Federal Policies to Foster Innovation and Improvement in Constructed Facilities: Summary of a Symposium (1996)

The purpose of the workshops on leveraging federal capital investment to promote innovation in the U.S. construction industry was to gain ideas and recommendations from a broader segment of the participants, particularly those from the federal sector. They made recommendations to assist the federal sector in overcoming the perceived barriers to innovation and, in turn, foster innovation and improvement of federal facilities. There is a general belief that by fostering innovation in federal facilities, benefits will accrue to the U.S. construction industry as a whole. As we have heard, other national governments directly and indirectly foster construction innovation.

Three separate workshops were convened covering technology, federal government roles, and management approaches as they relate to leveraging federal investment to promote innovation. The workshops offered the opportunity to develop substantive recommendations for policy makers to consider for eventual implementation. Participants were asked to concentrate on those areas that were perceived to be the dominant barriers to innovation and whose elimination would have the most positive impact on the process. Participants could also provide recommendations concerning those barriers which could be eliminated with only a minor change in the system.

The participants in the workshops recommended a number of actions that could be taken to leverage federal capital investment to promote innovation in the U.S. construction industry. Each of the three groups developed separate recommendations, which were not prioritized nor did they necessarily represent a consensus of all of the participants. The recommendations were as follows:

1. Develop a national policy statement on how the United States will use technology to achieve an improved living standard, increased employment and managed growth in an environmentally responsible manner. Such a policy statement is needed to establish a direction for federal agencies and others to follow. In Japan and some other countries with more centralized control, the government sets the vision and the policy for innovation and technology. In the United States, the construction industry is fragmented and so is government policy as it relates to construction and investment in R|andsymbol|D. Even when the government does invest in R|andsymbol|D and provide some policy direction, there is still a fear on the part of industry that the commitment will not be long term because of the way the government is structured. As a result, companies and government alike are hesitant to develop a long-term vision and make the needed investment in new technologies. The Civil Engineering Research Foundation's (CERF) Conference on “Engineering and Construction for Sustainable Development in the 21st Century,” to be held in February 1996, may be an appropriate forum for initiating discussions of a national policy statement.

2. Encourage more partnering of government with the construction industry and more partnering within and between federal agencies. In the Netherlands, the equivalent of an Institute of Civil Engineers tends to hold together a partnership of universities, contractors, labor and government. In fact, labor is allocated 1 or 2 percent of the money that goes into construction projects, primarily for training purposes. This type of partnering is occurring only to a limited extent in the United States, due in part to the fact that neither the government nor a voluntary organization controls the construction process. To foster innovation and technological advancement, the federal government should reorient its thinking so that it can better identify industry 's problems, align these with the problems the government is trying to solve, and then work together to arrive at an arrangement that will serve both interests optimally. The construction materials (CONMAT) activities at CERF provide an example of the type of partnerships that might be forged to allow the government to interface with industry to try to match technology needs. In this regard, federal agencies, as owners, should become more proactive in establishing partnerships and in developing internal practices that foster technological development.

3. Develop a Construction Excellence Center. There is a continuing concern that not enough long-range research is being done. A center could be established on neutral ground, such as a university and could foster greater owner involvement in innovative technologies. Such a center would be a partnership of government, the construction industry, and academia. The government could fund basic R|andsymbol|D and testing, industry could fund product development, academia could serve as a catalyst, and together they would develop products for the commercial market. The government should consider earmarking a small percentage (1 or 2 percent) of the monies that are

appropriated for federal sector construction to facilitate innovative technology development, demonstration, monitoring, and evaluation and for commercializing innovative technology. Federal agencies should proactively seek to serve as testbeds for innovative technology and should be involved at all stages.

4. Recognize the role of government primarily as an owner of constructed facilities and less as a regulator. Within agencies, there are three groups of owners: the project managers of design and construction, who are generally represented on the Federal Facilities Council; those who use the facilities; and those who are responsible for planning and funding facilities. As an owner, one of the government's obligations is to become a model for excellence, with all of its ramifications.

5. Involve the government as an innovator and a catalyst for change with controlled risk-taking because of its heavy involvement in construction. This does not mean that federal managers should be irresponsible in that role. They should play a leadership role in seeking to improve government facilities and thereby invest in necessary R|andsymbol|D technology to assist in accomplishing that. Such R|andsymbol|D and demonstration projects should satisfy the government's role as a smart buyer and a model for excellence. The government has the infrastructure resources to do this: the General Services Administration alone has access to tens of thousands of buildings, the Federal Highway Administration owns 6 percent of the nation's roads, and the Corps of Engineers owns a wide variety of facilities across the country and around the world. Federal agencies could lead the way in prototypical construction and in R|andsymbol|D on emerging technologies for the future.

6. Develop the government as a proactive knowledge/technology transfer agent. Through electronic communication and other devices, the government should serve as a repository and a disseminator of knowledge on innovative technologies. That is a unique collaborative role where government agencies could be more active.

7. Have the government serve as a coach rather than a referee. Government should be taking a leadership role in promoting innovation, rather than sitting back as a judge and deciding what should be done and what should not be done.

8. Define what constitutes innovation for federal managers. Is it technology, methodology or processes? It may be all of these and more. All aspects of innovation must be addressed, not just the technological aspects. It is possible that process changes will produce the greatest improvements and

savings in the long run. The cost of the structure perhaps is not the major cost. There are other ancillary costs that impinge upon the project, which may affect a greater savings than the cost of construction itself. The planning stage may be the time to realize greater improvements and savings, and federal managers should look further at whether there are opportunities to make a smarter investment.

9. Encourage federal managers to take a 'holistic approach' to facility construction. Federal project managers need to focus on the whole project, process, or system, instead of addressing discrete aspects and forgetting how they relate to the total process. In the long run, management has to develop a vision of the total process of innovation.

10. Develop alternative contracting approaches that may be applicable to different types of projects. Fixed price contracting does not seem to be very conducive to innovation. With the linear process of design, construction, et cetera, there is no place or incentive for each of the various partners to be innovative. The entity doing the innovation probably does not reap any benefit but does carry some risk. In the long run, the benefits accrue to the owner or user.

There are a variety of contractual systems available, and the emphasis should be on getting the best projects from the best resource allocations, whether that be time, money, personnel, or processes. Many of the large construction companies and owners have a wide variety of contractual techniques that are used, and they have to be geared to an individual project. Incentive, lump-sum design-build, and design-procure-construct contracts are all very effective under certain sets of conditions. The obligation of the project manager is to exploit the available tools that lend themselves to a particular project. Contracts do not necessarily make good projects: they are just a tool that enables communications to flow.

Design-build, negotiated and other forms of contracts provide a greater opportunity for innovation. Federal managers have to become marketers for the improvements that are to be gained from these alternative contract forms and how they can benefit the government in the long run. Managers need to be selective and choose their projects carefully, then use those projects to demonstrate to decision makers and policy makers that there are distinct advantages in alternative contract forms.

11. Develop credible tools to demonstrate the benefits of innovation. Currently there is no system that effectively communicates to cognizant people within the government what the benefits of innovation are or even what the innovations may be. A system to communicate this information throughout the federal government should be developed. There is a tendency to just recognize technical benefits from innovation, such as the life-cycle cost, the energy cost, the original cost, the interest, and so forth. The government needs to take a

broader perspective that looks at the social and personal benefits that may derive from innovation by improving living and working conditions and productivity. Means of promoting the benefits of innovation and explaining the advantages in taking some risks need to be identified. As there is a short-term investment cost, the government also needs to provide some money at an appropriate place in the budget process as an allowance for innovation. Managers have to prove to decision makers that there are benefits in innovation in order to gain their support for making such allowances.

12. Empower federal managers with risk resources. The federal government, as an owner, has to assume part of the risk of innovation. There has been a tendency in the past to pass risks to the contractor or other entities. Federal managers need to be more venturesome in promoting risk sharing. They are not entirely stymied by federal rules which are sometimes used as excuses. Commitment and support on the part of top management is essential. Managers also need to educate the budgeteers and the financiers, to gain their support for risk taking.

13. Ensure there are technical experts within government agencies to evaluate the potential risks. In an era of downsizing and out-sourcing, federal managers need to maintain the requisite technical background within the organization to make the appropriate risk decisions. This goes against the present philosophy of wholesale cut-backs but it is something that federal managers have to keep working at, to convince the decision makers that appropriate federal expertise is necessary.

14. Differences among agencies must be recognized. It will not be possible to standardize management approaches across the entire federal government. In looking at management practices, it should be recognized that the different federal agencies have a uniqueness, different missions, and different types of projects. One size does not fit all. However, federal managers can promote a centralized approach within each of the agencies.

Harvey M. Bernstein is President and Chief Executive Officer of the Civil Engineering Research Foundation (CERF). He has established and guided one of the most influential national nonprofit organizations focusing on civil engineering research. With the American Society of Civil Engineers (ASCE), Mr. Bernstein created an industry research foundation which integrates diverse groups within the civil engineering community to facilitate and coordinate common solutions to complex research challenges facing our nation and the civil engineering profession. Mr. Bernstein is a member of the American Society of Civil Engineers, the American Society of Mechanical Engineers, the American Public Works Association and the Transportation Research Board. Mr. Bernstein received his B.S. in civil engineering (cum laude) from Newark College of Engineering (now New Jersey Institute of Technology) in 1967; an M.S. in engineering from the Department of Civil and Geological Engineering at Princeton University in 1968; and an M.B.A. from Loyola College in 1978.