modeling the effect of an alternative review process

MODELING THE EFFECT OF AN ALTERNATIVE REVIEW PROCESS: CASE STUDY OF A STATE PERMITTING AGENCY Peter P. Feng1, Iris D. Tommelein2 and Glenn Ballard3 1

PhD Candidate, Department of Civil and Environmental Engineering, University of California, Berkeley, CA 94720-1712, PH (510) 292-9786, [email protected] 2 Director, Project Production Systems Laboratory and Professor, Civil and Environmental Engineering Department, 215-A McLaughlin Hall, University of California, Berkeley, CA 94720-1712, Phone (510) 643-8678, FAX (510) 643-8919, [email protected] 3 Research Director, Project Production Systems Laboratory and Professor, Civil and Environmental Engineering Department, 215-A McLaughlin Hall, University of California, Berkeley, CA 94720-1712, Phone (510) 643-8678, FAX (510) 643-8919, [email protected] ABSTRACT The purpose of this research is to model workflow through an organization and understand the effect of an alternative review process. Data was obtained from a state permitting agency to develop a simulation model of an alternative review process and the disruption rework causes on the permitting approval process. A simulation model illustrates the impact of alternative review. The focus is on understanding the impact of an alternative review process, which allows early engagement by the owner, architect, engineer and contractor with the state review agency. The model shows that incorporating an alternative review process can shorten the overall time to permit a hospital. It was determined that the alternative review process shifted the design and permitting curve to the left, reducing the time to permit. INTRODUCTION Typical hospital construction undergoes a review process that includes governmental oversight. In the state of California, this governmental oversight is accomplished by many organizations. These organizations include local government, Department of Health Services, Department of Geologic Services and the Office of Statewide Health Planning and Development (OSHPD). This paper focuses on the workflow of the design and permitting phase through the Facilities Development Division (FDD), one of six OSHPD divisions, and the primary agency that reviews and permits hospitals in California. This government review adds time to the process due to rework, which pushes back the construction schedule and can lead to significant cost escalation.

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REWORK Rework is defined in many ways within the design and construction of facilities. Rework can be defined as “the process by which an item is made to conform to the original requirement by completion or correct” (Ashford 1992) and “doing something at least one extra time due to non-conformance to requirements (Construction Industry Development Agency 1995). Rework has also been defined as the unnecessary effort of redoing a process or activity that was incorrectly implemented the first time (Love et al. 1999). Others have defined rework specifically for field operations as activities in the field that have to be executed more than once in the field or activities which remove work previously installed as part of the project (Rogge et al. 2001). Another definition of field rework is the total cost of redoing work in the field regardless of initiating cause (Construction Owners Association of Alberta 2001). The above definitions are primarily focused on negative iteration or rework that is wasteful to the final product. Ballard (1999) has defined rework as both positive and negative. Negative rework is that which can be eliminated without loss of value or causing failure to complete the project. An example of negative rework occurs when a plumbing system fails pressure testing and has to be removed and replaced. Positive rework adds value; as exemplified by instances when participants in the design process leave with a better understanding of customer requirements. Rework is costly and wastes time. Informal surveys of design teams have revealed estimates as high as 50% of design time spent on needless rework (Ballard 1999). During the construction phase, previous studies have found the cost of rework in design and construction to range from 2% to 12% of the contract cost (Burati et al. 1992, Josephson and Hammarlund 1999, Love and Heng 2000). This is partly due to the variability in the execution of work. One way to reduce the occurrences of rework is to change the design process by implementing an alternative review process. WHAT IS AN ALTERNATIVE REVIEW PROCESS? One way to streamline the review process is to implement an alternative form of review. One such alternative form of review is to involve major stakeholders in facility procurement as early as possible to avoid the embedding of errors in design. A critical piece to accomplishing this process is to acquire common understanding of the project. Common understanding consists of shared meanings created through communication or shared experiences and is composed of five elements: (1) shared ways of thinking, (2) shared ways of operating, (3) shared knowledge, (4) shared goals, and (5) trust (Makela 2002). There are two ways in which common understanding of a project can take place. The first is shown in figure 1 which represents traditional project delivery. Here the owner selects the architect early; this produces a concept design for the facility that is approved by the owner. Engineers are then hired to design the foundation, structural system, mechanical, electrical and fire, life, safety systems. During this time, the common understanding of the facility increases. Then, in the instance of hospitals, once the design drawings are completed, a government agency is called in to review the

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drawings as code compliant. Also during this time, major trade contractors are hired to contribute to creation of the contract documents. As this occurs the common understanding of the facility approaches 100%. ≤100%

Construction

Common Understanding

Pre-Construction Services Architect Hired Engineers Hired CM/GC Hired

Major Trades Hired Government Review SD

DD

Time

CD

FIGURE 1. Traditional project delivery level of common understanding (modified from Lichtig 2008) This is contrasted to the integrated project delivery approach shown in figure 2. Here the common understanding of the project increases dramatically early on because the architect and construction manager or general contractor are hired onto the project early. 100%

Common Understanding

Pre-Construction Services

Construction

Architect Hired CM/GC Hired Engineers Hired Major Trades Hired Government Review SD

DD Time Time

CD

FIGURE 2. Integrated project delivery level of common understanding (modified from Lichtig 2008) In addition, engineers, major trade contractors and government agencies are brought in early as well. This project delivery system has many benefits; however, the drawbacks is that the level of effort is realized earlier in the system by many stakeholders and puts additional pressure and costs on the owner.

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OFFICE OF STATEWIDE HEALTH PLANNING AND DEVELOPMENT The Office of Statewide Health Planning and Development (OSHPD) is organized into six divisions. One of these divisions is the Facilities Development Department (FDD) which is responsible for the permitting of all hospital construction, both new and renovated (OSHPD 2008). Design drawings must meet California building codes and when completed, they are delivered to FDD for review. This review can take up to two years because of the time to review, correct errors and re-review the drawings. There are three ways drawings are reviewed by the state permitting agency. The first is the traditional 100% contract drawings where the design team has completed the entire design package. This package of drawings is then delivered to OSHPD for review. Comments are made by the plan reviewers and then corrected by the design team. Often this cycle continues many times until the drawings are completely code compliant and then the drawings are approved. It is important to note that if the drawings contain no errors, this is the most efficient way for the drawings to be permitted through the agency. However, this situation rarely occurs. The second and most often used way to review and approve drawings is to break the project down into phases. A phased project divides the project into major systems, to include underlying utilities, foundation, structure, mechanical systems and roof systems. This is slightly different from the 100% drawings in which the design team can submit the different phases when they are complete. This process decreases the batch size of the drawings and increases the amount of reviews by OSHPD. Finally, the third way is to request partial permits of design drawings. This differs from the phased project in that the different phases obtain a permit to construct after each phase is approved. This allows the construction process to begin earlier by reducing batch sizes and increasing the number of reviews. However, the downside is the difficulty involved in determining which parts of the drawings are approved with permits and which are not. An example of this is: Where do underground utilities start and stop in relation to the foundation? All of these processes create substantial rework. What is missing is the early involvement of the plan reviewers which avoids embedding design errors and subsequent rework cycles. The processes above place the plan reviewers in a reactive manner in which they receive drawings and react by catching errors. On the other hand, an alternative review process allows the plan reviewers to be interactive. They can identify code compliant issues while the design is in progress, which allows the design curve to be shifted to the left. SHIFTING THE DESIGN CURVE “LEFT” There is effort in the design and construction industry to try to shift the design process to the left (curve no. 4) of traditional project delivery (curve no. 3) as shown in figure 3. In order to accomplish this shift left it is proposed that an integrated team must be put into place. The American Institute of Architects (AIA) presented a guideline that breaks the design process into seven stages. The seven stages are different from the traditional stages as shown on the x-axis of figure 4. The integrated delivery model, shown by curve

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four and the light grey text, on the x-axis shifts the effort to the left of the traditional curve. Also shown is the time that government review occurs. For integrated design delivery this occurs much earlier.

Government Review

Government Review

FIGURE 3. MacLeamy Curve - shifting the design curve (modified from AIA 2007) This shift left is made possible by delivering projects in a different paradigm. According to the AIA, the integrated project delivery approach “integrates people, systems, business structures and practices into a process that collaboratively harnesses the talents and insights of all participants to optimize project results, increase value to the owner, reduce waste, and maximize efficiency through all phases of design, fabrication, and construction (AIA 2007).” However, a criticism of the AIA integrated project delivery is that it does not offer many tools to accomplish the task of shifting the design curve to the left. It highlights the need for collaboration, concurrent and multi-level designs however, this research promotes the need for Last Planner System, target value design, built in quality and work structuring. DISCRETE EVENT SIMULATION (DES) It is difficult to forecast how process changes affect an organization. OSHPD is an organization that consists of 235 personnel and reviews over $14B in construction every year (OSHPD 2008). Therefore, making a change in this organization takes time and more time to understand the results. Computer simulation is relatively inexpensive and can provide insight on the effect of organization change.

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Discrete event simulation (DES) models help researchers study alternative production system configurations. These models, using for example the STROBOSCOPE (Martinez 1996) simulation engine, are made up of activities or processing steps (called ‘Combis’ = rectangles with cut-offs in the top-left corner, or Normals = rectangles), holding places for resources while they are not in use and thus accumulate (Queues), symbols to model flow (arrows) and stochastic or deterministic branching (Forks). These STROBOSCOPE elements have been integrated with a graphical interface in Microsoft Visio as a macro and allow construction of a variety of processes. STROBOSCOPE (1) Allows the state of the simulation to control the sequence of tasks and their relative priorities, (2) models resource selection schemes so that they resemble the way resources are selected for tasks in actual operations, and (3) models probabilistic material utilization, consumption and production. STROBOSCOPE has been used to model ‘lean’ applications such as ‘pull’ in pipespool supply and installation (Tommelein 1998), multi-tasking and batching in the delivery of pipe supports (Arbulu et al. 2002), feedback in planning, fabrication, shipping, and installation of duct work (Alves and Tommelein 2006), and various lean production management principles applied to high-rise apartment construction (Sacks et al. 2007). ALTERNATIVE REVIEW PROCESS DES MODEL In consultation with senior members of the Facilities Development Division (FDD) it was determined that a discrete event simulation model be developed to show how different review processes can affect the throughput of hospital permitting. The model describes the current state of the organization and data is used to validate system behavior. The model simulates the effect early involvement has on the time to permit. Early involvement of the governmental plan reviewers (i.e. architect, electrical, mechanical, structural and fire, life, safety engineers) with the owner, architect and design engineers can effect the delivery of hospital permits. A discrete event simulation model shown in figure 4 illustrates the review process for hospital design in California. There are two main parts to the simulation model. The first, highlighted and noted with a one shows the first review process. Drawings are located in the DrawingTable queue. Review personnel are categorized into five different disciplines which represent the 1) Architect, 2) Structural Engineer, 3) Mechanical Engineer, 4) Electrical Engineer, and 5) Fire, Life, and Safety Engineer. Each personnel queue contains one individual. In concert with the personnel queues are the associated discipline review activities. The review activity times were determined from organizational data. They are normally distributed and depend on project size; larger projects have larger combined review times. Projects enter the drawing table randomly and follow a first in first out (FIFO) sorting key. Each project must be reviewed five times, once completed, the project is then ready to flow into the second part of the simulation model.

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1

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FIGURE 4. Discrete event simulation (DES) of current and alternative review process The second part of the model, highlighted and noted with a two shows a dynamic rework cycle. The first part of the rework cycle is to determine if rework is required. Each project size has a different chance of rework. The probability of rework was determined from organizational data. If the project does not require rework it will be placed into the complete queue. If the project does require rework it will be placed in the rework queue. Upon entering the owner rework queue an error is determined for one of the disciplines. This information is tracked for each individual project. After that the project will go into the owner rework activity. This simulates the drawings going back to the design team to correct errors. The owner rework time is also category specific. Larger

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projects require more owner rework time while smaller projects require less owner rework time. Upon owner rework completion the projects flow into the resubmit queue awaiting rereview. The simulation matches the assigned error with the correct discipline and then draws the appropriate reviewer into the re-review activity and upon re-review completion the project re-enters the rework decision fork. It is important to note that a project requiring re-review has a higher priority than an first review. This simulates the intent to follow FIFO and get projects that have been in the system longer, completed. The rework cycle continues until the project is determined to not require rework and is approved. The chance of rework decreases with each rework cycle which simulates the improvement of design drawings. The rework percentage is divided by two after the first rework cycle and then by three after the second rework cycle. The rework cycle is allowed to occur indefinitely however, it is rare that a project is reworked more than four or five times. Three scenarios were conducted to determine the impact of an alternative review process. The simulation model allows projects to be input into the system in four categories. The four categories are 1) less than $50K, 2) between $50K and $1M, 3) between $1M and $10M, and 4) greater than $10M. The original model which represents the current organizational process receives approximately 50 category 1 projects, 100 category 2, 35 category 3, and 20 category 4 projects in a six month time frame. The second and third scenarios focused on a dedicated team to perform alternative review only. This was a request by the Facilities Development Division which intends to put this team in to practice and wanted to know the impact to the mean time to permit for the largest projects that the organization encounters. These two scenarios of a dedicated alternative review process were loaded with 40 and 50 projects and are referred to as DA 40 and DA 50 respectively. RESULTS Figure 5 shows normal distributions for three simulation scenarios. From left to right the first two represent a dedicated review team that only performs an alternative review process (40 and 50 projects respectively). The third curve represents the time to permit for the original organizational structure (20 projects). Each scenario utilized a sample size of 1000. The decreased mean time to permit represents only a portion of the benefits of an alternative review process that engages major stakeholders early. An additional benefit of the alternative review process is a reduced probability of rework and if rework does occur, the time to correct, resubmit and re-review is reduced. Also, there are secondary benefits to motivation and job satisfaction for the plan reviewers, because they are now integral members of a design team. They are involved in a proactive process to design a hospital versus the reactive process in which they constantly catch design errors. A statistical analysis was performed to compare DA 40 and DA 50 with the original mean time to permit. DA 40 (mean 450 days, SD 13.8) and DA 50 (mean 530 days, SD 14.3) were compared to the original model (mean 650 days, SD 17.6) resulting in a pvalue of 0.0001 for both scenarios.

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Therefore it is appropriate to utilize a separate review team to handle alternative review projects which would result in an overall mean time to permit savings of approximately six months. However, it is recommended that this dedicated review team maintain a threshold of how many projects it should have in its queue. The mean time to permit drawings increases when there are more than 50 projects in the system. There is a maximum amount of projects that a dedicated review team can efficiently handle. 0.035

Probability Density

0.03 0.025 0.02

DA 40 DA 50

0.015

Original 0.01 0.005 0 300

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450/13.8

530/14.3

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640/17.6

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FIGURE 5. Mean time to permit for three scenarios (N = 1000) REFERENCES AIA. (2007). "Integrated Project Delivery: A Guide." Rep. No. 1, American Institute of Architects. Alves, T.D.C.L. and Tommelein, I.D. (2006). “Simulation as a Tool for Production System Design in Construction.“ Proc. 14th Conference of the International Group for Lean Construction (IGLC14), 25-27 July 2006, Santiago, Chile, 10 pages, 341353. Arbulu, R. J. (2002). "Contributors to lead time in construction supply chains: Case of pipe supports used in power plants." WINTER SIMUL CONF PROC, 2 1745-1751. Ashford, J. L. (1992). "The management of quality in construction." E & F Spon, . Ballard, G. (1999). "Positive vs Negative Iteration in Design." Proc. 8th Conference of the International Group for Lean Construction (IGLC8), 17-19 July 2000, Brighton, United Kingdom, 10 pages.

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Burati, J. J. (1992). "Causes of quality deviations in design and construction." Journal of Construction Engineering and Management, 118(1), 34-49. Construction Industry Development Agency. (1995). "Measuring up or muddling through: best practice in the Australian non-residential construction industry." Construction Industry Development Agency and Master Builders Australia, 59-63. Construction Owners Association of Alberta. (September 28, 2001). "Meeting Minutes." Josephson, P.-E., and Hammarlund, Y. (1999). "Causes and costs of defects in construction a study of seven building projects." Automation in Construction, 8(6), 681-687. Lichtig, W. (2008). "Common Understanding vs. Time." McDonough Holland & Allen Attorneys at Law, Presentation. Love, P. E. D., Mandal, P., and Li, H. (1999). "Determining the causal structure of rework influences in construction." Construction Management and Economics, 17(4), 505. Love, P. E. D., and Heng, L. (2000). "Quantifying the causes and costs of rework in construction." Construction Management and Economics, 18(4), 479-490. Makela, K. (2002). "Construction of common understanding. Interplay of organizational culture, communication and knowledge in inter-company R&D-projects, Master's thesis, Department of Communication, University of Helsinki." Martinez, J.C. (1996). “STROBOSCOPE State and Resource Based Simulation of Construction Processes.” PhD Diss., University of Michigan, Ann Arbor, Mich. Office of Statewide Planning and Development. (2008). "Facilities Development Division." http://www.oshpd.ca.gov/FDD/Plan_Review/Hosp_Insp.html (August 15, 2008). Rogge, D. F., Cogliser, C., Alaman, H., and McCormack, S. (2001). "An investigation of field rework in industrial construction." Rep. No. RR153-11, Construction Industry Institute. Sacks, R. (2007). "LEAPCON: Simulation of lean construction of high-rise apartment buildings." Journal of Construction Engineering and Management, 133(7), 529. Tommelein, I. D. (1998). "Pull-driven Scheduling for Pipe-Spool Installation: Simulation of Lean Construction Technique." ASCE, J. of Constr. Engrg. and Mgmt, 124(4), 279-288.

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