Target-Value Design

A Q&A with SMMA's Life Science Studio
From budget planning to establishing program requirements, our studio leaders came up with insight and answers about the process of designing to cost.

What does the process of target-value design (TVD) look like?

TVD is associated more specifically with the Lean process, which has its roots in manufacturing. TVD was developed to provide the best value to the Owner. At SMMA, we don’t see TVD as a process—rather, we see it as designing to cost.

One major concern we have is the idea that, early in the process, TVD should identify a preliminary budget, then subsequently define a target that is lower than the expected cost. We believe that, when the team identifies the project's budget early on, it should set sensible and reasonable goals and expectations. Expectations should be achievable. Otherwise, individuals may view the project as a no-win situation and become frustrated.

When designing to cost, it is imperative to be mindful of the collaborative nature of the process. The whole team is brought together at the beginning of the project. The client is an active participant, not just a customer. It is an iterative process, wherein the team plans, designs, costs, and adjusts, and it requires learning and looking for improvement opportunities, and then reacting. The result is innovation and an on-budget project.

Describe the relationship of the team.

First, you need to determine who should be on the project team. Ideally, it would be fewer than 10 stakeholders—the owner/client/user, the designer (e.g., planner, architect, engineer, etc.), the builder, and the key suppliers. This allows for a higher level of trust and makes communications and coordination easier and, therefore, more effective.

Individuals’ interests need to align with the goals and interests of the group. Contractually, integrated project delivery (IPD) is best suited to manage the stakeholders. However, it isn't mandatory. The main goal is to have a relationship that promotes trust and open communication. This can occur in IPD, or in design-build and design-assist delivery models, but not in a traditional design-bid-build (DBB) delivery model. An alternative delivery model requires team commitment to a shared vision for the project, with incentives motivating all participants. DBB is inherently confrontational.

What type of client or business is suited to a TVD approach?

This model isn't for everyone. The organization or company must allow non-traditional delivery methods. There are still many public institutions, government entities, private corporations, etc. that require a minimum of three bidders—not just the builder, but sometimes the architects and engineers, too. Even if TVD is allowed, it requires a different skillset, approach methodology, and culture. This is a new way of doing business, and with that, sometimes, comes risk.  Projects that tend to use this method are more sophisticated and have more complex systems and infrastructure. It isn't necessarily intended for "easy" projects.

Projects for which the business model is heavily dependent on cost and time are ideally suited to TVD—where every day that they are not in operation, serious money is being lost. Healthcare, high technology, manufacturing, and education clients are likely to benefit from it. It isn't just risk to the end user. There can sometimes be real risk to the individual—the client's representative may be placing his or her own career on the line. Encouraging open, honest dialogue and understanding is critical to building trust.

What role does the client have in TVD?

Often, this is a new role—they've not had the opportunity to work on a project where the team is created at project inception. The client is still the one that needs to define the requirements and program. Although the programmer/architect/designer works with them, the client is still the one writing the check, and it is their responsibility to articulate and refine the project goals and concerns. It is their business plan and capital. They work with the designers, builders, and suppliers to review concepts, proposed solutions, and associated costs. They must make informed decisions and provide direction in a timely manner. Often, we see a gap in the client's representation to the project team. One person who will have a vested interest in the success of the project will always be the facility's manager. Including that person in the process is key.

How is the initial budget established?

Most clients begin with a feasibility study, which defines the program and business needs. There also needs to be a frank discussion with the client regarding available capital, funding steams, and schedule. Life-cycle costs, operational expenses, and their associated benefits must also be addressed.  Preliminary budgets can be developed multiple ways. Benchmarking and identifying costs per square foot are most common. The business plan and its goals need to align with program, design, and constraints (cost, schedule, location, etc.).

 

Clients need to be prepared to spend more of their project's budget up front. Proper planning will save more than it will cost.