Chapter 08: The Three-Building Plan: Building Relationships, Facing Challenges, Creating the Project Core Team and the Design-Build System
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Mr. Daigneau discusses the first steps he took on the Three-Building Project. He began by building direct relationships with those who would be using the buildings. He explains that he didn't want users to call executive management; he wanted to hear from them directly. He notes that when he arrived, there was a Department of Design and Engineering that users did not trust; the management level of Physical Plant was also perceived as non-responsive. His goal was to shorten communication channels so that there were no more than three levels between him and the customer. Mr. Daigneau explains that he pulled together a Facilities Management Design Group comprised of all supervisors who would plan design for the future. He also met with every section chief at his/her office to say, "Call me directly if you have a problem."
Mr. Daigneau next explains some structural problems that he addressed. Construction management was very bureaucratically structured, with all building contracts held by a management company out of Austin, Texas. This led to a near "train wreck" in the Three-Building Project. He addressed this by developing a new team and working out a new system for bidding contracts. He created the Project Core Team (a system that existed until he left MD Anderson) that would include plant operations, planning, design, construction, and executive management.
Mr. Daigneau next talks about the problems created by the "hard bid" contract system and how it could create problems with delays on the part of the architect or other contractors. He also explains how worked successfully to modernize the construction contracting rules in Texas, changing legislation to allow a 2-contract system, "hard bid" and "design-build." He explains the old and new systems and also tells an anecdote: MD Anderson successfully filed an errors and omissions claim against an architect (the problem was fallout from the contract system) and won the case 'the first win of its kind in Texas. MD Anderson uses hard bid contracts on small projects and a design-build system with a construction manager for large scale projects.
Identifier
DaigneauW_01_20131003_C08
Publication Date
10-3-2013
Publisher
The Making Cancer History® Voices Oral History Collection, The University of Texas MD Anderson Cancer Center
City
Houston, Texas
Interview Session
Topics Covered
The University of Texas MD Anderson Cancer Center Building the Institution; Overview; MD Anderson History; MD Anderson Snapshot; MD Anderson Past; Institutional Processes; Critical Perspectives on MD Anderson; Building/Transforming the Institution; Multi-disciplinary Approaches; Growth and/or Change; Obstacles, Challenges; Institutional Politics; Institutional Mission and Values; MD Anderson Culture; Professional Practice; The Professional at Work
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.
Disciplines
History of Science, Technology, and Medicine | Oncology | Oral History
Transcript
Tacey Ann Rosolowski, PhD
So what were your first moves in this job—your first day on the job?
William Daigneau, MBA
You know, this all evolved over time, but obviously when you’re the first—a new person—you have to build relationships. You have to develop—you know—because nobody knows you. They don’t know what you can do. They’re certainly not going to trust you. They have no basis to trust you. So you’ve got to basically show that you—as I say—you can fix things, you can get results, and you’ve got to build your relationships.
One thing I’d learned was the importance of those relationships, because the—I used to tell our folks—even before Anderson, but when I got to Anderson, I really communicated this—we do not want the clinical chiefs, the department heads, calling up Dr. LeMaistre, David Bachrach, or Dr. Becker. We want them to feel very comfortable whenever they have any problem at all to call us directly, and we’re going to fix it. We’re not going to argue with them. We’re not going to tell them it’s against policy. We’re going to find a solution. It’s got to be within policy or regulations, but it’s going to solve their problem. And they’re going to feel comfortable saying, “Well, I’ll just pick up the phone and I’ll call.”
Tacey Ann Rosolowski, PhD
Now, what sorts of problems were they calling—or did you anticipate that they would call with?
William Daigneau, MBA
Well, at the time that I got there, there was a unit called Design and Engineering. They had just bailed it out of several projects that had run over budget. They were in the hole in terms of a recharge unit. They didn’t have a real good reputation on the campus. Radiation Oncology didn’t really want them doing projects for them. Diagnostic Imaging didn’t want them doing projects for them. So the Physical Plant was viewed as kind of nonresponsive at the management level, but most people learned to bypass management and deal directly with a lot of the workers because they would get things done for them. But you don’t want to get into the management group because you’re going to get this well-we-can’t-do-that-type of response. The best respected group was in Environmental Health and Safety because they basically review it as necessary and you could work with them. Then there was the Major Building Program, which was “viewed as off running, doing their thing without any input.” “Nobody’s talking to us about this stuff.”
I had found in the two years prior, there were a lot of things that were fixable there in terms of improving performance and relationships. By then part of my management theory had grown to the point of I wanted to shorten communication channels as much—so that affected a number of levels in the management. So my goal was there should be only basically three levels between myself—including myself as one of them—and the customer—the worker, a supervisor, me. (laughs) That’s our goal, because that way communication—distortion in the flow of communication gets reduced, and that way we can get the things faster and better and understand customer needs. If we can’t do what we want exactly, what can we do? How are we going to do it? When are we going to do it? All that gets collapsed. So one of the first things I did was create what we call the Facilities Management Design Group, and it basically was all the existing supervisors, including the people working in the hospital, off in their own thing, the people in research working on their own thing—Mary Ann’s group. I pulled everybody together and I said, “We’re going to design a facilities management group for the future, in a whole organization, and how we want it to look. Not looking back at what’s wrong; just looking forward. You folks know what works well and what doesn’t. So if we were starting with a blank sheet of paper, how would we design this organization?” So that was one of the first things I did on the facilities group side.
On the institutional side, I made a point of establishing—introducing myself, meeting every section chief. I told my assistant, “Schedule the meetings at their offices because it will help me orient myself to the campus,” and furthermore, they shouldn’t be coming to my office. I’m not king here. I’m working for them. So I met with every division—Dr. [William A.] Murphy—every section chief, every vice president. I introduced myself. Before I left I said, “Anything, absolutely anything you have a problem with, here’s my card. Call me directly. I assure you I’ll fix it.” I had only one exception to that in all the years I was there where I failed to do what I said, and it’s still emblazoned in my memory, by the way.
So those are the two major things. I started on the facilities side of the group. I started making connections with the institution. One of the issues was to try to get my arms around—because—and I won’t go through the details of this, but the structure of construction management within the University of Texas was highly bureaucratic. They had a group out of Austin called OFPC—they still do—that would actually come in and run the construction program. All the contracts with the architect and the contractors were held by OFPC, not by the institution. And then there was the institution that had its group—like in this case, the Major Building Program—which was trying to interface with all of the eventual users, which OFPC didn’t really care about. They were just, “Get out of my way. Let me build this for you then we’ll leave.” Well, that doesn’t work. So we had Major Building Program, OFPC—you know—the existing plant operations and all of that and then all of the people we were building this for. [Dr. Donna] Sollenberger [Oral History Interview], Dr. [Waun Ki] Hong [Oral History Interview], Dr. [Charles] LeMaistre [Oral History Interview], Dr. [Frederick] Becker [Oral History Interview], all the department heads, section chiefs—we’re trying to build this for all these people. We have this next group called Major Building Program, we have OFPC, and we have the design construction group for the physical plant organization. This can’t work. I mean, I could see it coming. The train wreck was coming. (laughs) It almost came, by the way. It almost came. So I had to deal with that, and I had to deal with that early.
Tacey Ann Rosolowski, PhD
And how did you resolve that problem?
William Daigneau, MBA
Well, it started something that exists to this day. We created, at the time, what was called the core team—the project core team. And now every project at Anderson—well, up until the new management—but until I left, for every project we created what was called the core team because it worked so well. The principle of the core team was you had somebody that represented the user, you had somebody who represented the plant operations, you had somebody who represented the planning, design, construction activity, and you had an executive, and the executive was basically the tiebreaker. When we can’t get agreement, we’ve still got to make a decision. We’ve got to do something.
So the core team, in the case of the Major Building Program, consisted of Mary Ann Newman, who because of her background with strategic planning I viewed as primarily representing the users. There was the head of OFPC, Jim Broaddus, who kind of represented the design and construction group. There was, in this case, the onsite senior project manager, which managed the project from day to day onsite, and myself—the four of us. And we would meet on a regular basis to go over every aspect of the project. And that was my way of trying to get the decision making to occur, stop the wasteful finger-pointing and blaming, create more of a coherent team. We’re all working to build this, folks. If this is not successful, we are all gone. (laughs) So I created the core team, and that proved very effective, to the point where we used that on every project from then on, over eighteen years. Every project had a core team. So initially, that’s how I got—you know—
Now, the train wreck we almost avoided was the way the OFPC had set this up, they had things like design-build—construction management contracts were not legal in Texas. Everything was hard bid like highways. Buildings were hard bid. In order to try to get the project underway as quickly as possible because of this money issue, OFPC had decided to break the contract into two pieces, what’s called shell and core, which is basically the foundation, structure, and outside of the building and the build out, which is basically finishing off the interior of the building. So one contract was let to one contractor; the second one was let to another contractor. Well, that’s a train wreck right there, just waiting.
Tacey Ann Rosolowski, PhD
And what kinds of things can happen in a situation like that?
William Daigneau, MBA
Well, what happens is basically a contractor warrants their work for a year after construction. What happens when you have two contracts like that—hard bid contracts—is you have to draw a defining line in the project. Okay, so I finished the shell and core, so the contractor that is now going to do the build out inside has to say, “I accept all of this.” Because the problem is, a year later, the walls start cracking, well, is it bad drywall work? Is it the foundations? Is it the structure? Who is at fault here? Is it something that the finish contractor did to the structure that caused everything to crack? Who’s at fault here? Who do you, as the owner, go to and say, “Fix this for me”? Because you have two contractors saying—
Tacey Ann Rosolowski, PhD
Not me.
William Daigneau, MBA
Not me. It must have been that guy. So it becomes a legal and financial—most owners finally give up and just fix it or go through lengthy legal battles trying to get it taken care of, which are expensive. So you want to avoid all that if you can.
So right off the bat—and then there’s the whole thing of claims. If you’re not making decisions in a timely manner, you hold up the contractor. It leads to the contractor coming back and saying, “This cost me money. I want you to pay me more. Because you took so long and delayed the work, I had to pay extra for workers. I got charged extra for storing stuff. I had to keep my staff on there longer when they could have been on another project. I want you to pay me this stuff.” So there are claims. So we got hit with two claims on that project—one from the first contractor on the shell and core, which at the time I couldn’t do much about, so we settled. Negotiated down as much as we could, but we paid a claim there.
But then we got hit with a second claim from the second contractor, and that one I could do something about because I had had my core team in place by then, and we had a lot of documentation. So we actually went to—first time ever in Texas—filed an Errors and Omissions claim against the architect. We didn’t get an enormous settlement, but we got about half of the amount the contractor claimed. So when we ended up paying the contractor, very little came out of—by the time we negotiated with the contractor, very little came out of the pocket of MD Anderson. They paid a second claim, which is a story in itself because I’m telling OFPC, “Look, they’re claiming delay. Well, all the delays are caused by the architect’s plans. Let’s file against Errors and Omissions.” “Oh, we’ve never done that.” “Then why do you have it in the contracts if you’ve never used it?” Well, we find that there’s always something owner—” all these namby-pamby excuses. So I pressed. I said, “We’re going to go to a higher level because Anderson fully believes this is an Errors and Omission claim.” I finally pressed very firmly on that, and we filed the claim—the first ever by the University of Texas System—the first ever—Errors and Omission. Then of course, after that, then it became more common, but up until then they had never done it. So then on the second claim we paid very little out of our pocket on that one because we got it from the architect’s insurance company.
Tacey Ann Rosolowski, PhD
Interesting. So were you able to collapse the contracts for this project?
William Daigneau, MBA
No, it was too late. Because Jim Broaddus of the OFPC, he was relatively—he’d come from the design-build that the navy had been doing. He’d been working in the navy and had some experience with that and, let’s call it, construction management at-risk contracts. He was familiar with those kinds of contracts. So he lobbied—it was interesting. It was one of the partnerships that we—you know—because I got to know him. I didn’t have an adversarial relationship with him at all because he was very cooperative. He wanted to improve OFPC. And one of the things he decided was that we needed to modernize the state of Texas contracting rules. So he took it upon himself, using the power of the University of Texas, to get a law through that would allow design-build and construction management at risk. And the part that some of us played in all of that was to lobby our local representatives to support the bill. So we had our government relations folks, because they ask every year what are the list of things that you want through the legislative session. Right there, we had our modernization of the construction contracting rules. And luckily, that got passed. So from then on we could use construction management at risk and design-build as well as hard bid, and it changed the landscape dramatically for us.
Tacey Ann Rosolowski, PhD
Now, I’m kind of asking this question late in the day, but can you describe the difference between those two contract systems?
William Daigneau, MBA
Okay. Hard bid basically is what’s called design, bid, and build. You retain an architect to design the project for you, and they create specifications. You then publicly bid it, so anyone in the state can submit a bid for the work. And then you, what they call, award to the lowest responsible bidder. Now, that’s a little tricky. What does “responsible bidder” mean? Well, you go through their financials. You see how many times they’ve defaulted in the past. You get their reputation. But it’s really subjective. So usually, in practice, it was the low bidder got it, whoever the low bidder was. And then you award a contractor a contract, and then you build it through that contractor. So you have one general contractor that has a contract to build your building or roadway or whatever. You have one architect or engineer that created the plans and specifications for it, and you bid it. That’s the traditional way.
The two innovations were construction manager at risk—CMR. And there, you hire a firm that doesn’t necessarily build it. That firm is responsible for managing the construction for you. You still retain your own architect. They prepare plans and specs. But instead of a hard bid, or bidding it as a whole project, the construction manager basically gives you a guaranteed maximum price that says it should cost you no more than this, and I’ll guarantee that. And then the construction management firm goes out and bids the project in pieces. So they’ll award a contract to a foundation contractor, and they provide all the coordination. They provide all the warrant. So the construction manager—that’s why they call it risk—acts like a general contractor, but you, as owner, participate with them in the bidding of the entire construction of the project to different contractors.
Tacey Ann Rosolowski, PhD
So you better really be able to rely on that group.
William Daigneau, MBA
Yeah. I mean, the selection is not based on bid. You select the construction manager based on qualifications. And then you negotiate the fee that they’ll charge you. So that’s the second way. And then the third way is called design-build, and that is where you hire a firm and that firm hires the architect and the contractors and you only have one contract to build the whole thing. They manage the architect. They manage all the subcontractors. They provide the warranty to the building, insurance, bonds, all of that. So those are the two additions to the contracting process. At Anderson, we almost entirely used—only on hard bid, on small projects would we use hard bid anymore. Almost entirely we relied on design-build and construction management at risk, from that day forward. So we never had a contract like that again.
Recommended Citation
Daigneau, William and Rosolowski, Tacey A. PhD, "Chapter 08: The Three-Building Plan: Building Relationships, Facing Challenges, Creating the Project Core Team and the Design-Build System" (2013). Interview Chapters. 131.
https://openworks.mdanderson.org/mchv_interviewchapters/131
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