Four key steps to cut complexity and costs on capital projects

Authored by: Stephen MacIntyre Published on: April 21, 2016

Do you really know how your institution’s money is being spent? Is there a better way to approach capital projects?

The University of California San Francisco’s (USCF) Director of Capital Projects Scott Muxen, Associate Vice Chancellor Jim Hine, Director of Finance and Administrative Services Finance Service Center Melanie Long, as well as Haley & Aldrich’s Senior Vice President and Lean Integration Leader Stephen MacIntyre presented key insights on this topic at the 2016 Western Association of College and University Business Officers (WACUBO) conference. 

capital-projects-5.jpgLike many other universities, the University of California San Francisco (UCSF) is faced with significant pressures, including increasing competition, expenditures, workload and complexity. Recognizing that its research facilities must be world-class to attract the world’s best researchers, UCSF is planning to invest heavily on capital projects over the next 10 years. Staffing will not increase in line with these rising costs, creating additional burden. Additionally, UCSF faces the challenge of trying to manage complex projects in a siloed university environment.

To effectively address these pressures, Haley & Aldrich partnered several departments, including the Capital Projects group, to find better ways to work. The key insight from this partnership focused on the needs of the “customers:” the students, faculty and staff who live and work in the buildings. Those departments have identified ways to work across silos and shorten construction projects from 32 to 24 months, while significantly cutting costs to deliver exciting, functional and efficient space.

Here are the steps they took to generate these results:

Analyzing the problem

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  • UCSF analyzed the types of projects conducted by the Capital Projects group and determined that 80% were hard-bid construction projects. This helped them and others see that focusing on this type of project could result in big gains.
  • Their siloed improvements were helping but the projects were clearly experiencing costly delays that spanned four major departments involved in capital projects: Capital Projects, Procurement, Contracting and Facilities.
  • Work processes were causing delays that impacted project results. For example, changing specifications late in the process could result in a lack of qualified contractors. That type of change delays projects, reduces competition and drives up cost.

Engaging leadership and staff

The Capital Projects team engaged the leaders of other departments to improve the process. As different departments considered work processes, there was growing awareness that there were obstacles preventing them from working together as effectively as they could, both at the individual and departmental levels. Leadership and staff from each area were experiencing frustration and were willing to try something new; they wanted to do the best they can.

Assessing the entire system

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  • Taking a team approach: We assembled a team of 28 people and asked them to commit seven days to tackling the problem. We used Lean tools to look at the way work flows (the “value stream”) within the departments and mapped hundreds of steps.
  • Creating a common system view: Instead of critiquing the work, when we evaluated each step of the process, we asked the participants: “What causes you problems?” This resulted in identifying hundreds of problems.
  • Setting targets: Each problem was consuming time and money or frustrating staff but we couldn’t solve them all. Instead of asking “What problems can we solve?” we set new targets for the process and asked: “How can we achieve better performance?” Those new “target conditions” gave us goals for the process that could create the needed speed and cost controls. For example, clear responsibilities could shorten time by allowing staff to focus on their specialties; better university scoping could help reduce costs associated with changing project requirements.

Focus

capital-projects-3.jpgWith shared targets in mind, it was much easier to identify and select the problems and ideas that could make a meaningful difference. The team was able to focus on three key cross-departmental activities that would help: contracts, pre-qualification, and specifications review.

They developed a mechanism called University Project Requirements (UPR) to guide all of those (and other) project activities to be sure the project results were kept at the forefront.

Results

While process changes are still underway, UCSF is already making progress in standardizing activities and reducing the amount of duplicate work (rework) for each cross-departmental process. They expect to reduce project time by 25% and lower contractor prices by 3-5%. 

Key lessons – you can find a better way!

You may know the cost of your new building, but, how well is each dollar being spent? Are you getting the best price from contractors? Are your contract terms suitable? Is the project being managed so things are on schedule? These are just some of the capital project management issues that need to be addressed.

Here are some best practices you can begin implementing at your university:

  1. Find senior-level champions who can involve key leadership throughout the institution. It takes multiple departments to successfully tackle interconnected problems. 
  2. Engage people and unleash the power of collaboration. Strong facilitation and respect will result in multiple perspectives and better solutions.
  3. Listen. Find out what causes problems; and this will help you find sustainable results.
  4. Don’t fix everything! Create a set of target conditions for the future and focus on only those things that will help you get there instead of cherry picking problems.
Stephen MacIntyre

Stephen MacIntyre is Haley and Aldrich’s Lean sensei. He is passionate about applying Lean principles with a focus on respecting and developing people who can make things better by creating more value and reducing waste. “Mac” serves as an advisor and facilitator for our clients and internal staff to improve strategy, capital programs, construction, organization design, innovation, learning and operational performance.

Categories: Lean

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