Why UCHealth Says Project Delivery Is a Financial Decision, Not a Process

On a $300 million project, construction escalating at 6% a year adds $18 million in cost every twelve months. Cut six months from the schedule and that represents roughly $9 million in avoided escalation before a single wall goes up.

That math is why Mike Chihoski, VP, Facilities, Design, and Construction at UCHealth, argues that choosing the right project delivery model has become one of the most important financial decisions an owner makes before construction even begins.

At HealthSpaces, Chihoski walked through how UCHealth thinks about project delivery and why owners need to choose a model based on the priorities, risks, and desired outcomes of each project.

The Process Everyone Recognizes

Chihoski put up a slide that drew immediate recognition from the room.

How Design-Bid-Build is supposed to work:
Design. Bid. Build.

How it often works:
Design. Bid. Over budget. Value engineering. Redesign. Rebid. Negotiate. Build.

"Value engineering is neither a value nor is it engineering," he said. "It's just cutting scope."

That cycle can cost a project four to six months on the front end while teams redesign, rebid, and negotiate their way back to budget, often compromising what made the project worth building in the first place.

Construction costs increased roughly 30% between 2021 and 2025. Every month spent in that cycle exposes the project to more escalation.

UCHealth still uses Design-Bid-Build on roughly 40 to 50% of its projects, particularly smaller, more standardized work where the approach makes sense. On larger, more complex projects, UCHealth increasingly turns to alternative delivery models.

Go Slow to Go Fast

The answer to cost and schedule pressure isn't less planning. It's more.

"We often shortcut the planning portion of it, and that hurts us in the long run," Chihoski said. "We want to go fast, but we don't want to shortcut the planning portion."

UCHealth's alignment process begins with the business case and runs through schematic design. Clinical operations, facilities management, IT, and equipment planners help establish the program. Contractors, trade partners, and designers come in as scope, schedule, and budget targets are developed.

The sequence matters. An owner's ability to affect cost is plus or minus 100% at feasibility. By construction documents, that window is down to plus or minus 2%.

The earlier teams align, the more that alignment is worth.

The Trade You Can't Afford to Bring in Late

When Chihoski asked which trade should be engaged earliest, the answer came quickly from the room: mechanical.

MEP and low-voltage systems can account for roughly 50% of the cost of a healthcare project. They're also among the fastest-escalating scopes, with healthcare projects competing against data centers for limited electrical labor.

Bringing those partners in early gives teams a chance to coordinate systems, validate costs, and lock in pricing before the market moves further.

A Fair Contract Matters

Early in his career, Chihoski worked with a legal team whose philosophy was blunt: the golden rule. The one with the gold makes the rules.

"It was a very one-sided contract," he said. "And it didn't work well."

His conclusion was straightforward: start with a fair contract. It creates a better working relationship from the beginning.

Stop Optimizing the Wrong Number

Most project teams optimize for first cost. Chihoski thinks owners should look beyond it.

"When we talk about cost, I think it's important that we talk about not only first cost, but lifecycle cost," he said.

The initial capital investment represents only about 10 to 15% of a building's total lifecycle cost. The remaining 85 to 90% comes from operating the facility, including utilities, maintenance, downtime, warranties, and upgrades accumulated over decades.

UCHealth is applying a different framework on a greenfield hospital currently in development. The design team was given a clear ROI test for every building system:

- Three years or less: include it.
- Seven years or more: it needs a strategic case.
- Three to seven years: the team comes back together to decide.

That conversation can only happen if facilities teams are in the room during planning, while there is still time to act on what they know.

There Is No Single Right Answer

UCHealth uses a range of delivery models depending on the project.

"One size doesn't fit all," Chihoski said.

The right answer depends on what you are trying to accomplish. The goal isn't to pick a favorite delivery model. It's to pick the one that best fits the project you are trying to deliver.

Watch Mike Chihoski's full talk here 👇