When you need to deliver high-value projects, it makes sense to look for more efficient and effective ways to do so. The principles of lean construction are nothing new, and most construction professionals understand the risks of not using an organized, proven process when taking on a new project.
However, many owners and contractors still struggle to implement Lean concepts into their projects. This brings us to the goal of delivering value.
Target value delivery is a design and delivery process that allows teams to:
- Collaboratively explore ideas to find the best overall solution
- Manage opportunities and risks to maximize return on investment
Let's start by exploring how the target value delivery approach differs from common construction practices.
Target value delivery compared to traditional construction processes
Target value delivery focuses on prioritizing customer value over cost, eliminating many inefficiencies that accompany a siled approach. It all starts with understanding what is most valuable to the owner and the constraints of the project. Target Value Delivery essentially flips the traditional design and delivery process on its head – instead of the design determining the cost, the project scope informs the budget, which in turn determines the design.
Implementing this lean approach depends on three main processes:
- Create a proactive environment where team members feel ownership of the project and can bring creative ideas to deliver innovative solutions.
- Keep the line of communication open between team members, owners and stakeholders at all phases of the project, from conception to delivery.
- Maintain cost certainty by using transparent practices and tracking potential risks to make decisions during each stage of the project.
A big part of delivering target value is understanding value versus cost. Value is what the customer expects from the completed project – this is the main driver of delivering the target value. Cost, on the other hand, still plays an important role; the two must work together. If you cut costs somewhere, but it doesn't add value to the customer, it will end up costing you and your team in one way or another.
Target Value Delivery: Benefits During the Lean Construction Movement
Target value delivery is all about meeting the needs and values of a project while staying within a fixed budget. This practice is quickly gaining traction among homeowners – and for good reason. Every client wants their project to meet all of their needs without sacrificing safety or quality. Add that to a project that stays on time and on budget and it's a win for everyone.
Delivering target value to owners
When it comes to risk management, there are two factors at the center of the team's thought process: schedule and budget goals. The result is a cost-certain team that understands the cost situation and has ideas for meeting or exceeding the target. The same goes for creating clear goals for scheduling, energy performance, etc.
Target value delivery allows teams to create and focus on whatever goals the owner values.
It is not uncommon for the value generated by collaboration between owners, contractors and designers to be incorporated into project design, revealing operational inefficiencies that are not quantifiable.
Target value delivery allows teams to establish better decision-making criteria to evaluate different options, delivering more value to owners. These criteria change from project to project based on what is important to the owner. And because the team uses these specific criteria to evaluate its design and delivery options, the owner gains a more holistic sense of value.
Target value delivery for contractors
General contractors can take a more proactive approach to project risk management using target value delivery. Engagement with the general contractor early in the project allows teams to manage risk and costs from the beginning by analyzing the project from a constructability and cost perspective.
Along with other lean construction practices, target value delivery also helps reduce unnecessary or redundant iterations of things like value engineering and cost estimating, providing owners with more accurate cost models to validate their decisions.
Additionally, target value delivery helps create an environment of trust by allowing contractors to present ideas about innovative means, methods and materials based on their experiences working on similar projects. This creates a genuine sense of ownership across the team.
The way to achieve success in delivering value
While the concept of target value delivery is relatively simple, making it work in practice requires some organizational changes. Successful implementation means bringing together all project partners from the beginning of project development. Requires focus on team collaboration to function.
When you can align the project's target cost with the owner's value, you've hit the nail on the head in delivering target value.
But this is just the first step to creating truly lean construction practices. We need to break the siled approach that has plagued the industry for years and focus more on collaboration and interaction between contractors, teams and project stakeholders.
Learn how to implement Lean construction practices in your organization, from design to delivery, with our free e-book: A Quick Guide to Lean Practices for Construction Professionals.