The construction industry is witnessing a paradigm shift in project delivery methods, with contractors and industry experts exploring alternative approaches to streamline processes, improve collaboration, and enhance project outcomes.

At Thursday’s virtual Builder Breakfast panel hosted by the Daily Journal of Commerce, experts discussed various alternative delivery, procurement and finance methods and their applications in both the public and private sectors with around 100 registered attendees.

The panel, moderated by Bill Ohle, shareholder at Schwabe, Williamson, and Wyatt, focused on understanding what alternative delivery methods entail and the types of projects they encompass. While traditional design-bid-build methods remain prevalent, many contractors are now turning to more innovative approaches to meet evolving project demands.

Trevor Wyckoff, vice president account manager for Skanska USA, detailed two notable alternatives commonly used in Oregon and Washington. The first, Construction Manager/General Contractor (CMGC), involves bringing a contractor on board during the preconstruction phase to facilitate project planning and budgeting, usually leading to a guaranteed maximum price. The second, Integrated Project Delivery (IPD), entails a three-party agreement between the owner, designer and contractor. The IPD model focuses on shared incentives to align all stakeholders with project goals.

The shift and rise in alternative delivery methods, Stephanie Coyle, vice president of Hoffman Construction, said occurred because everybody looked at the construction industry and said, ‘There’s got to be a better way,” to build and foster essential collaboration, especially with complex projects.

Coyle added that in Oregon, CMGC remains a popular choice for many projects. In contrast, Washington is recently leaning more toward progressive design-build methods. The preference for these methods is often influenced by factors such as the level of control owners want over design and the degree of collaboration desired, she said.

These alternative delivery methods, while becoming more popular with public work, face implementation challenges as public agencies are typically constrained by state laws, requiring extensive justification for deviating from traditional design-bid-build methods.

George Seaman, project manager at the Port of Portland, said in these cases adopting IPD might involve a more informal version, termed “IPD light,” which retains the collaborative essence of IPD while working within legal frameworks.

A recurring theme throughout the discussion was the importance of collaboration and alignment among all project stakeholders. Seaman said that a project’s success depended more on “relational than contractual” dynamics. For instance, in the Main Terminal Redevelopment project at Portland International Airport, the design and construction teams sat together in co-location trailers to enhance coordination and foster common goals, Seaman said.

Another increasingly common alternative delivery method is joint ventures (JV), which was used for the Main Terminal project. It involves two or more construction companies coming together to pool their resources and expertise on a specific project, offering several advantages in supporting local or smaller firms and building partnerships with disadvantaged contractors.

Seaman said that in the case of the $1.95 billion Main Terminal project, the Port received two joint venture proposals that matched the qualifications, ultimately selecting the Hoffman Skanska Joint Venture for the contract. However, the Port’s contracts were initially set up for single entities, not joint ventures, so adjustments were necessary in case the venture folded to ensure the parent companies remained responsible for delivering the project, he added.

Overall, the panel emphasized the industry’s shift toward alternative delivery methods driven by the need for improved collaboration, increased flexibility and alignment with broader project objectives. While public agencies often face regulatory constraints, private sector clients exhibit a higher level of comfort with tried-and-tested CMGC methods. However, the growing awareness of the benefits of alternatives may soon prompt further changes in the industry.

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The next Builder Breakfast event will discuss building material, technologies and techniques. It will be held at 8:30 a.m. Nov. 9, at the Sentinal. Register for the free event here.

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A ceremony was held Friday to celebrate the grand opening of the Knight Cancer Research Building, a $190 million facility on Southwest Moody Avenue in Portland’s South Waterfront. A joint venture of Andersen Construction and McCarthy Building Companies, Inc. built the SRG Partnership-designed project for Oregon Health Sciences University.

The seven-story structure houses laboratory and office space with capacity for 650 employees, including experimentalists, technicians, researchers and support staffers, united under one roof with the mission of working collaboratively to eradicate cancer.

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A single change in the design of the Center for Health and Healing-South, now coming out of the ground in Portland’s South Waterfront District, is credited with saving Oregon Health & Science University $900,000. The move from an extruded aluminum product as a building accent to a thinner, stainless-steel plate product was actually suggested by a representative of one of the subcontractors, General Sheet Metal.

“That’s something we never would have considered, because stainless steel is a lot more expensive than aluminum,” said Kip Storey, a principal at ZGF Architects, the project’s designer. “It turned out to be great for the project and good for the design.”

According to the CHH-South project team, the change is the kind of idea that only could have come through the collaboration afforded by Integrated Project Delivery (IPD). Intended to close communication gaps and improve efficiencies on tight budgets, the alternative delivery method favored for large and complex projects has gained acceptance by the mainstream over the past decade. The team behind the CHH-South says theirs is the largest and most advanced local example of the form. But there are hazards involved with IPD, and other sectors beyond health care are moving toward it.

“Having all the owners in the same boat, rowing in the same direction, bound together to drive out waste – that’s all good,” construction attorney Brian Perlberg said. “But you can’t fit a square peg into a round hole. It’s certainly not the right fit for every project.”

Great expectations

The job trailer for the CHH-South is something to behold.

The 10,000 square foot “temporary” structure is eight doublewide trailers wide with an open-plan design and enviable frontage on the Willamette River. Every wall is covered with detailed, color-coded information, though actual paper plans are in short supply. Employee nameplates show the variety of firms at work. There’s an energetic buzz across the floor.

IPD is unique in how it binds the three traditional signatories to a construction contract – the owner, architect and contractor. It’s not quite like design-build. It’s not necessarily cheap. And it’s not magic, says Perlberg, who has written sample IPD agreements for ConsensusDocs, as well as Associated General Contractors.

“It’s not a panacea,” he said. “It’s a different way of doing things, and it takes clear expectations and trust.”

IPD is seen as the best fit on large, complicated projects where the owners are interested in exploring cost savings – meaning it’s right at home in the health care field. (In fact, the first project to use an IPD contract was the Cardinal Glennon Children’s Hospital in St. Louis.) It’s also gaining appeal for higher education projects and with museums and libraries, Perlberg said.

Perlberg said the risk-averse building field is historically uncomfortable straying from low-bid, because it’s often considered the fairest method. Owners of public projects are often barred by law from using alternative delivery methods, though there are informal, non-contractual forms of IPD, known as “IPD Lite” or “IPD-ish.”

“Pure” IPD involves greater up-front costs, an issue that’s compounded on smaller projects.

“There’s a scalability issue for sure,” Perlberg said.

SAIF and sound

Currently engrossed in preconstruction, the team building SAIF Corp.‘s new headquarters in Salem is employing a modified form of IPD. Owner’s rep Day CPM, Ankrom Moisan Architects, engineer Glumac and contractor Lease Crutcher Lewis are meeting twice a week in converted surge space in the latter firm’s Portland office. Team members will relocate to a construction office near the site in Salem as the heavy work approaches.

“We’ve found for us, two, three days a week has been real effective,” said Andy Dykeman, senior project manager for Lewis Crutcher Lewis.

SAIF is attaching a five-story wing to an existing five-story building, with a goal of making it all look like one building. Move-in for SAIF is expected in summer 2018.

It’s been a new experience for Ankrom Moisan and Lease Crutcher Lewis to have the contractor and trade partners involved in design, Dykeman said. But here it led to an enriching dialogue as the architects established the building’s programmatic layout: Four stories with wider floorplates, or five stories with narrower floors? Structural steel or concrete?

Dykeman said IPD has improved communication by replacing the traditional way parties communicate on big jobs – through a never-ending cycle of highly-formal requests for information.

“This prevents all that volleying where the architect has to write something up and toss it over the net, and then we have to analyze it and toss it back over the net,” he said. “It really puts everyone on the same side of the net.”

Values judgment

The CHH-South project is a good example of full-on IPD. Occupying a full block, the project will include a 15-story hospital with more than 370,000 square feet of ambulatory surgery and clinic space and will connect underground to the bustling CHH across Southwest Whitaker Avenue.

Early on, ZGF’s and Hoffman’s experience with IPD factored into OHSU‘s decision to choose them for the project, said Stephanie O’Brien, clinical enterprise liaison for OHSU.

“Not only did we think about how to improve processes to design the building, but having Hoffman as part of the design process, we began to understand what things cost,” she said. “They quickly took away the really expensive ideas to ensure we could afford the building we were trying to design.”

Design concluded in March, and permits with the city are now being finalized. Crews in the colocation trailers on the Willamette are shifting from the design phase to construction. With that shift, more ZGF designers are being recalled to their “mother ship,” as more Hoffman staffers and trade partners move in. ZGF has gone from around 30 staff on-site to about eight now, a figure it intends to keep through the duration of the project, Storey said.

“Most of the design is complete, but there are a lot of options we’re still looking at,” he said.

There’s a steep learning curve associated with IPD: smaller, less-sophisticated firms have to work hard to catch up. Teams responsible for certain components – the envelope team, for instance – must be educated.

“It’s a very different process than the traditional process, so a lot of people don’t have a whole lot of experience with it,” Storey said. “And it’s also fairly new to the industry, especially in the Portland market – and so it’s new for a lot of people, and it’s been an interesting process. … We’ve had some people who’ve took to it like a duck to water and some people that haven’t. So you’re doing a lot of educating and talking about the process to get everybody on board – but when it works, it works really well.”

The city hasn’t caught on as quickly as some subcontractors, according to the team behind the CHH-South project. In IPD, design elements are worked out during out construction, so the team often seeks building permits with incomplete designs. This project went before the Portland Design Commission five times, worrying OHSU it wouldn’t meet its goal of opening in 2018.

“To be honest, the city has made efforts to catch up, but they have not embraced the process, and they’re not really set up to do a fast-track process like this,” Storey said. “It’s much easier for them to understand a project when the project comes to them in one piece, and what we’ve asked them to do is look at it one piece at a time.”

Another advantage discussed by the project team is IPD’s edge in helping battle the twin evils of labor shortage and materials cost escalation. They say that by sharing space with key subcontractors, they’re better able to secure needed materials when they’re available, and they’re better able to administer coordinate trade partners based on their roll sheets.

Aside from gaining strength from the IPD method, the mission of the CHH-South has helped the team maximize value, said Elaine Dabrowski, senior project manager for OHSU.

“One of the things we did when we first got together is talk about what our true north is, what makes us come to work,” Dabrowski said. “And what we said is, at the end of the day when this building is done, regardless if you’re the contractor or the architect or a trade partner, you could be served in this building – you could get chemotherapy in this building. We take it back to that. This is not just a great construction project; it’s not (just) a great design project – it’s something that’s going to help all Oregonians. And that brings us together at the end of the day. It makes us trust each other.”

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