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29 February 2024

Optimising Life Sciences construction: How benchmarking can enhance cost and schedule predictability

Ahead of our Life Sciences Benchmarking Webinar on Thursday, March 28th, Nigel Barnes, Head of Life Science for EMEA, crafted this insight into the transformative benefits of Linesight's market-leading benchmarking program, and how leading organisations continue to join and enhance the datasets and insights.

You can read Nigel’s full perspective below.

“Can you give me a rough cost?” is a question I was often asked in a previous role as head of engineering at GSK. Refuse to speculate and you’re being – at best – unhelpful. But coming up with a figure off the top of your head can lead to trouble down the line. 

As pressure mounts to support the growth of life sciences within the UK and globally, it’s apparent that an accurate and swift system is needed for initial cost estimates for capital projects within the sector. Up until recently, there has been limited available systems for this purpose. But collaboration to share data across the sector is proving effective in addressing this challenge. 

Giving a figure off the cuff is perilous. However much you might stress that this is not a formal estimate based on a full assessment, any figure provided will stick in the minds of those who asked, most likely for the full life of the project. Without doing a detailed assessment and thorough benchmarking, that initial figure could be considerably off target, causing complications and delays. 

Additionally, when a capital project comes through for approval within the various governance systems of the company, often the key question is, how does that price compare against our peers?

To establish this properly would require a comprehensive view of competitor’s operations and costs, which would be challenging for one firm to gather, especially in the life-sciences industry, where confidentiality is integral.

To solve these challenges, Linesight launched our Capital Project Benchmarking program in 2020. The program consists of a global collaboration of Fortune 500 pharmaceutical organisations to benchmark and align cost and schedule data across capital projects, sharing data confidentially on their projects’ locations, costs and schedules. They provide Linesight with this data, which is anonymised, and quality tested through a consultative process with life sciences construction experts. All participants have access to the dashboard, enabling detailed drill down to inform decision making. This global data is covering four regions and a diverse range of project and site types. It allows participants to extract instant benchmarked schedule and other data points for estimating purposes.

Linesight’s database contains information provided by 20 participating companies, covering 213 projects, all completed within the past five years.  

Emerging insights – data can supercharge life-science construction programs

One of the more significant findings centres around the ‘Lang factor’ – a formula for estimating costs. Created by HJ Lang and Dr Micheal Bird in 1947, the Lang factor predicts project costs by looking at the fixed capital cost and working out the project value as a factor of that cost. The theory works around the basis that we have a good idea of the equipment a new facility will need, which we can use to give us a good idea of what the overall project will cost. The Lang factor was intended for chemical plant projects, with the pharma industry making occasional use of the theory. 

Now, drawing from our data on actual costs for completed projects, we have analysed and compared similar projects and have been able to prove that the Lang factor is a reliable method of predicting costs in the life-sciences sector. There are huge benefits, too: using the Lang factor is very efficient, it’s easy to use and widely recognised, and there is no need for specialist personnel. However, it must be remembered that the Lang factor should be calibrated, as smaller-capacity projects increase the factor by 10 per cent and, more generally, 80 per cent of projects fall within 30 per cent of the Lang factor, which means you have a 30 per cent margin for error.

Another key insight concerns project schedules. Based on 1,202 life-sciences schedule data points, our system shows that, on average, 39 per cent of the project schedule is spent on the construction phase and 20 per cent on design. For construction professionals, these numbers are expected, but they help us understand – and to better inform non-construction staff – what is involved in a project. For example, we can say that more than 200 projects show that the design phase takes, on average, 20 per cent of the schedule.

Linked to this insight, we are starting to see strong evidence that the more time you spend on design, the less time is spent on construction – especially on refurbishment projects.

If you are doing refurbishing, there are many unknowns – you discover things you weren’t expecting, and you are trying to fit elements into spaces that were not designed for that purpose. With a new build, in contrast, you can sequence the build and maximise efficiency. This data is very valuable in making the seemingly counterintuitive point that if you start construction on site later, you will finish the project on schedule.

This presents a number of opportunities. Firstly, it shows that the most value can be added during the design phase. In addition, it suggests that there are major benefits to be accrued through standardisation in design, design for site conditions, and early project team collaboration.

Through our dynamic and innovative approach, we are demonstrating that by sharing data, the life-sciences sector can collectively accelerate and improve construction programmes, benefiting the sector and its contribution to the UK economy, while supporting scientific breakthroughs.  


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