Whitepaper: 06.15.2014

Turnkey Procurement

How a turnkey equipment and furniture procurement process can reduce project timelines and lower costs
by Mike Tuohy, McCarthy Vice President, LEED AP BD+C

The new $456 million Hospital Replacement at Marine Corps Base Camp Pendleton was completed in August of 2013 — receiving patients six months ahead of schedule and more than $100 million under the Government’s estimate. One of the unique reasons for this success was that the Clark/McCarthy design-build team provided a 100 percent turnkey procurement process, including full medical planning, with the design, construction and procurement of all 20,000 pieces of medical equipment and Furniture, Fixtures & Equipment (FF&E) under the same contract umbrella. This approach was the first of its kind, never before used by the Navy.

Turnkey equipment procurement offers owners a means to realize substantial benefits. With full visibility into the equipment and furniture decisions, a project team can now design and build more precisely and better advise owners about the consequences of making one decision versus another. Taking full responsibility for the procurement process allows the project team to save time and work more efficiently, directly impacting final cost and schedule.

While turnkey equipment procurement is particularly well suited to healthcare projects, it’s also appropriate for other types of facilities that contain sophisticated equipment and require space designed and built in a specific way to accommodate that equipment. Government- or taxpayer-funded projects, where there is a compressed schedule on the funds before they expire, are also strong candidates. While it is easier for a team to manage procurement under a design-build contract, an experienced contractor can also manage this under traditional project delivery with sufficient lead time and involvement at the front end. 

Scope of Responsibility
Turnkey procurement under a design-build contract means that the design-build team would serve as the owner’s representative to determine the specific equipment needs of the user groups; meet with the equipment vendors to select the best options and pricing; advise the owner on the most logical options; plan and build the spaces to accommodate the equipment; coordinate purchases and timelines; install the equipment; facilitate training of staff to use the equipment; and outline care and maintenance. As part of this process, the team should perform a “Best Value Determination” for every piece of equipment, giving the owner and the user groups an opportunity to compare various models, options, first-day pricing, maintenance contracts and lifecycle costs.

Similarly the contractor must work with the project architect to define the owner’s furniture needs and desired design theme; meet with furniture and artwork vendors; provide the owner an analysis from which they can compare various furniture brands, options, first-day pricing, maintenance contracts and lifecycle costs; design and build the space to accommodate the selected furnishings; coordinate purchases and timelines; install the furnishings; and educate the owner on the furnishings’ care and maintenance.

The Process
In the case of healthcare facilities, the process begins with the confirmation of the program documents to establish all the clinical and support spaces, together with their function and capacity. The finalized program documents determine the physical layout of the hospital. Equipment planning experts work in concert with the space planning architects to understand the physical and infrastructure requirements. The “Basis of Design” equipment is selected based upon input from clinicians as well as the equipment manufacturers. The project team should then lead a series of user-group workshops to fully vet the room contents list, review equipment specifications and validate the physical layout of the rooms.

During design development, the mechanical and electrical engineers refer to the equipment specifications to ensure that proper infrastructure is provided to each room. The team works to maximize the flexibility of the design so that future upgrades in equipment or re-purposing of the rooms will cause minimal disruption to ongoing operations.

For example, on the Hospital Replacement at Marine Corps Base Camp Pendleton, all offices, exam rooms and treatment rooms were outfitted with quick-disconnect utilities and modular cabinets so any of these rooms can be converted from an office to an exam room, and vice-versa. Once the design was finalized, the team worked with the owner to understand its funding schedule and with the equipment manufacturers to develop a procurement schedule. The goal was to make all final equipment selections at the last possible moment to utilize the most current technology without delaying construction or requiring rework.

Based on this schedule, the team performed a full and open solicitation for all the medical equipment, with a goal of having at least three options to consider for each equipment item. Once three quotes were available for each item, the team’s equipment specialists reviewed the equipment detailed in the Basis of Design and provided input about the infrastructure coordination needed based on the available equipment options. This initial verification ensured alignment of equipment and construction.

Once coordination had been validated, the project team compared the first-cost and long-term value of the equipment and prepared a Best Value Determination package for Navy Medicine West and the Medical Facilities Design Office to review. This allowed the owner to consider the equipment options without impacting the schedule or requiring re-work.

To verify the coordinated room design, the project team built a mock-up for each type of typical room. Major medical equipment was simulated by using cardboard placeholders. Once the mock-up room was ready, the clinicians reviewed the space to validate workflow, accessibility, and location of utilities, booms, lights and so forth. These physical mock-ups represented the final validation of the design and space planning.

When a final decision on the individual pieces of equipment to be procured was made by the owner, the team secured a purchase order with the manufacturer. The team then coordinated manufacturing lead times with the construction schedule to develop just-in-time delivery into the facility, eliminating the need and cost of temporary warehousing. Equipment was delivered directly to the hospital to be installed.

The project team then worked closely with the manufacturers for testing and commissioning. This effort was coordinated carefully with the user groups to ensure their full participation during installation and testing.

Benefits
The advantages of turnkey equipment and furniture procurement are numerous and appreciable:

  • Lessens burden on owner
  • Significantly reduces project cost
  • Compresses project timeline
  • Supports a better fitting and more aesthetically appealing look to the interior spaces
  • Allows for flexibility of built-out space so it can be upgraded or repurposed in the future
  • Allows flexibility to procure the latest technology without impacting cost or schedule
  • Ensures overall better product at the end of the day

Conclusion
In traditional project delivery schemes, designers must make general assumptions about the equipment and furniture that each room or area will accommodate. Because technology changes so rapidly, by the time the latest equipment arrives on a job site, the space originally designed may no longer be the right size or configured properly to accommodate. The designers then need to be re-engaged to reconfigure the room, and the construction team may need to make significant construction adjustments.

Turnkey procurement eliminates this all-to-common scenario, significantly reducing the potential for change orders. As a result, project timelines can be reduced and costs lowered. Consider this method for your next project, if equipment and furniture are primary components. Then allow your contractor to explain how they might help you approach it a better way.

About the Author
Mike Tuohy is Vice President for McCarthy, based in Newport Beach, Calif. With nearly 30 years of experience in the construction industry, Mike joined McCarthy in 2006, serving as project director prior to assuming his current role. Throughout his career, he has been involved in a variety of complex projects in healthcare, science & technology, commercial, education and industrial markets. Most recently, Mike served as the project executive on the Hospital Replacement at Marine Corps Base Camp Pendleton, playing an instrumental role in that project’s successful completion. He holds a bachelor of science in construction management from California Polytechnic State University, San Luis Obispo. Mike can be reached at mtouhy@mccarthy.com.

 

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