Less than 10 percent of owners say that they received remarkable results in overall project execution.
That translates to 90 percent who are unsatisfied with their projects. Since project owners primarily want a project delivered on time and on budget, this satisfaction is most likely due to most construction projects running over deadline and over budget.
But there are ways in which the construction industry can combat this problem. By adopting the lean construction principle of target value design, preconstruction teams can collaborate with design to ensure cost certainty in a project, help owners make better, more informed decisions, and increase the overall efficiency of the preconstruction process.
What is Target Value Design?
Target value design is when you switch the traditional construction delivery method of design and then estimate cost. With target value design, preconstruction teams produce a detailed estimate first and give the scope work to the design team.
Target value design is a borrowed principle from lean manufacturing processes. Lean construction began with the construction of the Empire State Building in 1929. But it took until 1993 for the term to be official. The push to bring lean construction principles into preconstruction phase has only happened in the last 10 years.
It gives owners the information they need to make better project decisions.
The idea behind target value design is to reduce waste, make the design process more efficient, and add a high-level of value to the owner.
How does this make the precon process more efficient?
Because designing around the budget helps with cost certainty and leads to improvements in meeting clients’ deadlines.
For example, with target value design, if a client comes in with a $10 million budget, you can collaborate with designers and modify the design and still ensure cost certainty of the owner’s budget.
John Reich, Beck Technology Customer Success Leader, and host of the Precon Geeks preconstruction podcast reiterates, “this does not constrain design where we can’t show other ideas. It’s more of a conscious decision of ‘here’s your $10 million dollar project. I’m going to show you three or four paths to get there, but you might have to make some sacrifices to get there. I then might also show you an $11 million dollar project that checks all your boxes, and that puts the owner in a great position to make an active decision with all the relevant info.’ It’s the owner’s decision to go over budget rather than being forced into it or facing change orders later in the project.”
According to the Lean Construction Institute, “Designers who have implemented Lean methods see a sharp increase in productivity and project outcomes. These designers also see an increase in profit and a higher percentage of projects completed on time. Most importantly, Lean thinking more often results in greater levels of design excellence and innovation.”
John points out that precon teams who use the target value design method have to deliver estimate iterations faster. Instead of waiting months for a major design deliverable, you should deliver smaller, “micro” estimates to owners on a weekly basis that show different designs, material alternatives, and the cost differences which significantly cuts down change orders.
Putting the preconstruction effort into the estimate before the design may seem shocking to some estimators, but it puts precon ahead of the work rather than after the work.
Target value necessitates a strong relationship between the precon team and design team. Fortunately, the trend to collaborate and communicate transparently is catching on and GCs are onboard with working more closely with internal and external teams throughout the life of the project. Revolutionary estimating and project management software are making collaboration and communication easier.
Precon is the expert in cost and designers are the experts in design. Let each be the expert in their field but work hand in hand and share your knowledge with each other. John says, “Bring preconstruction in early. We can be a part of that team and build those relationships. Make some sacrifices on your own to make sure the team is successful. It requires a full team perspective which is a little different than traditional construction.”
Estimators are no longer just entering numbers into spreadsheets. They are directors of data, problem solvers, and relationship builders. Target value design and the tools that support the continuous workflow like DESTINI Estimator construction estimating software are helping increase productivity and efficiency, and better yet…. helping build better buildings for less money.
