How IPD Projects change Finnish construction industry

Lean in Public Sector Conference LIPS 2017, Santiago, ChileJani Saarinen

History of lean construction in Finland

2006-08: 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 2010-2012 (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 2013-15 (4,5 M€)

2014: LIPS Berkeley, USA• 16 Project Alliances + 4 IPD Projects

• 1st Public Sector R&D Project 2014-16 (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 2016-18 (0,7 M€)

2017 ILCC Chennai, India / LCI Anaheim• over 60 Project Alliances + IPD Projects

• 2nd Public Sector R&D Project 2017-19 (12 pilot Projects)

• 20 participants in Anaheim from Finland

2018• Publication of new Alliance Contracts and Guidelines

3000 M€ projects in 6 yearsQ1 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

1 Lielahti-Kokemäki radan peruskorjaus 100

2 Vuolukiventie 1b:n peruskorjaus 18

3 Tampereen Rantatunneli 180

4 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 28

12 As. Oy Gunillankallio 10 13

13 VTT:n ydinturvallisuustalo 2) 30

14 Joensuun oikeus- ja poliisitalo 2) 30

15 Naantalin voimalaitoksen allianssiurakka 45

16 Yliopistonkatu 4 peruskorjaus 25

17 Kainuun keskussairaalan peruskorjaus ja laajennus 120

18 VT 6 peruskorjaus 76

19 Kempeleen TK 14

20 Hiukkavaaran monitoimitalo 24

21 LaNa (Lasten ja naisten sairaala) 5) 60

22 Kotkan poliisitalo 2) 20

23 Espoonlahden kirkko 6) 8

24 Tampereen raitiotie 280

25 Turun Syvälahden koulun allianssiurakka 28

26 Finavian Asematason allianssiurakka 100

27 Jakomäen keskiosan kehittäminen 50

28 Tammelan stadion 60

29 Pohjankartanon koulusaneerausohjelma 7) 10

30 Pitkäkankaan koulusaneerausohjelma 7) 10

31 Finavian terminaalilaajennus 6) 200

32 Harppuunakortteli 7) 100

33 Äänekosken radan peruskorjaus 80

34 Rataverkon KP2-palveluallianssi 25

35 Tesoman hyvinvointipalvelut 140

37 Suomenlinnan huoltotunneli 7

38 Ylimaarian koulu 22

39 Raide-Jokeri 275

40 Lahden eteläinen kehätie - Allianssi 150

41 Vantaan koulut 2 kpl 40

42 Kuopion uusi sairaala 120

43 Tiestötietojärjestelmä- ja palvelut 8

44 Tikkurilan kirkko 44

44 Keravanjoen yhtenäiskoulu 32

45 Vaasan sairaala H-uudisrakennus 110

46 Pakilan palvelurkanneukset -allianssi 40

47 Infra-alan kustannuslaskentajärjestelmä 8

48 Kruunusillat-allianssi 120

Total 2981

2015 2016 2017 Project

M€ 2011 2012 2013 2014

Integration in project delivery

An example of leading organizations

The development of public procurement

Joint development projects & education

The results achieved

Integration in project delivery

Project alliances / Integrated project delivery

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

Owner

Designer Team

Contractor Team

0

10

20

30

40

50

60

70

80

90

100

1 2 3 4 5 6 7 8 9 10 11 12 13 14

Potential in house renovation?

0

10

20

30

40

50

60

70

80

90

100

1 2 3 4 5 6 7 8 9

Sources of waste indesign and construction

Owner’s goalsUser needs

Separation of design and construction

Source: KR TUKEFIN 2011-12, 13 Client, Designer and Construction organizations, ~ 700 respondents

Expertise in procurement and contract management

60 % potential in use

Integration of teams and processes

Organisation& Big Room

Processes Real estate & infrastructure

systems

High Performance Building / Infra

Simulation & Visualisation

Cooperation & Collaboration

Measurable Impacts

Production Management

Integrated Systems

Integrated contracts – Integrated commercial model – integrated action plans

Information - resources – processes - technology

Source: DPR Construction

InformationBIM

Early involvement

Aika

Co

mm

on

un

der

stan

din

g

Contractor

< 100 %

Sub contractors

• Owner’s plans• Owners obligations• Risk transfer• Traditional

contracting

Architect

Planners

Aika

< 100 %

• Integrated team• Shared

obligations• Shared risks• Integrated and

open contracts

Co

mm

on

un

der

stan

din

gArchitect

Planners

Contractor

Sub contractors

Full Alliance Contract Integrated team Alliance contract Compensation model

Delivery of Services Design and production development

and innovation Change management

Interim Alliance Contract

Project planning and design Alliance team

development Develop target

outturn cost (TOC), time schedule and project plan

Key performance indicators

Draft documents Preliminary plans Alliance contract Compensation

model

Selection of the best parties by competence and price (Fee)

Objectives & constraints

Decision of project delivery model

Source: Jim Ross, Alliance Contracting, lessons from the Australian experience, LIPS-conference in Karlsruhe 9.-11.12.2009

Common development phaseSelection

Phase Project AllianceStrategy

Owners want to proceed?

Development Phase

Implementation Phase

Guarantee and

Maintenance Phase

2TEAMS

TOOLS

Big rooms in major projects

PROCESSES

Value-added mechanisms in IPD’s

Source: Patina Project, P. Lahdenperä, VTT 2015, www.vtt.fi/sites/patina/en

Lean thinking

Last planner System

BIM & VDC & CAVE

Big room environments

Target Value Design / Delivery

Prefabrication

Takt time production

An example of leading organizations

Leading public organizations

Promoting change An example of leading owner

organizations and people

Dialogue between the owner organizations

Dialogue with the industry

Liekki-project (Railway renovation) 2011-15, 100 M€Finnish transportation Agency

Vuolukiventie Campus renovation 18 M€, 2011-13University of Helsinki, Center for the Premises and Facilities

Tampere Tunnel 2011-17, 180 M€City of Tampere, Finnish Transportation Agency

First pilot projects 2011

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 %)

Vuolukiventie Campus Renovation

Project Renovation (14.770 m2) and new construction (1000 m2) 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

6/2012-12/2013 + 5 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 300.000 €

Outcome Innovations in space solutions > 27 new apartments 0-defect completion Exceeded environment and life-cycle objectives

Project 2 x one-way 2,3 km road tunnel Target cost 180,3 M€ Development phase 6/2012 – 9/2013,

Implementation period 10/2013 – 11/2016

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

Tampere Tunnel

Project 300 M€ Terminal Investment Renovation of 157.000 m2 + 25.000 m2 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

Helsinki Airport Terminal

0 %

10 %

20 %

30 %

40 %

50 %

60 %

70 %

80 %

90 %

100 %

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56

Source: FIRA 2015

2 week pipeline renovation2015 As Oy Haukipato: 3 months 2016 As Oy Satumaanpolku: 2 weeks

Empty sites 75% of the time?

The development of public procurement

Cheapest Price ≠ Value for Money

Open procedure

Cheapest price

Negotiated procedure

Team performance Project competence Margin / FeeRestricted procedure

Price Quality

2009 2011 2013 2015 2017

Use of negotiated procedure

Market dialogue

Procurement announcement

Notice of intent

Prequalification Procurement decision

Draft Tenders

Negotiations

Final Tenders

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

Alternative ways to negotiate

Traditional contract negotiations Workshops

Teams instead of individual companies

O

designers and builders as a one team

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

O

designers and builders as two different teams

Joint development projects & education

Consti Fira Granlund Lemmin-käinen

Morenia Talokeskus Sweco VianovaFinland

WSP Group

Liikenne-virasto

Common Research Agenda

Two Joint Lean Construction R&D Projects

LCI 1 2010-12 (3,0 M€)

LCI 2 2013-15 (4,5 M€)

10 Private Companies, Finnish Transport Agency, University of Oulu and Finnish Funding Agency for Innovation

Lean construction R&D projects

Mission

Leading public owners + service

providers

Joint learning by using Pilot

projects

Developing Integrated Project Deliver models for

Finnish market

Finland #1 Using Integrated Project

Delivery methods in large capital projectsMarket and services

Public Owners: IPT2 Project

2014-16 Project level

Foundation

• 11 Public organizations• 11 Pilot Projects• IPD Procurement• IPD Agreements and

commercial models• IPD phases• Lean principles and some

tools

IPT

• 13 Public Organization• 13 Pilot Projects• Building new culture• Challenging and educating

people• Lean processes and tools• Creating value and reducing

waste

Producing value and improving productivity

IPT2

2017-19 Organization level

• New strategies• New business models and

opportunities• Focus to operational and

lifecycle value• Something we have not seen

yet

#1 in Using Integrated Project

KIRA #1

Industry level

Lean Production System

Joint R&D Program 2016-18

Private Companies & 2 Universities

Joint budget 500.000 €

Companies together over 2 M€

Private companies: RAIN project

Academic research

Research and papers Number

Doctoral thesis 4

Master Thesis 30-40

Lower academic thesis 30-40

Scientific articles 10-120

Conference papers several dozen

Presentations > 100

The Results Achieved

Innovations

0

10

20

30

40

50

60

70

80

Roads Bridges Tunnel Technicalsystems

Others

4338

45

18 19

13

11

26

22

4

Implementation phase Development phase

Ideas and innovations in Tampere Tunnel Project

Most Capable Teams

Innovations

Best Solutions

commercially viable

Win – Win

Value for Money ≠ Cheapest Price

Transparency and publicity

Job Satisfaction

* Lähde: Allianssikysely, 12 hanketta (n=85), Vison 2017

Weak 1 2 3 4 5 Excellent Average

Project Alliance as a whole 0 0 8 50 27 4,22

Transparency 0 3 9 35 30 4,19

Working atmosphere 0 4 9 48 22 4,06

Reaching Owner’s objectives 0 0 16 43 16 4,00

ScoresProject Outcome

Lielahti-Kokemäki Railroad Renovation

Uninterrupted transportation during renovationConstruction Site of the year 2011

Vuolukiventie Kampus Renovation27 new apartments5 year warranty

Tampere Tunnel Opening 6 months ahead

Lahti Transport TerminalDevelopment and Construction in a very tight scheduleSuccessful Architecture

Järvenpää Healt CenterInvolvement of usersUtilization of BIM and CAVE

Naantali Power Plant Construction Site of the year 2016

Syvälahti School ”6 M€ cheaper but much better”

Äänekoski RailroadSelection Phase in 3 months and 10 day in a very tight schedule

Jakomäki Center Firs public Private partnership

Cooperation

Big Rooms

Shared risks and rewards

Joint Development phase

Team performance as a selection criteria

Lean Construction processes

Lean management

Introduction of integration mechanisms in traditional projects

Prizes and Positive Publicity

Source: Mikko A. Heiskanen, Finnish Transport Agency

"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."

YIT Strategy update 2016

Source: Rakennuslehti 1.12.2017

The prime minister’s Office recommends

The prime minister’s rapporteur Erkki Virtanen recommends the increased use

of the alliance model in government-funded construction projects

The Conclusions

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

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

The conclusion!

Thank you