Kennedy explains that in Western Canada the trend toward escalating construction costs began in earnest four years ago. Since that time the construction industry has experienced increases between 50 and 70 percent. Specific increases include a 50 to 70 percent rise in mechanical costs, a 30 to 50 percent increase in electrical costs, and approximately 40 to 50 percent increases in the costs of concrete and glass.

He adds that many regions within Canada are currently experiencing unprecedented demand for all types of new infrastructure, especially in British Columbia where a large portion of federal funds are allocated towards new infrastructure that supports transportation. As a result, those same regions are also experiencing labor shortages, which Kennedy feels may continue to be an issue for the next 20 or 30 years.

“Within British Columbia, the city of Vancouver is in the midst of a huge residential development boom, which has led to extremely high real estate prices,” says Kennedy. “There is also a huge amount of new construction in Vancouver directly and indirectly related to the upcoming 2010 Winter Olympic Games that will be held there.”

Cost Mitigation Strategies

Kennedy recommends five cost mitigation strategies for project teams to employ. He adds that, if implemented during pre-schematic design, these strategies can be more effective than value engineering during the actual design process. The strategies include:

• Speed of Implementation
• Clarity of Governance
• Clarity of Scope
• Needs versus Wants
• Transparent Procurement

To illustrate these strategies, Kennedy points to Stantec’s current project underway with the International Collaboration on Repair Discoveries (ICORD). Construction began in August of 2006 on ICORD’s new multidisciplinary research center and treatment facility for persons with spinal cord injuries. Targeted for completion in June of 2008, the new six-story, 110,000-sf facility will be located at Vancouver’s principle acute trauma center, Vancouver Coastal Health Authority (formerly Vancouver General Hospital). It will include one floor devoted to clinical care, an underground animal care facility, and five levels of labs and offices for ICORD’s more than 300 researchers and staff members.

“Speed of implementation is a key cost-control strategy,” says Kennedy. “When we started working with ICORD last year, we developed a budget and made it clear that the budget also came with a very definite schedule. If we stray from the schedule, the project will not be feasible at this budget.”

He adds that once the schedule is defined, it is important to follow through and stay on top of specific deadlines so that the overall project is not delayed.

“In a perfect world, the trick is not just to stay on top of the schedule, but to do it in a way where you are not running too fast,” says Kennedy. “You want to stay on schedule, yet still maintain tight control and high quality standards.”

The second recommended strategy is to establish clarity of governance, which includes setting guidelines for project objectives and goals, then following through with clear and unambiguous decision making.

“With ICORD, we hold weekly project team meetings and provide all participants with follow-up reports that document decisions made during the meeting,” says Kennedy. “The meetings are set for every Wednesday morning and that meeting takes place every single week regardless of who can or cannot attend.”

He adds that weekly meetings encourage key participants to take a proactive approach to staying on schedule and provides the opportunity to clearly document decision making and to track overall project progress.

The third strategy that Kennedy advocates is clarity of scope, which relates to finding ways to ensure that everyone involved in the project, including owners, funding agencies, researchers, and end users, all agree on the defined scope.

“We begin each project by developing a Project Implementation Plan that defines the scope of the job and outlines everything that is included in the project,” says Kennedy. “More importantly, the plan also outlines what is not included, which can be especially important on projects like ICORD with fixed budgets. It helps owners and end users to see the financial impact of adding things that were not originally included.”

According to John Steeves, Ph.D., director of ICORD who is leading design and construction efforts for this project, a fixed budget provides a helpful framework for all outside consultants.

“Our contractors know we have $45 million to work with,” says Steeves. “If they propose something, I want them to show me that it fits the budget and meets the scope of the original goals and expectations of our researchers, our funding agencies, and the patients who will using this new facility.”

He adds that he does not want contractors to tell him that it is in his plan because it’s something they’ve always done. Instead he wants to know that it relates specifically to ICORD’s needs.

The fourth cost-control strategy deals directly with this by recommending that contractors and owners work together to define what are absolute project needs versus wants.

“The $45-million funding for ICORD’s new facility was approved in 2002,” says Kennedy. “However the actual budget was not fully approved until 2005 so we are trying to meet the same researcher expectations yet also compensate for three years of rising costs.”

To do this, Steeves and Kennedy both agree that on a fixed budget, ICORD’s priority must be function first and aesthetics second and only when and if it fits in the plan.

Kennedy calls the fifth and final cost-control strategy transparent procurement, which he defines as making sure that all consultants and sub-contractors are upfront about costs and that all expenses are accounted for.

“Transparency and accountability is especially critical for clients like ICORD who need to be accountable back to governmental funding agencies and to the community in general,” says Kennedy.

ICORD’s New Facility

ICORD’s new research center is being funded by multiple partnerships. The Canada Foundation for Innovation (CFI) is providing 40 percent of the funding through a competitive peer review grant application process. The British Columbia Knowledge Development Fund (BCKDF) is matching the CFI contribution, by providing another 40 percent. The remaining 20 percent will be funded by multiple partners, including Vancouver Coastal Health Authority, University of British Columbia, and the Rick Hansen Spinal Cord Injury Network.

In addition, a community advisory panel for ICORD, comprised entirely of people who have had spinal cord injuries, is contributing to the design and construction effort. The panel is currently led by Mike Harcourt, a former premier of British Columbia, and includes Sam Sullivan, the mayor of Vancouver.

“Our primary design goal is to make this new facility the world’s most accessible building,” says Steeves. “Our advisory panel provides us with personal insight that is helping us cater to the needs of all of our patients, whether they are here for urgent care after spinal cord injury, immediate acute care treatment, surgery, or rehabilitation.”

To emphasize ICORD’s need for accessibility Steeves asked Stantec’s design team to spend a day working in wheelchairs themselves to help identify building components that could be redesigned to simplify patient movement and clinical care.

“A prominent example of improved accessibility will be the wheelchair ramp leading into the first-floor atrium,” says Steeves. “The ramp is built at five-percent grade rather than at recommended code requirements which are seven-and-a-half percent grade because our patient base includes tetraplegics, people who have limited use of their arms. They cannot wheel up a seven-and-a-half percent grade, but they can do five.”

Other improved accessibility features include electrical outlets positioned 39 inches above the floor. Single-user, highly accessible washrooms throughout the building provide privacy and remove the stigma often associated with special handicap stalls in multi-user washrooms.

“The goal is to not have to display the disability sign anywhere inside the ICORD building, since everything should be accessible and equal for all,” says Steeves.

Moving Forward

“There is often apprehension among outside consultants when a project involves government funding agencies,” says Kennedy. “However we have actually found that the CFI and the BCKDF can be incredibly flexible. If you go to them with a problem, along with a proposed solution, they will most likely find a way to support your project.”

In addition to funding agency communication, Kennedy feels that developing a business case is a key component to successful projects.

“A real business case is one that looks at strategic alignment, the goals and objectives of why the facility is being built, and asks really simple questions about the level of functionality and the goals of a particular project,” says Kennedy.

He adds that institutions need to have the courage to make tough decisions based on the findings of the business case.

“I call it having the wisdom to make robust go/no-go decisions,” says Kennedy. “If a business case does not make sense, you should stop the project and focus those resources elsewhere.”

Kennedy also advocates the use of a truly integrated project and design process.

“This is a catch-phrase in the industry right now, but my challenge to the industry is that very few, if any, consultants are actually doing this,” says Kennedy. “People with the right expertise need to be brought in upfront to begin immediately integrating the business case.”

He adds that operating costs should be also be integrated into the design process, and following completion of the facility, audits should be conducted to make sure the facility is performing as promised.

By Amy Cammell

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ISSN: 1096-4894