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Become an informed client

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Become an informed client
The Rehua site at dawn

Running a major building programme is not part of the skillset required for most university management teams. But programme success requires an informed client that can contribute as part of the project team. It is neither realistic nor desirable to turn university managers into construction industry experts overnight, but we would offer three pieces of advice to help you move quickly to the best position possible. 

Purchase the skills you need 

Engage industry experts to protect your interests in critical areas. Existing staff can be upskilled alongside them, but the pace of the rebuild is likely to be too fast, and the consequences too great, to use this primarily as a training ground. Flexible engagement models such as fixed-term contracting or project-linked consulting can be used to focus this input on the rebuild rather than making it an ongoing commitment. However, take into account the value of knowledge and working relationships developed across the programme, and be aware that the best experts will be in high demand in a potentially undersupplied market. 

One area where we consider external expertise to be particularly valuable is construction procurement and contractor management, where the complexities of role boundaries and risk allocation can have significant impacts on project outcomes. 

Invest in processes and standards 

In project management terms, a mature organisation has documented processes and standards, and follows them in every piece of work. It is likely that a university will need to develop new processes to manage a rebuild programme. Make sure these are benchmarked against external standards, and capture them in a Centre of Excellence – which becomes the single source of truth for future work and to drive capability development. It is likely that new software will be required to facilitate these processes, and staff will need to be upskilled to use it consistently and effectively. 

Two areas where we developed new processes were cost management (specifically how project costs were estimated, budgeted and reported on), and design briefing and review (in particular the process for incorporating building user feedback and documenting design change decisions). 

In 2011, some Mechanical Engineering lectures were held in tents and the bar at the Ohoka/Mandeville Showground

Don’t forget the skills you already have 

Universities are full of experts. They might be academic experts such as Engineers or Architects who can advise on building concepts or plans, or they might be Facilities Management staff who understand how building elements will impact on wider campus infrastructure over time.  

There can be great benefit in having people with an interest in the end result in the room during building design, but expectations need to be managed carefully, and it is important to remember that they will be stretched with other recovery demands in their normal roles. 

You can’t manage risk to zero

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You can’t manage risk to zero
The Rutherford Regional Science and Innovation Centre, January 2018

Risk can never be removed completely, but it can be reduced. That’s true in normal operations and remains so during disaster recovery. However, in the aftermath of a major event, most people become increasingly risk averse, just when they are called upon to make crucial decisions in an uncertain environment. This can lead to two things: 

Sticky risk 

The risk may appear more significant than it would during normal business, and it digs in. Decision makers are reluctant to act until they are confident risk is minimised to the greatest extent possible and this can lead to slow responses and missed opportunities. 

Offload fever 

The focus shifts to contracting the burden of risk away from the organisation to external suppliers. But this is not realistic, particularly in an undersupplied recovery market. Some risk must always be carried internally. 

Risk management should be a shared activity – client owned but collaboratively driven – with risk management responsibilities clearly defined in contracts and terms of reference. Consultants, contractors and project governance boards, for example, should all be clear from the outset about which risks they are carrying and the boundaries of their responsibilities.  

One area where this multi-pronged approach had real benefits for us was Quality Assessment. The architect documented flaws and faults, and the list was reviewed by an independent consultant, providing both specialist and impartial assessment of build elements that required improvement to meet an acceptable standard. 

Internally, risk management requires adequate resourcing and staff should be encouraged to provide an open and transparent assessment of risk, rather than attempting to package it up to make it acceptable. 

Hoardings on the Mechanical and Civil Engineering wings, 2016

Remember the big picture 

The disaster environment itself creates significant organisational risk. Survival requires rapid and decisive action, and risky decisions need to be made. While risk cannot be avoided, it needs to be acknowledged and managed. For example, our rebuild strategy avoided the risk of bankruptcy even at the worst-case scenario, but ensuring that affordability meant we had to decline opportunities to expand some facilities. 

Cost escalation: fact or fear?

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Cost escalation: fact or fear?
Construction underway in the College of Engineering Core, 2016

Rapid cost increase was one of the biggest concerns in Canterbury’s recovery environment. The local market could not provide sufficient skilled consultants or contractors, and supply chains were strained nationally and internationally, leading to rising costs for personnel, materials and equipment. At one point, extreme projections suggested that every month of delay would result in an additional $1 million cost to the project. 

What did it influence? 

Operationally, the fear of cost increases was felt in three important areas: 

  1. Build schedule 

Our project durations stretched to five years with largely fixed budgets. Annual cost increases of 6-7% were predicted and budgeted for, significantly impacting on what was deliverable from year 3 onwards. An expedient strategy was to deliver the most expensive parts of projects first, where this was possible. This avoided the potential impact of later value engineering, but it was not always the ideal, or most logical, progression from a programme perspective.  

  1. Refurbish vs rebuild decisions 

When pause and challenge points were reached on brownfields projects, significant investment had already been made over 1-2 years of work. Projections going forward were based on the higher costs anticipated in the longer-term budgets, making rebuild less palatable and contributing to some decisions to continue with brownfields solutions. 

Consultants in the College of Engineering, 2016
  1. Contract management 

In the face of escalating costs, some packages were split to allow workstreams to proceed concurrently. On one project, remediation, structural work and internal fitout were let as separate packages, with the intent that the project would be concluded more quickly to avoid the impact of cost escalation over time. However, this also created increased management complexity and some contractual tags were not communicated to all consultants resulting in misunderstandings of areas of responsibility and, ironically, project delays. 

What does that mean? 

Costs definitely did escalate during the recovery period, although not to the extreme level that was feared. However, the concern about cost escalation had a very real impact on significant areas of programme delivery. While it might never be possible to quantify exactly how markets will respond in a recovery environment, the implications of strategies aimed at mitigating potential cost increases need to be acknowledged in programme planning. The legacy of fear can be as lasting as that of fact. 

Business change: An opportunity and a risk

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Business change: An opportunity and a risk
A flexible study space, Chemical and Process Engineering, 2016

The key message here is that a capital works programme cannot in and of itself drive business change.  

Capital works is essentially about delivering a product, but business change is strategic, long-term and values driven. Facilities change and business change certainly should support each other, but simply providing a new working environment does not mean staff will start to work differently. 

If wider business change is an organisational goal during disaster recovery, it should be resourced separately from the outset. It requires strong leadership and the appetite for change may vary across the organisation, so that leadership should be centralised to avoid inconsistency and to maximise the potential created by the unusual circumstances. A business change programme will also require dedicated skills including process development, communications and stakeholder management. 

Teaching space in the Rehua building, 2020

Although distinct, the business change and capital works programmes will impact directly on each other so they should work closely together. For example:  

  • Value engineering decisions may influence business change outcomes, so business change interests should be taken into account during the value engineering process. 
  • If increased staff collaboration is a business change goal, having cross disciplinary teams work on the design of shared workspaces can seed new working relationships and collaborative thinking.  
  • The assessment of proposed benefits that accrue beyond the construction phase, such as increased student numbers, could be managed by the business change programme. 

However, substantive business change must be driven outside of and beyond the capital works programme. Don’t put all your resources into delivering a new building and then wonder why staff fall back into old work habits. 

Benefits management

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Benefits management
The Engineering Core multi-use space, newly opened

Benefits management is a requirement of Treasury’s investment process. It measures the reality of the operating environment against the benefits argued in the business case. Among the benefits we proposed were operational improvements such as better staff communication and collaboration, and increased student numbers. Clearly, these take time to accrue so benefits management must extend beyond the project and into the BAU environment. 

Keep the benefits relevant 

As costs shift over the course of a project, so too can the cost/benefit ratio. For example, if budget is severely curtailed in a given area, the same level of benefit cannot be expected to flow from the reduced investment. Project duration is also relevant. Benefits outlined in the business case for a building that takes 5 years to reach completion may not be relevant to the new operating environment. 

Keeping track of these changes and their impact requires a broad view so we recommend that benefits management is included in governance-level programme reviews to ensure targets remain realistic in the inevitably volatile rebuild environment. 

Rutherford Regional Science and Innovation Centre, 2018

Resource it or lose it 

However, the Project Control Group winds up when the build is complete so ongoing benefits management needs to be resourced within BAU. We have a dedicated role which undertakes a Post Implementation Review (PIR) for all significant capital investments one year after occupancy.  

The PIR is structured to feed into Treasury’s post-project evaluation, but benefits management can also provide insights for monitoring internal performance. Therefore, the process should include reviewing benefits criteria and outcomes, establishing a reporting process and agreeing actions to be taken if targets are not met.  

It is also necessary to define appropriate soft metrics for difficult to quantify benefits such as improved communication. And some apparently easily quantified measures (such as increased student numbers) require interrogation for a robust understanding of the link between the project investment and the outcome. Do students come to a university because of a building or for other academic or social reasons? We are using student focus groups to understand the part the building plays in their decision making. 

Benefits management is a complex activity and we recommend it be viewed as an iterative and evolving process, just like the construction projects it underpins. 

Value engineering for the long haul

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Value engineering for the long haul
Services installation, College of Engineering, 2016

The goal of value engineering is to reduce the cost of design solutions without sacrificing the functionality of the end result. But the value of a building is not limited to the construction phase. Value engineering decisions also need to balance the benefits and costs that are likely to accrue across the whole life of the asset. 

One area where value engineering can have a significant impact on long-term costs is the installation of building services such as lighting, data cabling and HVAC. These components will incur operating and maintenance costs over the life of the building and need to be configured with this in mind. A decision to make short-term project savings by allowing ad hoc services installation can lead to unnecessary long-term costs if access is compromised as a result. 

Innovation is another area that can suffer under value engineering. Forward thinking solutions for rainwater collection or more efficient heating, for example, might involve significant up-front investments but can return future benefits both in financial terms and as part of achieving broader organisational goals. 

Also take account of the impact of value engineering decisions on the activities that will happen in the completed buildings. Make sure that construction cost savings do not lead to increased operational expenses for retrofitting and work arounds. 

Get the right heads around the table 

In the high-stakes, high-intensity recovery environment, it can be easy to lose sight of longer-term thinking in favour of the immediate bottom line. The answer is to make sure that representatives with a long-term interest in the building are involved in value engineering decisions, and that all consequences are taken into account, not just the immediate financial outcome. 

As well as university and programme senior management, in our case this included seeking input from Facilities Services, the group responsible for maintaining building fabric and plant across campus. But remember that these people will already be stretched by other recovery demands in their BAU roles so make it easy for them to contribute by identifying relevant questions in advance and focusing meetings on decision making. 

Chemical and Process Engineering, 2016

Communicate the outcomes 

Value engineering inevitably involves decisions that are unpopular with some end users. It is important to have a strategy for communicating difficult decisions and the reasoning behind them to those affected. Most people adapt more easily to incremental change, and this also allows them time to revise work processes so they function effectively in the spaces they will occupy. 

Whose quality? Don’t forget the end user

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Whose quality? Don’t forget the end user
Chemical and Process Engineering post-grad laboratory, 2017

A building that is delivered to specification, budget and timeline might satisfy many of the quality requirements of the project team, but its functional quality can only be judged once the building is operational. This means that quality assessment needs to be resourced post-occupancy, and end users will become a key influencer of perceived and reported quality. 

What is important to end users? 

Two issues emerged strongly for us: 

  1. Certification requirements 

A number of activities carried out in our buildings require certification, for example the storage of hazardous materials. Certification is usually managed by end users, and typically includes the achievement of standards for fitout elements such as floor coverings and service adjacencies.  

If international design consultants are engaged for building fitout, ensure they follow New Zealand specifications for the intended use of the spaces, and also ensure that design change decisions made by architects take account of functional requirements. Modifying fitout to achieve certification post occupancy can be both costly and disruptive for end users.

  1. Work environments 

It can be difficult to provide natural light in all office spaces but this is a key factor influencing end user satisfaction. Functional adjacencies, for example between laboratories and teaching spaces, are also important, as is noise transmission, and convenient access to service outlets for data, electricity, lighting and gas. 

These elements may change during detailed design or value engineering but university staff turnover is low so, even if buildings take several years to reach completion, it is likely that the same staff who provide input into the initial design will occupy the finished spaces. Keeping these people involved in design updates is vital to a smooth transition and to avoiding negative feedback if the built reality does not match long-held expectation. 

A presentation underway in the Engineering Core flexible central space

Appoint an end-user Project Manager 

End users are not building experts and it is important for design professionals to take the lead on balancing user needs with costs and timeline, but there needs to be a clear and adequately resourced line of communication. We appointed a Project Manager for each building to work between the end users and the project team. This person understood both BAU and the build process, and was able to manage design input and feedback, as well as transition planning.  

Effective building commissioning: Make a plan and make sure it happens

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Effective building commissioning: Make a plan and make sure it happens
Some of the contractor team at the College of Engineering, 2016

The goal of commissioning is to ensure that a building and its components function as intended from day one. Effective commissioning minimises contractor callbacks to make good non-conforming elements, and reduces the operational costs associated with managing that process.  

It’s safe to say that we didn’t appreciate the complexity of the commissioning process at the beginning of our rebuild programme, but by the end we had developed a much more mature approach, and along the way we learned some important lessons. 

  1. Plan for commissioning from the design phase 

Don’t think you can leave commissioning until the end of the project. Standards, criteria and responsibilities need to be defined from the outset and refined as the project takes shape. To achieve this, commissioning needs to be consciously resourced from the beginning of the project, and you should expect it to last for some time after construction is completed.  

Commissioning expectations should be set out in project contracts. We found the NZS 3910:2013 model contract to be satisfactory with some additional risk management clauses. Testing and commissioning plans also need to be developed, and documented right through to sign off. 

  1. Consider an Independent Commissioning Agent 

An ICA reports directly to the client. Being independent of the design team, they can provide an unbiased assessment of the quality and efficacy of work. They also focus on commissioning documentation, ensuring quality remains a priority during the intense drive to complete and hand over the building.  

Sustainable practices for waste disposal on the Rutherford Regional Science and Innovation Centre project, 2016
  1. It can be a juggling act 

Even with the best advance planning, the heaviest commissioning workload comes at the end of the project, when building users will probably be waiting to move in, and commissioning time can be compressed if there have been delays during construction. Building users will have developed decant plans for existing spaces, equipment and people, and delays can have a knock-on effect for other campus functions, creating even more pressure to complete pre-handover commissioning quickly. 

Our primary strategic driver was an open, functioning campus, ready to receive students, and keeping that goal top of mind meant we had to occupy some facilities before commissioning was complete.  

It’s not desirable and it becomes more difficult to address issues as time passes, but disaster recovery may require this sort of compromise. One possible strategy might be to stage commissioning so that key elements are resolved early on, and to define ‘no-go’ points which must be passed before the building can be used.  

The key is to document the commissioning gap at handover and create a plan to manage it going forward, including resourcing commissioning beyond the project team if required. Effective commissioning doesn’t typically save time, but it can save money, and it is an important cornerstone of project quality. Don’t let it fall off the list. 

Some things will be beyond your control

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Some things will be beyond your control
College of Engineering, 2016

Contractor and consultant performance are typically managed through contractual conditions. For example, KPIs are agreed as part of the engagement process, possibly with incentive bonuses for exemplary delivery and penalties for failing to meet standards. The indicators are monitored actively throughout the project and action is taken promptly if performance drops below trigger levels. That’s what you would expect under normal operations anyway. For us, the disaster recovery market held some nasty surprises which meant things didn’t play out quite so neatly. 

1. There was a huge turnover in contractor teams 

The demands of city- and region-wide rebuild created a constant churn in contractor personnel. On a number of occasions, the staff that turned up on site were not the team promised during tendering. Some did not have adequate skills, and many were recently arrived in New Zealand and unfamiliar with local methodologies.  

In a normal environment, we would expect consultants to performance manage main- and sub-contractors, and to require a change in personnel or supplier to meet contractual standards. However, in the drastically under supplied recovery market where escalating costs had a significant impact on project budgets, it was too risky to pause work to seek new suppliers, even if they could be found. 

For us, the reality was increased consultant input for contractor briefing and monitoring, and ‘work around’ strategies to get us to the end goal – an open and functioning university achieved in the most expedient manner. 

Works underway on the Rehua building

2. Two major suppliers collapsed 

Among our main contractors were two of New Zealand’s building industry leaders – Fletcher Construction and Hawkins Group. Both firms had track records stretching back decades across major projects around the country. In normal times, they could be seen as a safe bet – go with the big players and have confidence in their ability to deliver.  But, as it turned out, both companies collapsed in the volatile earthquake recovery market, resulting in loss of key personnel, project delays and increased delivery costs for us. 

During disaster recovery, even the safest bets are off. No matter how carefully you plan, your programme will be influenced by external factors that you simply cannot foresee or control. Be prepared and follow best practice wherever possible, but also remain nimble and ready to respond to the unexpected. 

Great expectations: Managing end user input

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Great expectations: Managing end user input
The central atrium in the Rutherford Regional Science and Innovation Centre, 2018

End users should contribute to the design process. This allows specialist requirements to be incorporated and improves end user ownership of the completed building. However, end users are not building experts, so the architect should take the lead on this process, providing structured briefing sessions and planned design review points.  

From the perspective of end-user satisfaction, our most successful projects were based on significant early collaboration between the architect and building users. This included design workshops, the adoption of a mana whenua cultural narrative, and testing new collaborative workspaces through modelling and visits to similar sites already in operation. But the real key to success lies in keeping clear lines of communication open for the duration of the project. 

Define roles and processes 

Be clear about which personnel should attend design meetings and what their role is. For example, are they providing advice, a wish list, or a set of requirements? And who, ultimately, will decide which features are included? The architect may not be equipped to determine the relative merits of specialist research functions, for example, while a particular user group may not have a sufficiently wide view across the project to understand where budget can be most effectively applied. 

Inevitably, elements will be requested that cannot be accommodated or that need to be removed or modified during build. It is important to develop a design decision process that includes an organisation-wide view, benchmarking against similar external facilities, and effective change control. The process and associated roles and decisions should be clearly defined, followed and documented. 

Students in the Chemical and Process Engineering Special Purposes Lab, 2017

Keep communicating 

Trust between architect and end user is an important element of perceived project success, and it requires clear communication on both sides. For example, the architect should relay design decisions in a way that internal stakeholders can understand. Simply providing an updated set of drawings is not sufficient for people who are not used to reading plans.  

We also recommend appointing a user-facing Project Manager whose role includes planning and management of design inputs from end users so that clear messages are communicated to the architect. This person should also coordinate responses to end users from the architect and project and programme governance.  In order to be successful, they should be appointed early in the design phase. 

Also take the time and effort to celebrate key milestones with end users. This keeps them engaged with the journey and the project team, and allows them to take ownership of the new building incrementally, in more manageable chunks. 

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