Value beyond cost

Will Burkitt
The way we define value in construction is changing. We can no longer afford to look at value merely in terms of lowest cost. Our definition – and the way we embed the concept into our procurement and delivery mechanisms – must be broadened. We must look beyond the lowest financial cost to the wider social, economic and environmental factors across the full investment lifecycle.

Research by the Construction Innovation Hub has shown that many projects fail to realise their intended value. Even for projects that are delivered on time and on budget, the anticipated benefits do not always materialise.

So, why do projects sometimes fail to realise value? And can a value toolkit really be the turning point for the industry?

A toolkit to redefine value

At the heart of the movement to recognise value beyond cost sits the Value Toolkit. Created by the Construction Innovation Hub, the toolkit aims to help the construction industry better plan programmes and projects by creating a unique value profile. It gives a baseline against which informed decisions can be made, enabling organisations to get the best possible long-term outcomes and select a delivery model and commercial strategy that best meets their value drivers.

The industry view

At a Surrey Constructing Excellence event, we discussed the Toolkit and how it can help breed a culture of “value” within the DNA of the construction industry.

Value beyond cost was seen as an initiative for the future, with young talent in the industry increasingly motivated by value more than money, driven by the difference they can make to communities and on big issues like climate change, well-being, diversity and quality of life.

It was also seen as an important tool to help focus the supply chain on value from the very start of a project. Too often when a project begins, it is already behind the ‘value curve’. This arises from the absence of collaboration between all parties at an early stage as to what the true value drivers of the project will be.

Furthermore, it provides an impetus to create value through the whole life of a project, embedding it into the project ethos rather than making it a box ticking exercise. In the past, there have been concerns that ‘social value’ is not followed up – this toolkit would help organisations see value all the way through the process, promoting fairness and the widest benefit at every step.

Encouraging value beyond cost in practice

Undoubtedly, some areas of the supply chain are more enlightened than others in terms of assessing, identifying and engaging in value. For value beyond cost to be truly recognised, it must be driven at the highest levels, on the ground and in the boardroom.

Suppliers also need to build trust in the process and believe that clients will consistently hold them and others to account on value initiatives. It is all very well stipulating a requirement in a procurement exercise, but courage is needed from clients to follow through on commitments and offer a fair playing field to the supply chain.

As with all initiatives of this scale, an awareness and training programme for end users is essential. If we want to bring clients and the supply chain into alignment and fully behind the idea of value beyond cost, we must take them on the journey with us and improve collaboration between client departments to champion the initiative. Local authority attendees stressed the importance of involving council committee members in the development and briefing as they often drive the agenda for the projects.

An evidence-based approach

As with any initiative of this magnitude, the key to taking it from idea to reality is evidence. These kinds of changes require investment levels similar to bringing in new IT programmes and operational models. For things like The Value Toolkit to be effective, we must show that they work in practice.

The more we ‘show and tell’, the more widely accepted it will be that this approach is valid, that it works and it can make a difference.

Without this evidence, value will continue to be an afterthought, considered at later stages of a project where it is often too late to realise it (or critical opportunities to derive value are missed).

Read the full report from the Surrey Constructing Excellence event: https://surreyconstructingexcellence.org.uk/wp-content/uploads/2021/02/Value-Beyond-Cost-document-2.pdf

 

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