHIN THE PROJECT CONSTRAINTS • FIRST IMPRESSIONS COUNT • GOOD LANDSCAPING ALWAYS ENHANCES A PROJECT – AND USUALLY DOESN’T COST MUCH IN RELATION TO TOTAL COST Procurement and Design 18 March 2021 Value “Engineering” Should be to either • Increase – “engineer” Value, or, if necessary, • Reduce costs while minimising any reduction in value. • It should NOT be simply a cost-cutting exercise, under the pretence of Value Engineering, - but it often is. The giveaway for the above is whether there are items to ADD to the project, or anything else in the workshop/matrix that will ADD Value rather than reduce it. 51 Procurement and Design 18 March 2021 Value Engineering Often done as a workshop involving Design Team, Project Manager, Client, and Contractor, if appointed. A typical Value “Engineering” matrix might include columns (or rows) for the following: • Proposal • Potential cost/saving • Advantages/disadvantages – possibly weighted • Commentary (by all members of team) • Approval (Y/N) • Agreed action/cost/saving • Remarks Procurement and Design 18 March 2021 The Value of Research, Development and Innovation q q q q Palladio’s “The Four Books of Architecture” Louis Sullivan – use of steel frame to construct high rise buildings John Portman – use of atriums in high end hotels (On smaller scale) Nightingale IBI – Cruciform 4 bed bays, bedpods, Open Plan “Barn Theatre” ● Procurement and Design “Barn Theatre” 18 March 2021 Procurement and Design 18 March 2021 The Design / Construction Professional as a Value Creator / Enhancer / Deliverer: In my lecture, I hope that I have shown that, critically, value doesn’t only lie in optimising the cost during the construction process, - there are many components to value, and a building has VALUE IN USE. My belief is that it is usually, – although not necessarily always, - the Architect and the Design Professionals, who have the best long term view of what represents good value in a construction project, as it is they who understand that a construction project is a means to an end, a building has a life that STARTS at Practical Completion, - it is not a project that is complete at Practical Completion. 55 Procurement and Design 18 March 2021 So what can YOU do to maximise value? • Ascertain what will constitute true value in the project • Establish stakeholder requirements and aspirations even if you can’t achieve all of them. • Practise good project hygiene • Spend the money where it counts • Look for and advocate the LONGER TERM VALUE • Practise true Value Engineering not cost-cutting • 56 Procurement and Design 18 March 2021 So what can YOU do to maximise value? • Specifications of buildings, equipment etc. usually rise over time, so for futureproofing value, consider higher specifications where possible, or facilitating higher specifications in the future. • USE YOUR SKILLS TO ADD VALUE, - individuals can make a big impact, even on a large project, - and as a certain supermarket advertises, - “Every little helps.” 57 Procurement and Design 18 March 2021 The End! I would have liked to meet you all in person, but sadly it hasn’t been possible. I will take this opportunity to wish you well in both your UCL studies and in the future. Procurement and Design 18 March 2021 A Delivery Model is a set of principles, structures, relationships, contracts and approaches developed by institutions and ● adopted and customized by inter● organizational networks as a way of delivering programs and projects. Project Procurement: The overall objective of Project Procurement in a Design and Construction context, is to provide a means and a process to complete the relevant project. Procurement and Design 18 March 2021 Project Procurememt: Selection of the Procurement Route – if there are options, - will be driven by the client’s objectives and view of how procurement can assist in achieving best value for the project……..however best value is defined. It will therefore be influenced by several sometimes competing - and not necessarily effective - drivers: Procurement and Design 18 March 2021 Costs/Pricing Lowest or Best Value Price ● ● Price Certainty Programme Design Quality – who controls it may be an issue Control Laws/Regulations eg. EU rules on Public Sector Procurement Funding RISK (is risk, - or its reduction, - part of value?) Procurement and Design 18 March 2021 Older types of Project Procurement, - Traditional, (Design – Bid – Build), Design & Build, and Construction Management procurement routes have been used for a long time. They “get the job done,” – they deliver – at least most of - the value added by the Design Team, and the Contractor. Each has positives and negatives, but in broad measure, with the possible exception of the greater integration in Design Build, the procurement itself does not add value in most categories that we have described. Procurement and Design 18 March 2021 Procurement of Design Team Private Sector clients can select their Design Team (and their Contractor), however they wish, ie social contact, repeat business, no selection procedure is required by law, but shareholders may require transparent and equitable selection procedures. Public Sector clients must select their Design Team (and Contractor) in accordance with regulations to minimise risk of corruption and to maximise value. Selection methods include approved lists, fee and qualitative performance tenders, and design competitions. Procurement and Design 18 March 2021 Design Competition Competition encourages, rewards, and therefore generates improved performance, and innovation In several European countries, all public sector buildings are awarded through Design competitions A design competition multiplies the number of professionals bringing their expertise to bear onto a project, and therefore increases the likelihood of a design that meets the client’s aspirations, - ie value When competitions select the architect, not necessarily the design, features of the unsuccessful entries can be utilised too. Procurement and Design 18 March 2021 More recent types of Project Procurement ● PPP – Public-Private Partnerships (also called PFI) Public Sector Capital Projects or Services provided, funded and/or operated either wholly or in part by Private Sector Companies eg. ● Hospitals, Equipment Schools, IT Roads/Motorways, Catering Procurement and Design 18 March 2021 PFI (PPP) in the UK: PFI/PPP was first pioneered in UK in 1992. Or was it? The UK NHS was born in 1948, providing free health care to all. But all doctors in General Practice/Primary Care were - and most still are - private businesses working from health centres they owned or rented, and managed, - in effect, thousands of “mini” PPPs! So one could say that British PPP was born in 1948. Procurement and Design 18 March 2021 PFI (PPP) in the UK: But was it? Think about the East India Company, - and the Hudson Bay Trading Company……. Now it is acknowledged that the Colonial era inflicted terrible suffering and wrongs, but, nevertheless, Great Britain built an empire using PPP, and so has been utilising PPP to do Government business for centuries! Procurement and Design 18 March 2021 PFI (PPP) in the UK: PFI/PPP as we now know it first pioneered in UK in 1992 PPP in the UK could (but didn’t always): • Finance, • Design, • Construction, • FM / Maintenance • Equipment • Operations – eg. Trains, some Schools and Academies, Hospital nonClinical Services and NHS Independent Treatment Centres, - though NOT Hospital Clinical Services. Procurement and Design 18 March 2021 PFI (PPP) in the UK: Perceived Benefits for Government: • Capital development cost initially “off balance sheet”, (not now), and spread over many years. • Risks lie principally with Private Sector Partner (PSP). • Competitive process encourages and rewards innovation, especially in design. • Emphasis on life cycle costs instead of capital costs encourages robustThe high UKquality Nationaldesign/material Audit Office hasselection found that some • Cost Model resulted projects represented good value for money while nottime completion for most projects inothers earlydo / on Procurement and Design 18 March 2021 PFI (PPP) in the UK: Negatives: • Cost of borrowing – interest rates – higher for private sector than government • Significant affordability problems with some PPPs • Risk transfer generates cost premium • Contract price increases between selection of Preferred Bidder, and Financial Close • Value engineering due to above can drive down quality • Wastage of resources,The time money in unsuccessful bids a UKand National Audit Office has found that–some projects represented for money while large bid can take months/1 year+, andgood costvalue £ millions. others do not • Some projects criticised for poor design quality Procurement and Design 18 March 2021 PPP - LIFT (Local Improvement Finance Trust) A form of PPP but: • Local Trusts – and in some cases Local Authorities, partnered with Consortium taking equity in Project Co. • Small schemes ‘bundled’ together e.g. Health Centres, GP Surgeries, to achieve economic and PPP viability • Could be linked with other local services and facilities eg. dental services, physiotherapy clinics, district nursing and health visiting, Local authority services, third sector and private providers, and Leisure Centres. Procurement and Design 18 March 2021 PPP - LIFT (Local Improvement Finance Trust) • Continuing relationship – future projects utilised repetition and feedback. • Opportunities for ‘3rd party’ income eg. Residential/Commercial Development. • 314 projects were developed using LIFT. • LIFT procurement represented something approaching a true Public Private Partnership – utilizing a Partnering approach • The National Audit Office stated (in 2005), “The local LIFT schemes we have examined appear to be effective and offer value for money” • Sadly the LIFT programme suffered from a re-organization of NHS Primary Care, - which was not a Procurement / Design and Construct issue, and so its use did not expand. • Procurement and Design 18 March 2021 So has PPP in the UK enhanced / added Value? And if so, how? Procurement and Design 18 March 2021 PPP bids are scored not only on capital construction cost, but on: Design Unitary Payment based on Life Cycle Cost Facilities Maintenance Proposals Legal Provisions SO THEY REPRESENT A GENUINE ATTEMPT TO PROCURE INFRASTRUCTURE PROJECTS ON THE BASIS OFVALUE, NOT JUST COST. Procurement and Design Before PPP, most design decisions ranging from • finishes selection, to • strategic decisions on whether or not to refurbish or build new, prioritised CAPITAL COST. 18 March 2021 Procurement and Design However in PPP, Unitary payment is based not just on the capital cost of the development, but on the TOTAL COST of • Financing, including interest, • Building, • FM/Maintenance including replacements, repairs, cleaning etc • Operations over the life of the PPP contract, ie LIFE CYCLE COST 18 March 2021 Procurement and Design 18 March 2021 Life Cycle Costing • This changes the emphasis on (short term) capital cost, to long term life cycle costs, - LONG TERM VALUE. • It is often cheaper to use higher quality materials that will not require replacement and/or high maintenance during the life of the building • It can even change strategic decisions, - such as whether to refurbish an existing building, or replace it. Although the CAPITAL COST of say demolishing an existing building, and building new, may exceed retention, - OVER THE LIFE OF THE PPP CONTRACT IT MAY BE CHEAPER. • This was the case at Peterborough City Hospital. • Procurement and Design 18 March 2021 PFI (PPP) in the UK: Design Quality Measures : To ensure a high standard of design was achieved, the NHS utilised • A bidding process where the bidders compete on design, - the design is an important criterion in the bid scoring process • CABE and Design Review Panel reviews • Costs that are based on the whole life cycle of the building • • Procurement and Design 18 March 2021 Design Competition Design competitions were an intrinsic part of British PPPs, bidders competed on design as well as other factors such as price Therefore much effort, time, money and intellectual expertise was expended by: • Clients, in ensuring that the PPP process delivers a building of high design quality, and • Bidders, on trying to make each bid better than its competitors in terms of design. Procurement and Design Design Quality According to many, PPP has led to a deterioration in design quality They would have us believe that before PPP, good design was paramount. But was it? These two projects were designed prior to the PPP era, and traditionally procured. 18 March 2021 Procurement and Design 18 March 2021 Design Quality And these two examples are PPP Hospitals Do we really think we would have had public buildings like this without PPP? Southmead Hospital, by BDP Golden Jubilee Wing, King’s College Hospital, by Nightingale Associates, now IBI) Procurement and Design 18 March 2021 Functional Design / User Consultation / Bid Scoring • In the UK Healthcare PPP bid process, user consultation is regarded as an important tool in achieving a design solution of high quality. • The clinicians contribute to the bid scoring process • It is therefore in the bidders’ interests to “win over ”the user groups with solutions of high quality • ….. – Adding Value by enhancing Functional Performance • Procurement and Design 18 March 2021 Case Study: West Middlesex University Hospital • Nominated for the 2002 PFI Awards, and for Design Excellence, at the Healthcare 2004 Awards Procurement and Design 18 March 2021 Case Study: West Middlesex University Hospital Procurement and Design 18 March 2021 Case Study: West Middlesex University Hospital Feedback ● ● ● ● The Unitary payment is approx. £10 million p.a. For the 3 years before the Pfi, the WMUH Trust had spent > £7m just on “sticking plaster” repairs necessary to maintain the hospital functions. Now for a little more than £10m each year, the Trust have a wholly maintained new building, plus “soft FM”, - catering, porters, receipt and distribution of deliveries and waste. PPP certainly added value for West Middlesex University Hospital. Procurement and Design 18 March 2021 PFI (PPP) in the UK: • The National Audit Office had found that some projects represented good value for money while others do not. Nevertheless, “We found that most PFI hospital contracts are well managed. And the low level of deductions and high levels of satisfaction indicate they are currently achieving the value for money expected at the point the contracts were signed” However subsequently, the world-wide Financial Crisis increased the cost of credit, and the NAO expressed doubts about continued PPP VfM. • • Procurement and Design 18 March 2021 PFI (PPP) in the UK: • In their more recent, well publicised (January 2018) report, the National Audit Office was much more negative about PFI/PPP. A reading of the report shows that the main thrust of their criticism is the cost of borrowing the money to finance the projects, - the private sector pays higher interest than the government. The report also criticised biased Business Cases that were slanted towards the adoption of PPP. Nevertheless the report also states that the case for some of the perceived benefits of PPP has insufficient evidence and is unproven. Procurement and Design 18 March 2021 PFI (PPP) in the UK: • In the face of the NAO reports, and mounting criticism both from the public, and within the Construction Industry, PPP as described in the preceding slides, is officially “dead”. However, • The Welsh Mutual Investment Model (where the government takes an equity stake in the project) and • Variations of the Scottish Non-Profit Distributing Model (which operates on a fixed rate of return for contractors and lenders) are still in operation, and elements of several large current infrastructure projects could still be considered PPP. Procurement and Design Principal types of Project Procurement Frameworks 18 March 2021 Procurement and Design 18 March 2021 Background to Rationale of Frameworks ● ● ● ● Traditional Contracts frequently adversarial, as both Client and Contractor/Consortium optimise / protect their financial position. Sir Michael Latham’s 1994 report, ‘Constructing the Team’ criticised the adversarial approach inherent in traditional construction contracts In 2001, just 28% of public sector construction projects were delivered on time, and only 29% were on budget. Slough Estates’ research indicated that approximately 10% of all man hours on a typical construction project were to either generate claims/payment for variations, or to protect against losses for same. Procurement and Design 18 March 2021 Background to Rationale of Frameworks Large Clients with extensive portfolios of project work eg, the NHS, Slough Estates, increasingly concluded that the advantages of price competitive tendering were offset by the above. Several adopted Construction Frameworks as a solution. LONDON’S GLOBAL UNIVERSITY Capturing and Delivering Value BCPM0044 (2020/21) School of Construction and Project Management, Room: 243a Dr. Grant Mills Tel: 41815, Email: g.mills@ucl.ac.uk LONDON’S GLOBAL UNIVERSITY Structure - What is value? Value in the Construction Industry Value Theory Types of Project Value How is Value Delivered? What is Value? What is Value? (bad or good) ‘A contemptuous conception of life’s values.’ Philosopher Roger Scruton The Trellick Tower, London, WC10 Now Grade II listed What is Value? (bad or good) ‘It… illustrates perfectly the social and economic values of good design.’ Sir Stuart Lipton, 2003 Bournemouth library, opened 28 June 2002 What is Value? (bad or good) Therapeutic environments What is Value? (bad or good) What is Value? (Function) Move Vertically Contain Patients Controlled Entrance Quench Thirst Drawbridge at the fort of Ponta da Bandeira; Lagos, Portugal Wandsworth Recovery Centre - MAPP Market substitute What is Value? (Function) Cross Channel Cover Body Fasten Shoes Dolce & Gabbana Topshop Ever-greater Integration Production / Re-engineered substitute European Union Post EU System What is Value? • • • • • Value – The delivery of benefits / costs Depreciation – The loss of value Obsolescence – The end of value Service-life – The duration of value Failure – The price for not creating value LONDON’S GLOBAL UNIVERSITY Structure - What is value? Value in the Construction Industry Value Theory Types of Project Value How is Value Delivered? Value in UK construction (Past) • The construction sector is calling for greater efficiency and effectiveness (HM Government, 2013) • To reduce both initial capital and whole-life cost (33%) and halve the overall time (from inception to completion) Value in UK construction (Past) • UK Cabinet Office (2011) called for – ‘...a profound change in the relationship between public authorities and the construction industry to ensure the Government consistently gets a good deal and the country gets the social and economic infrastructure it needs for the long-term…'. Morrell (2010, p. 7 - chief construction advisor at the time) • Morrell saw “value” as one of those notable themes that keeps cropping up (along with collaboration, integration and innovation) and that whole life value has been top priority for some forty years. • “I hope it is now a cliché that real value lies in outcomes” and, • there is a complicated matrix of interactions which means that it is not “...good enough to point to one aspect of good design, and one aspect of a good outcome, and claim that it proves the value of all aspects of good design...”. Value in UK construction (Past) • • • • • Too many public buildings including hospitals had not been designed with future needs in mind. “We tend to revere bricks and mortar in this country,” he said. “We think buildings have to be built for a long, long time. In other countries there is a tendency to treat buildings as a consumable.” He launched the government’s construction strategy. This is designed to cut 20% off building costs by 2015 and will see £22 billion spent on government construction projects over the next three years, of which £2.2 billion is earmarked for health schemes. The minister said hospital buildings could be built “as sheds around people and equipment that can be reconfigured very quickly in 10 or 20 years’ time when needs change. We need to build in flexibility. We need to have a shell that’s capable of being reconfigured. At the moment, we’re building in obsolescence.” Rogers, D. (2011). Minister Favours "Sheds" for Hospitals: Maude emphasises future flexibility. Building Design. Value in UK construction (Past) Value in UK construction (Past) Peter Hansford (Chief Con Adv) “Chair” 5 Don Ward (CE) “It is more” 25 – 200 Graham Ive (UCL) “1:2:20” Will Hughes (Reading) “1:2:25 – land value Roger Madelin (Argent LLP) “Timing, luck and good design” Design cost 0.1 Initial construction cost 1 Operation and maintenance Business operation costs / Hughes et al. (2004) Exposing the myth of the 1:5:200 ratio relating initial cost, maintenance and staffing costs of office buildings. In: Khosrowshahi, F (Ed.), 20th Annual ARCOM Conference, 1-3 September 2004, Heriot Watt University. Association of Researchers in Construction Management, Vol. 1, 373-81. Edge Debate: Edge Debate 65 – 26th November 2014 “What is the true ratio?: costs and value of construction”, UCL Bartlett Value in UK construction (Past) Assets Operational Failure Capital / Cost Fitness for Purpose Investments Capacity / Demand Mandated / Compliance Land Value Benefits of Operation Efficiency / Effectiveness Future Flexibility Whole-Life Assurance in Project Management Relationship Design Value in UK Construction Value in UK construction Construction Innovation Hub https://construction innovationhub.org. uk/wpcontent/uploads/20 20/07/20200715_B R_09_ValueFrame workReport_Digital _Pages.pdf Worldwide Asset Crisis • Organisation for Economic Cooperation and Development (OECD) estimates that spending to update (in developed) or to develop new (in emerging) is $53 trillion - between 2007 and 2030 • In the UK alone in the last decade, £150 billion is estimated to have been invested • Future demand is expected to rise to around £45 billion per annum until 2020. Open Building Manufacturing: Key Technologies, Applications and Industrial Cases : book2. VTT: Manubuild; 2009.. LONDON’S GLOBAL UNIVERSITY Structure - What is value? Value in the Construction Industry Value Theory Types of Project Value How is Value Delivered? Value Theory • Plato was probably first to distinguish between: – Value in exchange, and… – Value in use • Baier has defined value as: – Value is the capacity of a good, service, or activity to satisfy a need or provide a benefit to a person or legal entity (1969: 40) • Today, there are many different definitions of value – we will explore many of these Value Theory • Adam Smith, the famous 19th century economist said: – The things which have the greatest value in use have frequently little or no value in exchange; and on the contrary, those that have the greatest value in exchange have frequently no value in use (Smith, 1937: 28) Value Theory • In the long run, the market must retain a connection between exchange and use value – Factor inputs configured in the product or service – Outputs in terms of functional use + other more subjective criteria around perceived value • In project businesses requirements + time, cost and quality/scope do not fully address value Value Theory • Economic models over the past three decades reflect theoretical developments of agency theory, contract theory, shareholder value maximization, and transaction cost theory (Grant et al. 1994) • These share the premise that central to the firm is the maximisation of shareholder wealth and individual self-interest through single-minded, rational, economic decision making • Governance is by economic contracts and cost efficiency driven by contractual and structural forms, determined either by management or market • This is a narrow view of the firm. What about judgement, dialogue, relationships and knowledge Value Theory • In the economic model, conflict and self-interest is a natural consequence of every individual seeking to maximize his or her economic benefit and to mitigate the risk of failure • In contrast to objective, and rational behaviour, human action is un-predictable, although people may choose to comply with values, moral codes and standards • This is not to say that a firm should not maximise profit and shareholder value, rather that its actions should be pursued with a broader awareness, social responsibility and consciousness of all stakeholders • Individuals can be seen to be motivated by more than economic gains (Grant et al. 1994) What is Value? Economic What is Value? Efficiency / OM Outputs Inputs What is Value? Accountant 1 Cost What is Value? (Value Manager) Function Cost The Five Connotations of Increasing Value (Male et al. 1998) What is Value? Satisfy a Need Use Resources The Five Connotations of Increasing Value (British Standards Institute, 2000) What is Value? There are different views of value Framed by different values, expectations and perceptions of what is important LONDON’S GLOBAL UNIVERSITY Structure - What is value? Value in the Construction Industry Value Theory Types of Project Value How is Value Delivered? Types of Project Value Consider for Example a School Project Types of Project Value Consider for Example a School Project Developing Ideas Population Wealth, Welfare Wellbeing Child Health, Safety, Enjoyment, Achievement, Contribution and Economic Wellbeing Outcomes Education Attainment Activity / Capacity Infrastructure Investment and Asset Inputs ROI Time Types of Project Value Consider for Example a School Project Types of Project Value Now Consider a Hospital Project Types of Project Value Now Consider a Hospital Project Population Wealth, Welfare Developing Ideas Wellbeing Health Status and Health Gain Outcomes “First do no harm” Inman T. Foundation for a new theory and practice of medicine. John Churchill, 1860 Healthcare Intervention Output Activity / Capacity Infrastructure Investment and Asset Inputs ROI Time What is Value? Health - Harms Resources Types of Project Value (Sector Dependent) Different sectors view value differently Different stakeholders in each sector have different priorities LONDON’S GLOBAL UNIVERSITY Structure - What is value? Value in the Construction Industry Value Theory Types of Project Value How is Value Delivered? How is Value Delivered? (Projects) Mills, G. R. W. and Austin, S A. (2014) “Making Sense of Stakeholder Values Emergence”, Engineering Project Organization Journal, (4)2-3, 65-88. How is Value Delivered? (Programmes) How is Value Delivered? There are different views of value Framed by different values, expectations and perceptions of what is important Different parties have different responsibilities for the delivery of value Project and operational views of value may be at odds Value is impacted by the contract Different sectors view value differently Different stakeholders in each sector have different priorities How is Value Delivered? Mills, G. R. W. and Austin, S A. (2014) “Making Sense of Stakeholder Values Emergence”, Engineering Project Organization Journal, (4)2-3, 65-88. How is Value Delivered? Project Value Value Criteria Stakeholder Value Trade-off Programme Value Requires a hierarchy of priorities LONDON’S GLOBAL UNIVERSITY Capturing and Delivering Value BCPM0044 (2020/21) School of Construction and Project Management, Room: 243a Dr. Grant Mills Tel: 41815, Email: g.mills@ucl.ac.uk LONDON’S GLOBAL UNIVERSITY Structure - Foundations Shift from project- to enterprise-based thinking (P13) Supply Chain Management Across Three Programmes Case Study – Anglian Water (High performing programme and project) Hybrid Organising Investment in Digital Innovation Theoretical Foundations Business Model / Ecosystem Practical Foundation • • • • • • Berin Brandenburg airport Not functionally fit for purpose resulting in significant cost overruns and time delays from its 2011 opening. Various scheduled openings prevented on the basis of mandatory fire protection and alarm system failures. A large number of construction flaws and problems. Many changes in project management / governance and operational management (e.g. bankrupt, allegations of bribery, dismissals and resignations). To make way for the new airport, two villages were removed with 370 inhabitants receiving compensation and new homes. Long term industry partnerships “When you innovate, look at the forest, not the trees – and get the overall design of your activity system right before optimising the details” (Amit and Zott, 2012) Long term industry partnerships Reduced Product / Service / Business Model Innovation We are not sharing data and not learning Reduced Planning We are not investing or innovating to develop advanced practices Operational Failure / Public Disvalue Low Margins / Fast Delivery Increased Error / Failure Uncertainty in Employment Reduced Projects Increased Accidents Increased Total Project Cost Increased Claims Increased Insurance We are paying twice because it is difficult to change what we presently do Increased Risk Transfer We lack the data-driven skills to show what is going wrong Typical project status reporting for all project information is 28 days Vicious Construction Industry Circle (as a result of a non-data driven approach) Long term industry partnerships Increasing innovation and incubating advanced business models Increased Margins Increased Performance Increased Employment Increased use of Offsite Democratising the use of data to change the behaviour of the industry Increased Planning Developing data analytics skills and capabilities Improved Prediction and Prevention Research and data-driven Reduced Claims Increased No of Projects Reduced Total Project Cost Increased Certainty Reduced Accidents Establishing specific data communities to transform the industry Virtuous Industry Transformation Circle (result of a data-driven approach) LONDON’S GLOBAL UNIVERSITY Structure - Foundations Shift from project- to enterprise-based thinking (P13) Supply Chain Management Across Three Programmes Case Study – Anglian Water (High performing programme and project) Hybrid Organising Investment in Digital Innovation • Researching - “the shift from project- to enterprise-based thinking” “how information flows in such endeavors and how digital transformation affects programme complexity and governance across the asset lifecycle” • • The ICE Infrastructure Client Group (ICG) instigated P13 ICG brings together more than 20 major infrastructure clients (programme investment above £2bn), from across a range of expert sectors. Supporting the Government's Infrastructure Cost Review Report 2010. The following opportunities to reduce costs and deliver greater value have been identified: – Improving the commissioning, procurement and delivery of projects – Effective collaboration at all levels of the infrastructure supply chain – Addressing barriers to innovation and sustainability “the shift from project- to enterprise-based thinking” The main difference between an enterprise and a traditional construction programme are: •Reward/profit in the enterprise is based on value added to the overall outcomes, not time spent •There is greater understanding of cost drivers and risk across all organisations in the enterprise, with commercial incentives for collaboration to jointly mitigate risk, not transfer it •Establishing a high performing enterprise requires a fundamental shift in leadership, governance, behaviours and skills to succeed The asset owner is central and leads the enterprise Suppliers have direct relationships with the owner An integrator actively engages and integrates all tiers of the supply chain The owner, key suppliers, advisors and integrator work as one team Heathrow Cost of Quality Failure Create a scalable AEC Production Control Room (£3.6m) CASA/BSCPM Data Trust and Task Force Project 13 – Development of delivery model principles [1,2,3,4] are exploited through policy [5], R&D investment [6], new contract definition [7] and programmes/projects [8,9,10,11,12,13,14,15] Researching “the shift from project- to enterprise-based thinking” Case Study: London Underground Embankment and West Hampstead Case Studies: Broomhill Sands Coastal Defence Scheme & Warrington Flood Risk Management Scheme Phase 3A Case Study: @One Alliance Cambridge project Pulloxhill WTW “A team was brought together to Look at projects across infrastructure. The team was lead by UCL…who undertook a detailed analysis of those projects and aggregated the characteristics that they saw in that project to find the overall approach taken by project 13. This is really important. It ensured that it was not a hypothesis or theory – it was drawn from industry research and represents current industry best practice” LONDON’S GLOBAL UNIVERSITY Structure - Foundations Shift from project- to enterprise-based thinking (P13) Supply Chain Management Across Three Programmes Case Study – Anglian Water (High performing programme and project) Hybrid Organising Investment in Digital Innovation Three Major Programmes Hybrid A Flood Defence A+ (Coastal) A £29.2M coastal defence scheme covering 2.4 km. It involved installing a rock revetment, shingle beach, timber groynes, vehicle ramps and extension to designated environmental site and live firing range. Flood Defence A- (River) A £6.5 million new river flood defence scheme. This scheme was the third phase. It consisted of steel sheet piles with precast concrete cladding units, raised embankments, precast concrete walls and wetland environments. Hybrid B Rail (Station B+ Refurbishment) A £14.5 million investment in the refurbishment of a station including M&E services, information systems and finishes to improve customer service and make them safer to operate and cheaper to maintain. Rail (Platform B- Extension) A £3.4m investment to extend and widen platforms at an inner city railway station. The scheme consisted of site clearance, sheet piling, ground works, capping beam and insitu concrete. Hybrid C Water Recycling C+ Centre A £22 million investment in the installation of a pumping station and eight new treatment tanks. Delivered to a tight 10-month construction deadline and came in £9 million below the budget. Water Treatment Centre C- A £8 million investment in the construction of a new water treatment plant on an existing decommissioned site. It was a emergence of regional water supply and demand issues. Mills, G. R. W., Evans, D, Candlish, C (2020). “AnglianWater @one Alliance: A New Approach to Supply Chain Management”. In Pryke (Ed) Successful Construction Supply Chain Management: Concepts and Case Studies, Second Edition. London: JohnWiley & Sons Ltd. (237-249). Supply Chain Management • • • • Much of the discussion has remained on whether supply chain management should be: Client-centric or Contractor-centric (King & Pitt, 2009) Rather than mutually beneficial win-win outcomes (Cox et al 2007 and King & Pitt, 2009). Supply chain management remains hampered by traditional attitudes and behaviours, such as quasi-competitive controls, mistrust and conflict (Bresnen & Marshall, 1999; Moore & Dainty, 2001) and by project, stage and bidding silos. This fails to capture the advantages of a more collaborative alliance-based supply chain approaches (Construction Industry Institute, 2014) Supply Chain Management A key part of supply chain management outside of the construction sector has been early supplier engagement, to access to supplier design and manufacturing knowledge (Dowlatshahi 1998). This involves, for example: – Establishing long-term strategic relationships through early procurement (to analyse make-buy decisions, negotiate price and terms, orders, lead times, stock and quality) – Improving product innovation and standardisation (to agree material standards, quality control, defects, efficiencies, capabilities and research and innovation) – Increasing the speed of project design and production information (to conceptualise, define functions, performance and material requirements, plan work packages, identify standard components, identify costs, minimise waste and establish the market for supply chain partners), and – Continuous manufacturing process improvement (production processes, schedules and runs, to set goals for inventory, set-up, efficiency, handling and turnover) (Dowlatshahi 1998). Programme A Supply Chain Management Programme B Supply Chain Management Programme C Supply Chain Management LONDON’S GLOBAL UNIVERSITY Structure - Foundations Shift from project- to enterprise-based thinking (P13) Supply Chain Management Across Three Programmes Case Study – Anglian Water (High performing programme and project) Hybrid Organising Investment in Digital Innovation Programme C Supply Chain Management Anglian water has a long history of alliance supply chain management. The Anglian Water @one alliance has since 2004: – Halved carbon emissions – Made time efficiencies of 40% – Consistently out-performed Anglian Water’s business plan target – Increased the length of the alliance partner contracts (now 15 years) Programme C Supply Chain Management • Key was establishing a strong strategic direction, clear transitional goals, fair commercial arrangements and robust selection and governance frameworks. • Everyone is in the alliance together, all alliance partners generate a return only by collectively and continuously out-performing the baseline. • They directly manage and develop capabilities and behaviours of the supply chain partners, develop efficient and collaborative engagement strategies and promote early engagement to identify effective and innovative solutions that deliver the required clients and customer outcomes. Programme C Supply Chain Management • • • C+ The project cost came in £9 million below the budget. 82% of suppliers on the Cambridge project were in a long-term relationship with Anglian Water (beyond 3 years) and 60% were in stable framework or alliancing relationships. The Cambridge project exhibited a high intensity of innovation relating to the use of modularised and standard products. There was innovation in: – the use of new materials - recycled plastic (weholite) for tanks, overground pipework, and fibre reinforced concrete – new techniques - soil stabilisation techniques, innovative platform design and ‘profibus’ control technology – new management system (level sensor integration) were all deemed contributing to the improvement in project functions. Programme C Supply Chain Management C+ The boundaries of several organisations, subsystems and activities were redrawn in order to: – – – – – prevent the emergence of interface issues, to increase buildability, facilitate the exchange of information, to support the appropriate allocation of risks, and to exploit all the knowledge, expertise and innovation potentially carried by the members of the supply chain. The project was organized around clusters and work packages. – – Sub-system interface management (e.g. MCC, MEICA and Civils). Customised and standard package products (e.g. Plant Rooms, Tanks, Pumps, Pipework, Valves, Pre-construction and Construction Materials). Programme C Supply Chain Management C+ Integration between alliance partners / Work packages clustering and team integration (Nicolini et al., 2001) Programme C Supply Chain Management • Strategic approach to alliance SCM – • Effective environment for the early engagement of specialist suppliers – C+ • • • • “…the framework is brilliant because you deal with the same people all the time…this one must have been the eighth or tenth…scheme of a decent size, so all the lessons learnt from all of those “If it wasn’t for [our early engagement] it wouldn’t have happened”. “...
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How a modular hospital can be developed to capture and deliver value 1

How a modular hospital can be developed to capture and deliver value

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How a modular hospital can be developed to capture and deliver value 2
Healthcare institutions require well-organized and sustained physical and managerial
setups that provide medical services and satisfaction while performing the assigned duty of
attending to patients. Based on this research's theme, modular hospitals are assumed to be the
modular configuration of hospitals. The hospitals, in this case, are treated in diverse dimensions,
including individual modules (containers) the have been subjected to mutual interconnections.
During this process, assembling is performed through the means of using cranes. This sector
(healthcare) plays a causal role within societies. It requires special handling for its retaining
process and elevation into the next advanced level of operation and management. For that matter,
a couple of states have adopted the tendency to revamp the clear and attractive image of the
healthcare industry within the countries in terms of renovating and the newly designed
constructed building aiming to meet future expectations in changes of medical service delivery.
Extensively, in the quest to provide overwhelming results when delivering and giving
value capture due to renovation in modular hospital, various approaches are encompassed within
the scope of those services. This research strives to ascertain the possible available theories
attached to modular hospitals' process regarding developing capture and delivery values,
articulating the notorious specific features of modular hospital manufacture, and the general
recommendation about designing and implementing modular hospital concept and the merits
associated with the procedure.
Within the U.S medical institution, the concept of modular hospitals has been extensively
adopted and applied to create the affordability rate of health services and taint an impressive
image for hospitals. In that regard, several theories are applied to ensure a better, and the
expectable result is attained as required (Davies, MacAulay, and Brady, 2019)). The theories are
applied in terms of supply chain management; some are given in the form of procurements, a

How a modular hospital can be developed to capture and deliver value 3
number are presented in terms of alliances, and a greater percentage also given as per the wish of
the management team: stakeholders or requirement management. In implementing the modular
hospital for capture and delivering valuables, procurement as a highlighted theory participates a
lot within the healthcare institutions in the U.S. in this process, the procurement intervention
creates effective changes that elevate the hospital’s performance level in service delivery.
Experienced with critical cost fluctuations erosion, companies in industries undergoing a steady
surge in products subjected to commodity situations and at the same time faced with
unprecedented pressure to manage cost and cash positions. With such predicaments faced within
the U.S healthcare industry, it is logical to adopt a relevant permanent antidote towards
remediating such causes.
The actions often are particularly strong when technological advances are strong in
combination with the advanced industry like, for example, semiconductors. However, according
to the research done, the devices (semiconductors) have undergone some experienced price
erosion which is approximately 5 to 20 % yearly for the past years (Yusong et al., 2020). A
notice on the rise in shocks has been detected right from the pandemic and international trade
tension, resulting in a sudden increase in stress on the liquidity, which most companies are
fighting towards relieving the tensions. Under such a situation, procurement intervention, which
is an often-underappreciated, can play a leading function in the provision of required efforts to
address such arising issues and produce the required capture value. Unfortunately, among the
discussed procurement organizations, a greater percentage have not gotten the privilege of
gaining devotion which would be creating enough time and resources for perfectly undergo
operational renovations and strategic priorities (Mustaqeem, Anwar, and Majid, 2020). However,
the organizations pay much attention to short-term activities like, for example, category waves

How a modular hospital can be developed to capture and deliver value 4
that have been orchestrated in-year effect. A greater number assume the longer-term strategic
initiatives, which are known to be productive and produce convincing results compared to the
short activities. Long-term initiatives include; capability building, applied digitization, and stress
used when testing the supply base. This plan encourages resiliency within organizations.
Additionally, as a mentioned factor, supply chain management works as a theory that
helps in pushing for the value capture and delivery within healthcare centers through the modular
hospital. Upon implementing this supply chain management program, it works in fulfilling its
mission within the organizations by detecting and identifying weak points of the healthcare
positions, thus providing the required rectifications to enhance the efficiency of the targeted
outcome and promote the increase of global health investment concurrently (Gimelli et al.,
2019). The program in the line to produce the value capture and delivery is associated with the
merits such as improved processes, proper exhausting of the available resources, ensure the
satisfaction of employees in the health industry, advanced and quality treatment services, and
finally producing amusing patients. However, most keen observers have asserted that managing
and controlling the healthcare supply chain is generally fragmented and, at the same time, a
complicated process. In support of that, amongst the encompassed privileges include; managing
supplies, availing required and expected resources for the smooth running of the organizations,
and supply of significant food and services to the health care deliverer. This program is essential
as far as the modular hospital's issue is concerned and much important when the need to provide
effective and adorable services is expected in delivering value and capture.
Similarly, for alliances in association with the modular hospital, the issue is important
following the significant role. The concept is relevant, being strategic alliances epitomizes
possible reasons why the body or program is formed. Customers are the same reason stimulating

How a modular hospital can be developed to capture and deliver value 5
the formation of strategic alliances. Since most organizations are formed to attract and get more
customers, they must work tirelessly to provide better services for their esteemed customers
(Fifield, Lomas, Giridharan, and Allinson, 2018). However, recent research has confirmed that
most customers suffer courtesy of their ignorance and assumptions. Today most of them have
remained alert and developed the courage of antagonizing any humiliation intention from the
known oppressors who are the organizations. The alliances formed have put the suppliers and
delivers on toes by ensuring they provide quality and top-notch results as far as the goods and
service they work with are concerned. In alliance formation, while delivering services, the
healthcare care industries use specific teams of service deliverers, which include networks and
affiliations. The program is also formally applied by healthcare services and servicing given
patients known as customers. Strategic alliances are critical for healthcare institutions since they
worked formally in providing a reshuffling program protecting customers from oppressors by
securing the fundamental right for customers.
Amongst the theory, stakeholder engagements are much essential in this field of modular
hospitality. This team strives to accomplish the building of involvement and the sense of the new
future's progress. Within this process, they work tirelessly using all the available resources to
ensure the started project is not left unfinished, for example, in the process of renovating the new
image of the health industry in terms of service delivery, to allow for the adequate time required
as well as planning strategy with the aim of involving all the available parties. The coming
together is meant for consolidating ideas and making final internalization of the agreed remarks
for the project's progress (Grossman et al., 2016, 440). The parties discuss, comprehend, and
corroborate every project milestone and terms of the applied procedure. These people play
critical roles in every project and healthcare system, which therefore provides the convincing

How a modular hospital can be developed to capture and deliver value 6
reason to confirm such forces' legitimacy in this institution and more so for the expected future
changes in the healthcare industry. The medical facility's full construction in the absence of such
efforts might be rendered an unsteady move.
Besides the old methods of attaining the modular hospital designs for accomplishing the
value capture delivery, new methods have em...


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