Lab construction projects

April 1, 2012

Building, renovating or expanding a well-equipped, state-of-the-art medical laboratory can be an exciting and satisfying venture. But such a venture can quickly sour when planning and execution are inadequate. You may instead be confronted with excessive costs, delays which damage your operations and client relations, and a facility that does not meet expectations. But lab owners and administrators can avoid most construction problems with careful planning and robust, transparent communication.

Build a united team

Create a project team that shares common goals and can work effectively together. The principal members of this team are the lab's executive leadership; the project manager (in-house or hired for the project); the architect/engineering group, responsible for design and mechanical, electrical, and plumbing work; and the general contractor who builds the lab based on drawings and specifications developed by the architect/engineering team. To be successful, you must thoroughly understand the duties of each of these players and how they can best work together.

Your lab's leadership team must be explicit about its objectives and communicate them clearly, and the team must be willing to make timely decisions about the project. The project manager must coordinate and manage the activity of the architect/engineer and general contractor in a way that is totally focused on your interests. The project manager's duties include monitoring the schedule and budget, being first responder for the unexpected situations that often arise on construction jobs, and leading weekly general team meetings that keep everyone up-to-the-minute on job status and upcoming challenges.

The architect should be strong in both design style and in the details that will deliver a comfortable environment that meets code requirements. In most projects, 50% or more of the construction dollars are spent on things unseen-electrical and heating/ventilation/air conditioning (HVAC) infrastructure. Generally, the architect will contract with a mechanical/electrical/plumbing (MEP) engineer on your behalf. But you must qualify the engineer separately.

You need professionals who can produce the best quality for you. This means knowing how to allocate funds effectively and maximizing the value you receive from funds available for finishes.

Decide on a building model

In choosing the general contractor, decide first on the building model you will use to execute the job. The most common models are “design-bid-build” and “design/build.”

In the “design-bid-build” model (also called stipulated sum), all construction drawings and details are complete before you seek to hire a general contractor. The general contractors compete primarily on price in these situations, and as a result have little input into how a job will be constructed, little scope for creativity, and no official role in improving the job. General contractors hired on this basis sometimes overlook details, misread drawings, or simply want a larger profit margin. They have incentives to use change orders to make money, and this can make the process adversarial.

“Design/build,” on the other hand, incorporates the general contractor earlier in the process and invites his or her construction expertise into the final design stages. This may take more management and some additional risk on your part, since according to this model you hire the general contractor before construction costs are finalized, but it can deliver lower costs and superior facilities. When this relationship is properly structured, you gain an additional consultant for the same general contractor fee.

Consider which approach works for your project. “Design-bid-build” may be best for straightforward work where the details are clearly laid out and the general contractor is responsible and qualified. “Design/build” works best for fast-track jobs where a general contractor, experienced in this type of job, not only builds but troubleshoots, and can deal with uncertainties that come up.

An example of how a general contractor may be called on to solve a problem occurred in one case when an unexpected change in building sites raised a lab owner's building costs from $800,000 to $1.4 million. The general contractor intervened and negotiated with subcontractors and trimmed costs to $900,000 by changing lighting, HVAC, and technical components-while making sure everything would work as it should.

Comply with codes

Complying with building codes and passing inspections is another area where teamwork is essential. Generally, the contractor will take the lead in securing building permits and walking inspectors-electrical, HVAC, and fire marshals, for instance-through the job. An inspector can demand changes if he or she interprets the code differently than your team has interpreted it-for example, by insisting that additional lights or strobes be added, that door swings for safe exit be changed, or even that additional protection be added to combustion-proof rooms for chemical storage. On another recent job, the fire marshal threatened to withhold a certificate of occupancy because he wanted additional smoke detectors. The architect and contractor worked together to craft a solution that used battery-operated smoke detectors and strobes for additional coverage, instead of adding stations to the hard-wired system, and the lab opened on time.

Stick to the schedule

Take the schedule seriously. “On time, on budget” is the watchword of every successful construction project. Too often, though, individual departments or managers hesitate to make interim decisions needed to keep a project on track. Another not uncommon snafu is adding or changing scope during the construction process.

In one success story, a medical diagnostic lab needed to be operating six months after leasing raw space. The general contractor used his purchasing power to secure specialized HVAC units in short supply and then, when building ownership defaulted on its base building obligations to the lab, she negotiated the right to take over the work and completed all the necessary work on time.

To keep a job “on time, on budget,” pay careful attention to deadlines. A diagnostic lab in another city planned a construction job with a tight schedule but missed a deadline to pay the HVAC subcontractor, who then walked out on the job. All work stopped as other trades had to wait for HVAC completion. The delay forced the lab into holdover space after lease expiration, with high penalties and costs totaling $20,000. The lab finally realized this and paid the HVAC contractor, who was back at work after just two days, minimizing excess costs.

Develop transparency

Speed and accountability are keys to success. Within your organization, there must be a single point of contact with authority to make changes on the job. Whatever your internal processes, the architect and general contractor must know that only one member of your team is authorized to provide direction. This avoids the problem of unauthorized change orders and uncertainty about whose direction to follow. Decision-making must be prompt, because decisions required during the construction job may affect work already underway.

Hold weekly job meetings

The general contractor, architect, project manager and others whose skills are required should have regular, scheduled contact to review current progress, discuss outstanding issues, agree on responsibility for next steps, and anticipate challenges that may come up in the weeks ahead. The project manager should use the weekly job meetings to create a forum for brainstorming, evaluation, and, when needed, reminders about accountability. Meetings can be held by conference call, Skype, or in person; virtual is just as good as real, as long as the communication is there. Weekly meetings reinforce shared goals and sustain the focus on results. Following each meeting, someone should be assigned to summarize key action items and send that information out as part of meeting notes.

Controlling construction costs and delivering work on time and within budget can be accomplished by planning carefully in advance and assembling a team that is focused on a common goal and that maintains open communication throughout the process. Building or renovating a lab is rigorous and expensive, but with the right approach errors and overruns will be minimized, and you'll benefit from an excellent facility to carry your business forward.

Marisa Manley is president of Healthcare Real Estate Advisors, a nationwide real estate consulting and advisory firm. Contact her at [email protected]

This column addresses compliance, regulatory, legal, certification, and additional concerns in the lab. Readers can submit questions to [email protected].