Cost study: Warwick University International Manufacturing Centre

<B><font size=”+1”>Warwick University International Manufacturing Centre</b></font><B>Project</b>
4400 m2 third phase of a four-storey university building for engineering research and teaching.
<B>Location</b>
University of Warwick campus, near Coventry.
<B>Cost and procurement challenges</b>

• Outline scheme was 10% over available budget.
• A reduced timescale ruled out traditional procurement through full bills of quantity and a lump-sum tender.

<B>Cost and procurement solutions</b>

• Egan-inspired partnering approach (project adopted as Movement for Innovation demonstration project).
• Appointment of same architects and QS as in earlier phases.
• Highly effective value-engineering involving contractor and user.
• Fast-track procurement through management contract.

<B>Cost</b>
Unit construction cost: £995/m2, excluding university fit-out.
<B>Construction period</b>
Fully operational ground floor handed over for fit-out within 10 months; whole building within 12 months.

<B><font size=”+1”>Procurement challenges</b></font>The original brief for the centre was to provide a functional engineering, research and teaching building to house the various activities of Warwick Manufacturing Group. These included a double-height virtual reality centre, computer labs and other academic facilities. The university required a building that could be constructed in phases, and a design that would properly reflect the image and purpose of the group and its partners in industry.
The first two phases were constructed in 1994 and 1997 by traditional procurement and suffered a number of the problems that are often associated with clearly separated client, design and construction responsibilities. In 2000, the Warwick Manufacturing Group was awarded a £4.25m grant by the government and Wellcome Trust Joint Infrastructure Fund to complete the building’s third and final phase. By the time that the necessary approvals were in place, inflation had eroded the fixed budget to the point that the scheme was 10% over-committed at outline design stage, and the user’s requirement for early occupation had cut six months out of a 24-month programme normally required for traditional procurement.
To achieve improvements in time and cost, an Egan-inspired approach was adopted involving partnering and a management contract that placed the price and design risk with the client. Although this approach called for a leap of faith by the project team, it was considered necessary to achieve several key changes:

• Design consultants and management contractor could be appointed on perceived value rather than lowest price.
• The entire project team could appraise and draw lessons from previous phases together.
• The team could subject the project to value management and value engineering exercises.
• Design and construction expertise could be more readily accessed and shared.
• Supply chain management could be improved by the designers contributing to analysis of works package tenders, and by works contractors and management contractor carrying out a continuing performance review.

Despite the rather uncomfortable feeling of being on unknown ground, the university believes that the project team have delivered benefits in terms of time, cost and certainty.

<B><font size=”+1”>Architectural design</b></font>The design draws on materials used elsewhere on the campus: blue engineering brick, white spandrels, and profiled aluminium. The bricks, as a material “from the earth”, are used on ground and first floors to express a heavy base for the building. Higher than that, brickwork is only used on the four stair and lift towers, which mark the corners of the engineering hall. In contrast with the solid base, the upper storeys reach out in a series of steps, with hanging white cladding panels, the thinness of which is expressed at the sharply pointed ends of the building.
Inside, the building uses colour sparingly to pick out significant surfaces. For example, red is used to mark the boundaries between the three phases of the building.
A light footbridge links the building back across the main university ring road to the rest of the engineering school. A second, internal, glass-floored footbridge spans the engineering hall at second-floor level linking phases one and three, and giving an overview of the constantly changing activities in the engineering hall below.
The front end of the building forms the edge of an oval courtyard, a gateway to the new extension to the campus. At the rear, a service yard is enclosed by sculptural containers of utilitarian objects: a store, chiller compound and substation.
<B>Design improvements in phase three</b>
For the third phase, time and cost savings of 5% had to be found to meet the budget and deadline. This ruled out the re-use of detailing from the previous phases. On the other hand, the client stressed that the design should not be dumbed down through value-engineering, as the third phase was intended to present a finished building that would project a prestige image for the department. At the same time, a significantly higher energy target was set.
By using the completed previous phases as a benchmark, real and measurable savings were achieved. By involving the clients and end-users in this process, value-engineering was focused on real needs rather than the project team’s notions of what might be important. The benchmarking system was one reason why the project was adopted as a Movement for Innovation demonstration project.
The value-engineering process resulted in a wide range of design changes from earlier phases:

• Steel frame adopted instead of concrete
• 6 m × 6 m structural module adopted instead of 6 m × 9 m
• Use of high-finish precast planks.

In themselves, these structural modifications were no cheaper. But they made significant savings to the programme (and therefore prelims); the ready-finished ceiling finishes cut out the expense of applied finishes; and the shorter spans reduced the depth of the beams, which in turn reduced the area of the building envelope.

• Mechanical plant is distributed throughout the building. This improved the efficiency of duct runs and sizes.
• Translucent glass Kalwall wall panels were specified where appropriate instead of steel framed curtain walling. Kalwall insulated wall panels that could be rapidly installed improved the envelope cost and programme. At the same time, they contributed to a 28% improvement in the energy efficiency of the envelope.

<B>Cutting corners, not quality</b>
An appraisal of the patterns of use in the existing phases, coupled with early consultation with building control, identified that the central stair could be omitted, releasing money and useable floor area. Front-of-house and back-of-house areas were identified with the user, so expensive finishes could be focused on areas of most value, with other areas relying on pared-back finishes and details. The use of exposed concrete floor soffits and services in the academic offices released money for more expensive finishes on the main access stairs and on the glass-floored bridge slung across the engineering hall. The exposed floor soffits also served as a heat sink that would lower the cooling load.
The use of the management contract in phase three gave the design team several months to assess and negotiate details of construction with the individual works contractors at the time of tender. This resulted in fewer site queries and forced variations during construction than would have been the case under a traditional lump-sum contract. It also fostered a non-confrontational approach on site, contributing to the completion of the building within time and on budget.

<B><font size=”+1”>Procurement</b></font>The original intention had been that phase three of the International Marketing Centre should be procured through either a traditional third-party contract or a design-and-build contract, as had previous projects at the university. However, as an early completion date had been laid down by the building’s end-user, such traditional contracts would not have been feasible. Instead, a fast-track procurement strategy was called for that would allow the design and construction processes to overlap.
Project quantity surveyor Northcroft suggested a two-stage management contract, with which it has had considerable experience. But the adoption of this route would be a significant step for the university estates office, not just because cost certainty could not be achieved until after the project had commenced on site, but also because the cost risk would remain with the client. However, the estates office became convinced that, with a robust cost plan and the earlier involvement and integration of a contractor into the project team, the desired result could be produced.
In parallel with the developing design, the estates office investigated how a management contractor could be selected on best-value criteria rather than on lowest price, and how to adopt a partnering approach with an open-book accounting policy. From the contractors that replied to the European Union Official Journal advertisement and were selected for interview, two were asked to provide benchmarking information relating to preliminary costs, percentage for management fee and the application of main contractor’s discounts. On this basis, Interserve Building was selected as the preferred partner.
In order to maintain a competitive element, all subcontract packages were tendered. Interserve drew up shortlists of subcontractors from its supply chain, which could be supplemented by firms proposed by the designers or the estates office. After tenders were received, a rigorous investigation was undertaken by all members of the project team. This process clarified costs, design issues, information required and interface between various package contractors. The time devoted to this process reduced the queries during construction.
Costs were managed against the agreed contract cost plan. Some 75% of the value of the project had been tendered and agreed before commencement on site, and 95% had been achieved within the first 10 weeks. Cost certainty could have been achieved sooner if the management contractor had been appointed earlier.
As this was a new departure for the estates office, it asked Northcroft to set up a one-day seminar on management contracting for the whole project team. By the end of the seminar, a dozen performance targets were set, against which the project would be assessed on completion.
At the end of the project, the team acknowledged that one performance target it failed to meet was the early appointment of the management contractor. However, the remainder of the performance indicators were all met or surpassed. They included a design process that was properly managed and unhurried, careful and minimal changes by the client during construction, and clearly defined co-ordination of the works responsibilities and liabilities.
The university had taken a bold step in adopting this approach and was rewarded with a building delivered on time, to budget and with a quality that matched the user’s requirements. Two further university projects are now being procured using this approach and incorporating the lessons learned from this successful project.