Nov. 25, 2020

Building with Integrated Project Delivery (IPD)

James Pease, Executive Director - Design and Construction at UCSF Medical Center, shares his decade-plus of experiences of integrated project delivery in healthcare, more than 20 projects and counting. James is a leading expert in the setup and structure...

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James Pease, Executive Director - Design and Construction at UCSF Medical Center, shares his decade-plus of experiences of integrated project delivery in healthcare, more than 20 projects and counting. James is a leading expert in the setup and structure of large, complex capital projects using Lean and Integrated Project Delivery. He has a record of driving highly reliable results with projects finishing on time and on budget. James is also the Executive Editor at the website that shares information and best practices in order to further the use of Lean Construction, Integrated Project Delivery, and Building Information Modeling to ultimately improve outcomes in the Design and Construction of capital projects.

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Today's episode is sponsored by the Lean Construction Institute (LCI). This non-profit organization operates as a catalyst to transform the industry through Lean project delivery using an operating system centered on a common language, fundamental principles, and basic practices. Learn more at


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Felipe Engineer  0:00  
Welcome, James. How's it going? up, dude, how you been? I've been really good, man. It's good to see you too. I'm glad I dressed up for you.

James Pease  0:10  
Right. I was the I did my did my recording for the LCI Congress at six o'clock this morning. I should have thought all the way through this, but I had. That's why I have a nice shirt on today.

Felipe Engineer  0:25  
Welcome to the nbfc show, the easier better for construction podcast. I'm your host, Felipe Engineer Manriquez. This show is all about the business of construction. Today's episode is sponsored by the lean construction Institute. LCI is working to lead the building industry and transforming its practices and culture. Its vision is to create a healthy and thriving industry that delivers outstanding project outcomes every time for everyone. Check the show notes for more information. Thank you, LCI. Now to the show. Welcome to the show. James Pease
 is good friend of mine, longtime lean practitioner. James, why don't you go ahead and introduce yourself to the audience. Tell them a little bit about who is James Pease

James Pease  0:56  
Oh, it's a deep and dark complicated question. But I'll give you the the career the professional highlights. So I studied Management Science in college, mainly because I dropped out of engineering. And then I never really used it again. Until like 15 years into my career journey. So I ended up getting a job as an intern and design and construction for a hospital. And that was 17 years ago now. Mostly did lump sum construction projects, low bid, that was really the only thing, anything they taught me how to do. I changed jobs and got introduced to cm at risk with a little bit of pre construction and design assist trade partners. And it was right really at the beginning of BIM for construction. And so we were arguing about like whether we were going to pay for it or not, or whether we actually wanted bam, and it would add any value. And this is unlike a ground up OSH pod hospital, which now it's a no brainer, but then it was kind of new. And I think we invested a lot in people learning how to do it. And from there, I changed and I spent 12 years at Sutter Health, and was fortunate when I started at Sutter Health to land on one of the early IPD projects. And so there are definitely a lot of people there that got it moving. But I landed on a project that I was told by Dave pixley, you have to do all your projects with IPD from now on. So I I didn't know what that meant. And I took the contract home and read it and I he was my boss and he just hired me. So I didn't know otherwise. I found out years later that I was the only one that really listened to just did it.

Felipe Engineer  2:03  
Were you the new guy.

James Pease  2:04  
I was the new guy. And it was my first project was like a $20 million project, which was a good size to learn on because I made a lot of mistakes. But they weren't so big that leadership noticed. So I'd recommend that if you can try that small. 

Felipe Engineer  2:15  
That's good advice. James already already given the nuggets start small.

James Pease  3:26  
Yeah, you know, don't start so small that you can't gain anything. So a project has to be big enough that the upfront investment will give you some kind of return. But don't start so big that if you something goes wrong, you get fired. Like that's bad. 

Felipe Engineer  3:41  
But that has been...

James Pease  3:43  
So I had the opportunity to work on over 20 IPD projects. While I was at Sutter, it was really a lot of fun. And about a year ago I left and so I'm now the Executive Director for designing construction at UCSF health. And so we do everything from kind of small equipment replacements up to full gut remodels on floors and a new hospital tower that we're working on over and Oakland and the hope is to build off the work done by Stuart ecpat and team on major capital projects to start implementing IPD with a full integrated form of agreement in the public space so that we can create some case studies for other public owners out there and see if we can't shake this loose a little bit.

Felipe Engineer  4:31  
Please please shake it loose.

James Pease  4:33  
So and now then I got introduced just one last thing to lean construction. When I started at Sutter I got invited to the LCI meetings and it was like all of that lean manufacturing stuff I did in college all of a sudden I was like wait a minute, I studied something about this and seems like it's been a nice intersection now.

Felipe Engineer  4:55  
No, that is excellent background. But that that last little Aren't you you're downplaying how big that is? 2020 lean IPD projects, right? And do you distinguish the difference between lean IPD and IPD. And integrated project delivery for everybody who doesn't know the acronym, book bookmarks and glossary we're dealing and I can give a little. 

James Pease  5:20  
So I do I didn't use too. So I would say lean lean construction, a lean project could have any contract model. And that is where you would you would implement last planner system, you'd be looking at using target value design, if you can get your partners on board early implementation of five s, just keeping the worksite clean, I would say is a lean, lean principle. So all of this borrowed from the Toyota way in manufacturing and with various implementations in construction IPD, I used to think as long as you were had an integrated team, I was calling it IPD, I'm now kind of transitioned to the camp where I think an integrated contract where design and construction are under a single contract with a shared risk and reward pool where there's some mutual indemnification of parties, I think you will get better outcome. So I would call that kind of a true integrated form of agreement, true IPD approach. I put lien IPD, because I have experienced, you can have an integrated contract, and still run things very traditionally, and not unlock the value of having everybody on board and early. So for me that the sweet spot is taking lean construction principles, and combining them with an integrated contract where scopes can flow back and forth between design and construction partners with relatively little friction, so that you're not arguing about transferring scope, it's it's in everyone's best interest to let the scope go to wherever it can best be done. So that's, that's what I would call lean IPD combination.

Felipe Engineer  7:12  
There's one thing that we're not going to debate on. There we go. Yeah. And I like to that you told everybody, from your perspective, and it's it's a rich perspective, James, that you have that anybody any contract type can do lean construction. I totally agree. And should and should, right? Yeah, I'm in the same boat as you my first couple at bats with lean construction, I was on back to back hard bid projects, traditional design, bid build, and, and I didn't even occur to me that I was swimming upstream. So I like that you're reinforcing. 

James Pease  7:49  
I just design bid build definitely has. As you said, it's got a current that's rushing against you, that makes it harder to get people to collaborate, because it's just by its nature, it's it's everyone's out for themselves. And, you know, if you win, I'm probably losing. And if I win, you're probably losing, right. And so it's hard to get people to, to give and take. And that's a message to the owners, you know, you you get the outcomes you set your projects up for. So think about how you set them up.

Felipe Engineer  8:21  
Now, you always get exactly what you asked for. No surprises.

James Pease  8:27  
People don't realize that that's what they're setting themselves up for. But that's actually what's happening, I think.

Felipe Engineer  8:32  
Right? And then you mentioned to you you dabble a little bit and and see I'm at risk that was probably at a date that early 90s. Before your your soiree with BIM and OSH pod.

James Pease  8:43  
I say early 2000s 1000s. Okay, early 2000s. And it was just other than Sutter at the time, nobody would I mean, Sutter really didn't start implementing IPD on more than one or two pilot projects until like 2012, or something like that. I mean, it was 2015. So you know, you had the big hospitals, but they take a decade. So it seems like it started a lot earlier than it did. But to see cm at risk, even at Sutter, we did a lot of cm at risk, I mean projects of a certain dollar value in a certain complexity cm at risk, I think is is a good model, the complexity of the time tracking and the and the cost tracking and in a true IPD model. I think there's some projects that you'll never see the benefit of that. The projects are straightforward enough. If you hire good partners, people that you've worked with for a long time, even you know, lump sum, you can get good outcomes. It's that design bid build, low bid, no pre construction, design bid build that gets you in trouble, right? 

Felipe Engineer  9:58  
And you're still reinforcing what we Know, anybody who's been in the business for more than a decade, the team is so critical, you know, who you get, who gets elected, has a lot to do on the project success.

James Pease  10:10  
Yeah, I agree, I've learned, I learned that the hard way that you know, you can have a company that's got got all the resume, but the team, you get just just doesn't have the experience to do things in a lean way. And vice versa. I've had companies that weren't supposed to be successful, because the it wasn't their typical product that they built, that was outside of their wheelhouse, but a team was really open minded and, and they implemented, they far exceeded my expectation. So it's more about who you get, and giving them opportunity once you get them to be successful than than the company that you hire. And the other thing I realize is you should put the right type of company on the right type of project. So, you know, the the big sophisticated contractors are, I learned, are probably not the right company to do like a 10,000 square foot outpatient clinic, there's just too much overhead and too much process. And that some of these less sophisticated, technologically less sophisticated companies can do a great high quality job at a much better price point. So you want to actually think about what the job is, and who are the right partners for it, I don't think there's a one size fits all, contractor designer trade partner, the more you think about it, the more you want to align what you're doing with the team, right. 

Felipe Engineer  11:38  
And some of the big general contractors have even in response to that have created small nimble groups that only do like little ti work for niche clients and niche markets and in certain cities. So there are some that do that. But you're right, and you know, the smaller very nimble contractors will be set up to handle something really complex. Yeah, I mean, recently, you, and your thank you, again, for sharing on the show, James 100%. Appreciate that. You're under no obligation as a board member for the link construction Institute to make an appearance on the show that they sponsor. So those just cool when you started leaving IPD a couple years ago, I remember you sending me and a friend of mine, an invite to come check out this webinar. And I was like, Man, this is gonna be interesting. I was like, I've never gone to a webinar that was organized by and hosted by, you know, a traditional owner. And your webinars actually good. Yeah, I mean, it was that we watched it together and a conference cuz we were cheap. We cheaped out and just bought one ticket and sat together and watched it. This was before BCE before COVID ever could be in a conference room all close. And you're presenting ideas on lean construction, and my friend kept elbowing Me Like You see, owners do care. It was like, I know. I know they're out there. So what what made you get started with lean IPD? The website and what is that as a as a thing?

James Pease  13:10  
Yeah, maybe it's a little bit of background. So my first webinars I think were from the lean construction Institute. The first presentation I ever did was actually after my first IPD project, I got invited to Colorado, back in Boulder back when LCI was like 300 people in one room, and there were no breakout rooms. And, and I was late to the party. I mean, that was probably 15 years into it or something. But I did the presentation, and I got some good feedback on it. And I said, Well, you know, I should Well, first of all, I saw that so lean IPD calm is a website. And it's focused on lean construction and integrated project delivery. I'm the editor. So it's something that I put out there. But I have an excellent advisory board, and a ton of ton of experts that write content for the website, including you. And thank you very much for that.

Felipe Engineer  14:09  
You're welcome.

James Pease  14:10  
The reason I started the website is because I was surprised that somebody didn't own lean IPD calm already. So I bought the website. on a whim, probably after having a beer on a Friday night. I said, Okay, I'll just put, I'll put the PDF slides of one of my presentations up there. And then I started reading a little bit like oh, people never, they won't find it. I need to make this into a case study it with HTML so that Google will rank it and I probably spent the first three years doing the work myself, on the weekends and at night. You can pretty much learn to do anything on YouTube. You might not be able to do it well, but you can learn how to do something.

Felipe Engineer  14:55  
So you've got we got to get you a certificate that you graduated from the School of YouTube.

James Pease  15:00  
Yeah, I'm, well, I don't know if I've graduated, but I've taken some classes. So anyway, that's the so it's really a passion project. I like interacting with people that find the content, I like being able to share it with people. And probably more recently, what I've realized is that writing helps me form formalize my thoughts. It helps me distill, when you try to, there may be something that you know, but until you try to explain it to somebody else, you don't actually organize it and create it into chunks that you can explain and share with somebody. So I think the webinars and the writing made me better my day job because I just had to try to explain what I was thinking. So that's been an outlet for me is literally is to just try to write down what it is that I'm thinking and share it with somebody. That's a long winded summary. But that's not what it is.

Felipe Engineer  16:03  
And I think for people that don't know, like, I myself consumed James's website pretty regularly, even before I committed any content to it. There's a lot of really good stuff on that site, if you're thinking about doing lean construction on your project, even if you're not to the point yet. And it doesn't matter who you are, if you're a trade partner, general contractor, recovering general contractor or even a construction manager, there are really good articles and content on that site that can benefit your project like right now today, I can almost guarantee you that you're facing something right now that an article post on lean IPD can help you with and it's definitely there have been many posts that have helped me and the the outpouring Jas of people for the stuff that I've written and share it on your site has been incredible. Like so I mean, it people are reading the site, like a lot of people are reading the site. Well, that's a great endorsement. Thank you. Yeah. And the organization's really good. You're I love to that your site is like, it's a great example of a site of today 2020. It's not dated, it's like fresh, it's changed over time. I remember when you rebranded it and you know, updated it, and I thought, is it time to rebrand the site yet and you go around the internet, and you're probably, you know, ahead of the curve, you're definitely in the first wave of sites that were changing the appearance and the usage for folks to make it easier to navigate. So

James Pease  17:29  
that was above my YouTube skills. That was the point where I, I've done a small amount of consulting, and that's all plowed back in so I actually hired somebody to help me do that. Because it was above there's a vision there but no skills. 

Felipe Engineer  17:45  
No, no, that's in true ownership style, you hire others, so you know where your your expertise domain is, and where it's not. Nothing wrong with that.

James Pease  17:54  
Yeah, so that's, that's good. And that gives me my weekends back mostly.

Felipe Engineer  17:58  
Yeah, but that is really good. But yeah, the content is really good. Even just the the approach, and you mentioned some things that I think might be worth exploring a little deeper, like target value delivery. And you specifically said, if you can get your partners to do it with you, I think that is a that's a great thing, because I've been asked inside of our company, like, when should we apply TVD targeted delivery? target value design? Some people say designed, but if you include construction work, we have to change it to delivery. And why would a general contractor ever not include construction? We wouldn't. So it's always TVD with delivery at the end. But I just tell people, like you want to have the owner bought in, like, you want to be sure that the owner wants this because the the amount of work that they have to do is if a regular job, the work level for them is here, like on a on a design bid build. And maybe a design build is somewhere here. TVD for an owners like here, it's like the most involved that they can possibly be I think, right? I can't think outside of an IFA, right and most integrated forms agreement, you're using the target value delivery approach anyway.

James Pease  19:12  
Yeah. You know that I liked the way you put that though, because that's true. A lot of times, people will say why don't more people do IPD in general? And I said, because it's a lot of work. Yeah, it is. And I heard an owner one time say, you know, we're gonna go with design build, because we just don't have the PMS to do the, the upfront work for the projects, which I didn't agree with at first, but now that I have more of a programmatic view, I get it. It's very, it's a lot of work. I've never learned more about design and construction and how things work than being on an IPD job surrounded by experts and working through issues. Like, why should we use different structural systems? or different ways of cooling the building? Or what are the different ways we can distribute the power? Like, what the most fun thing is doing target value design when you have like project engineers that it's their first job, and you see just how much they absorb and learn, because in a traditional environment, you get your one discipline, right? You're not exposed to the other disciplines the way you are in that kind of big room. TVD approach. 

Felipe Engineer  20:33  
So, yeah, how many times do people on traditional projects get the opportunity to hear other cross functional teams presenting on options, and that never, we never see that in traditional delivery, ever? Ever. And you couldn't even see it at a conference. I've never even gone to a conference and seen like a mock big room cluster report out. I've heard people talk about someday doing it. But I've been short of having that in your portfolio of jobs to go be a part of it's, it's something you're not going to get to witness very often. That's a good point. That's a really good point. Maybe a future webinar idea for you, James.

James Pease  21:14  
Yeah, I mean, it's exhausting. But it is the most fun. I mean, sitting in in a room like that, when everybody's kind of trying to climb the same Hill. And you know, the budget sometimes are aggressive. And then you really have to think outside the box. But those I think, are the most fun.

Felipe Engineer  21:33  
No, we just make jokes behind the scenes, James, we say that all owners go to the same school. And they learn that at some point in the project, they have to start acting like they're broke. And they have to tell the team that, you know, they just got word, and we got to cut 20% off of this budget, or we're 20% over budget, you know that in programming, we were already 20% over here, these numbers all the time. And I always laugh and you see people on the team that are new. And it used to say like, no, this is just part of the game, this is part of the fun of it. Like, if you didn't have that constraint, the design team would not be as creative, like amazing things come out, when you're back against the wall having to be really creative. And then even better on these jobs where they they show, you know, here's the number and everybody on the team can see full transparency. Where are we in the budget? And they know that what I do with my team affects whether we're going to make it or not.

James Pease  22:25  
Yeah, wait is there is a manual, it's in chapter one, we all as soon as you become an owner, they actually they mail it to you. It's true.

Felipe Engineer  22:34  
Oh, we suspected it now. That's been confirmed. Here it was, let's market 2020 we found out the secret is out, we'll just have to lower it to 30% or something, I'm sure that we should just say 50%. Just watch what kind of innovation comes out of that.

James Pease  22:52  
But you're right, when you say it's part of the game. I mean, one of my favorite things on a project is in the IPD jobs, what the grounds for change orders are a little bit different. So you know, things that the team should have known are generally not increases to the contract is people still get paid for them. Right. And so one of my favorite things is when the designer, the builder comes back with a well articulated argument about why something should be my cost. And because it never starts that way, because it The rules are different. And it takes a while for people to to adopt the new rules. But you can tell when someone gets the game now and they come back. And I generally, you know, pat them on the back and say, you know, welcome to the game. Let's play now. And then I'm like, ah, and then I have to up my game now. Yeah. Those are fun. Those are fun, especially a hospital, right? You're a team for like four or five years together. Yeah. These are not quick things. 

Felipe Engineer  23:54  
No, no, they're not they become like family we've had, we've had partners that have done IPD projects. And as it's getting to an end, you can see people getting like the long faces, they don't want it to be over. And we've even had people that contract where they were not the contract with the market where they were didn't allow for them to go to a subsequent IPD job. And they started looking to go elsewhere. Where else could they go?

James Pease  24:18  
And there's also there's a lot of there's a lot of groups that are trying like their first one, but there aren't many groups that have made a you know that they'd have 20 right in their program. And one I think it's hard. Even at Sutter, like every couple of years, we had to kind of re present to the board of directors. Why it was a good idea. Because I think design bid build is really easy. Like if you're gonna go buy a car, you know, and it's the same car from three dealerships. Whoever's gonna give you the best price you buy it from them unless there's, you know, some kind of service or your brother owns one of the dealerships or something.

Felipe Engineer  25:00  
No brainer don't buy his unless you read the terms.

James Pease  25:03  
Like design and construction is just not that way. It's it's infinitely complex, it's, it's like wanting to buy a car and having all the parts delivered to your driveway and then having 20 different companies show up and try to put them together, you know, right. 

Felipe Engineer  25:18  
And then all the 20 different places all built to specs with ranges. And they didn't have to look at how do the things actually fit together. 

James Pease  25:26  
So knowing and then my favorite, so then when so I go through that process. And then if I want another car, like now my wife wants a car. So instead of hiring all those same people, I'll go hire somebody else to start from scratch. And I'll build my whole supply chain again. I mean, it's, it's crazy. 

Felipe Engineer  25:44  
When you think about it, it is crazy. It is it is so but no other. So I want to ask you now that you've got your you've been attending YouTube University and doing lean IPD sustain successful website, hands down, you got a thriving board on there, a lot of good contributors. Shameless plug, you can check out more articles on lean ipds website anytime you like. Lean IPD comm slash blog. That's right, lean IPD comm slash blog, we'll put it right here. And we'll just let it stay there on the screen for a little bit, give people a chance to get it'll be in the show notes too. So don't worry about that there'll be a hyperlink for your convenience, we've mastered that. But what's something that has been surprising to you, James, you know, hosting that, not necessarily on the technical side. But what's surprising, like any kind of feedback from the industry that when you started this out, that you didn't anticipate that's been either a good surprise or a negative surprise. So starting on the positive, I'm surprised at how much IPD there is in Canada. And its most IPD project, if not all IPD projects in the US are done by private owners. In Canada, almost all of the IPD projects are are done on government projects. So their procurement rules are different. And so a lot of like fire stations, civic center, schools are being delivered in Canada. And it's actually like a really, it's growing. Whereas I would say on the downside here for all of the positive case studies that are out there about integrated project delivery and just lean construction in general, for all the case studies that are out there. I'm just I'm surprised that the adoption curve is so low. And I mean, that's, that's our job, right? That's your job. That's my job, spread the word. And share, share. I'm just surprised that you're gonna go positive if you went negative when you tricked me.

James Pease  28:05  
Well, I started positive because I liked it. Everything's done in Canada. Yeah, that's that's the positive is that there are IPD jobs. And that I've learned that because I get more people reaching out for information from Canada than I do from the US. That's well, so that's a surprise to me. Yeah, the negative I guess, is not so much from the website, but to put all this information out there. And people either aren't interested because they believe with all of their heart and soul that they're already doing everything already, or that they're just not interested. 

Felipe Engineer  28:51  
I'm only laughing because I get that all the time.

James Pease  28:55  
You've always you've I've been doing this, you know, since 1900.

Felipe Engineer  29:01  
That's like a trigger word for a trigger phrase for me when I hear someone say, but we've always done this like and this being lean. We've been lean, we've always been doing it. Right. It's a it's interesting to hear that it's it always depends on who the individual is how they respond. I don't have the boilerplate. Like you said, One size doesn't fit all. There's not a one size fits all response for that phrase either. But it's always interesting because they usually the people that say stuff like that, James, that's like a defense state statement back to you. When you're sharing something, it's never like this. And we've always done this. And we're, it's great to learn this new thing you're doing. Or this this new thing you're doing like for 20 years, or this new thing that you're doing on over 20 projects. Right? People are still like now can't be. Now there's other ways better. It's like, no, I remember going to a conference. I think it was a design build Institute Western Region conference two years ago. And one of the keynote speakers was talking about prefabrication. And this gentleman owns a prefabrication. Company, I want to say his name is Ryan Miller. And I can't remember the name of the company off top my head. But I'll look it up. If somebody messages me, I'll, I'll find him. And he was saying that the designing construction industry has become commoditized to a certain extent. And most of the companies are just eking out these little tiny niche margins. And I kept thinking like, well, you obviously don't talk to subcontractors, because their margins are way healthier. And it's, you know, there's a level where a specialization does get you either when you're early to specialization, you can have a high return. And I'm sure you've got IPD case studies where the owner got a lot of scope for a for little cost, right. But then as time goes on, and people start to learn what the new normal is, you start seeing some diminishing returns. And that's where I think, you know, some of that is in the industry, we have this incredible momentum, like I was talking to this with someone on the show $3 trillion a year. Well, we spend in the US on construction, 3 trillion, right? That's design and construction and support. Right? It's a big number. But global economy. It's not that big of a number, but every country builds. It's done everywhere. It's huge. I mean, we see I can't even see pictures of things abroad, like because I can't go anywhere right now. But when I used to before, and you don't see like in progress, construction photos in the background, like how are we not getting better? Someone has said that one of the root causes could be lack of sharing. So here we are, you have a website. I have a podcast we're trying to share. And yeah, I'm also surprised the same, I've seen the same thing. The outpouring from outside the US is far greater than inside the US, for people tapping my shoulder for Alper just being curious. Interesting. Yeah, I say the same thing. And I think some of that is a friend of mine in a different industry said that there's this thing that's called the arrivals syndrome. We ever heard of it, James? So the arrival syndrome is this a psychological type of thinking mindset that once you've achieved certain level of success, you get comfortable and complacent, like you made it. And we see this in sports teams all the time, like, you know, it's, you'll see a team win. And you can tell that I'm a Chicago fan, right? We won a World Series Finally, and then you don't see the team just automatically continue to win. There are some dynasty teams for sure. In any sports, right?

James Pease  32:41  
But they're rare. But they're not there, they're less common, then they're very rare. 

Felipe Engineer  32:46  
And people have said, The hardest thing to do is to just not get complacent, or what people called coin the arrival syndrome.

James Pease  32:55  
So another another take on that, which I appreciate that makes a lot of sense is that that people are successful in this system. There are a lot of construction companies, there are a lot of design companies. There's a lot of people making good salaries, I always joke, there's a lot of new trucks on the road, right? Whenever my car breaks down, and I'm like, I should go for it for a contractor, because at least then I would get a gas card and a truck and I wouldn't have to worry about taking my car to the shop. So the point of all of that is that, you know, like we said earlier, the owners are setting up the game. And the designers and builders are finding a way to win at that game. And so until you start to change the rules, like maybe things are not going to change, because people have figured out how to play the game. I think about this a lot, in some ways, the best motivation for the design, the construction industry to improve as with all lumpsum contracts, where they get to keep all of the gains, the costs reimbursed contracts, I think they're not the way to get the cheapest project, I think they're the way to get the product that you want. And to know how much it's going to cost and how long it's going to take to get it before you spend a lot of money. So you can invest one to 2% of your project budget, get your team on board and quote validated or whatever you want to call that initial phase. Sure. And you can get reliability out of that. And you the team can help you with that. TVD we talked about make all those trade offs. But none of that, you know, another downside is after 20 IPD projects. The cost of the jobs were still way more than they were 10 years earlier. It's like we weren't doing things for less. I used to joke that if anything costs were going up less fast. You know, which is I thought my first IPD probably Project like, Oh, we just do the job for 30% less. And the more time I spend, like the the nature of the way the industry is organized and contracts are set up and the way the supply chain works and the way we it's structurally very difficult to drive out 30%, I'm convinced there's 30 to 50% waste in the system. Getting it out is really, really, really hard. I don't know how to do it yet.

Felipe Engineer  35:30  
It's even more than that. There are researchers who spent years looking at this. And I remember looking at a report by University of Minnesota dodge data analytics, and they threw some numbers out in conjunction with other surveys that were done with construction industry institute that the number is somewhere between 60 to 80%. waste. So just that's like, you know, every dollar and construction you spend, you got 40 cents, potentially, if not almost 50 cents, you're paying too much.

James Pease  35:59  
Yeah, the owners are paying too much. The issue is that money doesn't disappear, that shows up as wages, you know, it shows up people, you know that money is getting spent in the supply chain.

Felipe Engineer  36:13  
Right, but it's not getting spent on things that anyone wants not valuable things necessarily, right. If we're trying to build a hospital that can treat patients, we might be spending a lot of money on inspections, or other things that are necessary evils due to a myriad of reasons, because it's complex, like you said, right? How many people are stepping back and saying how can we design this thing? So that it just gives us more of what we want faster?

James Pease  36:39  
Yeah, I think and it's there's those, there's a couple of companies out there that are trying like the terrors of the world. You know, and I'm hoping some good case studies come out of those where in that case, I feel it's like an owner steps in and says I'm going to I'm going to own the entire supply chain. And then from that, I'll try to drive waste out now I think, you know, people are trying to do it in traditional methodologies by buying traditional companies and putting them together. Yeah, I think you almost need a completely bottom up. I'm going to build a supply chain from scratch, which I don't know how much venture capital you need for that. But a lot, I think, I mean, well, there's, there's, I can think of three case studies, all by the same CEO. Or that's happened. SpaceX, Tesla, right. Solar City, right. Yeah. And finally, fundamentally, based on the on the numbers, and the science, like this is what should be possible.

Felipe Engineer  37:42  
Yeah, it was simple ideas. Like, I'm just gonna hire the smartest people. Like, I can hear Ilan in the back of my head, I'm just gonna hire the smartest people, we're gonna solve our problems, we're gonna have fun doing what we do. And that's like, how they go. And now you see a very siloed automotive industry, even companies like Toyota, looking to well, we gotta adapt, we can't ignore what Tesla is doing in the in the car space. And then you've got all kinds of things with electronic cars becoming just prevalent or dominant in the market. All the high luxury brands are already there. Right? I mean, this has all happened really fast. I remember hearing somebody was talking the other day and said that the electric car was invented first. And then something like, almost 10 years later, the gas engine was invented for the gas car. And like, why do we go to why do we get go gas? Right? Why don't we just stay electric? Like, that's an interesting fact.

James Pease  38:38  
Yeah. And if you think about all the transportation costs associated with hauling gas around, it's, it's like It can't be. There's just some basic physics they're moving, moving weight around, that don't seem like they make sense in the long term.

Felipe Engineer  38:54  
So I think I think you're onto something in the in capital construction. And you want to, I think it'd be more for serial builders, like a health system, or university or governments that are on the build every year. Not the one off, you know, things. No, there are some interesting stories with one off and smaller, smaller things. Definitely. I mean, there is this momentum in the industry, though. Like everyone right away, wants to say, I want to mitigate risk. Right. So just do what you've always done. Because you you know what your problems are going to be. So when that when that happens, nobody's like surprised if you got to go back to your boss and say, yeah, the contractor took longer than their schedule said it would. They're not going to even get mad at you not even gonna raise their voice at you, James. Like, what happens to construction? Three out of four jobs are late. Three out of four jobs are over budget. And people just accept it. Yeah, they do. It's frustrating. Yeah, it is because you could be doing other things like from our perspective on the couch. matricide, we'd like to be chasing more work. We'd like to get the next thing and and keep our people employed longer. Staying on a project longer doesn't make anybody an extra money. It's the same is true for the the trade community. Like I always tell, the foreman will get talked to foreman, your companies don't pay you any extra for being here longer, right? They're like, No, we often it's a bad thing to be here longer than we estimate. So we all we have some things that we have in common. There's definitely some common ground that we can move together. And I think there are some promising things happening, you know, organizations like LCI, where you've got owners talking to each other. I'm the vice chair of the lean construction Institute's communion practice in St. Louis. And there were a couple of owners on our panel, and they said, the greatest value to them of being on the core team is being able to talk across organizations without their owners about, you know, what can be done, what's possible, they didn't even know, right? It's almost like someone has a website, they're not advertising it well, so that people can even see what's there. Right? They're giving it away, but nobody knows is there? How can we how can we get people to know what's there, and like, how impactful it is?

James Pease  41:14  
You know, I like that. And we got to I mean, this is on me and on is you got to meet you got to put it in terms that are valuable to the receiver. Right. What's in it for me that whole what's I think the best case of lean adoption that I've seen a plug for Dave McNeil of onpoint. Lean is his like breakout presentation at LCI many years ago. He talked about this was like a hot dip galvanizing plant down in Louisiana. And they were building two of them at the same time. So it's one of the only case studies I know where somebody is literally building the exact same thing right next to each other. And one was implemented with five s and last planner system. And the other one was implemented just with a traditional process. But eventually, the traditional process guys wanted to implement lean. And the reason that they did is because the guys on the lean job, were getting to the bar two hours earlier every day, then they were they were like, how are you guys getting here so early? They're like, Oh, we got this, you know, this lien thing that we're doing? We're spray paint and colors on our stuff and organizing it. And, you know, so what's in it for me, I think the takeaway for me is you got to, you got to think about we got to do a better job of packaging it for people so they know what's in it for me.

Felipe Engineer  42:44  
I saw timely, timely there cross cross promotion here. Lean Enterprise Institute published an article today on planet lean. That said, here's the lean marketing canvas. And it's essentially it's the it's the business canvas that a lot of entrepreneurs would recognize. But it's for how to market lean inside your organization, or outside the customers because people that do lead don't know how to market. Well. I mean, stereotypically, I'm not talking about everybody. So if you're out there, and you're doing both, yeah. Me too. I remember people asking me, I had a new person start recently, that does become one of my mentees. And she was asking, like, what is lean? I told her what it is, and it's, you know, fundamentally equates to just mindset of learning. Right? Learning is the biggest thing I said, Yeah, there are some principles respect for people super big. If you don't have that, you won't be into anything else. And get to this room, but it's all about having like a learning mindset and always being in a learning mode. And they're like, that's it. That's the big fuss. Like it's that's too simple. Like, it'll take you your whole life to figure it out though. I always laugh cuz cuz you know, like, when you come at it from the outside, and I came at it the same way like I thought, you know, decade ago, it was just, if you just eliminated waste, you'd be lean. And it took me years to not know it that way. 

James Pease  44:16  
Yeah, I don't really even talk about waste with the actually right. I was telling someone the other day. So I've been in my job now at UCSF for a year. And I haven't talked about Lean at all. I've talked about making things visual. I've talked about getting things out quickly and getting feedback on it. You know, this idea Don't let perfect be the enemy of good. Like let's not design this thing forever and never actually show it to anyone. This concept of a validation and getting people on board early. You're not like I need an IPD contract. I'm working with our team like find a way to get trades on board. Early so we can get their input before we go for funding, like figured out how to do that. I don't care how we do it.

Felipe Engineer  45:07  
You can just buy them a breakfast or a lunch, they'll show up and give you feedback if you feed them.

James Pease  45:12  
Right. It was like my whole I went 12 years of my career before I first learned the term free con. And I was like, how did I get that far without knowing something that funny?

Felipe Engineer  45:25  
Obviously, we have a saying in the office all the time, like when someone and preconstruction is talking about this really awesome job, or was like, Well, wait is a free con? Or is it pre con? Yeah. And then then continue the conversation because it will react differently? Yeah, that's the thing. That's the thing.

James Pease  45:42  
But for all my designer friends out there that I think it was David Marr that said this, I don't understand why it's pre con and construction. You know, it's why is it not like design and post design? Like, I don't, I don't get this? And the obvious answer is because design is never done. There's no such thing as post design.

Felipe Engineer  46:02  
Remember, we were doing the thing with the team. Last week, it was the first time ever, the leads of this wanted to go, they're still in programming. So it's way early on. And they're like, why don't we try one of these agile approaches, because the architect is hates last planner system? For some reason, no reason that anyone even knows, like, probably, we didn't even ask, why don't you like it? Alright, so they're like, okay, we'll try this agile approach. And, and the team's like, well, it's good, because we have all this work. We've got like this ton of work to do, like, you know, just the stack of work to do. And it's not getting done in the deadlines in 60 days. And I said, Well, I bet you we do this and you start making the work visual, like you said, we're gonna find out that a lot of this designs already in progress, and we need to slow it down, and actually stopped some of it and let more of it go in the right sequence. And sure enough, when we started visualizing what the work was, we had 10 people on the phone, we're doing it a digital Scrum board. I found out there was all kinds of things in flight James that would not need to be done until like, five days before the big turnover reveal to the client. And we had to pull those things back. And I was like, that's why you got to make your work visual because especially with knowledge work, so much of it's invisible. You got to let people see and then react to what's the most important thing today. Yeah, like so for? What's the most important thing we can do for lean IPD? What's if you're a brand new person coming to the site, where should they go first, just do the integrated project delivery page and read. 

James Pease  47:44  
Just read, there's kind of a summary about some of the key concepts. I define integrated project delivery is kind of a combination of a contract, lean construction principles, and a collaborative culture. And so, you know, it's like we had said, you know, you can do IPD, without lean and lean without IPD if you don't have a culture where people want to work together, and yeah, you have actually have to work at that it happens. But it happens over a real long period of time. And so if you want it to happen faster. So that's what I would suggest. There's a lot of good information out there on lean construction, and just just start to get exposed to it. And I don't think you need to be a PhD in this stuff to start practicing it right. Now get out there and roll your sleeves up and get your hands dirty.

Felipe Engineer  48:46  
But more than anything, get your hands dirty. Yeah. And you guys have been on the you're on the northern California lien community practice core team. At one of your last events. I remember somebody saying, get, you know, get started. And just get started and get started. It could have been you, I think it might have actually been you.

James Pease  49:12  
I have this, this candle that a friend gave me like 20 years ago, and I still have it because I've never lived it. But it's the box says the journey of 1000 miles begins with a single step. Right. So that's, that's the philosophy there, right? 

Felipe Engineer  49:28  
You got to start. You've got to start. You've got to it doesn't matter what contract you're on. You've heard it here from James himself.

James Pease  49:36  
And then here's my other. My other words of advice. I don't I don't think you can read this.

Felipe Engineer  49:42  
I can read it. It says good judgment comes from experience. experience comes from bad judgment.

James Pease  49:52  
So those are my Words To Live By. Yeah. The journey of 1000 miles begins with a single step and good judgment comes from experience. experience comes from bad judgment. That's kind of that's lean for me and in in two quotes, though, that's a that's really interesting. 

Felipe Engineer  50:09  
And I wanted to ask you, you know, you're on lcis board, and you're helping to shape What's going on? Have you ever been on a couple of Congress planning calls, especially when we shifted from pre pandemic knowledge to post as we were originally going to be in Detroit this year in 2020. And now we've gone 100% virtual? What was that? Like, you know, making that decision? We're already where the where there's some debating involved? Or was it just like, it's just a clear no brainer, right thing to do?

James Pease  50:44  
Well, so a little, little background. So I've got involved in the northern California Community of Practice pretty quickly and been involved in that group for about 10 years. And we put on local events. And you know, the venue's get too expensive. And so we've been moving it around trying to make sure that we at least break even on the events and, and so I was the treasurer for a while, and just looking at what does it cost to put on events. And then I just, I had the really the honor to join the national board in January. And so it was clear that people were volunteering for things. And so I volunteered to be on the Finance Committee. And I was the only volunteer for the Finance Committee. So Mike stone, the chair, he called me in like, February, early March and said, Hey, would you be the treasurer? I mean, you really don't have to do much because the finances are pretty locked in. You know, we've we've been consistent for years. But we need somebody to fill that role. And I said, Okay, is if you think it's not going to be a lot of work. You know, I'll take selfishly because I got other things to do. Yeah, and then this thing called that the Coronavirus, hits, and in March, and I was on calls once or twice a week, because you know, background for people without without disclosing everything is that when you put on a conference of 1500 people, you now have to make a commitment three years in advance to have a hotel, a block of rooms, and a conference center that can have with the link construction conference in person is a room that fits 1500 people, but then a whole bunch of you know, 20, breakout rooms for all the other things. And so you need a pretty good size convention center with hotels that can hold that. So in order to get one so we're like Phoenix next year, St. Louis the year are New Orleans the year after. So it's already booked out several years. And so we had to pay a significant amount of the hotels in April, right when it had started. And it wasn't clear if the event was going to happen or not. And so all of a sudden, you start looking at the cash flow going like, wow, we're gonna go from, from having money left at the end of the year that we can reinvest to have a bigger Congress the year after, to, you know, maybe we're not going to be able to put on the event. What's I mean that, then we looked at different scenarios. And the worst scenario, which probably would have happened now, in hindsight, but we're trying to decide in April is this thing is just starting, is to hold the event and have no one show up. That was the biggest, you know, the biggest thing because it costs a lot of money to put on an in person event like that. You know, if you haven't been in person, I'd highly encourage you to go, it's not just a blog, it's, it's really a lot of fun. I consider it like a family reunion. Now, when I go, they see people from all over the country that have similar mindset to you and me that that are out there trying things all the stories are great. presentations are good, but the happy hours are better, way better. Um, so all of that, too. So we started looking at this idea of a virtual conference. And so, you know, kudos to you and the team for really, as you mentioned earlier planning to conferences. Yeah, because the work was really I forget when exactly you do the call for speakers, but in general, you have all the speakers figured out and the April May timeframe right out, right. So typically, so the agenda is figured out, you know, it's kudos to you and the conference planning team and that is an amazing and it's a volunteer effort. It's an incredible left.

Felipe Engineer  54:54  
I remember Jeff Creighton calling me he's the chair and he said Is it too Typically, this much work is like I'm on the phone. It feels like every day, but he's like, I know, it's not every day, but it just feels like it's like, Well, Jeff, you're planning to go to events. And if you allow the team to keep going with this third idea of a hybrid, you're gonna play in three events. And at some point, someone's gonna make a decision. So you've just got to think with a little bit, do you know, who can we talk to you? Who can LCI get involved and figure this out. And they started reaching out to some more of the support people like the conference, conference direct that they work with, and got some really good feedback from, from that team, things that we just didn't have the perspective on. And that helped to inform the team. And as the information came in, it became more obvious, like what should be done. I've heard people today James talking about events that, you know, some people just put their head down, said, we're going to have our event anyway. And no one showed up. I've heard from a couple people that have had, like, even just simple golf things across the country, kind of depends on where you are, and no one comes and then other other places where people practice socially distancing. And, and you see, you know, some smaller form of it happened, but it's not the same. A friend of ours was even talking about just having a friend get together at a dinner for like a, you know, a baby shower, and they just couldn't even do it with the restaurant, there wasn't a restaurant in their area that can handle 20 people showing up dried out enough and spread out enough. Yeah, it couldn't, it could not it could not be done where they lived. I mean, just the lot of change for folks. And one of the lucky things that that we did as a congress planning team was that a, we drink our own Kool Aid, right. And so we know we have to adapt. So when when a change happened, I remember Romano who's on the board to told the team is like this, the enthusiasm that you've guys have maintained, you know, given all the changes are thrown at you has just been unbelievable. And the team is like, well, we have to, because that's just what we do. We have to adapt, we have to.

James Pease  57:05  
I think and also you have a chance to share this Congress with people in a way that hasn't been shared before. Because in a virtual environment. You know, I, in looking at my own budgeting, I mean, it's two to $3,000, to send somebody in person for four days to a conference with flights and hotel room. So it's a significant investment. And, you know, you can attend all four days for for less than $1,000. I forget what the exact pricing is. More people can attend without the travel. And so you know, I think you and the others really got on board with this idea of like, this could be the biggest conference ever. I mean, it's going to be different, it's going to be different for sure, because we've got more days of program, right and shorter days of program, because we all know what that zoom fatigue is real. I read an article the other day about zoom apnea that they've done some studies that you actually stop breathing on conference calls, and you got me laughing so hard, there's no chance of us stepping on this one. So yeah, I think it's I think it's gonna be exciting. Just one other one other kind of joke is if we weren't able to get out of all all the deposits for the hotels, but we still did a virtual event I was going to organize just a massive party. We were going to go to Detroit, see if we can work through the deposit. So instead the the folks in Detroit were excellent. So now that essentially what we did is negotiated to push it out three years so that we will go to Detroit eventually. Probably after the virtual Congress this year, we'll start talking then in December January about whether it's likely that we're gonna have an in person event a year from now.

Felipe Engineer  59:05  
It's hard to say there's so many variables with that but but you're totally right if you have never been to Congress before in person, and I had only started attending my first Congress I think was only five years ago in Chicago was my first one. And I and Yeah, you've got it, you've got to definitely go if you can, and the virtual is gonna be really good. I've, I've recorded all my session, James like a good little volunteer, all my session recordings are done. And I am going to have a blast interacting with the attendees in the chat during my entire presentation because I won't be busy running my mouth like I usually am. Okay to answer questions and, and even connect with people post post event like that's one of the great things about computers practice. I want to plug them too because the networking you can do in the community practice like because of COVID I've been able to participate with Southern California, which I couldn't do as often. Because of the travel, we used to, you know, get lucky and align the stars to be down there for a project reason and then do it. And then even attending your events in this neck of the woods now has been like a no brainer when something comes up. If my calendars open on there, you know, throw my money in, I think you guys charge too little though, should totally go back and forth on that. It's definitely for the value that people get. Like, I remember the the last one that I went to, you had a team from University of California Davis, presenting on an ice on a project and hearing the client talk about it, write it down, I was so excited. She was ecstatic with the team's progress, like hitting where they needed to be with with budget. And being ahead of schedule, the architect working so tight together with the general contractor was refreshing. Right? These are not my words, these are her words, right? And they shared it with everybody. They're just like, here's how we did it. So you have all these people calling in, I think you had some people from overseas, too. You got some international participants as well. And saying, like, look at what can be done. And it's just that that collaboration that happens in that group, I was telling the board at romanova. You know, in the team, and the last time we're early on with this planning team. Where else does that happen? Where else do people just let their guard down? And just be honest about what's going on?

James Pease  1:01:31  
Yeah, this virtual format allows us to, to network more outside? Do we did a virtual meeting, and we implemented the breakout rooms for just networking where you get these little short. And I don't know why I was surprised. But there were people from all over the country. Which was interesting, who I'd never would have met, you know, at a local event. If we're meeting in in Oakland or something. We're not gonna have people in general fly in for the event. But when it's online, people can stop in for an hour.

Felipe Engineer  1:02:03  
Yeah. And you guys do your, your salad talk? What do you what do you do that? That's like, I think that's unique to your group?

James Pease  1:02:10  
Well, there's one thing about you do that continue to do the plus delta is at the end of every meeting, right? whatever's working gets repeated, whatever's not eventually dies off. So I don't know when it started. But the salad chat, is we asked a question to the group when we were in person, they would be at dinner. And during the salad, supposedly, and it's usually a question that's asked to get people to talk to each other. But also some kind of leading question that the presentation will then go much deeper into detail on. And the it virtually at work, too. So we gave people a salad chat for the breakout room. So if they didn't know each other, they had something to talk about. In my case, you know, you end up with somebody you know, and maybe we didn't talk that much about the salad chat.

Felipe Engineer  1:03:00  
Maybe never been at one of your events in Walnut Creek, and I bumped into a lighting design architect, and we were in the sell chat. And that ended up being a great relationship. I got a chance to go tour her office in San Francisco, and we ended up we had some mutual friends. And it's like, wow, I'd never would have been able to do that. Have we not had the salad chat, right? Because I ended up sitting at a table after the salad shower of people that I knew. Like, I see you guys all the time.

James Pease  1:03:32  
You know, there's maybe something to be said to for if you truly buy into this idea of continuous improvement, it means that you're open to the fact that whatever you're doing today is not as good as it can be. Yeah, right. So you're there's an inherent humbleness, like, I know what I'm doing can be better and that I need to go learn from other people and I need to improve. So the point of that is like you put a room of people that are just open to say, Hey, I tried this, and it didn't work. And I find that those relationships become really good relationships. And a lot of those people I consider to be friends that I've I've worked with over many, many years, where before I got involved in LCI, just the lean construction in general and IPD. When you finished a job, he never wanted to see the people again, right? It was like, I cannot wait until this job is over. And I never have to work with these people again. And my first IPD job finished and you know, a bunch of the different trades and the designers we got together for dinner, and celebrated a job well done. And I was like, I want to do that again. Yeah,

Felipe Engineer  1:04:44  
that was cool. That's very cool. Those are rare and you're lucky, lucky, lucky. You've had so many of those happen time every time and you forge extremely deep relationships. 

James Pease  1:04:58  
So there's a lot of good people out there, right if you but you got to be at the job that they, in IPD the smartest best people are your allies. And if you have an adversarial contract, the smartest best people are going to be kicking your butt every day. They're gonna outwork you, again out hustle, you know, I'm like, Hey, I'm not that smart. I don't, you know, I get better get these guys on my side. And I better get these teams on my side to help out.

Felipe Engineer  1:05:29  
Yeah, that's really good. I like that. That helping mode that you're in. And I want to, I want to close down our little talk on that positive helping mode. You went back to things that I like and that's just thinking about there are other people have figured it out that can help you. I definitely agree. And you've been great, James. You know, sharing your time with people in some of your insights definitely made me laugh a ton. I want to go back and I'm going to share that, that sign with my son. And as I tell him, like whenever he has a hard day is like what a great character building day it was right? We learned more from the hard days than the good days sometimes. Absolutely. That's great. But yeah, thank you man for coming on the show. Really appreciate you being here.

James Pease  1:06:16  
Well, Felipe, I appreciate you inviting me and and just keep it up. I love that you've got this podcast going and I love the content that you're putting out and I think you're gonna make a difference. So thank you for that.

Felipe Engineer  1:06:29  
Thank you, James. Thank you.

Very special thanks to my guest. I'm Felipe Engineer Manriquez. The EBFC show is created by Felipe and produced by a passion to build easier and better. Thanks for listening. Stay safe, everybody. Let's go build!