ARTICLE SOURCE: Kyle Davidson
Vice President & Manager – Life Sciences Division Evans General Contractors
Today’s Pharmaceutical & Biotechnology market requires Life Science companies to be dynamic and forward thinking in all aspects of their business. This includes the efficient use of capital to support product launch or capacity increases. Many C‐Suite conference room discussions on CAPEX requests routinely focus on capacity utilization, capacity v. market demand, cost probability models, and risks affecting outcomes. The successful project outcome, which is defined in the CAPEX request, includes financial metrics such as Total Project Cost (TPC), Return on Investment (ROI), Net Present Value (NPV) and schedule metrics such as Project Start, Construction Completion, and Ready to Launch.
Market dynamics in the Life Science Construction Industry and Real Estate Sector are imposing significant risk to the outcome of capital projects. These risks range from resource availability to land acquisition issues and lengthy permitting duration. These dynamics are providing evidence that the risks affecting project outcomes should be understood and managed. Life Science companies need to work thoughtfully with their project partners to navigate this landscape and mitigate risk in order to achieve a successful outcome for their capital projects.
One way to mitigate the risk is by choosing the most appropriate project delivery method. The project delivery method can have a significant impact on cost and schedule as shown in Figure 1. According to the Construction Industry Institute & Charles Pankow Foundation study of Project Delivery Performance from 2018, the Design‐Build (DB) method outperformed other delivery methods, namely, Design‐Bid‐Build (DBB) and CM@Risk (CM@R), on both schedule and cost. While this article is not intended to be an editorial on the best project delivery method (which is clearly Design‐Build), it is intended to show that the choice of approach or method can have an impact on the project outcome. At Evans, we utilize a proven approach developed through an understanding of the unique aspects of Life Science Capital Appropriations Requests and relationships with Real Estate Development. This approach helps mitigate schedule and financial risks associated with market dynamics by providing opportunities for early commitment and project acceleration. We call this project delivery approach a Life Science Shell.
This project delivery approach involves decoupling the design and construction of the shell from the interior fit out. While these two efforts are inextricably linked by construction logic, it is possible to progress them on separate but related timelines. The approach can be implemented on a wide variety of project types ranging from manufacturing of pharmaceuticals, cell & gene therapies to logistics & distribution or future development. Both facility owners and property developers can apply this approach to their new Life Science facilities in order to benefit in several ways. Advantages to this approach are numerous, but special consideration should be given to the difficulties resulting from decoupling the shell from the interior improvements.
At quick glance, this approach may seem very similar to a fast-track delivery technique regularly implemented on pharmaceutical and biotechnology projects. However, it is markedly different in the business considerations, discussed below, with the same opportunity for schedule acceleration.
Generally, developing an early understanding of how the market conditions will impact total project cost is a major concern for clients. The core and shell of a manufacturing building can represent 8% ‐ 10% of the total construction costs. Securing early and firm commitments from developers or general contractors will reduce the overall financial risk for the client. Utilizing the Life Science Shell approach allows for two different opportunities to work with potential project partners, to validate pricing, and confirm an accelerated schedule using a clear scope of work.
The Life Science Shell approach does not require a complex scope of work for an experienced design-build firm, such as Evans General Contractors, to provide a responsible proposal. The optimal approach is to engage the design-build firm to provide outline specifications and drawings for the proposed scope of work. The design-build firm will become a part of the project team and work with the stakeholders during the programming phase. From there, as shown in Figure 2, the shell design will progress to sufficient detail for permitting in parallel to the schematic phase of the interior fit out. Any revisions to the shell design, as a result of the interior fit out design development, can be simultaneously incorporated into the shell construction documents. With this, the General Contractor can deliver the designed solution in concert with the interior improvements at a firm cost and known schedule.
The current market conditions in Life Sciences real estate are fostering mutually beneficial relationships between real estate development companies and owners. The idea of a Life Science Shell approach provides an opportunity for development companies to leverage their strengths and capital resources to propose multiple business options with well‐defined financial terms and conditions. These options can result in a business relationship between the developer and owner that can reduce the initial capital outlay for the overall program and provide firm definition of the costs and schedule.
The design phase of Life Science Shell can be advanced and completed in a matter of weeks depending on the overall complexity. The allows an opportunity for the shell information to be submitted for permit ahead of the interior fit out. This is where the Life Sciences Shell approach mirrors the “fast‐track” technique and can typically save weeks or months on the overall program schedule, see Figure 3. This illustration shows the relationship between the major project activities. All else being equal, the figure shows the relative improvement in overall duration resulting from using the Life Science Shell approach.
Choosing the right plan depends on the specifics of the project, municipalities, and other factors. The project team should collaborate closely early in the programming phase to choose the approach that best supports a successful project outcome.
The Life Science Shell approach requires a unique understanding of the factors and parameters of the client’s facility to accurately define and account for the impacts to the shell’s construction. These can include, building footprint, equipment design/layout, and waste systems (process & building). Also, major consideration needs to be given for construction sequencing.
One of the biggest decisions in advancing the shell design is finalizing the building footprint. As with most technically challenging projects, this parameter is driven by a myriad of considerations including facility type, function, throughput, co‐located business functions, equipment, planned future growth, etc. Evans General Contractors works with the project team to develop a target for freezing the building footprint that will support the overall program schedule. It is imperative that the project team focus early in the programming phase on defining the needs that drive this critical project parameter. Programming should result in anticipated footprint size, arrangement of rooms, and sizing for each room allowing advancement of the shell design. The project team should consider freezing the footprint at the completion of programming to avoid future impacts.
Once the footprint is established, the shell permit design should be developed with continuous input of information from the interior fit out design progress. The shell permit set should be submitted with the latest information available to the project team without compromising the milestone date for submittal. As the shell design is being finalized for permit, the project team should minimize refinement to the footprint. However, as indicated earlier, any minor changes to the shell resulting from design development can be simultaneously incorporated into the construction release.
A key advantage to how Evans executes the Life Science Shell approach comes from developing a unique understanding of each clients’ process, equipment sizes, and layout to optimize work flow. It is necessary to understand and estimate the size of the process and building equipment during the programming phase. This vital information will drive many design parameters and details for the shell, from structural components to process waste pipe sizing.
In particular, the centralized equipment and systems of a shell’s infrastructure can dominate the design of the structural components of the building. Project teams need to consider the use of mezzanines, penthouse equipment, roof top equipment, and maintenance accessibility as these will impact structural components. It is wise to work with equipment vendors for custom process or HVAC equipment to estimate the loading instead of using a standard loading estimates. The project teams must also consider bulk raw materials, water storage, racked piping, modular wall systems or other dense loading situations that will impact structural components. Keep in mind that structural components include foundations and slabs, as well as steel, joists and deck.
The design of bio‐pharmaceutical processes is, by nature, very fluid (pardon the pun) and will likely be evolving to some degree throughout the project. A large majority of the critical process and building waste systems’ infrastructure will be below grade. Evans’ Life Science Shell approach manages this specific challenge by integrating flexibility into the waste systems, utilizing smart and agile construction methods, and by maintaining accountability of all partners throughout the design.
The location, sizing, and utilization of equipment can provide insights about the building and process waste design. Early process models should provide information on process water usage, effluent characteristics, and building systems. Design teams need to answer the question, “Is process effluent treatment required?” Likely, this will require a lift station or process waste vault for adjustment of the effluent prior to releasing to the municipality.
The final aspect of equipment considerations is for the project team to literally, “Think outside of the Box.” Any new shell design should take considerations for the planned access to rig and set process and building equipment by way of exterior access panels, roof hatches, and strategic equipment locations. Access pathways should be considered during shell and interior fit out design and include as no‐fly zones equipment pathways in design model.
The successful execution of a shell building that will house complex life science operations, demands that construction sequencing is a major consideration in the overall project plan. Evans General Contractors regularly provides additional temporary access to facilitate installation of large equipment where permanent access is not feasible. This includes strategically leaving out portions of the shell to accommodate parallel sequencing allowing clearance for larger pieces of equipment to be installed without negatively impacting safety or the project schedule’s critical path.
Evans has a unique understanding of the difficult task of process design and works to develop a construction sequence that provides the maximum amount of time possible for the process engineers to complete their work. We develop the plan and manage the project knowing that the highest schedule risk on a bio-pharmaceutical manufacturing project is process equipment delivery. We regularly include plans for temporary walls to support HVAC startup and develop contingency plans for “less temporary” walls for commissioning of HVAC and qualification of room conditions if necessary.
The Life Science Shell approach utilized by Evans provides several distinct advantages over traditional methods. Most importantly, it introduces an opportunity to reduce financial risk by soliciting lump sum design‐build proposals for the shell or engaging a real estate developer. Both options will provide firm financial commitment for nearly 10% of the construction costs at a very early stage in the project. The approach can also lead to an overall program schedule improvement similar to that of the fast‐track method.
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