Target Value Delivery in lean construction

Written by LetsBuild

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When you need to deliver on high-value projects, it makes sense to seek out more efficient, effective ways to go about it. The principles of lean construction are nothing new, and most construction professionals understand the risks of not using an organised, 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 target value delivery.

Target value delivery is a design and delivery process, allowing teams to:

  • Collaboratively explore ideas to find the best overall solution
  • Manage opportunities and risk to maximise return on investment

Let’s start by exploring how the target value delivery approach differs from common construction practices.

Free eBook: Quick guide to Lean practices for construction professionals

Target value delivery compared to traditional construction processes

Target value delivery focuses on prioritising customer value instead of cost, eliminating many inefficiencies that come with a siloed approach. It starts with understanding what’s most valuable to the owner and the project’s constraints. Target value delivery essentially flips the traditional design and delivery process upside down—instead of the design determining the cost, the project’s scope informs the budget, which, in turn, determines the design.

Implementing this lean approach relies on three core processes:

  1. Creating a proactive environment where team members feel a sense of ownership of the project and can bring creative ideas to the table to provide innovative solutions.
  2. Keeping the line of communication between team members, owners, and stakeholders open throughout every project phase, from design to delivery.
  3. Maintaining cost certainty by using transparent practices and tracking potential risks to make decisions during every step of the project.

A huge part of target value delivery is understanding value vs. cost. Value is what the client expects from the finished project—this is the main driver of target value delivery. Cost, on the other hand, still plays an important role; the two must work in tandem. If you cut costs somewhere, but it doesn’t deliver value to the client, it will end up costing you and your team one way or another.

Read more: Last Planner System in Construction

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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 with owners—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.

Target value delivery for owners

With regard to risk management, there are two factors at the core of the team’s thought process: schedule and budget targets. The result is a team with cost certainty that understands the cost status and has ideas to meet or beat the target. The same is true for creating clear targets for scheduling, energy performance, etc.

Target value delivery allows teams to create and focus on any targets that the owner values.

It’s not uncommon for the value generated from collaboration between owners, contractors, and designers to embed itself into the project’s design, revealing operational inefficiencies that aren’t quantifiable.

Target value delivery enables teams to establish better decision-making criteria to evaluate different options against, providing more value to the owners. That criteria changes from project to project based on what’s important to the owner. And because the team uses those specific criteria to evaluate their design and delivery options, the owner gets 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. Engaging with the general contractor at the beginning of the project allows teams to manage risks and costs from the start by looking at design from a constructability and cost perspective.

Coupled with other lean construction practices, target value delivery also helps reduce wasteful or redundant iterations of things like value engineering and cost estimating, providing owners with more accurate cost models to validate their decisions.

In addition, target value delivery helps create a trusting environment, allowing contractors to bring ideas about innovative means, methods, and materials to the table based on their experiences working on similar projects. This generates a genuine sense of ownership across the entire team.

Related webinar: How to get from reactive to proactive planning on your multi-storey construction sites thanks to Lean & Digitisation

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The way to target value delivery success

Although the concept of target value delivery is relatively straightforward, making it work in practice requires some organizational changes. Successful implementation means bringing every project partner together early on during a project’s development. It requires a focus on team collaboration to work.

When you can align the project’s target cost with the owner’s value, you’ve hit the target value delivery nail on the head.

But that’s just the first step to creating truly lean construction practices. We need to break down the siloed approach that’s 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 ebook: A quick guide to Lean practices for construction professionals.