Healthcare Facility Standards – a P3 Bid Director’s Perspective

December 8, 2014 – Toronto, Ontario

Presentation by

J. Paul Boucher, PEng MBAVP Infrastructure DevelopmentCarillion Canada Inc.

Agenda

Facility “standards” in a P3 bidding environment Why “push the boundaries” of building standards? Challenging healthcare facility standards: risks,

benefits, constraints Some Examples How can you encourage win-win proposals for

healthcare infrastructure?

Facility Standards in a P3 Bidding Environment

“Regulatory” Standards Third Party standards such as Ontario Building Code,

AODA, technical standards/certifications Requirements of “Authorities Having Jurisdiction” (e.g.,

conservation authority) Local bylaws, SPA requirements or building permit

conditions, “administrative practices” “Discretionary” Standards

Voluntary technical standards and guidelines (e.g., CSA) Project Specifications to capture evidence-based design

principles (e.g., PSOS) Intended to be output based but often prescriptive

The two extremes co-exist in many contract documents, leading to interesting conflict situations

Regulations Codes Bylaws Project Specifications

Voluntary Standards

Change

Regulatory Discretionary

Why “Push the Boundaries” of Building Standards?

Bidders are incentivized to search for design solutions that meet or exceed client objectives and yet score higher than “strict compliance” with standards (and scoring is heavily weighted to favour low cost!)

But with the advanced risk transfer of a P3 structure … Bid period for design tradeoffs is compressed Facility design-build time is compressed (time=money) Design decisions are a risk-adjusted, whole life cost/benefit assessment Oversight from many stakeholders ensures risk allocation and risk

management are appropriate

Therefore, although bidders are motivated to challenge project standards and specifications, they have an appropriate bias toward:

Schedule certainty (predictable processes and with some means to accelerate if necessary)

Cost certainty (related to schedule, too) Ability to manage risks (as opposed to “taking risks”)

“Compliance” is a complex concept: Many specifications are conflicting, ambiguous, or cannot be achieved Many are un-bounded because of they contain absolutes (all, every) or superlatives (maximize,

minimize) Most quantitative specifications have a qualitative objective “behind” them

Dimensions of Efforts to Challenge Healthcare Facility Standards

Many Few

Regulations Codes Bylaws Project Specifications

Voluntary Standards

Decision makers

Judicial ContractualChange Mechanism

Very Low HighCost and Schedule Certainty

Change

Regulatory Discretionary

Barriers to Challenging “Regulatory” Standards in a P3 Environment

Contrasts in risks/benefits: Challenging a standard can be highly uncertain with respect to

time and cost but P3 project delivery is specifically designed to minimize time and cost uncertainty!

A change in a particular standard may benefit many similar projects but P3 projects are “ring fenced” with respect to risks and benefits!

The lengthy procurement/approval process for healthcare facilities is championed by a particular hospital without incentives or resources to “trail blaze” for its peers!

The P3 bidding process requires that bidders “commit to achieve” rather than “promise to try”.

Success reinforced by objective oversight P3 project financing is only repaid if project is

successful Lenders would recognize that contractors cannot

manage the cost and time risk of changing certain types of standards

Example #1 – Piping Expansion Joint

Piping in a new Ontario hospital will be subject to thermal, seismic movement

Owners engineer specifies that traditional (but complicated) bellows or sliding expansion pipe joints must be used

Advances in materials means that a “flex loop” can be used. Product is approved by UL and TSSA, and is certified for use in Ontario

Project saves schedule, capital cost and maintenance cost

Not compliant but functionally equivalent Note that bidder required change in project

standards but not regulatory standards!

Example #2 – CCC Space Planning

A hospital wanted to deliver the therapeutic benefits of outdoor access to its Complex Continuing Care patients in its new hospital

Owners engineer specifies that CCC must be located on the ground floor

Bidder locates CCC on second floor with rooftop gardens

Bidder not compliant but … Better patient privacy Improved patient security Lower capital cost

Customer agreed to waive ground floor requirement for CCC

How Can You Encourage Win-Win P3 Proposals?

If you want your project to challenge a “regulatory” standard, do it before P3 bidding starts

Share your vision and objectives Specify the required outcomes not the inputs Question superlatives and absolutes in specifications Challenge yourself and your technical advisors … “Are

our standards biased by a pre-conceived solution?”

Win-Win from higher performance at lower cost … innovation without compromise!

“You won’t find a winner and a loser in a P3 relationship. It’s either two winners or two losers.”

Questions? To continue the dialogue…

J. Paul BoucherVP Business Development(905) 532-5394pboucher@carillion.ca

Carillion Canada Inc.7077 Keele StreetConcord, ON L4K 0B6