WHY MORE PUBLIC SECTOR OWNERS ARE CONSIDERING LEAN PROJECT DELIVERY BASED ON DATA-DRIVEN METRICS. Presented to LCI San Diego CoP January 15, 2015
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1 WHY MORE PUBLIC SECTOR OWNERS ARE CONSIDERING LEAN PROJECT DELIVERY BASED ON DATA-DRIVEN METRICS Presented to LCI San Diego CoP January 15, 2015
2 Current State Future State
3 What s Going On Elsewhere in the World?
4 Courtesy: Mauri Mäkiaho
5 Courtesy: Mauri Mäkiaho
6 Courtesy: Mauri Mäkiaho
7 Finnish Project Key Performance Indicators Courtesy: Mauri Mäkiaho
8 Finnish Project Key Performance Indicators Courtesy: Mauri Mäkiaho
9 Finnish Project Key Performance Indicators Courtesy: Mauri Mäkiaho
10 What s Going On Elsewhere in the World?
11 UK Construction 2025 Goals e/210099/bis construction-2025-industrial-strategy.pdf 2014 Umstot Project and Facilities Solutions, LLC
12 UK Construction 2025 Goals 2014 Umstot Project and Facilities Solutions, LLC
13 UK BIM Goals 2015 Umstot Project and Facilities Solutions, LLC
14 IPD in the Public Sector
15 What is UCSF Doing?
16 Source: UCSF (2014)
17 Source: UCSF (2014)
18 Source: UCSF (2014)
19 Source: UCSF (2014)
20 Source: UCSF (2014)
21 Source: UCSF (2014)
22 Source: UCSF (2014)
23 Source: UCSF (2014)
24 Source: UCSF (2014)
25 Source: UCSF (2014)
26 Source: UCSF (2014)
27 Source: UCSF (2014)
28 Source: UCSF (2014)
29 Source: UCSF (2014)
30 What Other Public Agencies are Requesting Lean Approaches to Projects?
31 What Is Important to Public Owners?
32 What is of Value? Total Cost of Ownership? Energy Efficiency? Speed to Market? No disruption to ongoing business operations? Iconic design? Improved productivity and occupant satisfaction? Sustainable buildings? 2014 Umstot Project & Facilities Solutions, LLC 32
33 Total Cost of Ownership 50-year design life 100,000 square foot classroom building Design and construction cost - $30 million Capital Renewal: 2% of current replacement value (APPA benchmark) O&M Budget $5.69/square foot Inflation: 3%
34 Total Cost of Ownership Total Cost of Ownership Save 5% in Cap. Renewal 36% 11% 53% Savings D&C: $30M Total NPV Cap. R.: $101M $ 5M $1.1M O&M: $149M $15M $3.4M Total: $280M $20M $4.4M Save 10% in O&M 34
35 Defining Values for SDCCD Enhance the student experience Flexibility in design to accommodate future changes in pedagogy Lower total cost of ownership Highly energy efficient buildings Reduce maintenance and operations costs Meet or exceed sustainability objectives
36 Value-Waste Nexus How to create value within fixed monetary constraints? Eliminate waste Enhance value with the savings from waste reduction 2014 Umstot Project & Facilities Solutions, LLC 36
37 Public Owner Benefits Reduced Waste in Project Delivery Sustainable Buildings Reduced Total Cost of Ownership Enhanced Value 37
38 Use of Lean Tools in Capital Project Delivery 1. Target Costing 2. A3 Problem Solving and Reporting 3. Set-Based Design 4. Value Stream Mapping 5. Building Information Modeling (BIM) 6. The Last Planner System
39 Target Costing - Project Budget Development Space Programming Space Efficiency Targeted Cost Per Sq. Ft.
40 A3 Problem Solving HVAC Design
41 A3 Problem Solving Structural System Design
42 Is Critical Path Method Scheduling Obsolete?
43 Schedule Performance SDCCD Experience: 34 Major Projects with CPM Scheduling 4 (12%) finished on time UC System Experience in past 10 years: More than 30% of projects delayed by more than 90 days Research by Glenn Ballard and Greg Howell indicated only 54% of planned weekly activities get completed on average. Last Planner pull system a better way (typically 80-90% percent promises kept)
44 Last Planner System Principles 1. All plans are forecasts and all forecasts are wrong. The longer the forecast the more wrong it is. The more detailed the forecast, the more wrong it is. 2. Plan in greater detail as you get closer to doing the work. 3. Produce plans collaboratively with those who will do the work. 4. Reveal and remove constraints on planned tasks as a team. 5. Make reliable promises. 6. Learn from breakdowns.
45 San Diego Ccd Metrics discussion 2014 Umstot Project & Facilities Solutions, LLC
46 Wouldn't It Be Nice If You Could... Average Savings of $900,000 on each of 15 projects Reduce Average Schedule Delay by 56 days Enhance Sustainability Objectives by 44% Reduce Facilities Maintenance Costs by 53% 46
47 + 80 percent The Compelling Need for A Different Model Built Environment (+1.6M square feet) Operating Budgets (-US$46M) -16 percent 47
48 By the Numbers The Database 35 COMPLETED PROJECTS US$584M CONTRACT VALUE 8000 CHANGE ORDERS 48
49 Selected Metrics Metric Definition of Metric Lean Principle(s) Evaluated Total Project Change Order Rates % of change order costs of total project construction costs Waste reduction Change Orders caused by errors and omissions (as % of project construction costs) % of change order costs due to errors and omissions of total project construction costs Waste reduction, collaboration Project Schedule Performance Number and % of projects meeting the original contract completion date Waste reduction, flow, enhanced communication and collaboration 2014 Umstot Project & Facilities Solutions, LLC
50 Selected Metrics Metric Definition of Metric Lean Principle(s) Evaluated Project Target Value Design Number and % of projects meeting the published target budget Value generation, waste reduction Sustainability Value Generation Number and % of projects that exceeded LEED Silver certification Owner-defined value generation Annual Maintenance Costs Annual total maintenance costs divided by the square footage in the portfolio Waste reduction, process improvement; value generation 2014 Umstot Project & Facilities Solutions, LLC
51 Methodology Review of nearly 8000 change orders for 2008 January 31, 2014 Evaluated 35 completed projects (20 without BIM and lean; 15 with BIM and lean) Construction value of these projects: $584,731, projects using target costing; 6 have reached GMP 2014 Umstot Project & Facilities Solutions, LLC
52 Change Order Rates with/without BIM and Lean Without BIM or Lean With BIM and Lean Number of Projects (n) Total CO Rate (%) Errors & Omissions CO Rate (%) Ratio of Errors & Omissions Rate/Total CO Rate Umstot Project & Facilities Solutions, LLC
53 Change Order Analysis Pre-Lean 7.73% Total COs 2.99% E&O COs Post-Lean 4.43% Total COs 1.88% E&O COs 53
54 Interesting Finding Without Lean: E&O 33% of COs With Lean: E&O 36% of COs 54
55 Change Order Rates New Construction vs. Renovation Number of Projects (n) Total CO Rate Errors & Omissions CO Rate Ratio of Errors & Omissions Rate /Total CO Rate New Construction Without BIM or Lean % 3.04% With BIM and Lean % 1.90% Renovation Without BIM and Lean % 2.90% With BIM and Lean % 1.79% Umstot Project & Facilities Solutions, LLC
56 Who is on Time? Pre- Lean 1/19 (5%) Post- Lean 3/15 (20%) 56
57 San Diego CCD Schedule Impacts Lean (with BIM) vs. No Lean or BIM (20 projects) Average Delay (All Contract Types) Lean w/ BIM: 25 days (n=8) Pre-Lean w/o BIM: 80 days (n=12) 2014 Umstot Project & Facilities Solutions, LLC
58 Target Costing 11 Projects Avg. Value: US$21.8M 83% Met Target Cost; Avg. 7% Below Target Cost 58
59 Target Value Design Six projects evaluated Range of GMP: $4,707,408 to $50,423,353 Average: $21,768,648 5/6 (83%) met target budget Averaged 7% under target budget 2014 Umstot Project & Facilities Solutions, LLC
60 Target Value Design Root Cause Analysis Lack of contemporaneous estimating and exclusion of specialty trades from early participation in project resulted in project exceeding target budget Counter measure: All subsequent projects required presentation of budget first 2014 Umstot Project & Facilities Solutions, LLC
61 SDCCD Values Enhance the student experience Flexibility in design to accommodate future changes in pedagogy Lower total cost of ownership Highly energy efficient buildings Reduce maintenance and operations costs Meet or exceed sustainability objectives 2014 Umstot Project & Facilities Solutions, LLC
62 Potential Sustainability Features Higher building energy efficiency Extensive use of daylighting Use of natural ventilation tied to EMS Reduced water consumption Use of reclaimed water for irrigation, flushing Solid flooring without need for stripping and waxing 2014 Umstot Project & Facilities Solutions, LLC
63 Sustainability as a Core Value LEED Gold Projects Direct Contract with Architect Post-Lean Target Value Design 63
64 Value Generation LEED Certification Level Number of Projects Number of Projects Exceeding LEED Silver Goal % of Projects Exceeding LEED Silver Goal Without BIM or Lean With BIM and Lean Direct Contracts with Architect Target value design with Design- Builder Umstot Project & Facilities Solutions, LLC
65 Value Generation LEED Certification Level Without BIM or Lean With BIM and Lean Direct Contract with Architect Target value design with designbuilder Number of Projects (LEED v2) Number of Projects (LEED v3) Number of Projects Exceeding LEED Silver Goal (LEED v2) Number of Projects Exceeding LEED Silver Goal (LEED v3) % of Projects Exceeding LEED Silver Goal (LEED v2) % of Projects Exceeding LEED Silver Goal (LEED v3) NA 56% NA % 29% % 20% % 44% 2014 Umstot Project & Facilities Solutions, LLC
66 San Diego Community College District (SDCCD) Potential Cumulative Savings - $25,863,512 FISCAL YEAR FY 09/10 Custodial FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Avg. Salary Custodial Forecast H/C $ 58,643 Cust Forecast Salary $ 6,098,855 $ 6,650,098 $ 7,769,004 $ 8,731,333 $ 9,504,832 $ 10,169,255 $ 11,098,158 $ 1,227,172 Custodial Adj H/C Custodial Adj Budget $ 4,497,197 $ 4,782,522 $ 5,187,077 $,878,320 $ 7,150,669 $ 7,622,296 $ 8,208,826 $ 8,597,611 Delta $ 1,601,658 $,867,576 $ 2,581,927 $ 2,853,013 $,354,162 $ 2,546,959 $,889,331 $ 2,629,561 $ 19,324,187 Maintenance Hold HC Flat until projection exceeds current HC $ 13,273,027 Maint Forecast H/C $ 76,457 Maint Forecast Salary $ 3,440,546 $ 3,793,010 $ 4,344,262 $ 4,857,286 $ 5,245,685 $ 5,579,036 $ 6,044,656 $ 6,108,880 Maintenance Adj H/C Maint Adj Salary $ 2,236,355 $ 2,465,457 $ 2,823,770 $ 3,157,236 $ 3,409,695 $ 3,626,373 $ 3,929,027 $ 3,970,772 Delta $ 1,204,191 $ 1,327,554 $,520,492 $ 1,700,050 $ 1,835,990 $ 1,952,663 $ 2,115,630 $ 2,138,108 $ 13,794,676 Hold HC Flat until projection exceeds current HC $ 12,590, Umstot Project & Facilities Solutions, LLC
67 Maintenance Costs ( ) Goal of $2.55 in Umstot Project & Facilities Solutions, LLC
68 Value as Reduced Maintenance Costs $3.93/sq.ft. Over 3 Years $1.91 $1.73 $
69 Benefits to SDCCD Using Lean Benefit SDCCD Metric SDCCD Experience Reduced waste associated with change orders Improved schedule performance Total and error & omission change orders as % of total construction cost % of projects that completed within contractual completion date Total change orders reduced from 7.73 to 4.46% on average; $13.6M estimated savings; average cost savings of $900,000 per project Project schedule performance improved using BIM and Lean, but using critical path method scheduling only 20% of projects completed on time; this prompted abandonment of CPM scheduling and requirement to use the Last Planner System Meeting programmatic requirements and enhancing value with a constrained budget # of projects that met target value design budget Used target value design to enhance value and meet the target budget in 83% of the projects included in this study 2014 Umstot Project & Facilities Solutions, LLC
70 Benefits to SDCCD Using Lean Benefit SDCCD Metric SDCCD Experience Enhanced value generation through more sustainable buildings Enhanced value generation through lower operational and maintenance costs # of buildings that exceeded LEED Silver certification Maintenance cost per square foot Using BIM and Lean improved this by a factor of 45% and using target value design improved this by a factor of 100% from projects where none of these tools were used. Major factor in helping reduce annual square footage maintenance costs from $3.73 to $1.46 over a 3-year period 2014 Umstot Project & Facilities Solutions, LLC
71 US$34.6 Million of Waste Eliminated US$13.6M Total Savings in Reduced COs US$7.7M Total Savings To Date with TVD US$13.3M Total Savings over 3 Years in Maintenance Costs 71
72 Questions? David Umstot, PE, CEM Umstot Project & Facilities Solutions, LLC (O)
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