Rice Building InstituteSeptember 13, 2007

Sid Sanders, Vice President

Facilities Planning and Construction

TMHS Capital Construction Program

Methodist System Overview

San Jacinto

Willowbrook

Sugar Land

Medical Center

Overview of Capital Design and Construction Program

Capital Construction Program Overview(Major Projects)

Projects under Construction• Outpatient Clinic Building $331 M 1,600,000 GSF • Sugar Land Hospital Expansion $235 M 431,000 GSF• Research Institute Laboratory Building $218 M 420,000 GSF • Willowbrook Hospital Expansion $260 M 555,000 GSF

Projects in Design• Sugar Land MOB and Garage $61 M 158,000 GSF

Projects in Programming• West Houston Hospital and MOB $310 M• North Campus Hospital Expansion Unbudgeted

Projects in Conceptual Evaluation• Radiation Oncology Center Unbudgeted• Imaging Center Unbudgeted

Project Scope24 Floor towerTPC $ 331 M 760,000 GSF occupied space 846,000 GSF parking – 1370 spaces

Outpatient Clinic Building

The Methodist Hospital Research InstituteProject Scope425,000 GSF TPC $218 MSurgical Training Vivarium BSL 3 labsOfficeImaging center

TMHRITMHRI

Sugar Land Expansion

Project Scope432,000 GSF Hospital TPC $296 M158,000 GSF MOB 188 Beds950 Car Garage

Willowbrook Expansion

Project Scope555,000 GSF TPC $260 M240 Beds

North Campus Expansion Massing Concept

North Campus Expansion

PotentialProject Scope1.8 M GSF

West Houston Hospital

Project Scope200 Beds

Construction Procurement StrategyGoals• Complete a state-of-the-art Hospital and Research Facility • Optimize expenditures to maximize Clinical and Research

capability of the Facility• Meet or accelerate proposed construction schedule• Maintain project cost transparency and accountability

Challenges• Aggressive schedule• Aggressive program w/ little recent experience• Highly complex project with thousands of design decisions,

developing technologies and hundred of suppliers and subcontractors

• Price volatility• Limited supply of key subcontractors & skilled labor

Project Organization

Roles and Responsibilities

Project Director – Methodist Employee• Organizes the Methodist User Groups• Insures that the Project Meets the Goals of the

Institution• Assists the Project Manager as Needed

Project Manager – Contract Employee• Organizes all the of Consultant and Vendor Teams• Develops Overall Project Schedule• Develops Overall Project Budget• Insures the Coordinated Execution and Delivery of

the Project

Roles and Responsibilities

Architect – Consultant• Develops the Project Program and Design• Develops the Documents to Execute the Project• Coordinates the Design of all Specialty Consultants

Construction Manager – Consultant/Vendor• Responsible for Overall Construction of the Project• Develops GMP(s)• Responsible for Construction Buy-out

Construction Procurement Strategy

Use Construction Manager at Risk

Allows for aggressive scheduling and early project deliveryAllows just-in-time decision making on program elementsAllows for Guaranteed Maximum Price (GMP)Allows for high degree of collaboration and constructabilityAllows for best-value selection of major subcontractors during buy-out.

Project Life Cycle

PROGRAM

PRELIM.DESIGN

CONCEPT

PROJECT LIFE CYCLEPROJECT LIFE CYCLE

PRO

JEC

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Selection of Construction Manager

Cost Curve

Influence Curve

Construction Procurement Strategy

CM-R Part I – Pre-Construction Service

Collaboration in design as member of project teamEvaluation of project constructabilityMaintenance and acceleration of scheduleForecasting costs using market informationContinually optimize project budget with design alternativesAssess early selection of subcontractorsNegotiation of a comprehensive Guaranteed Maximum Price (GMP)

Construction Procurement Strategy

CM-R Part II – Construction Service

All costs of work are competitively procured using best-value selectionIncorporate design-assist subcontractors previously selectedBid package strategy allows for optimal decision-making on technology procurementAccelerates scheduleAllows early involvement of major subcontractors and manufacturersAllows best-value selection of subcontractors

Construction Procurement Strategy

Part I Services• Pre-Construction Services – Lump sum

Part II Services – Guaranteed Maximum Price • Construction Phase Fee – Lump sum• General Conditions – Open book, Not-to-Exceed • Cost of Work – Open book, competitively procured• Buy-out Contingency – Joint controlled, Not-to-Exceed• Special Allowances – Owner controlled, lump sum - specified

All savings revert to owner

Construction Procurement strategyCM-R Contract Elements

Project Life Cycle

PROGRAM

PRELIM.DESIGN

CONCEPT

PROJECT LIFE CYCLEPROJECT LIFE CYCLE

PRO

JEC

TPR

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Selection of Construction Manager

Cost Curve

Influence Curve

Construction Procurement Strategy

Problems with this ProcessCritical innovation and creativity exist in the SC and MFG FirmsStandard CM-R procurement leaves out the scoping and design documentation of projectThe procurement “below” the CM-R tends to become design-bid-build (slowest & least innovative procurement)Key parts of project are redrawn in shop drawing process by selected SC & MFG

Construction Procurement StrategyLimitation of CM-R Procurement – Key Subcontractors (SC) and Manufacturers (MFG) are not Selected until Design & Documents are Completed during the Buy-Out

Conundrum• Capital Projects take 3 to 5 years to complete• Reimbursement environment changes• Market changes• Diagnostic/treatment technology changes• Clinical therapies change

More information is needed earlier in project conceptualizationOnce commitment is made time-to-market is criticalMaximizing facility flexibility is essential

Construction Procurement Strategy

Project Life Cycle

PROGRAM

PRELIM.DESIGN

PROJECT LIFE CYCLEPROJECT LIFE CYCLE

PRO

JEC

TPR

OJE

CT

EX

PEN

DIT

UR

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EX

PEN

DIT

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FINALDESIGN

BUY-OUT

CONSTRUCTION

FURN./ COMM.

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NC

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Selection of Construction Manager

Cost Curve

Influence Curve

Construction Procurement Strategy

Construction Procurement StrategyConstruction Manager at Risk (CM-R) with Design-Assist

SubcontractorsGoal: Move up key subcontractors in process as Design-Assist agents

Project Management

Team

ConstructionManager

A/E

Subcontractor SubcontractorSubcontractor

Methodist

Challenges to Early SC Selection

How to keep early selection SC competitive in final pricingDesign team and construction team naturally revert to traditional rolesReluctance to step out of traditional roles due to unknown risk issuesMany SCs do not have design assist capabilityMany CMRs and SCs are reluctant to commit to GMPs until construction documents are well developed

Emerging Opportunities

Integrating design of multiple-disciplines thru object-based 3D modeling• Use of collision detection software in design• Integrating shop drawings with CDs

Use of building information modeling (BIM)• Still more promise than reality

Off site fabrication of subsystems