Playing it safe: Keys to reducing construction risks
As with any new venture, embarking on a major construction project can be exciting, but the excitement is warranted only if the owner understands and is prepared for the risks involved. In the end, the project's success will be determined by how well these risks are controlled. Poor control usually results in inferior quality, delays, cost overruns and, worst of all, accidents.
Generally speaking, there are four measures for reducing the risks in the construction of healthcare projects:
1. Choosing the right project- delivery strategy. Minimizing risk for an owner starts with an appropriate project-delivery strategy. This strategy has to be tailored to an owner's specific needs and the relative strengths of the other team members. A few of the major strategies to consider are:
Conventional vs. design-build. With the conventional approach, the architect/engineer and contractor hold separate contracts with the owner. The owner assumes much of the risk of design deficiencies, but the trade-off is better control during the entire process. With the design-build approach, one entity (usually the contractor) takes on all of the design and construction risks based on a detailed set of design and performance standards.
“Hard bid” vs. negotiated. Letting the low “initial” cost determine who the builder will be can be risky, particularly if the builder lacks proven experience, management skills, and financial strength. It is often far better to have a high level of reliance on the most competent builder than on the perfection of a set of bid documents and the low bidder's understanding of them. A negotiated contract with your selected builder also can provide many more options on how to better spend your money; that is, a negotiated builder can offer value engineering and other means to help control the budget.
Conventional project schedule vs. fast-track. Time is money, and larger projects often reduce both by overlapping the various design and construction activities. This is accomplished by dividing the construction documents into two or more “bid packages,” allowing the builder to start excavation and foundations, say, while finishes are being determined.
2. Selecting the right team and team leader. Choosing the right owner's representative, architect, engineer, and construction manager is crucial to the success of the project, as is deciding who is best suited to lead the team through the entire process.
Once the team is in place, establishing good rapport among the team members is the next step. Credibility and trust will open lines of honesty and communication, leading to successful risk-reduction planning. This should carry through all the team's working relationships, creating opportunities to reduce risks throughout the duration of the project. As the project gets under way, a good working relationship also should be established with legal representatives, insurance representatives, vendors, and other entities having authority over or influence on the project.
It is of paramount importance that the team leader makes sure that each team member understands risk-reduction needs, objectives, and concerns, which requires excellent communication. Cell phones, e-mail, digital photography, fax machines, and even project Web sites make the timely communication of risk-reduction planning and decisions easier than ever before.
3. Controlling budget, costs, schedule, and quality. Once the owner has the framework established for a team that is focused on producing a quality project, with risk reduction at the forefront of all team members’ minds, he needs to depend on his core team to institute and maintain control over the four key elements of risk: budget, costs, schedule, and quality. These major project drivers are all interrelated and require constant vigilance, both in the field and in the office.
Controlling budget and costs. The more complete and accurate a budget is, the less risk there is of its being exceeded. An experienced estimating team not only can pre-sent accurate construction costs early in the process, but also can help ensure that all of the “soft” costs such as interest, permits, testing, and printing are included. Accurate estimating requires keeping abreast of changing market conditions and material prices. It also includes strategizing and implementing the most competitive procurement method for all aspects of the work. Finally, it's important to negotiate fair pricing from subcontractors on changes and to avoide construction claims from subcontractors by good management.
Controlling the schedule. This requires time management for the entire project and should include well-planned strategies for reaching the projected completion date. Common strategies include phasing of design and construction, and determining which elements of the work can be prefabricated off-site. An incomplete or unrealistic schedule—or, worse yet, one that is not enforced—can greatly increase the risk of delay and its financial consequences.
Controlling quality. Quality control must encompass all levels and stages of a project and can be a major area of risk for a project owner. For example, if the planning and design process does not yield quality documents, the owner is at risk of ending up with unexpected costs, at best, or an inadequate facility, at worst. A construction firm that does not adhere to project specifications or uses inexperienced subcontractors or tradesmen also can seriously jeopardize construction quality, leading to delays, costly disputes, and long-term building maintenance problems.
4. An environment of safety. The most important area of risk control for an owner is patient safety, which begins with the design process. CG Schmidt recently completed the Synergy Health St. Joseph's Hospital, a replacement facility in West Bend, Wisconsin. This project, designed by Gresham, Smith and Partners, has gained national recognition for its primary focus on patient safety. Its design strategy is based on reducing the risk of errors and infection through standardization and technology. Standardization includes identical patient rooms (as opposed to mirror-image layouts), uniform locations of electrical and medical gas outlets, and uniform selections of equipment. Technologic strategies include the installation of HVAC systems with HEPA filtration and the use of UV light systems for maximum infection control throughout the facility.
Patient safety is also a key consideration during the construction process. Infection control and risk-assessment guidelines to follow during construction have been established by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). The JCAHO guidelines identify all of the factors that should be considered when developing a project plan. These guidelines can be obtained from the Joint Commission Resources Web Site (http://www.jcrinc.com [subscription required]).
The risks involved with hospital construction should motivate construction teams to take extraordinary safety measures when building a new facility, and even more so when they are renovating or adding onto a functioning facility.
For example, while we were renovating the Southwest Tower at Waukesha Memorial Hospital in Waukesha, Wisconsin, strict dust-control and debris-removal processes were established and enforced—to such an extent that construction crews even changed into scrubs before entering critical areas. Negative-pressure construction areas and temporary anterooms also were established to contain dust. Keeping air moving into a renovation zone by negative pressure and entrance vestibules minimizes patient infection risk. This level of concern and awareness protects healthcare providers and patients alike, and also protects the construction crew.
Risk reduction involves the decisions made by every member of the field crew. For example, although it might be easier for tradesmen to get around if they risked not tying themselves off at great heights, doing so would be foolish. Safety practices need to be conveyed to the crew and then carefully monitored.
Frequent meetings and site inspections encourage sound safety decisions in the field, as well as enhancing the quality of the project. Bonus programs that promote a culture of high safety awareness and best practices also can reduce risk. One of the best things owners can do before choosing a construction manager is to make sure that firm's safety philosophy matches their own.
In the final analysis, although the benefits of risk-reduction efforts won't be fully realized until a project has been completed, the right team players with the right plan can help an owner avoid pitfalls by keeping money, time, quality, and safety in check. HD