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How data can improve
pharmaceutical construction project
performance
38 January 2021 Turner & Townsend
Despite this, ‘big pharma’ companies have been unable to significantly increase new drug output over the past decade. Drug
approval in the world’s largest pharmaceutical market, the USA, continues to average at around seven to 12 years, and the
estimated average cost of taking a new drug from concept to market is about $1.3 billion USD.
The momentous time and cost pressure within the pharmaceutical industry is putting project capital spend under the microscope,
‘There are growing calls from executives, shareholders and governments to drive greater efficiencies and savings which can be
passed onto consumers through lower drug prices.
However, increased pressure is not being met with improved construction pe-formance. Both from our own project experience and
analysis of publicly reported projects, we estimate 70 percent of pharmaceutical construction projects miss their original budget
target by around 15 percent on average, with delays of about four months on a typical three year project schedule.
Finding answers in the data
Data analysis enables us to diagnose the reasons why construction projects for pharmaceutical companies so often miss thelr mark
‘Through the benchmarking of pharmaceutical manufacturing projects we have supported across the US, Europe and Asia, we have
grouped together where time, effort and capital's being expendes (see figures one and two below).
What the dataset has illustrated is a broad range of results,
exposing the lack of industry standardisation.
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Less haste, more speed
Speed to market will always be the overriding driver for pharmaceutical companies which need to get a faciity into operation so they
can start to manufacture products. This is especially true for our clients currently producing COVED-19 vaccines at an
Unprecedented pace
However, when it comes to the development of manufacturing space, the need for speed causes a propensity to rush through the
early planning stages and an over reliance upon internal benchmarks of past project performance,
‘embark ont
Issues typically start to arise during the conceptual phase of a project. At this stage, companies too ofte
requesting capital funding while neglecting the importance of conceptual estimate validation, as well as comprehensive quantitative
cost and schedule risk analysis.
e process of
‘This means that well into the basis of the design phase, project teams find themselves measuring their performance on estimates
and plans that reflect wreng assumptions, and inevitably result in an increase in engineering costs.
Lack of intervention from project controls and proper
benchmarking at an early stage of projects frequently leads to
changes in scope during the design phases.
Such changes make it dificult to determine @ procurement strategy reflective of the true project scope and the construction team
is left to absorb project delays, causing sometimes severe cast overruns.
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Inthe Gataset provided, the schedule duration ranges are Drocen into the project phases wat we typrcaly see on medium ang farge~
scale pharmaceutical construction projects (see figure one).
Typically, the consequences of poor-up front planning play out
most strongly during the back end of the project, during the
commissioning, qualification and validation phase (CQV).
ur data Indleates the CQV phase typically ranges from three to ten percent of the project cost, but encompasses up to 40 percent
of the schedule. This is particularly due to the operational qualification and validation stage, where there is extensive Interaction with
organisations outside of the construction project team to coordinate approvals, tral runs and significant decumentation, causing @
drop in productivity.
‘Any schedule slippage in the early phases of the project typically resu in attempted acceleration of CQV, with significant additional
resource added to the project. Extra resource doesn't necessarily save time, however, because more consideration needs to be given
to the constraints of the equipment availability (i.e. equipment usage dictates speed more than extra people)
Rather than trying to salvage a project schedule in its latter
phases, investment should be weighted more heavily to pre~
planning and throughout the design and construction phases.
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up-front plannin
Figure 1: Global schedule benchmarks
os mutumerntonandcoenprpaivehouci-an.npovegharraeiis cata poe patomarce! sina Average 10%
Basic design
Aver 24%6
Detail design =
Construction ss
Startup and commissioning
Average: 105%
Qualification
wera 4%
Validation
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Minimising cost risks
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Too often, more time and resources than anticipated end up being
@ spent on the utility work to create the veins of the building. Any
changes to an MEP system can have an adverse impact if it is not
built into the risk-based contingency.
This risk once again highlights the crucial need for proper planning and scope review during the early engineering phase.
‘Through the use of benchmarking and third party estimate reviews, we have created a robust package of data that enables
leadership groups to determine if their business case and both the time and cast are worth the investment
Figure 2: Global cast benchmarks
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vera: 2%
Engineering
Construction management
(Labour and fee)
General conditions
verge 205%
Process equipment / process piping 2
verge 59%
Clean / process utilities oe
Avera 78%
Mechanical, electrical and e-
plumbing (MEP)
nora 5%
Givil structural architectural e Sos
‘VVVVVVV
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average
Commissioning and qualification > Qe em
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