2019Case1DPSGroup

13 L EAN C ONSTRUCTION I RELAND A NNUAL B OOK OF C ASES 2019 The Lean Construction Institute (LCI USA) assert that “TVD is a very different model from the traditional, large- batch process of design, estimate cost, and value engineering — a process replete with waste. Clients do not value the process of rework and loss of quality that comes from this traditional “value engineering” process. The driving force of TVD is to increase value while decreasing cost for all team members”. In his 2011 publication ‘Target Value Design: Current Benchmark’ Ballard notes that “In the building sector, it has been customary for architects to work with customers to understand what they want, then produce facility designs intended to deliver what’s wanted. The cost of those designs has then been estimated, and too often, found to be greater than the customer is willing or able to bear, requiring designs to be revised, then re-costed, and so on. This cycle of design- estimate-rework is wasteful and reduces the value customers get for their money. Cost has been an outcome of design”. TVD, therefore, is a design strategy and process that offers designers an opportunity to engage in the design conversation concurrently with those people who will procure services and execute the design. It focuses on designing based on the project values, which become design criteria rather than mere aspirations. Using TVD, the design and construction is steered towards the target cost. A continuous and proactive value engineering process is utilised during the design phase to quickly evaluate the cost implications of design options. Cost is a constraint (one of many) rather than an output of the design process. Benefits of TVD include: • Proactive rather than reactive problem-solving. • Less fighting and more collaboration. • Better value delivered for the money. • More satisfied clients - designs that fit stakeholder values. • Better work-life balance for contractors and architects. • Continuous improvement and kaizen within projects and between projects. Implementation on the Case Project In assessing a cost budget for this project , previous exper ience would have pointed towards a f igure of € 100Million (± 50%) for the project. The project leadership team would then use TVD principles to steer and direct the design teams’ efforts towards achieving this cost target. The principles of TVD were introduced at design concept stage because if a budget is not in place for concept design then the project could emerge with a figure that is unacceptably high and causing further investigation to remove scope to achieve a cost figure agreeable to the client. Using TVD pre- empted this on this project and avoided the non-value rework tasks of shrinking the scope back – such outcomes traditionally emerged from initial over-design or over- speci f icat ion. Therefore, the concept des ign stage commenced with a predetermined target budget in mind. However, towards concept completion it could emerge that the budget target figure was insufficient to accommodate all project scope and speci f icat ions , thus requi r ing re- examination of the budget. For example, at pre-concept the client would have had a figure of € 100Million in mind, but post-concept this could have crept up to € 105Million after addition and removal of various elements of scope. A decision must then be made regarding the ‘value’ that is being added by the additional € 5Million. This analysis and decision on the cost target must be made and agreed before proceeding to the next stage of design development, namely “Basis of Design” (BOD). At this point, an increased level of detai led design commences and some initial purchase orders (PO) are placed for specialised equipment, but everyone is directed by the overall agreed TVD figure. The team was mindful that BOD phase carried a contingency estimate of ± 25% that, after 4 months of engineering the estimate, can then be tightened and fixed at 10% contingency. At this point the original TVD f igure of € 105Mi l l ion could have reduced to € 95Million or increased to € 110Million. This figure now becomes the agreed project TVD sum. The client may, having assessed the confidence level of the TVD figure, consider reducing the contingency element of the TVD sum. The team has at this stage been working with the concept of TVD for over 6 months and from concept through detailed design have been working towards a target project cost figure, thus enabling confidence in a reduced contingency. This aligns with recent research on TVD, as illustrated in figure 2. Figure 2. TVD Project Forces (Source: Do et al., 2014) Figure 2 illustrates the breakdown of a project’s costs. The total project cost includes the cost of work, contingency, and profit. The cost of work can be further broken down into direct and indirect cost – it is the sum of all the participants’ costs of work. Compared to projects that do not use TVD, less contingency was required using TVD here because the entire project contingency was pooled together instead of being carried individually by each participant. By pooling the contingency together, the project team needed to allocate less contingency to cover the same amount of uncertainty in the project. Examples of Decisions & Impact At concept stage, the TVD figure and process are managed by the leadership team. At detailed design (DD) stage there may be up to 10 design teams inputting to the project. The project leadership team will initially sit with each team, for example, process, electrical, mechanical, HVAC, civil – structural – architectural (CSA), and collaboratively validate their assigned pool of money for the design deliverables. The designer must consider each decision they make in relation to achievement of the quality goal and assess whether this decision will add or subtract or will not change the TVD figure. An example is where the designer proposed a type 1 surface finish cladding solution to the building and the client