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Building Blocks

Constructing a building is a complex, precarious process, which requires collaborative effort with particular focus on quality from all sides. New technological advances in the construction industry are advantageous for both contractors and pharmaceutical companies

Pharma companies make substantial investments in their R&D laboratories, manufacturing facilities and quality management systems – not just because they are heavily regulated, but like any manufacturing industry, their customers expect and rely upon the product they purchase being of the requisite quality and performing, when used, in accordance with the clinical information published. Usually, pharma companies get their products right first time, whether these are generic drugs to be purchased over the counter or advanced therapy medical products.

By contrast, the construction industry is not known for constructing buildings that are ‘right first time’. This reputation may not be wholly deserved, as there are many contractors and suppliers who do construct and develop a quality product. However, the building of a manufacturing facility requires dozens of such contractors and suppliers, each of which is reliant upon the other parties in the supply chain. It only takes the failure of one or two and the project has the potential to become a costly disaster.

Construction Contracts

All the standard forms of construction contracts prioritise control of construction cost and time for completion of the works – penalising the latter through the use of liquidated damages – rather than the quality of the work. This usually merits little more than a passing reference to the contractor being obliged to carry out the works in a proper and workmanlike manner, and in compliance with the technical specifications contained in the contract documentation, relevant legislation and statutory regulations.

Quality control is usually limited to infrequent site inspections by the professional team and a final inspection when the works are signed off as complete and ready for handover or occupation. The standard form contracts actually assume that there will be defects or snags which can be rectified following completion/handover, and allow for a period when the contractor may return to rectify these issues – free from the risk of being sued for what is essentially a breach of the contractual obligation to construct the facility properly.

High Expectations

It is acknowledged that the process of designing and constructing a particular manufacturing facility will differ from project to project. Not all site locations are the same, the surrounding infrastructure is unique and each customer’s requirements differ, so designing and constructing a particular pharma facility is to some extent like developing a prototype without the opportunity to evaluate the results and modify the prototype before construction. It seems there is almost an assumption this would result in more contractual provisions relating to the quality of the finished building – or additional quality control during construction – than are already covered in the standard forms of contract.

Customers’ expectations are changing, however; people require the products they purchase to work first time without modification or repair. They also expect to be able to customise their order and vary the specification of the product, while still receiving something of the same quality that will perform as desired.

Naturally they have similar demands when new engineering or construction work is procured, but to date they perceive (rightly or wrongly) that the construction industry is not customerfriendly and that contracts are for the benefit of the contractor rather than the customer. It is only through a combination of luck, coercion and conceding to demands for additional money from the contractor that the finished facility can meet the employer’s expectations.

Prefabrication and Modularisation

Fortunately, technology is available and being developed which will allow the construction industry to shake off such negative impressions and more readily meet its customers’ expectations. The 57-storey tower built in China in 19 days using prefabricated components and off-site construction may be regarded as exceptional, but it is not. There are similar case studies from around the world; for example, a 10-storey building constructed within 48 hours in India.

Of course, these examples focus on the attention-grabbing headlines of how long it took to construct the building on site and do not refer to the time it took to design, develop and test the components and prefabricated modules, but the message is clear: prefabrication and modularisation in construction is the way forward, and the industry needs to embrace it. The advantage of this to the pharma sector is not only the speed of the construction process on site, but also the ability to apply rigorous quality control in a manufacturing environment to the construction and performance of the components and modules before they are delivered to the site for assembly. Prefabrication and modularisation are products of digital design and engineering that allows designers to conceive and fabricate components in a digital world and virtually assemble them into the completed building, thus ensuring the methodology for the construction of a manufacturing facility is considered from the outset.

The implementation of building information modelling (BIM) allows the information compiled by the design team to be disseminated to the construction teams, the client and the personnel who will use and manage the facility. BIM also enables them to provide input to the design team and inform the design and procurement of the facility.

The potential benefits of BIM are primarily the avoidance of misunderstandings; the design team are able to visualise and coordinate the building to avoid clashes between differing elements of the structure and the services to be installed within the facility. Suppliers can deliver accurate product information directly into the digital model and highlight deficiencies in the design in relation to their particular product, as well as informing the team on the method of installing and coordinating the building of the facility.

Collaboration and Cooperation

To be effective, however, BIM relies upon everyone involved in the project to exchange information, including specialist contractors supplying items of pharmaceutical equipment, who may not have sophisticated design software. Information sharing also requires a change of mindset in the construction industry from the adversarial to collaborative.

However, I have stopped counting the number of initial meetings I have attended where the design and construction teams agreed that this particular project was going to be different and everyone would work together; some meetings even concluded with all parties signing a partnering charter. While the people present at those meetings had the best intentions and genuinely wished to manage the project collaboratively as set out in the charter, all too often a problem would arise, and collaboration would be replaced by adversarial relationships between members of different teams as they sought to protect their own interests rather than the wider interests of the project.

Their reactions were hardly surprising; the majority of construction and engineering contracts are not collaborative and the partnering charter, if there is one, is not legally binding.

The new engineering contract (NEC), which is considered by some to be a collaborative form of contract, relies upon the following contractual provision: “The Employer, the Contractor, the Project Manager and the Supervisor shall act as stated in this contract and in a spirit of mutual trust and co-operation” – in other words, there is an overriding duty of the parties to act in good faith, as the means of enforcing collaboration. In most other respects, apart from being prescriptive in the process of administering the contract, it is similar to other published standard engineering and construction contracts.

The less popular Project Partnering Contract 2000, drafted specifically to foster a collaborative contractual process, relies on a similar contractual provision to that contained in the NEC contract; yet consider the case of Costain Ltd, O’Rouke Civil Engineering Ltd, Bachy Soletanche Ltd and Emcor Drake & Scull Group Plc versus Bechtel Ltd and Mr Fady Bassily [2005] EWHC 1018. Mr Justice Jackson reviewed the phrase “act in good faith” and was of the opinion that its meaning “was ambiguous”.

More recently, Mr Justice Akenhead – illustrated by Mears Ltd versus Shoreline Housing Partnership Ltd [2015] EWHC 1369 – believed the NEC provision to act “in a spirit of mutual trust and cooperation, or even in a partnering way, which would prevent either party from relying on any express terms of the contract freely entered into by each party” was contradictory. In other words, broad statements of intent for the parties to cooperate and act in a spirit of good faith would be overridden by the other express terms of the contract.

Forms Revised

If the construction industry is to function in a collaborative manner in order to embrace the new technology and meet its customers’ expectations, new contract forms will need to be devised or, more likely, the existing forms revised. The Construction Industry Council has attempted this by publishing the BIM Protocol, in which one of its purposes is stated to be to “support the adoption of effective collaborative working practices in Project Teams”. The protocol is intended to be used by “all parties who are involved in the use, production or delivery of models on the project”. This appears to encompass most of the supply chain, particularly as specialist suppliers will be expected to input information regarding their products into the digital model.

The protocol endeavours to achieve its objective of collaboration by clearly defining the elements of the works and services each member of the project team is to provide, if they are using the model. The protocol identifies the deliverables that each member of the project team is to supply at each stage of the project. It also requires a description of the level of detail expected to be contained in the model at that defined stage and the extent to which the information within it can be used, so that intellectual property rights of the individual project team members are protected and their liability for the information in the model is defined.

In this respect, the protocol differs from the NEC form of contract and the less commonly used Project Partnering Contract 2000, both of which contain broad statements requiring the members of the project team to cooperate with each other. The Construction Industry Council protocol instead attempts to define exactly what each member of the project team is required to do, because, according to the guidance notes, “project teams perform better when there is clear responsibility for action and deliverables”.

Embracing Change

Whatever form construction contracts eventually take, it is certain they will change to reflect the new technologies, new procurement processes and new working methods on construction sites. The current standard forms of construction contract are drafted based on methods prevalent in the 19th century – methods that are out of date, uneconomic and unsatisfactory for today’s customers.

The new procurement and construction processes that are being developed as a result of digital technology are particularly appropriate for the pharma industry with its regulations focused on quality control and quality management systems. The younger generation of construction professionals will undoubtedly embrace this new way of working, as they have grown up with the digital technology that is making these changes possible; in the meantime, there is a generation of construction professionals who need to be re-educated and a generation of lawyers who need to re-think how they can reflect these changes in the construction contracts to be used by the industry in future.


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