Prior to the $320-million Castro Valley project, Sutter Health's Digby R. Christian had never managed a hospital job, let alone one with a relational contract.

But that isn't stopping him from making integrated project delivery history in earthquake-prone California and in the U.S. For the 230,000-sq-ft Sutter Medical Center, Castro Valley near San Francisco, Christian skipped over the baby steps of IPD with a tri-party agreement and went straight to IPD with an unprecedented 11 partners sharing risk and reward.

“I wanted to be able to talk directly to the contractor, the major designers and the major trade partners,” says Christian, a senior project manager in the non-profit health-care system's facility planning and development group. “I wanted everyone to know the profit-risk scenario, which is completely alien to most,” adds Christian, who had cut his teeth on integrate project delivery on a Sutter medical office building.

When the hospital's partners penned a commitment agreement in late 2007, having 11 signers was a brand-new approach even for the Sacramento-based Sutter, which is writing the book on the paradigm shift to IPD—also called lean project delivery with a relational contract (LPD-plus). Four years later, Castro Valley's “IPD on steroids” remains the exception.

By all reports, Christian's collaborative, waste-reduction strategy—though not without considerable challenges—is working. “We have seen fewer change orders of less substance and less rework than we typically see,” says Chris Murray, supervisor for health-facilities review with the Office of Statewide Health Planning and Development, Sacramento. “They've done some wonderful things,” he adds. OSHPD is the regulatory, review and permitting agency for state health-care projects.

The 164-bed hospital, at 70% completion, is on budget and set to open six weeks early on Nov. 15, 2012.

To date, there are only 333 requests for information, when 3,000 is the norm for an equivalent conventionally built hospital, according to the Redwood City, Calif.-based DPR Construction Inc., the job's construction manager and general contractor. There are 26 owner-initiated change orders that amount to less than 1% of the project's cost, which includes furniture and equipment. About 400 is typical, says DPR.

Money Left in Contingency Fund

With most of the project bought and the handover set for July, there is $2.2 million left in the project's $5.8-million contingency fund. “This is one of the great success stories and my best project in 43 years,” says Lance Slagle, director of preconstruction in the South San Francisco office of the hospital's electrical trade partner, Morrow-Meadows Corp.

Slagle is amazed Sutter was able to take a “bunch of type-A personalities, convince them that this was a good thing in spite of their own resistance and trepidation” and mold the group into an effective team.

“It turned into a great experience and one of the best coordinated drawing packages we have ever had,” adds Edwin Najarian, a principal of structural partner TMAD TAYLOR & GAINES, Pasadena.

Sutter is applying the Castro Valley model, with lessons learned, on its 250,000-sq-ft Patient Care Pavilion for the Alta Bates Summit Medical Center, Alta Bates, Calif. The pavilion job has 12 partners; five are on the Castro Valley job, including DPR and Devenney Group Ltd. Architects, Phoenix.

The Sutter path is not an easy one, agree all involved. “The actual effort required was underestimated on both the design and construction sides,” says James Mobley, a Devenney principal. “We had to make adjustments—some were painful,” he adds. Still, he refers to the project as a “phenomenal adventure.”

Bryan E. Johnson, a principal of mechanical engineer-partner Capital Engineering Consultants Inc., Rancho Cordova, Calif., says that creating the project culture “was and at times continues to be a challenge.” Capital is an IPD veteran but not as a signatory.

“The partnership is dependent on the quality of the parties and a good leader,” adds Julie Schmidt, chief financial officer for fire-sprinkler partner Transbay Fire Protection Inc., Pleasanton, Calif. “Digby was instrumental in making this work,” she says.