Envisioning the Project Organization Structure

Contractors and suppliers will need to be managed from the start of facility design through production facility startup. An important first step in this is deciding how the project team will be organized and extended to ensure successful project delivery, including assessing the company’s internal resources and experience to successfully deliver this unique project. Below are some of the options a project owner has for the delivery of capital improvement initiatives.

Managing the Project Internally

Managing the capital project internally may be an option.  Internal resources need to include project management, design, validation, construction management, and general contracting personnel with proven experience and the bandwidth realistically required to deliver the capital project plan.

Depending on the size of the capital improvement initiative being considered, temporary changes may need to be made in the company’s internal organization to ensure project success, including setting up or improving an existing Project Management Office (PMO). A well-organized PMO can focus on successful project delivery by deploying proven processes like project scope charters, progress monitoring tools, cost management, communication plans, and resource tracking.

Design firms and construction management entities who are contracted for the delivery of the project may be asked to report the project’s status through the PMO if an internal PMO is used as the point of contact for the project.

Hiring an Owner’s Consultant

An Owner’s Consultant (also known as a Design-Build Consultant, Owner’s Advisor, or Owner’s Agent), that has a record of accomplishment of successful delivery of similar type projects and is contracted directly with the owner, provides several benefits. The consultant’s expertise is a source of reliable project management information for complex and critical project elements, such as the selection of a project delivery method (CMAR, Design-Bid-Build, or other models), selection criteria for contractors and other consultants, management of change orders and identification of problems, as well as independent cost, schedule, and compliance reviews for the project.

A design-build consultant is experienced in preventing critical components of the project from being missed, identifying project issues to the owner in a timely fashion, and explaining complex or contentious components of the project to staff and leadership, all of which allow the owner to remain impartial and ahead of issues.

Contracting with a Design-Build Firm

Hiring a company that will be fully responsible for delivering the project in a turnkey fashion, from design completion to facility validation, including meeting budget and schedule targets and ensuring GMP compliance, is another option. A design-build firm can work alongside the project owners from the very beginning of the project to identify cost, scope, and schedule objectives, and directly manage the design and construction of the project so that you, as the owner, do not have to reconfigure your organization for the delivery of a one-time capital project. To mitigate the risk of defective design, materials, or construction, changes in work, and defensive engineering that can occur with the Design-Build project delivery method, hiring a separate Owner’s Consultant that reports to and that solely represents the interests of the owner is often advised.

Ensuring the Project Delivery Team has the Competencies Needed

Whether provided by an owner’s internal management team or by contractors, the project owner will need to ensure that their team has certain competencies and experience to deliver a significant capital improvement project, as well as the bandwidth to provide those competencies.

Project management, risk analysis, and schedule compliance competencies

Project management and scheduling expertise equal with the project’s size and complexity often makes the difference between project success and failure. To ensure success, project managers and schedulers collaborating on these complex projects must be proficient in the following competencies:

Selecting and implementing an adequate project management software platform

Project management information systems (PMIS), as well as other software systems, may need to change to accommodate the scale of the new initiative. If internal team members do not have the time or relevant experience to efficiently track the progress of a significant capital improvement project, the owner’s consultant can aid with the selection and implementation of software platforms based on prior successful deployments.

Establishing project metrics and progress information

Knowing the right Key Performance Indicators (KPIs) to track allows an owner to understand the ongoing status of the project. Having staff at hand whose role it is to both collect and interpret project progress information and create meaningful and actionable metrics helps an owner address project needs on time.

Processes modifications

To successfully manage a project, one which significantly deviates from the owner’s day-to-day business, on time and on budget, existing processes such as workflows, communication protocols, and team collaboration may need enhancements or project-specific modifications.

Risk analysis competencies

Expertise on how project risks that have the potential to impact the project’s budget and/or schedule will be handled is beneficial, including which risks will be quantified and then either accepted, avoided, mitigated, or transferred.

Claims avoidance strategies

Successful owner avoidance of construction claims starts before contracts are signed and continues throughout the life of a project. Expertise in this field such as selection of delay analysis methodologies to be written into contracts, use of best practices in cost and schedule information collection, and how to communicate with contractors in ways that will avoid later disagreements on entitlement can lead to more successful owner outcomes for delay claims.

Cost and budget tracking competencies

Processes and systems for how costs and budgets will be tracked and reported on are already in place within the owner’s organization, but these may need to be expanded or modified to fit the scope of the initiative.

Change order management

Inevitably projects will have change events and change notices as the project develops. Setting up methods for and tracking these against the budget is critical for understanding the cost and schedule projections for the project.

Cost KPIs establishment and tracking

Being able to understand, at a glance, the status of project costs and budgets is a benefit as the owner considers the best use of appropriated funds or looks forward to other associated scope.

Value engineering

When substitutions are acceptable or alternatives should be considered on a project, having a structured and industry-validated method of tracking these value-engineered items allows an owner to promote the alternatives without affecting project delivery or compliance with regulatory requirements.

Construction management competencies

A construction manager with the skill to oversee designers, specialty consultants, trade subcontractors, and suppliers, is essential to the successful completion of a capital improvements pharmaceutical or biotechnological project. There are many companies in the construction industry that have successfully managed these types of projects from conception to validation. A construction management entity that acts on behalf of the owner brings experience and expertise that can be leveraged from day one, including recommendations for decisions on the use of Building Information Modeling (BIM) and 4D scheduling /Virtual Design & Construction (VDC) to avoid installation problems, choices between stick-build or modular construction, and paths of travel. Selecting a company that has a record of success will increase the chances that your project will be delivered to meet the owner’s definition of success.

GMP compliance

Augmenting the current compliance and validation teams with added resources to support the scale of this new initiative is necessary. The FDA expects that pharmaceutical companies will improve their manufacturing standards as what is considered ‘current’ evolves, and what was considered GMP in the past may not be cGMP today. Project teams that have the competency to select proven state-of-the-art equipment and technology which will ensure product quality and purity can ensure that the best of current practice is used to the owner’s benefit. Experience in supporting project teams with the complexities of cleanroom construction, and commissioning, validating, and qualifying a capacity expansion is a specialized skill set that will ensure facility readiness for product launch.

Next Steps

Equipped with the above knowledge, what are some of the next steps a project owner can take on the path to successful project delivery?

Clarify project goals (time-to-market speed, net present value maximization, or other goals), envision what a successful project delivery looks like, and work back to what needs to be done today to ensure that the company can achieve these stated goals.

Build a project team, whether it is securing the commitment of internal resources or external consultants who will provide expert services for the duration of the contract.

What PMA Does

PMA helps pharmaceutical and biotechnology companies deliver compliance-driven projects on time and on budget by establishing proven project processes and tools on day one and supporting projects throughout their entire lifecycle. In this competitive landscape, flexibility and speed to market are just a few of the challenges we can help owners like you overcome. Please review some of our recent projects and solutions provided for the pharmaceutical industry. As an owner, when looking to confidently expand your pharmaceutical and/or biotechnological operations, let our practiced experts help you along the way.

The post Construction in the Pharmaceutical and Biotechnology Sector appeared first on PMA Consultants.

As a manager or executive of a new or expanding manufacturing facility that was shut down mid-construction by the COVID-19 crisis, you need to strategize to put your company in a better position. COVID-19 has not only caused a health crisis, but also a financial crisis.

Competitors, of course, are facing similar challenges with their production facilities. Doing the research necessary will ensure you are first out of the gate as facility construction transitions back to normal.

As an Owner, what are some of the issues to be thinking of for a successful project restart? Below is a list of important considerations.

Key Ideas:

• Assess the current and future financial health of the company and project.
• Reassess capital project plans and net present value.
• Document pre and post-shutdown cost and schedule status.
• Develop concrete plans for best, likely, and worst-case scenarios.
• Review and modify pre-pandemic project work and construction processes.
• Give notices and keep communication and collaboration channels open.
• Secure materials and labor resources well ahead of planned restarts.

Assessing Business Considerations

Key considerations for Owners when assessing project impacts from changes to the business environment and planning for subsequent mitigations may include:

Risk Mitigation

Conducting scenario planning and risk assessments with leadership and project management team members during and post-shutdown may better assure planning for all contingencies. Developing action plans for all scenarios, both optimistic and worst case, including financial challenges and loss of critical project inputs, can ensure that gains are maximized and losses mitigated as evolving situations allow.

Owners who instruct their teams to maintain and create records of project status prior to and during project shutdown and after startup may better be able to support their interests, such as in the case of future construction claims.

Process Changes

A review of impacts from telework and travel restrictions can allow Owners to surmount administrative challenges when projects resume. For example, wet signatures may need to be replaced with digital signatures and VPN networks may need to be extended. Documents that are specified to be delivered in hard copy may need to be delivered digitally to ensure the intended outcome of the process is met.

Implementing the CDC’s recommendation to identify a workplace coordinator who is responsible for COVID-19 issues may have already been completed in your organization. Owners who align these responsible persons with their counterparts in contractor organizations and instruct these coordinators on what is expected to be tracked, identified, and communicated may be better able to align on-site responses to pandemic impacts.

The CDC also strongly encourages coordination with state and local health officials so that timely and accurate information can be used to make appropriate business responses.

Financial Considerations

Depending on the situation, project financing may be at risk under certain economic conditions as the COVID-19 crisis unfolds. Owners who proactively work with their finance and legal team members to assess impacts that may change financing on current project contracts or future project viability may be able to preempt consequent cascading effects.

Likewise, checking on contractor’s financial viability may allow Owners to ensure that project contractors, subcontractors, and vendors have not been impacted by the COVID-19 crisis in a way that might materially affect their continued obligations to a project.

Ascertain if a contractor is receiving reimbursement through federal government stimulus packages for COVID-19 impacts. Open and collaborative communication will promote more optimal project outcomes.

In uncertain circumstances, creative thinking by management, such as advances or faster payments to allow key contractors to remain viable when the project restarts, may lead to a higher chance of project success than following the trajectory of pre-shutdown policies.

In addition to direct impacts of potential cost increases and schedule delays to project return on investment, market conditions may have also changed since the start of the pandemic. Reassessing the project’s Net Present Value for the project with executive team members can ensure that allocation of capital for the completion of the project remains a sound investment given the current stage of construction and contractual obligations.

Assessing Project Considerations

Project-specific areas that may be important to assess are:

Materials and Equipment

Price Escalations

Owners might see post-crisis costs for materials and equipment vary from pre-crisis levels and may need to work with their planning staff to ensure that these changes are budgeted for. Possible increases to project cost can be included in any reassessment of business rationale for the project. Cost spikes may cause some projects to gain more investment value if they are postponed pending expected future cost stabilization or to become unprofitable compared to their original capital plan.

Project Owners who work with their accounting and finance teams to separate and track costs for remobilization efforts, ensure retention of supporting documentation, and instruct contractors to follow these procedures can prevent mixing of costs in the future. This can allow for quick document assembly if required by future government legislation offering offsets or compensation for these costs.

Material and Equipment Shortages

Many manufacturing projects across the US and the world might be resuming facility construction at the same time, putting a strain on the already disrupted supply chains of both basic and advanced materials and equipment. Owners should be aware that certain materials may not be in supply for extended periods of time after current stocks run out.

Similarly, Owners who ensure that those responsible for scheduling arrivals of heavy equipment are finalizing those orders earlier than they had prior to the COVID-19 crisis may be better able to limit possible project delays.

If shortages can be reasonably anticipated to impact the project, Owners may consider working with their project teams to reconfigure project delivery, such as re-phasing the project delivery to focus resources on the project sections that will deliver the highest value when completed and postponing sub-projects that are not as critical.

Value Engineering

If required materials and equipment are expected to be unavailable or their costs have changed significantly, an Owner can work with the facility design, construction, and project management teams to seek substitutes that are fit for purpose and the budget of the project.

Personnel and Labor Resources

Absence of Key Personnel

Key personnel may be affected by the virus, both directly or by needing to care for children who are home from school and sick family members. Owners who are prepared with continuity plans in place for key personnel may be better able to maintain essential business functions in the event critical employees are absent.

Labor Shortages

Stemming from both COVID-19 impacts and from many companies jostling for labor resources in the construction industry as projects restart, preparation and mitigation plans for possible construction labor shortages can prevent delays.

Work Stoppages

As various government and private entities issue orders pertaining to COVID-19, project work may be affected. Contractor, Design-Builder and Owners should consider contingency plans to help protect the project interests.

OSHA Compliance

Owners should receive assurance from the responsible members of their teams that the latest OSHA guidelines concerning COVID-19 are being complied with.

OSHA guidance is being updated frequently, and staff maintaining visibility of ongoing guideline adjustments can prevent oversights.

Government, Utility and 3rd Party Constraints

Information, Inspections, and Approvals

Building, other government, and vendor inspectors may become both local and industry-wide project constraints widely or in your local area. Arranging required building, equipment and other inspections far ahead of the need date of those inspections may prevent construction delays.

Government approvals may also become a constraint. For pharmaceutical and biopharma facility project restarts especially, approvals of FDA-regulated products may encounter backlogs as pharma companies jockey for priority and the ongoing pandemic adds workload to a limited number of FDA reviewers.

Utility Connections

Project owners and contractors may have difficulty scheduling connections with utility companies who may be under their own pressures due to the pandemic. Working closely with utility contacts may be able to mitigate some of these constraints.

New and Modified Work Practices

Work restrictions, stay-at-home orders, PPE, and distancing requirements may remain in place for the foreseeable future. Owners that proactively accommodate these measures, both those that are required by statute and those that become expected by convention, can build goodwill which can mitigate other stressors.

Reviewing how project schedules might be impacted by changes to construction practices, such as daily fever screenings or other new controls, may reveal the impact of these changes on resources and project phase completion times.

New engineering controls, such as physical barriers, increased ventilation, negative air pressure zones, and high efficiency air filters, may be needed to continue work. This may have direct and indirect effects on the cost and schedule of the project owners who continue to work with contractors to give notice of project changes early and often can reduce challenges caused by missed communication.

Assessing Contract Considerations

The Owner’s legal counsel checking contract language during this period can give assurance as to the rights and obligations of contract signatories. At the same time, Owners may seek to keep in mind the bigger picture of project success. While an executed contract may have language that places the burden of costs and performance on contractors, contractors may have a different reading of the language.

Disputes that are not able to be resolved collaboratively may lead to non-optimal project outcomes. Strict interpretations of pre-pandemic contracts may also not find favor in the event a dispute needs to go in front of a jury. Critical items for Owner-legal counsel discussion would be:

Contract Clause Language

Ascertain whether the contracts contain “force majeure” language and consider how the contract details affect the specific project issues involving COVID-19. Consider how the COVID-19 crisis effects a specific project if the contract does not contain “force majeure” language.

Communications Provisions

Review how the shutdown was handled when work originally stopped, and whether prompt written notice was provided.

Review the language specifying site collaboration requirements or on-site presence requirements. Contracts may need to be amended to comply with new government regulations that have changed since the start of the COVID-19 pandemic.

Review delivery of project information. For example, a contract may require that one hard copy set of project drawings is delivered to an Owner’s offices for review, and provisions such as these may not lead to optimal outcomes when teams are working remotely.

Financial Arrangements Provisions

Review financial bonding provisions to determine if the COVID-19 crisis has any financial implications to a specific contract.

Labor and Materials Provisions

The following items should be subject to review:

• Assess price escalation language and determine which parties are contractually responsible for cost measures associated with impacts from the shutdown.
• Potential substitution requests, both allowed by the contract and what would be acceptable to the Owner given new realities.
• Delays and extensions provisions. Consider also loss of productivity labor issues due to COVID-19.
• Language concerning Owner rights due to unavailability of key personnel.
• Contractor relief from provisions due to reductions in key personnel, labor, closures of plants and factories, and disrupted supply chains.
• Termination rights triggered from work stoppages.
• Whether orders by state and federal governments, such as stay-at-home orders, the use of PPE, and area occupancy limits that took place after contract formation are considered a change in law.
• Safety of persons and property provisions and who is responsible for reasonable precautions for employee safety. This includes compliance with the lawful orders of public authorities, which may result in a claim for extensions of contract time and sum to accommodate that compliance.

Change Orders

• Extensions of contract time may be warranted depending on contract language.
• Increases in contract sum from additional costs may or may not be warranted depending on contract language and cost drivers. Paramount to protecting owner interests is checking requests for changes against documented pre and post-shutdown project status.
• Modification of new contracts to accommodate changed circumstances may be required.

Conclusion

Detailed readings, documentation, creativity, and collaboration are guiding principles during this unprecedented situation. Construction sites and projects across the United States and the world are currently faced with new realities and business environment changes which require informed and rapid response. Those Owners who use the time during shutdown to collaborate with other key personnel to review project documentation and create actionable plans will likely be best able to position their organizations for quick startups and minimize impacts from pandemic effects.

Alexander Neary, PMP is an Associate at PMA Consultants. An experienced project manager and project controls specialist with a background in team coordination and management of program and project implementation processes, his experience covers the following sectors: infrastructure, biopharmaceutical, electric utilities and software deployment industries.

Dennis Lucey is a Managing Director with PMA Consultants. Mr. Lucey has developed, implemented, and managed project controls systems that have delivered effective management tools and successful project completion for 20 years. His experience spans both public and private residential, academic, biopharmaceutical, office/retail, water/wastewater, and highway projects.

For more information about PMA Construction Management, Project Risk Management, and Construction Claims services, please contact info@pmaconsultants.com.

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