PDG - Target Value Design

Target Value Design

One of the most important processes in the Program's design is the use of budget as a design criterion. That process is implemented through Target Value Design (TVD), a collaborative design process involving designers, builders, suppliers, estimators, and owners co-located in one place to collaboratively produce a design that provides the best value for the owner. The team designs to the budget instead of the conventional process of estimating the cost of the design, and then re-designing to eliminate overruns.

Once the expected cost is validated, a target cost is set to create a sense of necessity in driving further costs out of the project through a Target Value Design process. According to Paul Reiser, one of the industry leaders in implementing TVD, the TVD process evolves through four phases with four different goals:

Phase	Goal
Planning/Programming	Right size, right fit
Design	Optimizing systems
Detailing	Optimizing parts
Production Planning	Optimizing work flow, productivity and pre-fabrication

Research has shown that the Target Value Cost is often as much as 19% below market (expected) costs. Incentives continue to play a role in project delivery where teams are often able to drive additional costs (up to 10%) out of the overall project cost.

Lean/IPD is not just a "new" and "improved" project delivery method. It is a valuable process for maximizing value to all participants on the project while simultaneously eliminating waste. Given the current state of the California State Budget, it is a process that is necessary and timely.

Target Value Design at Site

As initially described above, Target Value Design (TVD) is a collaborative design process involving designers, builders, suppliers, estimators and Owners co-located in one place to collaboratively produce a design that provides the best value for the Owner. Budget (the target value) is a design criterion. The team designs to the budget instead of the conventional process of estimating the cost of the design, and then re-designing to eliminate overruns. The TVD process employs Responsibility-based Project Delivery planning and relies upon lean systems thinking among team members.

TVD has already been used effectively during the Prototype Design phase to weave into the kit of parts the concerns of the end user (inmate-patients, doctors, nurses, security managers, maintenance managers and administrators) and the lessons of state-of-the-art lean health care to drive down square footage and attendant costs. At the sites, the Target Cost will have been established. Important to the Core Group at the site is the continued driving of costs out of construction.

A number of collaborative techniques contribute to the TVD process at the sites:

• Work Structuring includes a number of processes that assist designers and team members in making determinations about cost and value in the project.
  • BIM: Model Based Estimating (real-time estimating) based upon the developed Building Information Model assists the team in planning and re-planning subsequent cost-sensitive iterations.
  • Value Stream Mapping assists in optimizing project flow of materials and work.
  • Standardized Design Concepts and set-based design are utilized, where final choice of design alternatives is deferred until the right combination of pre-analyzed sets emerges to simultaneously achieve design and target value goals.
  • Strategic Sourcing optimizes selection of trade partners.
  • Choosing By Advantages, a collaborative decision process used during Prototype Design, helps structure the choices among design sets, so stakeholders can make fully informed choices.

The IPD Agreement requires the Core Group to develop a Target Value Design plan and requires the IPD Team members to provide Target Value Design support services throughout development of the site specific design.

The site Core Group will develop cross-horizontal clusters to address various concerns in TVD. The clusters will be managed by the TVD liaison appointed by the Core Group who will coordinate weekly meetings and map results of the process against the expected cost. Target Value Design plan is expected to proceed as follows:

• All team members understand the business case of the Owner and stakeholder values
• A cardinal rule is agreed upon by all performers -- the Target Cost cannot be exceeded and the Target Program and Quality cannot be changed, except by the client
• Cost estimating and budgeting is done continuously through intimate collaboration between owner, design professionals and cost modelers (all team members) -- 'over the shoulder estimating'
• The Last Planner system is used to coordinate the actions of team members
• Targets are set as stretch goals to spur innovation
• Target cost and scope are allocated to cross-functional TVD cluster teams, typically by facility
• TVD cluster teams update their cost estimates frequently -- usually every 3 weeks during design development. The project cost estimate is frequently updated (often weekly) to reflect TVD team updates, and reviewed in a weekly meeting of TVD team coordinators and discipline leads, but open to all project team members
• The cost and quality implications of design alternatives are discussed prior to major investments of design time
• Design is managed with a set based strategy, so that all time and resources available within project constraints are used to test and develop alternatives
• Continuous cost model updating to assure that on-going design is not exceeding budget
• Methods for evaluating Target Value Design tradeoffs and opportunities (including function/cost trade-offs) to maintain total project target

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