Rebuilding Hospitals After the Storms: What Now?

We’re all sympathetic to our fellow citizens living in Texas, Florida and Puerto Rico as they struggle with the aftermath of hurricanes Harvey, Irma and Maria. It’s a miracle there weren’t more fatalities, and kudos to all the first responders.

Much has been written about the damage and destruction to property, not only residential, but to critical facilities like hospitals, schools and infrastructure. Some of the first numbers mentioned exceed $250 billion to restore or replace all that has been lost and damaged. Even with all of the necessary funding, it’s going to be a challenge to rebuild everything properly.

But out of this challenge comes a once in a lifetime opportunity. Regardless of funding source, repairing or replacing healthcare facilities to their prior condition, it would be foolish without thoughtfully taking advantage of where we are today.

Planning hospitals and other healthcare facilities to address the current healthcare environment makes sense. Using the rebuilding funds to address today’s consumer-driven healthcare facility needs, including virtual medicine, micro hospitals, ambulatory care and community health centers, will make more sense than just rebuilding what was.

Let’s not do business as usual. Let’s take a breath and do it right by adopting the following suggestions :

1. Be sure that selection of the entire team (planning, design and construction) is qualifications-based, not fee-based. The ability to deliver the project on time, on budget with scope intact is more important than shaving a relatively small percentage from the total project cost.
2. Align fees with services. In order to get proper staffing and proper services, proper fees are essential. This is not the time to be looking for low fees, since fees drive staffing and proper staffing provides proper services.
3. Create a realistic completion date. Everyone wants to get done as quickly as possible, but there is an optimum schedule for each project. An optimal overall schedule is one that allows the contractor to develop a realistic schedule based on a carefully developed program and design, the availability of labor (avoiding overtime and shifts) and the use of just-in-time delivery to allow for an open workspace.
4. Know the value of BIM, Lean, IPD and web-based-management and insist on their use for the project. These tools and techniques are used by the most successful firms – success being defined as delivering on-time, on-budget and with scope intact. Don’t invite firms that are not comfortable with these processes to submit on RFQs or RFPs.
5. Secure funding for the project prior to beginning—not operating cash. It’s tempting to try to avoid formal financing and pay for part of the new construction from operations. While that’s common for small work, when it’s attempted on larger projects, especially in today’s reimbursement environment, it’s a potential project killer.
6. Include end users in early decision meetings and avoid change of end users once construction has started. Planning and design missteps caused by wrong or incomplete information because the users didn’t participate from the outset can create costly delays and changes once the errors are discovered. If new end users are unavoidable, bring them up-to-speed quickly and help them understand the underlying project goals and assumptions – and which ones can be changed and which can’t.
7. Avoid unrealistic contract terms. Everyone wants to avoid risk, and owners are no exception. A few good examples of onerous contact terms would be liquidated damages, compensatory damages and making the contractor responsible for unknown, underground obstructions.

The problem with all of these types of onerous terms is that the contractor does not really take the risk, but will add money to his guaranteed maximum price. The owner ends up paying for it anyway. And if the risks don’t materialize, the money accrues to the contractor, not the owner.

A not-so-obvious side effect is the impact on the relationship between the owner and the contractor. The contractor often becomes defensive and protects his position to ensure his financial well-being. That’s the exact opposite of the collaborative relationship that’s desired.

The truth of the matter is that there is great risk in the capital project delivery industry for all of the reasons we know. But risk should be mitigated by the party that is best suited to address that risk. Design risk belongs with the architect, and construction risk, with the contractor. Project risk, as described above, truly belongs with the project owner.

8. Avoid design changes. We understand that issues come up after the project is underway, and that can’t always be helped. Regulations change, delivery methods are affected, new equipment is specified and the list goes on. Those kinds of changes can’t be avoided. But when changes crop up because proper thought and time weren’t put into the discussion at project inception, that’s inexcusable. Design changes delay the schedule and invariably add cost to the project.
9. Define your project in terms of your community needs assessment. Maintaining tax exempt status in today’s low-charity care environment as a result of the ACA is not a given. Every three years a community needs assessment is required and, if needs are found, they must be addressed. In order to build the most effective facility to meet community needs, make sure your assessment is up-to-date and ensure that rebuilding money is well spent.

News articles are full of stories of monumentally botched schedules and budgets. And even projects that are said to be on time and on budget often have scope and content significantly reduced from the original concept in order to meet those schedules and budgets.

Most of the issues that contribute to these dismal results are well known. And their respective solutions are also identified in countless books, white papers and blog posts. Yet, the majority of solutions aren’t implemented – despite the considerable efforts of numerous industry organizations. Consequently, despite the work of smart people, the dedication and hard work of the trades in the field and the digital revolution in our industry, we’re still stuck with the likelihood of projects that will be late and over budget and under scope.

So why are we writing about this now? Because enlightened owners can make their projects more successful. And the planners, architects, engineers, constructors and suppliers with whom they collaborate can support better processes and, therefore, more consistently derive at successful outcomes.