Why is it so Hard to Hit a Timeline?
“How long does it take to open an ASC (ambulatory surgery center),” is a question we are often asked by potential physician clients. In a Certificate of Need State, we tell them, it is usually around 18 to 24 months. However, a Gantt chart that we present with key steps such as construction, legislative approval, securing a site etc., only shows 16 months. An astute physician once asked us, ‘why the delta?’.
“Well, the 16 months can be done in theory, if nothing gets delayed.” But this never happens, so we present the more conservative 18 to 24 month estimate, which assumes a range of delays – all above zero.
This reminds me of a former head of a mining conglomerate explaining to me how we once presented to the board on a new mining project, and a young board member asked with unearned authority why there was a 10% cushion in the budget for ‘unknown field conditions.’
‘Well, that’s standard.’
“But can’t we target a lower number? If you don’t know of anything, shouldn’t you make it zero?”
“We never know what it will be, but there will always be something. Never in my career has there been nothing unexpected.”
Which is kind of the point.
It’s the same with delays (and for that matter a new ASC budget too). You can’t know where the slippage will be, the only thing you can know for sure, is that like death and taxes, there will be slippage.
A project requires thousands of steps, coordinating between dozens of individuals across multiple specialties. There is a limit to how quickly and perfectly each of these tasks can be completed, but their ability to be delayed is virtually infinite – it’s a highly asymmetric bell curve. From the mundane (delaying an email a single day means it’ll take one extra day to receive a reply) to the catastrophic (losing your lease), there is always something that comes up.
Think about just the construction part of the project – below are delays that have previously occurred on actual projects of ours:
· A Manhattan building had no cabling or connection for wi-fi (delay mitigated)
· A cold snap meant the contractor had to pause work on the floors (one week delay)
· A contracting company suffered an unrelated scandal, lost money and didn’t have the workers to finish (mitigated)
· A small fire was started next door due to work done on the site near a buildup of lint (2 weeks)
· Existing elevator didn’t have a necessary license (mitigated)
· Asbestos found in ceiling (3 weeks)
· Nearby bank complained about construction hours (extra construction time)
Every type of problem that you can think of, and many that you can’t. We are still waiting for the day we dig into a foundation, find an old skeleton and need to shut down for the detectives to case the scene as is so common in crime shows, but we won’t rule it out.
The upshot is, that while some delays can’t be avoided, a good management team should be able to mitigate them:
Be the squeaky wheel
To develop an ASC, a management company must deal with a plethora of counter parties, including lawyers, architects, designers, contractors, sub-contractors, equipment vendors, lenders, landlords, permit offices, engineers and more; all of whom have other clients and priorities. Some will be strong and organized vendors, some will be less so, but all of them will at times be focused on other tasks and clients or not have you top of mind – punting something that can be done today, to tomorrow.
The best way to mitigate this is communication and encouragement. Lots of follow-up emails, lots of check-ins and finding that delicate balance between being persistent but without micromanaging or being rude, and generally doing your best to not drive the counter party insane.
Keep Checklists
As the Chinese proverb goes: “the faintest ink is more powerful than the strongest memory.” Checklists aren’t glamorous, but they are effective. It’s mindboggling how many items we must keep in our heads each day, and it is amazing how many we do in fact remember. But there are still many that we forget. It’s illuminating to read through old notes and be reminded of ideas and conversations that have completely escaped your mind. Even the most organized people will let things slip. But if you review a checklist and see a date, you are far less likely to forget one of the hundreds of documents that need to be filed, and the many milestones that require follow-up.
Frequent Review of Limiting Steps and Priorities
Not all delays are created equal. It is the role of a high-level development partner to know what items are most important and most likely to result in a delayed opening. Securing debt financing is an example of something where there should be plenty of time and it shouldn’t contribute to slippage. While a CON application is being reviewed by the DOH, there are a couple of months to speak with lenders, present pro formas as well as the Members’ financial profiles, review term sheets and work towards documentation. If your banker is away for a week, or doctors are slow getting in their personal financial statements, it shouldn’t’ matter, so long as there is funding available to begin engineering and construction and none of this is delayed due to not having cash on the ready. Construction on the other hand, is a time-limiting step, there is a one-one for one relationship between each day of delay and extending the opening date. And finally, other items are probabilistic. We like to race to submit all items to the DOH, because once it’s been sent, the clock has stopped on our side – it is now up to wheels of bureaucracy to turn. We can’t know which cycle we will be on, but the sooner we submit, the better the chance it will be reviewed one cycle sooner and save a couple of months.
Each project for us is a new challenge to provide excellent client service and transformational results to the doctors’ practice and their business; and a key part of this is to deliver results on time and on budget.
