Techniques for Cost and Quality Control: Initiatives at The Department of Veterans Affairs

Lloyd H. Siegel

Department of Veterans Affairs

The stewardship and management of a large facilities system obviously presents its own challenges and lessons. I will address some initiatives in the Department of Veterans Affairs to better control project quality and costs.

The Department of Veterans Affairs

When people think of the Department of Veterans Affairs (VA), they think of the ''Bradley hospitals'' from the 1950s—the tall, thin, multi-winged brick buildings built all over the United States after World War II when General Omar Bradley was the agency's Administrator. But the VA has a highly diverse and extensive inventory of facilities. We have about 1,000 facilities, representing 4,500 buildings and 235,000 employees. We own 137 million square feet of space, and lease another 12 million.

Our inventory includes some startlingly beautiful places, such as the new Massachusetts National Cemetery in Bourne, Massachusetts, the very handsome Victorian buildings at the campus-like Veterans Affairs Medical Center (VAMC) in Levinworth, Kansas, and the ultra-modern replacement hospital in Portland, Oregon. We have some very tiny buildings, like a commitment shelter in Michigan at the VA cemetery outside Battle Creek, and enormous facilities, like the new VAMC in Houston. Our facilities include a recent $25 million clinical addition to the Westside VAMC in Chicago, nursing homes, and even vehicles that serve as mobile clinics in rural areas and which helped the VA serve Hurricane Andrew victims in



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--> Techniques for Cost and Quality Control: Initiatives at The Department of Veterans Affairs Lloyd H. Siegel Department of Veterans Affairs The stewardship and management of a large facilities system obviously presents its own challenges and lessons. I will address some initiatives in the Department of Veterans Affairs to better control project quality and costs. The Department of Veterans Affairs When people think of the Department of Veterans Affairs (VA), they think of the ''Bradley hospitals'' from the 1950s—the tall, thin, multi-winged brick buildings built all over the United States after World War II when General Omar Bradley was the agency's Administrator. But the VA has a highly diverse and extensive inventory of facilities. We have about 1,000 facilities, representing 4,500 buildings and 235,000 employees. We own 137 million square feet of space, and lease another 12 million. Our inventory includes some startlingly beautiful places, such as the new Massachusetts National Cemetery in Bourne, Massachusetts, the very handsome Victorian buildings at the campus-like Veterans Affairs Medical Center (VAMC) in Levinworth, Kansas, and the ultra-modern replacement hospital in Portland, Oregon. We have some very tiny buildings, like a commitment shelter in Michigan at the VA cemetery outside Battle Creek, and enormous facilities, like the new VAMC in Houston. Our facilities include a recent $25 million clinical addition to the Westside VAMC in Chicago, nursing homes, and even vehicles that serve as mobile clinics in rural areas and which helped the VA serve Hurricane Andrew victims in

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--> Miami, when most hospitals other than our VAMCs were out of commission. The VA itself is relatively new, but the care of those who have served to defend us has a long history in America, as it does all over the world. The leaders of the Massachusetts Bay Colony at Plymouth used the promise of care for veterans as a recruiting tool in their wars against the Indians. Today, VA's primary clients are 27 million veterans and their families. Our budget in 1995 was $39 billion. Construction represents $1 billion, and facilities in the pipeline add up to $5 billion, not including leases and commissioning, which we call activation. Our leased facilities and enhanced use facilities, accounting for $106 million and $10 million respectively in 1995, will become more and more important as time goes on. Quality Management and Control The VA has been moving on several general fronts to achieve better quality control. Our standards are evolving, more often shared today across federal government than simply departmentwide. They benchmark with comparable private sector practice, and more often take the form of guidelines rather than rigid mandated criteria. They focus more on performance, instead of being prescriptive. They are more often multidisciplinary. Finally, they are designed to be user-friendly and oriented to their particular audience. The VA Design Guides. Our design guides prepared in this spirit include one on the hospital's surgical suite. The Surgical Service Design Guide was largely based on computer-aided design (CAD). In developing it, we first looked at general operating rooms from each the last 12 major facilities the VA had constructed. All of these facilities had been designed with exactly the same criteria for air changes, lighting, and other engineering requirements. Yet we had 12 examples that still differed significantly in lighting, ventilation, locations for the entry of medical gases into the room, placement of surgical lights, and so forth. Some were ideal only for left-handed surgeons working with right-handed anesthesiologists, and so on. But they all started with the same basic discipline-focused criteria that we had used in the past.

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--> We then put together a team of surgeons, nurses, administrators, architects, and engineers, and developed a narrative statement of what needs to happen in this hospital area. Our next step was to chart the flow of the many different activities that happen in those spaces. Then we created figures, each symbolizing a person performing a different kind of activity, and together with the surgeons and others we moved them around. We got down to the precise movements necessary for the surgical procedures. This information determined where the walls and the various pieces of equipment should be placed. In turn, these decisions indicated where the utility connections should be. The surgery plan derived from all of that information was a plan that happened to be very similar to that of our Houston VAMC. This plan is something we now include as part of our design guide for surgery. It is the consensus of a very large interdisciplinary group of people about the best arrangement to support surgery "today." But it is not a standard. It is a guide. You may choose to do things differently in your new or renovated space, but at least you, working from this knowledge base, know why you need to do it differently. The guide provides a relatively solid base, with reference to the latest technology and professional experience, compared to more arbitrarily chosen plans. Of course, along with this, the guide includes all kinds of notes about the rationales for the decisions and the ramifications of certain choices. There is a summary of the various basic criteria for the room, and an equipment list. We used this approach to develop guides for all the different rooms within the surgical suite, as well as for a new ambulatory surgery design guide. We have had good feedback about the use of the design guides. In fact, some of our other customers wanted the design guides so quickly, they paid the salaries of staff assigned to us, so that their guides could be prepared faster. Cost Management and Control Analysis of Change Orders. As managers of a large base of facilities, we also tried to identify areas where we had the opportunity to save money. In the past, change orders were examined strictly on a project-by-project basis. If they did not exceed a certain percentage for that project, everything was fine. If they exceeded that percentage, we had a bit

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--> of a problem. If they exceeded a still higher percentage, something more serious was afoot. We decided we ought to examine the change orders, which represent roughly 5 percent of the total project expenditures, and claims, which represent another 5 percent. We were spending $34 million a year on change orders and claims, and perhaps we did not have to spend all of it. We wanted to see whether the change orders had common features. If they did, perhaps something could be done. We began to look systematically at change orders across projects and established a nonadversarial reporting system to analyze the change orders' rationales. We decided that the best analytical approach was to tie any problem occasioning a change order to a specific reason and also to a specification section. We used two existing financial reporting systems, tweaking them a bit, and we reassembled our data into what we refer to as the Proactive Claims Automated Tracking System (ProCATS). Table 1 shows an early analysis. TABLE 1. Reasons for Change Orders Issue Index Number of Changes Change Amount (Dollars) Percentage of Total Dollar Value (%)1 A—Design Error 511 2,509,635 21 B—Design Omission 509 2,975,612 25 C—Unknown Con. 223 2,539,581 21 D—Program Change 68 748,174 6 E—Tech./Admin Dec. 227 1,009,660 6 F—Phase Design/Con. 24 64,537 1 G—Value Engineering 1 18,000 0 H—VAMC-Requested Change 104 2,055,059 17 TOTAL 1,667 $11,920,258     Source: Department of Veterans Affairs, Facilities Quality Office 1   Percentages do not add to 100 due to rounding

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--> We discovered to our surprise that the general reason for 25 percent of change orders was design omissions. Twenty-one percent were attributable to errors. Another big surprise was that 21 percent were due to unknown conditions. Seventeen percent, a lower proportion than we had previously thought, resulted from changes requested by the facility user. In reanalyzing by specification section, we discovered that 16 percent of change orders—an unexpectedly large number—came under site work. Another 25 percent were in mechanical engineering, and 17 percent in electrical engineering. We then analyzed the changes within each specification section, for example, heating, ventilating, and air-conditioning (HVAC), by the general reason for the change. For HVAC, we discovered that program change accounted for 17 percent of change orders, and design omissions for 31 percent. But this was not yet enough information. We had to analyze it further. At the level of the division of the specification system we began to see some very interesting things. For example, we discovered that in one year about 1,000 change orders were associated with water coolers. The electric outlet was missing, or the plumbing connection, or the wall material behind the water cooler was not right—there were many different reasons. But 1,000 water coolers! We also discovered specifically that we were paying $1.2 million annually because in many cases no wiring was shown on the drawings between switches and motors. Design Alerts. As one result, we began to issue design alerts for problems occurring during construction, many of which had the potential for hazardous results. These documents go out electronically to the field to all construction sites, to all medical centers, and to the architect-engineers who work for us, so that they will avoid these problems. AE Quality Alerts. We also issue a series of documents that we call architect-engineer (AE) quality alerts. These are specifically subtitled "Avoid Errors, Omissions, and Costly Liability." These documents are prepared by discipline (architecture, electrical engineering, etc.) and by project phase, with separate AE quality alerts for schematics, design development, and construction documents. While some of these items seem to be obvious problems, these obvious problems have caused change orders time and time again (e.g., "Do not locate air intakes where trucks idle at the loading dock").

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--> Conclusion We correct our specifications and other guidelines and standards as soon as we discover dangerous or recurring problems. We also have received universal praise for our design alerts, and AE quality alerts, and have recently received a Vice Presidential Hammer Award for these efforts. A next step will be attempting to quantify savings. As for looking down the road at long-term directions, I can only quote Yogi Berra: "I can predict anything but the future."