How IPD Projects change Finnish construction industry. Lean in Public Sector Conference LIPS 2017, Santiago, Chile Jani Saarinen

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1 How IPD Projects change Finnish construction industry Lean in Public Sector Conference LIPS 2017, Santiago, Chile Jani Saarinen

2 History of lean construction in Finland : LCI comes to Finland Some studies of Australian Project Alliance Some understanding of Lean principles and IPD s Establishing LCI Finland 2009: LIPS Karlsruhe, Germany Introducing Project Alliance EU-legislation challenge public procurement 2010: LIPS Washington DC 1st Joint LCI R&D Project (3 M ) 2011 LIPPI Brisbane, Australia 2 Project Alliances PATINA research and development project, Technical Research Centre of Finland 2012: LIPS Tampere, Finland 4 Project Alliances 2013: LIPS Nottingham, UK 6 Project Alliances + some hybrids 2nd Joint LCI R&D Project (4,5 M ) 2014: LIPS Berkeley, USA 16 Project Alliances + 4 IPD Projects 1st Public Sector R&D Project (11 pilot Projects) 2015: LIPS Barcelona, Spain 34 Project Alliances + several IPD Projects 2016: LIPS Elsinore, Denmark / LCI Berkeley over 40 Project Alliances + more coming 1st Lean Production R&D Project (0,7 M ) 2017 ILCC Chennai, India / LCI Anaheim over 60 Project Alliances + IPD Projects 2nd Public Sector R&D Project (12 pilot Projects) 20 participants in Anaheim from Finland 2018 Publication of new Alliance Contracts and Guidelines

3 3000 M projects in 6 years Project 1 Lielahti-Kokemäki radan peruskorjaus Vuolukiventie 1b:n peruskorjaus 18 3 Tampereen Rantatunneli Helsinki-Vantaan liikennealueiden päällystystyöt 1) 20 5 Terveyden ja hyvinvoinnin laitoksen päärakennus 2) 18 6 Järvenpään sosiaali- ja terveystalo 51 7 Franzenian peruskorjaus 3) 6 8 Lahden matkakeskus 19 9 Pakilan alueurakka 8 10 As. Oy Helsingin Retkeilijänkatu 3-7 4) 9 11 Jyrkkälän lähiön julkisivuperuskorjaus As. Oy Gunillankallio VTT:n ydinturvallisuustalo 2) Joensuun oikeus- ja poliisitalo 2) Naantalin voimalaitoksen allianssiurakka Yliopistonkatu 4 peruskorjaus Kainuun keskussairaalan peruskorjaus ja laajennus VT 6 peruskorjaus Kempeleen TK Hiukkavaaran monitoimitalo LaNa (Lasten ja naisten sairaala) 5) Kotkan poliisitalo 2) Espoonlahden kirkko 6) 8 24 Tampereen raitiotie Turun Syvälahden koulun allianssiurakka Finavian Asematason allianssiurakka Jakomäen keskiosan kehittäminen Tammelan stadion Pohjankartanon koulusaneerausohjelma 7) Pitkäkankaan koulusaneerausohjelma 7) Finavian terminaalilaajennus 6) Harppuunakortteli 7) Äänekosken radan peruskorjaus Rataverkon KP2-palveluallianssi Tesoman hyvinvointipalvelut Suomenlinnan huoltotunneli 7 38 Ylimaarian koulu Raide-Jokeri Lahden eteläinen kehätie - Allianssi Vantaan koulut 2 kpl Kuopion uusi sairaala Tiestötietojärjestelmä- ja palvelut 8 44 Tikkurilan kirkko Keravanjoen yhtenäiskoulu Vaasan sairaala H-uudisrakennus Pakilan palvelurkanneukset -allianssi Infra-alan kustannuslaskentajärjestelmä 8 48 Kruunusillat-allianssi 120 Total 2981 M Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

4 Integration in project delivery An example of leading organizations The development of public procurement Joint development projects & education The results achieved

5 Integration in project delivery

6 Project alliances / Integrated project delivery Designer Team Owner Contractor Team Early involvement of participants Common objectives Joint organization Shared commercial compensation model Shared risks and rewards Fully open-book commercial transactions Common Development phase Commitment on cooperation, building trust and continuous improvement

7 Potential in house renovation? 100 Expertise in procurement and contract management 100 Sources of waste in design and construction % potential in use Owner s goals User needs Separation of design and construction Source: KR TUKEFIN , 13 Client, Designer and Construction organizations, ~ 700 respondents

8 Integration of teams and processes Information - resources processes - technology Information BIM Organisation & Big Room Processes Real estate & infrastructure systems High Performance Building / Infra Simulation & Visualisation Cooperation & Collaboration Production Management Integrated Systems Measurable Impacts Integrated contracts Integrated commercial model integrated action plans Source: DPR Construction

9 Common understanding Common understanding Early involvement < 100 % < 100 % Owner s plans Owners obligations Risk transfer Traditional contracting Sub contractors Integrated team Shared obligations Shared risks Integrated and open contracts Sub contractors Contractor Contractor Architect Planners Planners Architect Aika Aika

10 Common development phase Strategy Selection Phase Project Alliance Objectives & constraints Development Phase Implementation Phase Guarantee and Maintenance Phase Decision of project delivery model Draft documents Preliminary plans Alliance contract Compensation model Selection of the best parties by competence and price (Fee) Interim Alliance Contract Project planning and design Alliance team development Develop target outturn cost (TOC), time schedule and project plan Key performance indicators Owners want to proceed? Full Alliance Contract Integrated team Alliance contract Compensation model Delivery of Services Design and production development and innovation Change management Source: Jim Ross, Alliance Contracting, lessons from the Australian experience, LIPS-conference in Karlsruhe

11 Big rooms in major projects 2 TEAMS TOOLS PROCESSES

12 Value-added mechanisms in IPD s Source: Patina Project, P. Lahdenperä, VTT 2015,

13 Lean thinking Last planner System BIM & VDC & CAVE Big room environments Target Value Design / Delivery Prefabrication Takt time production

14 An example of leading organizations

15

16 Leading public organizations Promoting change An example of leading owner organizations and people Dialogue between the owner organizations Dialogue with the industry

17 First pilot projects 2011 Liekki-project (Railway renovation) , 100 M Finnish transportation Agency Vuolukiventie Campus renovation 18 M, University of Helsinki, Center for the Premises and Facilities Tampere Tunnel , 180 M City of Tampere, Finnish Transportation Agency

18 Liekki Railway Renovation Project Lielahti-Kokemäki 90 km railway renovation project Project budget 106,4 M Alliance partners: Finnish Transport Agency (owner) and VR Track (service provider) Idea First public sector alliance project in Europe Firs fully open book railway project in Finland Finding cost and time-efficient solutions while achieving other objectives at the same time Outcome Completed 2/2015, about 3 months ahead of schedule Actual outturn costs 10 M under target Punctuality of railway traffic: 99,7 % (target 90 %)

19 Vuolukiventie Campus Renovation Project Renovation ( m 2 ) and new construction (1000 m 2 ) Target outturn cost 18,3 M Alliance partners: Helsinki University (owner), SRV Ltd (general contractor) and SARC Architects Ltd Development phase 1-5/2012, implementation phase 6/ / year warranty phase Idea First completed alliance project in Finland Life-cycle and energy efficient solutions 5 year warranty phase linked to the compensation model Maximum bonus Outcome Innovations in space solutions > 27 new apartments 0-defect completion Exceeded environment and life-cycle objectives

20 Tampere Tunnel Project 2 x one-way 2,3 km road tunnel Target cost 180,3 M Development phase 6/2012 9/2013, Implementation period 10/ /2016 Idea Forming alliance with two Owners City of Tampere and Finnish Transport Agency Improving Big Room activity and practices Outcome Designing the project to Owner s target from 220 M to 180 M Successful Big Room and TVD-process Major innovations Opened 6 months ahead and completed under the target outturn cost All KPI s exceeded

21 Helsinki Airport Terminal Project 300 M Terminal Investment Renovation of m m 2 of new passenger and baggage facilities + 9 gates for widebody jets Alliance members: Finavia, ALA Architects, HKP Archtiects, Ramboll Finland and SRV (Construction) Idea The best Project Alliance in Finland & Lean everywhere 50 % increase in passenger and baggage handling capacity

22 2 week pipeline renovation 2015 As Oy Haukipato: 3 months 2016 As Oy Satumaanpolku: 2 weeks Empty sites 75% of the time? 100 % 90 % 80 % 70 % 60 % 50 % 40 % 30 % 20 % 10 % 0 % Source: FIRA 2015

23 The development of public procurement

24 Cheapest Price Value for Money Open procedure Cheapest price Restricted procedure Price Quality Negotiated procedure Team performance Project competence Margin / Fee

25 Use of negotiated procedure Market dialogue Notice of intent Draft Tenders Final Tenders Procurement announcement Prequalification Negotiations Procurement decision Negotiated procedures allows to communicate the owner s objectives clarify the procurement process develop the project reduce uncertainties and risks start early integration evaluate the tenderer s performance develope tenders

26 Alternative ways to negotiate Traditional contract negotiations Workshops

27 Teams instead of individual companies O designers and builders as a one team O designers and builders as two different teams On team + 1 public procurement + pre-integrated teams - Expensive to tender - Individual members can not be selected Two separate teams + Cheaper to tender + Individual members can be selected - 2 public procurement - Later team integration

28 Joint development projects & education

29 Lean construction R&D projects Common Research Agenda Morenia Talokeskus Sweco Vianova Finland WSP Group Consti Fira Granlund Lemminkäinen Liikennevirasto Two Joint Lean Construction R&D Projects LCI (3,0 M ) LCI (4,5 M ) 10 Private Companies, Finnish Transport Agency, University of Oulu and Finnish Funding Agency for Innovation

30 Mission Market and services Finland #1 Using Integrated Project Delivery methods in large capital projects Leading public owners + service providers Joint learning by using Pilot projects Developing Integrated Project Deliver models for Finnish market

31 Public Owners: IPT 2 Project Project level IPT Organization level IPT 2 Industry level KIRA #1 Foundation 11 Public organizations 11 Pilot Projects IPD Procurement IPD Agreements and commercial models IPD phases Lean principles and some tools Producing value and improving productivity 13 Public Organization 13 Pilot Projects Building new culture Challenging and educating people Lean processes and tools Creating value and reducing waste #1 in Using Integrated Project New strategies New business models and opportunities Focus to operational and lifecycle value Something we have not seen yet

32 Private companies: RAIN project Lean Production System Joint R&D Program Private Companies & 2 Universities Joint budget Companies together over 2 M

33 Academic research Research and papers Number Doctoral thesis 4 Master Thesis Lower academic thesis Scientific articles Conference papers several dozen Presentations > 100

34 The Results Achieved

35 Innovations Ideas and innovations in Tampere Tunnel Project Roads Bridges Tunnel Technical systems Others Implementation phase Development phase

36 Value for Money Cheapest Price Most Capable Teams Innovations Best Solutions commercially viable Win Win

37 Transparency and publicity

38 Job Satisfaction Weak Excellent Average Project Alliance as a whole ,22 Transparency ,19 Working atmosphere ,06 Reaching Owner s objectives ,00 * Lähde: Allianssikysely, 12 hanketta (n=85), Vison 2017

39 Scores Project Lielahti-Kokemäki Railroad Renovation Vuolukiventie Kampus Renovation Tampere Tunnel Lahti Transport Terminal Järvenpää Healt Center Outcome Uninterrupted transportation during renovation Construction Site of the year new apartments 5 year warranty Opening 6 months ahead Development and Construction in a very tight schedule Successful Architecture Involvement of users Utilization of BIM and CAVE Naantali Power Plant Construction Site of the year 2016 Syvälahti School Äänekoski Railroad Jakomäki Center 6 M cheaper but much better Selection Phase in 3 months and 10 day in a very tight schedule Firs public Private partnership

40 Introduction of integration mechanisms in traditional projects Cooperation Big Rooms Shared risks and rewards Joint Development phase Team performance as a selection criteria Lean Construction processes Lean management

41 Prizes and Positive Publicity Source: Mikko A. Heiskanen, Finnish Transport Agency

42 YIT Strategy update 2016 "We've picked good visual management practices from alliances and other places, like Big room and Last planner. YIT started its Productivity Leap program in connection with its strategy update. The objective of the program is to reform the operating models so that the company will achieve 15% savings in total production costs. "This is to be achieved by developing, not by cutting." Source: Rakennuslehti

43 The prime minister s Office recommends The prime minister s rapporteur Erkki Virtanen recommends the increased use of the alliance model in governmentfunded construction projects

44 The Conclusions

45 The next steps? New type of project alliances Infrastructure management and maintenance services Real Estate Services Social and health care services ICT projects Lean production Last planner Target value design Takt time production Value stream mapping Lean management

46 Finland s experience Integration of Project Deliveries (IPD) is an effective way for launching change and to introduce Lean Construction projects Leading owner organisations must start cooperation, dialogue with the construction industry and change their procurement procedures Focus on people, challenge and educate professionals and co-operate with research institutes to adapt Lean Construction to construction projects

47 The conclusion!

48 Thank you