First, Focus on Owner Value

by Balfour Beatty

…and watch the benefits transform your team!
When it comes to delivering projects worth millions of dollars or more, it seems like common sense to continuously seek more efficient and effective ways to build them. The principles of lean construction are intuitive, and many construction professionals recognize the risks of not taking organized, proven processes with them each time they embark on a new project.
Even as we head into 2020, many still struggle to fully commit to universally implementing lean concepts on their projects of all sizes. Perhaps this is because many across the industry continue taking a traditional approach to projects by focusing on first cost rather than first focusing on owner value. 
This brings us to target-value design and target-value delivery or collectively known as TVD. TVD is a structured design and delivery process that allows teams to collaboratively explore and validate many concurrent ideas to determine the best all-around solution, while collectively managing opportunities and risk to maximize the owner’s return (useful value) on investment (cost).
“Ultimately, TVD requires a mindset change that moves its practitioners toward a trust-based, collaborative approach that generates value by harnessing the collective ideas of the team and eliminates wasteful methodologies that have too long plagued the industry,” said Richard Ryan, vice president at Balfour Beatty and a project lead on the PennFIRST integrated project delivery (IPD) joint venture team working to deliver the $1.5 billion Penn Medicine Pavilion in Philadelphia.
“TVD, both in design and delivery, prioritizes customer value rather than cost alone, and is designed to eliminate the inefficiencies that come with more siloed approaches. Project teams start with what’s valuable to the owner and to the mission of the project, and budget and schedule are considered constraints. Rather than design informing cost, value (scope) informs budget, which informs design, effectively flipping the traditional design process upside down,” explains Bevan Mace, Balfour Beatty’s vice president of operations and lean.
Key differences between TVD and the traditional process are:

  • Cross-functional/multi-disciplinary cluster teams (not silos) with much earlier contracting of key stakeholders including general contractors and key trades. This enables teams to co-create solutions and provide real-time insights on design challenges with an eye on how best to build the project and steer it to targets.
  • Steering toward targets (not budget trackers or value engineering) by clearly identifying how to measure value, and thoroughly understanding budget and schedule constraints. Teams constantly assess the state of design to those targets and track opportunities and risks throughout the design and construction process.  
  • Smaller batch design process (not big batches like schematic design, design development, construction document packages) with consideration of multiple options for key decisions and features of work, such as systems and floor plans. Also, faster-pace, collaborative workflows that enable brainstorming and quick analysis concluding with sound team-based, decision-making processes using real data to reduce the chance of revisiting the decision throughout the project.

Techniques such as project values definition, set-based design, choosing by advantages, options analysis, and A3 thinking are some of the key tools that support TVD. When used collectively they can be very powerful, however, they are also useful individually. TVD is very difficult to do meaningfully without early and dedicated trade partner education and involvement. This is why it usually goes hand-in-hand with integrated project delivery (IPD) and design-build projects, in addition to providing great potential for construction manager (CM) at-risk projects.

Value for Owners

When it comes to risk management, the budget and schedule targets are always known and central to the team’s thought process. This results in much better cost certainty because the entire team is constantly aware of the actual cost status and is incentivized to meet or beat the cost target. The same is true for other types of risks, such as schedule or energy performance if the owner wants to also create clear targets for those. TVD allows teams to design any number of targets that are of high value to the owner.
In many cases, the value generated by the “close-quarters” collaboration between designers, owners, and contractors is quietly embedded into the design and reveals itself in operational efficiencies that are rarely quantified.
As its name suggests, TVD delivers more value for owners. As part of TVD, the team establishes clear decision-making criteria they will evaluate options. Those criteria will reflect everything important to the owner and the project’s ultimate end-users. Because those criteria are constantly being considered and used to evaluate options, the solutions are able to create a much more holistic sense of value for the owner.

Value for Trade Partners

The early involvement required for TVD provides an opportunity for teams to develop more strategic partnerships with the supply chain. In addition to helping manage the contractor’s risk, working closely with trade partners from the beginning of a project allows teams to learn from each other’s best practices. It also naturally builds team trust, a multiplier across the team touching every aspect of the job ranging from safety to schedule and on to quality. Further, it provides an industry-wide benefit by enabling greater future efficiencies when working with those partners (e.g. BIM protocols, and streamlined coordination processes).

Value for Contractors 

TVD enables general contractors to manage project risk more. Engaging the general contractor from the beginning allows the team to manage cost and other types of risk much earlier by helping inform design from a cost and constructability perspective. When coupled with parametric modeling, it also helps eliminate wasteful and redundant iterations of estimating and value engineering, which ultimately provides owners with early and accurate cost models that validate decision-making.
Significantly, TVD creates a trusting environment that permits contractors to bring new ideas to the table as they relate to innovative materials, means, and methods based on experience on similar projects. This, in and of itself, generates a sense of ownership for the entire team.

Value for Designers

TVD promotes transparency and builds trust within the entire team, which for designers empowers them to focus on areas of most value to owners, while also leveraging available funds to maximize design excellence. Traditional processes usually resort to protecting the ‘sacred cows’ whereas in TVD the design intent is established and defined much earlier. Working closely with designers so early in the design phase allows the construction team to understand the design in greater detail, which creates opportunities for greater innovation and collaboration.