An integrated approach to building

Whether you are renovating an existing senior environment, repositioning a campus, or building a new continuing care retirement community (CCRC), the earliest decisions can have a substantial effect on the timing, cost, and outcome of construction projects. Similarly, property entitlement issues, property assessments, or facility conditions can greatly dictate success or pitfalls with any renovation and/or new building projects. Consequently, how wisely an eldercare provider organization chooses its development team and how well that team plans ahead will have a significant effect on the long-term success of any construction project.

The trend toward identifying a Program Manager, or Owner’s Representative, to lead the construction project team is becoming a vital factor in accomplishing an integrated approach to the building process. Outsourcing can fulfill this role if in-house resources with expertise in senior developments are not available. A typical team includes the Owner, Program Manager, Designer, and Builder. Defining the right team enables project personnel to make early decisions that guide the building from vision to occupancy.

The Process

Begin with the definition of roles and responsibilities for project participants. The Program Manager will need to establish a design and construction delivery method. Traditionally, design-bid-build was done; now other delivery methods such as fast-track, design/build, and construction management are being considered more frequently. A common method today is a Guaranteed Maximum Price (GMP) agreement whereby a General Contractor provides preconstruction services and a contract is negotiated.

In a design-bid-build, or traditional method, full construction documents are competitively bid to multiple contractors and a lump sum for construction is chosen. In a fast-track scenario, multiple bid packages are issued so that construction phases can overlap and reduce the overall duration of building. With a construction manager, an agreement is negotiated for time and materials, with subcontractors bidding. There is no right or wrong way; selecting the methodology that suits your project requirements is the key.

Whatever the method, early involvement of various team members is crucial in completing a building project timely and effectively. A well-qualified Program Manager must understand senior environments, be skilled at zoning processes, have solid experience with the construction type being undertaken, and communicate well with project participants. In this capacity, whoever is functioning as the Owner’s Representative should understand where the most common problems occur and be ready to offer solutions. An outsourced Program Manager, if used, should be proficient in construction cost estimation and establishing overall project budgets for senior developments.

Visioning

Planning for projects should include property assessment or a facility conditions analysis. As an Owner’s building program is defined, it is measured against whether construction is to occur on an existing campus or a proposed site. The delivery of the construction project in a timely and cost-effective manner is a key issue in building.

Team Roles

The project team begins achieving its goals by entitling the property for the proposed use. Various team members will assist in securing local municipal approvals. The Owner is in the best position to voice the project’s parameters; the Designer’s plans respectfully respond to community wishes; the Builder communicates how construction will be handled to minimize disruption; and the Program Manager coordinates all of these efforts.

The Owner will complete market studies, an operational impact analysis, and a financial feasibility determination. A Designer who has a broad range of experience in the proposed type of project will be selected. The Builder will be involved early in the process, knowing local constructability issues and codes, including health department regulations for licensed programs. The Program Manager will run cost estimates to define the project budget and develop the master schedule.

The development timeline identifies milestones of planning and later implementation; it is a road map that guides the process. Team members coordinate efforts throughout the process, with communication being the most important critical success factor.

Every building project prioritizes three factors: schedule, cost, and quality. Effective management moves a project along in a timely fashion. Total project costs are managed through programming, reviewed with value engineering, and then adjusted according to Potential Change Orders (PCOs).

The Building Process

No building process is without its imperfections; PCOs are inevitable. If the planning process has accounted for appropriate contingencies, a PCO is not necessarily a bad thing. A change order can be used to add enhancements to a project. A good schedule also allows for time to address a PCO in order to get the project back on track.

When a PCO comes up during a building project, the building team must know the right questions to ask and have a process in place to evaluate the answers. Review the sidebar (“Potential Change Orders,” p. 19) defining the common types of PCOs. If a building team understands how the project might be affected by change orders, it can anticipate alternatives and work the necessary contingencies into the budget and schedule.

Communication

The Program Manager acts as a “quarterback,” calling the plays that will “score” on schedule, cost, and quality. His or her skillfully planning for zoning ensures a timely entitlement process that will reduce the overall schedule. An early conceptual estimate that takes into consideration all the implications of building the desired program will enable the project budget to be met. A good Program Manager doesn’t just save money; he or she makes sure that the Owner’s dollars are well spent.

Senior housing organizations can add value to a project by having a clear vision of their program and of the team they want to carry out the building. The participants need to understand the project scope and the limitations of their roles. Information and instructive material should be available for various team members to help them do their respective jobs in the best manner possible.

For example, the Designer has access to market study information or the Builder has an understanding of related financial material and how to commit to project parameters. If the General Contractor acutely understands the financing, development of a GMP agreement will be in line with project expectations. Currently, senior housing lenders prefer a GMP contract, and that it be in place before construction financing.

It is crucial, however, that Owners remain engaged in the construction process even after a GMP is signed. Owners often participate less in the details or day-to-day building activities because of the perceived comfort level of a GMP. However, because the scope of existing construction is often based on less than full contract drawings and construction contingencies must be managed properly, program management becomes essential to maximizing the value of building costs. The Owner’s representative becomes central to communicating the Owner’s wishes along these lines.

The Integrated Approach

Most experienced observers agree that the best collaboration occurs when the Owner, Program Manager, Designer, and Builder work together as directly as possible. This integrated approach provides clear and direct communication between and among all team members. So, once the right team is in place, consider how the team will meet and how key decisions will be made. It is imperative that the Owner ensures that a decision-making structure is in place because, without one, the professionals will not be in a position to do their jobs well.

Make sure that the team identifies critical issues early on and that it articulates appropriate strategies to mitigate risk. As the Italian economist Vilfredo Pareto observed in coining the so-called 80/20 principle, “The first 20% of effort often contributes 80% of the benefit.”

An integrated building process is one that involves people working together. The right people understand that construction problems are temporary and that every one of them has a solution, given the appropriate time, attention, and input from the team.

Frank R. Muraca, AIA, is the Managing Director of ARCH Consultants, Ltd., an Owner’s Representative firm located in Lincolnshire, Illinois, that provides planning and program management services specifically for senior environments.

For further information, phone (888) 692-4925 or visit https://www.archltd.com. To send your comments to the author and editors, e-mail muraca0607@nursinghomesmagazine.com.

Sidebar

Potential Change Orders

Consider the following common types of change order situations when evaluating how PCOs affect cost and schedule:

• Errors and OmissionsChanges involving findings from any survey, record documents, program communication, site investigation, or coordination of disciplines

• Code InterpretationGoverning authority changes an interpretation

• Program ChangesOwner-directed changes (i.e., ones that deviate from original scope

• MiscellaneousChanges caused by weather delay, natural disaster, accident, commodities cost, labor strike, etc.

I Advance Senior Care

I Advance Senior Care is the industry-leading source for practical, in-depth, business-building, and resident care information for owners, executives, administrators, and directors of nursing at assisted living communities, skilled nursing facilities, post-acute facilities, and continuing care retirement communities. The I Advance Senior Care editorial team and industry experts provide market analysis, strategic direction, policy commentary, clinical best-practices, business management, and technology breakthroughs.

I Advance Senior Care is part of the Institute for the Advancement of Senior Care and published by Plain-English Health Care.