Sutter Health Unlocks the Door to A New Process
...as to how to implement it,” Pixley says. “We greatly underestimated the difficulty. It was a really tough road because it takes so long to see results.”
Lean construction principles have been around for 15 years. But until recently, few U.S. building contractors used them in part due to the absence of a relational contract, which Sutter calls the integrated form of agreement. “You can’t do lean without” an IFOA, says Jay Halleran, an NBBJ managing principal. “You can try, but it won’t work.”
Sutter found that out during its early lean-only projects. They showed promise but needed more fuel. “The IFOA is the underpinning that enables these practices to be delivered,” says Lichtig, a lawyer with McDonough Holland & Allen PC, Sacramento, and author of the IFOA, first released in early 2005.
 Sutter Health  Nadine M. Post / ENR San Carlos Center team is pleased to have a relational contract. |
The contract is more than 70 pages and in its second version as of this month. It abandons, as a document, the idea of preparation for litigation. Instead, it is based on focusing the team to concentrate on how to deliver a successful project. “It’s a very basic concept, but a paradigm so difficult to shift to because of a century of construction contracting,” says Long.
Pixley calls Long his lab rat for managing Sutter’s first lean job a 40,000-sq-ft medical office building in Davis. Long is currently program manager for the planned, $1.7-billion Cathedral Hill Hospital in San Francisco. It is Sutter’s most ambitious lean-plus project to date. Not yet approved, it already has had its share of challenges related to its budget estimate and a reshuffling of the team.
“The details of implementing an IFOA are staggering because you’ve rejiggered the entire process by which the project participants organize the project,” says Long. He advises leaving extra time for contract negotiations on any project with an IFOA.
“Will’s IFOA takes a huge step toward putting parties together in a collaborative way,” says Mark D. Herrero, chairman and CEO of Herrero Contractors Inc., San Francisco. Herrero Boldt of San Francisco, a partnership, is the CM/GC for Cathedral Hill.
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Even for smaller projects, the IFOA means adjustments. “Our concern when we first saw the prime agreement was understanding how the risk was allocated,” says Blake W. Dilsworth, a principal with the San Francisco office of KPFF. The structural engineer, currently on its second Sutter lean project San Carlos with NBBJ became a convert once it became clear to him that risk is fairly allocated.
Pixley first came across LPD in July 2003 while being shown a presentation by a vendor of solid-object-modeling software. Some slides referred to the lean model. “We kept taking the vendor back to those slides,” he says.
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On a parallel path, Lichtig, weary of 20 years of construction claims work, had been seeking a better project operating system. He found LCI on the Web and attended its first meeting on contracts, also in 2003. [Lichtig already knew Howell as an expert witness.]
Pixley and Lichtig combined forces and soon convinced Sutter’s upper management to include lean-delivery goals in its 2005 strategic plan. It wasn’t an easy sell, especially as there were few metrics to...
