"The Ronan Report" provides insight about the activities at the Western Maryland Health System in Cumberland, Maryland, and about the changes taking place in healthcare today from a CEO's perspective.

Tuesday, September 29, 2015

On Time and Under Budget

As November approaches, it will be six years since we moved into the "new" hospital. I was reminded of the success that we had when we were nearing completion of the building process during a meeting last week.  The audit partner from KPMG was rotating off of the WMHS account and, during the Audit and Compliance Committee, he took a walk down memory lane in his farewell remarks.  He commented on the "new" hospital project coming in on time and under budget.  He said that in all of his years in accounting and auditing, he never saw a project of this magnitude come in on time let alone under budget, especially a new hospital.  

My thought at the time was if you only knew how difficult that it was to accomplish.  Without strong, direct oversight neither would have happened.  Toward the end of the project in 2009, we were told that there was no way that the project would be completed on time.  We were told that instead of a November opening, it would be more in the February / March timeframe.  Our contractor was reminded that we were a hospital and that we planned our completion around our less than busy season.  Their revised completion date would put us the middle of our peak season with flu and pneumonia.  They were told that we would enforce our agreement and there would be penalties for every day that they missed our original completion date.  Fortunately, we prevailed but it wasn't easy.  

What also wasn't easy was keeping the project under budget.  The intense oversight that was involved by Kevin Turley, the VP in charge of the project, and Mike Smith, our Internal Auditor, were the reasons for our success.  The financial aspects of this project could have been equivalent to a runaway train if those building the hospital were given the opportunity.  They would submit receipts for the pay application without any detail, which we would not accept.  There was obviously a great deal of pushback and evasiveness, but we prevailed.  We would also have Mike Smith audit every pay application before any payment was awarded.  This process alone saved hundreds of thousands of dollars, if not more.  We applied a number of techniques to ensure that the project remained on budget and fortunately, we were successful.

There is a new book out called F.I.R.E. by Dan Ward, which focuses on Fast, Inexpensive, Restrained and Elegant methods for leaders when involved with projects. He copied the term F.I.R.E. from the military's approach to project work, Fast, Inexpensive, Simple and Tiny (F.I.S.T.).  Ward says Fast is for having a short schedule; speed is important, don't let the project be dragged out.  Amen!  The Inexpensive doesn't mean cheap; it means exactly what we did by effectively managing the construction and payment process.  Restrained means tight controls, a small group providing oversight and a well-defined schedule to which all are held. Very important as we found out first hand.  Ward's Elegant represents elegant simplicity.  Don't make the project more complicated than it has to be.  He says that you can have true sophistication as well as true design and process maturity through deep simplicity.  

I can certainly get on board with Fast, Inexpensive and Restrained; I am having a little difficulty with Elegant.  No matter how hard we tried, there was nothing simple about bringing this "new" hospital from the drafting table to reality.  Fortunately, we ended up with a wonderful outcome, but it took a great deal of time and oversight of the project for it to be known as such an exceptional outlier--being on time and under budget--in the eyes of our audit partner.

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