Content uploaded by Glenn Ballard
Author content
All content in this area was uploaded by Glenn Ballard on Aug 18, 2015
Content may be subject to copyright.
A preview of the PDF is not available
Target value design: using collaboration and a lean approach to reduce construction cost
Abstract and Figures
Target costing is an effective management technique that has been used in manufacturing for decades to achieve cost predictability during new product development. Adoption of this technique promises benefits for the construction industry as it struggles to raise the number of successful outcomes and certainty of project delivery in terms of cost, quality and time. Target value design is a management approach that takes the best features of target costing and adapts them to the peculiarities of construction. The concept of target value design is introduced based on the results of action research carried out on 12 construction projects in the USA. It has been shown that systemic application of target value design leads to significant improvement of project performance—the final cost of projects was on average 15% less than market cost. The construction industry already has approaches that have similarities with elements of the target value design process or use the same terminology, e.g. partnering and target cost contracts, cost planning, etc. Following an exploration of the similarities and differences target value design is positioned as a form of target costing for construction that offers a more reliable route to successful project outcomes.
Figures - uploaded by Glenn Ballard
Author content
All figure content in this area was uploaded by Glenn Ballard
Content may be subject to copyright.
... In TVD, systematic cost reduction exists: identifying concrete actions and incentives and continuously estimating the proposed changes to achieve the TC. Likewise, TVD seeks to maintain the value requested by the client, controlling the project's scope or primary objective [11][12][13] or some measurable conditions such as metrics and capacities [9,14,15]. However, there is no evidence for measuring subjective satisfaction conditions or the systematic reduction in value losses to achieve the target value. ...
... In general, value generation is related to achieving cost, schedule or constructability [37,38] and the pursuit of the satisfaction of customers' needs [39][40][41]. The satisfaction of needs is achieved through consideration of the following factors: (1) requirements capture [42,43], (2) requirements flow [33,44], (3) verification that the requirements are met [5,15] and (4) value measurement through metrics [20,45]. ...
... A tool is a structured technique or instrument that facilitates the implementation of principles, while a management practice refers to concrete actions associated with increasing productivity [62][63][64]. Table 1 includes the first documented project practices that are used and recommended [47,48]; the fundamental practices listed by [27]; and updated, added, and recommended practices and tools that were associated with the TVD, lean design, and lean management by other authors [4,5,9,11,[15][16][17]55,[60][61][65][66][67][68][69][70][71][72][73][74][75][76][77][78][79][80]. [5,11,15,17,48,60,75] 5 ...
Target value design (TVD) is a management approach that applies target costing in the design and construction industry. TVD enables a project environment with favorable characteristics to generate value. However, because the TVD's primary assessment is cost, target cost can be met without necessarily achieving the project's full value. This research applies the action research approach to implement TVD in a housing project and explores the value generation of the project using a value analysis model (VAM) to study the balance between cost and value fulfillment in the product and design process. According to the results, even though the target cost was achieved, the desired value of the project was not achieved during the project design. However, there is a tendency to increase value over time to a greater extent in the product and not so much in the process. The main contributions of this study are the possibility of comparing cost and value, identifying the emphasis of product over process and cost over value throughout the TVD project. This study enhances the literature on project value generation and maximization, offering new knowledge for a better understanding of how to conduct a value analysis in combination with costing in TVD projects .
... However, as the Toyota Production System promotes, a wider knowledge base to select the most suitable option could be achieved by extending the number of decisionmakers and options (Liker 2004;). Selecting the right people and the contract strategy in the early stages is an essential part of the LPDS (Zimina, Ballard, and Pasquire 2012;Alarc on, Mesa, and Howell 2013). The partnership networks should be extended to improve the culture of working for one project (alliancing) or longer terms ). ...
... The as-built BIM model should include a detailed cost breakdown to help determine a target cost for subsequent projects (Pishdad-Bozorgi, Moghaddam, and Karasulu 2013). Target value design (TDV) constrains the design and construction of a facility to a maximum cost (Zimina, Ballard, and Pasquire 2012). This way the initial scope is completed for as much as 19% below the market cost (Dave et al. 2013;Tauriainen et al. 2016). ...
An Analytical Network Process (ANP) was created to test the Lean and BIM concepts with data collected from U.S. companies to find the success factors of the Lean/BIM framework. After an extensive
literature review, a total of 17 sub-categories for Lean/BIM are classified into three clusters, namely
Communication, Production, and Visualization. An ANP network is then established to station the links
between the attributes of the framework while computing their importance weights. Eight experienced civil engineers took part in the questionnaire study to assess the relations between the attributes. The main purpose of this study is to reveal the synergy between Lean and BIM with different
components reflecting this synergy and present the Lean and BIM synergy on a comprehensive model.
The results indicate that Production is the prominent cluster and Production Control, Standardization
and Information accuracy are the most important factors in the Lean/BIM synergy. To validate the
model, five construction projects were selected to test and observe the results accordingly. The study
is expected to help construction industry leaders set their priorities, benefit more from the interaction
between Lean and BIM, and revise their strategies accordingly. This study identifies Lean/BIM categories and subcategories as a roadmap for research and implementation. In this context, the study
reveals the relationship between the categories/subcategories along with the weights and most and
less important categories for Lean/BIM implementation and research.
... The research approach used in this project is the Action Research (Koshy et al. 2010). Action Research (AR) was introduced by Kurt Lewin to describe a process of organizational change (Zimina et al. 2012). It is defined as an approach that is distinguished by two interests: an interest in problem-solving, and an interest in research. ...
Many companies in the construction industry have recently expressed a particular interest in undertaking digital transformation by adopting new technologies in an attempt to increase productivity and quality. In responding to this new reality, these companies, particularly small and medium-sized enterprises (SMEs), face multiple challenges. Software vendors have recently been developing a large range of digital solutions, such as project planning and control software. Nevertheless, target companies are not generally guided in their choices and cannot find the support they need. The delays seen in these companies’ adoption of new technologies can be attributed squarely to a lack of references allowing them to understand their real needs and manage the main challenges they face. The project reported in this article was carried out with an industry partner specializing in construction mechanics. The first step was to understand and characterize the partner’s current project planning and control processes. Then, different information technology (IT) solutions were compared through a number of criteria defined with the company in order to choose the most appropriate software solution. Finally, new processes were proposed, and a prototype was developed and validated with the company in order to ensure the effectiveness of proposed changes. Using research action methods, the research brings a new perspective on the needs of specialized contractors, highlighting the challenges related to the characterization of the needs due to the difference of perspective of the different practitioners in the company. It also showed how it is important to define new processes to map the complementarity between the selected tools and the existing ones. The research finally highlighted the importance of an active involvement of the practitioners in order to validate the proposals and avoid resistance to change.
... The IPD process mandates the formulation of a conditions of satisfaction (CoS) document through team alignment workshops (see Step 4 in Figure 2), where multiple stakeholders involved in the design process enlist SMART (Specific, Measurable, Attainable, Relevant and Time Based) building design goals. These goals can include achieving a net zero energy rating, minimizing construction cost, and other desired outcomes (Emmitt et al., 2004;Lichtig, 2007;Ballard, 2008;Zimina et al., 2012;LeanIPD, 2016). These can be considered equivalent to objectives and constraints in optimization (Meacham., 2016). ...
... Design practice and competence used beyond art and architecture context-considering decision-making, sense-making and reflective practice as key constituents of problemsolving In a nutshell, design thinking illustrates the TVD process as it implements an action plan (Zimina, Ballard and Pasquire, 2012) by: ...
Purpose
Price reliability for complex and highly complicated infrastructure projects is problematic. Traditional project delivery approaches generally fail in achieving targeted end cost reliability. However, integrated project delivery (and particularly Alliancing), develop a far more reliable and robust project delivery plan and outturn time-cost targets. This paper aims to explore why this may be the case.
Design/methodology/approach
This case study investigated the project design, planning, cost/time estimation approach and how risk/uncertainty was dealt with. Five senior project delivery experts from an organisation that delivers multi-billion-dollar infrastructure projects in Australia were interviewed. These five experts collectively had 100+ cross-disciplinary experience years delivering complex infrastructure projects.
Findings
Alliancing adopts a radically different approach to project design, time/cost planning and risk assessment and management to traditional project delivery approaches. Key findings explain how the project alliance agreement designs-in processes that maximises team integration and collaboration. Analysis concludes that design thinking is used to craft and shape collaborative behaviours and project governance. Additionally, including project owner and facilities operator representatives in the project team adds valuable insights, expertise and knowledge contributing to planning reliability.
Research limitations/implications
This study is exploratory and focussed on complex infrastructure projects so findings cannot be generalised.
Practical implications
We unpack Alliancing processes that develop the target outturn cost plan, comprising a holistic and realistic plan to design a project to meet expected project outcomes. This case study may serve as an exemplar for complex project delivery.
Social implications
This paper illustrates how Alliancing more effectively delivers best value than traditional procurement approaches through its TOC-TAE processes.
Originality/value
The paper contributes to the scant existing academic literature analysing these processes. Its novel contribution is explaining how Alliancing treats unexpected events that in traditional delivery forms trigger expensive and time-energy-wasting disputation. This case study may serve as an exemplar for complex project delivery.
... QFD facilitates the "identification, structuring, analysis, rationalization, and translation of explicit and implicit client requirements into solutionneutral specifications for design purposes" (Kamara et al. 1999). Moreover, target value delivery (TVD) is considered a strategic way of delivering projects by including a set of tools based on lean management principles; TVD enhances value in a continuous process starting from the predesign or project definition phase to set the target (Zimina et al. 2012). Other methods that are important to highlight from the literature beyond construction, include: ...
... The client sets criteria for the project, such as price, quality, and time before the supplier delivers a serviceor value -within these criteria [29]. TVD correlates with lean thinking and promotes value creating activities [30]. Collaborative relationships are often regulated by a Design-Build contract since it can be combined with functional requirements instead of detailed specifications of work which leaves no room for maneuver to the contractor. ...
For years the need for road maintenance has been rising in Norway, and the Norwegian Public Road Administration (NPRA) has tried to find a solution. The Valdres model is a project delivery model developed by the NPRA for use in road refurbishment projects to utilize resources more effectively. By using early contractor involvement (ECI), the NPRA combines their own expertise with the contractors’ buildability knowledge in the design phase to reduce risk and uncertainty with smarter and cost-reducing solutions. The studied pilot project E16 Fagernes-Øylo is chosen as case for testing the Valdres model. Ten semi-structured interviews with key informants have been carried out together with a document study to fill the knowledge gap regarding the Valdres model. The contractor was procured by a competitive dialogue (CD) before the final zoning plan was settled and has positively impacted on buildability and trust in the design phase. ECI was combined with Target Value Design (TVD) and Integrated Concurrent Engineering (ICE) to integrate lean thinking and enhance value creation in the design phase. This seemed to give fewer conflicts and cost reductions through a streamlined planning process. The studied case has experienced less changes and higher levels of cooperation with working towards the same goal in the construction phase compared to traditional project delivery models. Overall, the Valdres model has so far been a success.
... Accordingly, the contract is the law of the contracting parties, which is the set of mutually agreed obligations, neither of which may be breached. This is a law applicable to both parties [8]. ...
In the last few decades, substitute modes of debate analysis in construction projects have experienced considerable concern from researchers and practitioners because of the industry fixes on productive dispute resolution methods. Nevertheless, the subject of individuals addressing managers to settle conflicts rests a resolution of interest. It is an opportunity to incorporate the collected experience in the research to script a course for the industry approaching overcoming contracts to resolve disputes. A systematic review of the literature remarked that the dynamics that influenced companies to resort to contracts lacked critical focus because of the inadequate analysis recognized in the construction context. It was perceived from the research reflection that while the bodies and behavioral circumstances have an imperative impact on the contracts management of organizations, an inadequately planned contract exhibits importance that can develop such practice in frames that may complete in case. On the contrary, a well-drafted contract may be significant but not satisfactory to develop a peaceable interpretation of conflicts among the contractors to the agreement. This research delivers knowledge on the significance of managing the bodies and their practice to execute construction projects less prone to demand through a literature review.
Practices of collaborative planning - as related to novel project delivery methods, information technologies, lean construction, and supply chain practices - can impact the cost and schedule performance of projects in the architectural, engineering, and construction (AEC) industry. However, there is a lack of research providing a quantitative holistic assessment of implementing collaborative planning practices. This paper fills this knowledge gap. Using an interdependent multistep research methodology, the authors (1) analyzed a holistic literature-based list of collaborative planning risks using 46 responses from industry expert surveys; (2) calculated the criticality of these risks and compared the obtained results using Spearman rank correlation; (3) statistically analyzed the impact of these risks - based on a project-based survey that collected data from 65 different projects - using distribution fitting analysis and weighted average calculations; (4) developed a framework for predicting the cost and schedule performance impacts in relation to utilizing collaborative planning in the AEC industry; and (5) mathematically verified the research steps using an extreme condition test and sensitivity analysis, and practically validated the research output utilizing a case study example and the insights of 25 industry experts. Within the context of collaborative planning, this paper highlighted and discussed the top six risks that affect cost and schedule project performance: resistance to change, no early involvement of key project participants, lack of construction coordination, late and ineffective communication, lack of leadership, and absence of flexibility and coordination of design. Ultimately, this study provides a necessary and highly customizable metric for industry practitioners to manage their collaborative planning practices efficiently and improve their project performance.
Purpose
Extensive research on the importance of collaborative working (CW) and aligning stakeholders’ interests in construction has been widely conducted. But often the practice of commercial actors during CW has often been overlooked, particularly within the UK setting, where scholars have lamented on the lack of industry-wide collaboration. This study aims to explore the factors affecting commercial actors in CW, specific to the UK construction industry.
Design/methodology/approach
The research used a context-based approach to seek stakeholders’ perspectives on the key factors affecting commercial actors in CW within the UK. Semi-structured interviews with individuals (contractors, cost consultants, designers among others) from construction and infrastructure organisations were conducted, using multiple case study investigations. The collected data was analysed using a case study approach, and principles of inductive thematic analysis to identify the key factors.
Findings
Findings from the analysis identified “institutional” factors such as transactional cost economic influence, the prevailing construction model influence and professional related drivers. Key drivers within these factors include commercial background and training, custom and practice, misaligned interests in projects, clients’ perception of consultants, cost-driven environment, conventional procurement protocols and bureaucratic functions.
Originality/value
In conclusion, these factors continue to affect CW with undue influence on commercial actors in the UK, thus preventing performance improvement demanded by successive UK Government reports. The context-based approach applied in this study is expected to provide some insight in construction management research, especially from a commercial perspective in the UK, to gain an understanding of how these factors are manifesting.
Target costing or Genka Kikaku, as originally named in Japan, is not only a tool for managing costs, but a strategic approach for development of new products, that aims to reduce costs, ensuring quality, reliability and other attributes that will add value to the customers. This paper presents a framework that summarizes a product development process with the literal application of target costing, and seeks to compare this framework to three implementations of it in the construction industry. It started with elaboration of a flowchart that allowed the definition of the parameters to be used in the analysis. Results show that none of the cases studied covers a completed target costing implementation as envisioned in manufacture. Finally, this work points out some issues that need further development such as studies about alternative ways of obtaining the target cost - based on the current market price instead of historical data.
Target cost contracts are growing in popularity but concerns remain about the interplay between fee, target, sharing ratios and the final price. This paper offers a fundamental analysis of the principles under-pinning target contracts. It shows that there is scope for manipulation of tenders and that suboptimal methods of tender evaluation are in use. The paper analyses both fixed fee and percentage fee contracts. Methods of tender evaluation are proposed that will both reduce the scope for manipulation by tenderers and increase the likelihood of the contract being awarded to the tenderer whose final price will be the lowest. The analysis reveals a strong case for setting the contractor's share of cost overrun or underrun at a value that is not less than 50%. Finally, the paper proposes two simplifications that would reduce the number of variables in target cost contracts of the future. One is for the employer to set the fee and the other requires only that a target be tendered but with the fee built into it.
This publication reports on the development work focusing on the procedures of a procurement method for a construction project that integrates early, competitive implementer selection and sharing of risks between the parties. An approach where the key parties bear the risk jointly and service providers are rewarded based on the success of the overall project, encourages the actors to consider each other's views and to cooperate effectively. The integration of know-how creates a basis for innovation and excellent performance - especially in the case of projects that involve a great deal of uncertainty. The procurement (or project delivery) method in question is project alliance where competitive selection is integrated with collaborative and early selection of service providers from the viewpoint of design in a novel way. The publication describes an operational model where selection takes place through elimination of candidates and a subsequent two-phase tendering process: the qualitative tender precedes the workshops that are part of evaluation, followed by submission of tender price data. The price is made up of unit prices and overhead rates while price and scope assessments common to all competitors are used selectively for comparison calculations. In the developed operational model selected service providers, designers and builders, develop the project and its designs in cooperation with the owner before the actual target cost is set. The revised tender price and target cost together with the predetermined allocations of cost overruns and underruns determine the rewards of service providers at different performance levels. The idea is to spur actors to invest especially in the preimplementation development phase which is also promoted by the project's incentive system. An attempt should also be made to incorporate into the system the impact of the realisation of the key qualitative target areas. Other issues the publication deals with include the features of project alliance, its potential advantages and drawbacks, assessment of the suitability of alliancing and prerequisites for using it as well as the administrative structure of the organisation formed by the partners. The so-called competitive single target-cost project alliance presented has been developed in close cooperation with a wide expert network of practical actors. Their view is that the project alliance approach produced as a result of the work is a suitable and useful for the implementation of demanding transport infrastructure projects, road and railway projects, which were the primary application.
Incentives and disincentives are common contractual tools to influence the behaviour of contracting parties. The type of incentivization differs according to the objectives involved. A contract may involve general objectives, for example, the enhancement of the client-contractor relationship, the establishment of long term relationships, or the use of certain business models. Other more tangible objectives concern the issues of cost, performance, and time/completion on schedule. In regard to the latter types of incentive, a range of different types of incentive may be used, e.g. monetary incentives such as fixed-price contracts, cost-plus-incentive fees, cost-plus-award-fees, share-in-savings incentives, and non-monetary incentives such as automatic extension of contract term, more frequent payments, letters of appreciation etc. There is little information available about how they are used and whether they are effective. Questions to be answered in this connection concern the scalability of performance, the choice of the appropriate kind of incentive, the frequency of their use, the percolation of incentives through supply chains and methods of incentive management.