Photo Courtesy of UCSF
USCF's Mission Bay medical center is ahead of schedule and $200 million under budget.

When Michael Bade arrived at the University of California, San Francisco, in 2004 as director of capital programs, he walked into the middle of what he calls "a litigation storm." Four of UCSF's previous five projects were in court or mediation. What's more, many local contractors refused to bid on projects due to the school's reputation.

Bade, now assistant vice chancellor of capital programs and campus architect for UCSF, sought ways to build future projects without brewing up similar storms. His search for a better way to build led him to lean construction, which uses principles he observed during the 12 years he worked in construction in Japan. Last month, he described his experiences using lean at a Construction Users Roundtable meeting in St. Charles, Mo.

Lean strives to improve the way construction work and design is managed to create more value for customers using fewer resources. While lean has gained traction in the private sector, its use in the public sector has been slower.

"In the public sector, it's not so simple," Bade said.

Government agencies generally require a prequalification process to assemble a pool of bidders, with the award going to the lowest, a method long used to control graft. But that approach can lead to cutting corners to meet price and, potentially, an inferior product, experts say. Lean construction musters a team with a best-value proposal, potentially yielding lower costs and fewer disputes.

In 2006, the California Legislature allowed UCSF to go the best-value route, opening the door to lean project delivery. "Best-value legislation really changed the game for us," Bade said.

UCSF's next medical projects—a $254-million cardiovascular research building that came in 10 weeks early and a $123-million regeneration-medicine and stem-cell research building—used lean. The projects were so successful that UCSF is using lean for construction of its Medical Center at Mission Bay, a $1.5-billion project that is a few months ahead of schedule and $200 million under budget. Completion is expected in late 2014.

The state Legislature has since extended the best-value approach for five years and is allowing other UC campuses to use it, Bade noted.

In addition to lean project delivery, Bade uses incentives that reward companies and workers for meeting milestones. "Everybody succeeded together, or everybody failed together," he told attendees at the CURT meeting.

Mostly, they have succeeded, and each company decides how to handle the payout it receives. One employee-owned company took a long-range view of its windfall, opting to put it into the company retirement fund.