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Target value design: using collaboration and a lean approach to reduce construction cost

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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.
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... 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 ...
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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). ...
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... 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. ...
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... 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: ...
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... 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. ...
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... 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]. ...
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