Target Value Design 101: Maximizing Value in Construction

Innovative collaborative practices are transforming construction to meet owners' stringent and exacting needs across various building types. Target value design (TVD) is a construction management approach that integrates design and project teams with budget limitations. Working with cost estimates from the beginning of the process provides owners with optimal value for their investment, aligning project deliverables with financial constraints.

Cost overruns pose challenges for many projects, but TVD mitigates these by deriving maximum value from designs that are both financially feasible and efficient to execute. As construction management increasingly adopts cross-functional, team-based methodologies, TVD offers a technique to realize projects within available funds, increasing the flow of communication to bring complex projects to life and minimizing waste while maximizing quality.

This article explores how TVD works to deliver value, outlines the benefits of this approach, provides tips for implementing it and highlights how technology enables productive collaboration on TVD projects.

The Collaborative Approach in TVD: Design, Cost and Schedule Integration

Target value design provides a framework to integrate lean principles into construction project management starting from the design phase. Once a project budget is determined, the design team can work with estimators and the construction team to integrate cost concerns into the design, finding the most cost-effective way to meet the client’s needs for the end product of the build.

Without the intention to stay on a reasonable budget, project costs tend to creep up during the scoping, design and construction phases. Target value design refers to integrating cost and schedule constraints to derive more value from a design that is executable within the project budget. The related process of target value delivery is a lean construction method that uses these ideas to optimize the whole construction process.

The Target Value Design Process

Every team will need to optimize the TVD system for their project, but here are the basic steps:

1. Set an initial target cost for the overall project.
2. Create three TVD teams: design, cost control and owner.
3. Assess the design options with input from the teams.
4. Adjust the overall target cost and assign target costs to parts of the project.
5. Schedule regular budget alignment meetings to problem-solve and make adjustments.

Common Construction Delivery Methods and TVD

The traditional delivery model, design-bid-build (DBB), has the chosen A/E firm creating the design before the contract for the construction phase goes out to bid. The design team generally has no communication with the GC or trades who will eventually execute the design and, therefore, has less understanding of how the design will impact the construction costs. In DBB, the design determines the eventual price of the project.

When using TVD with various delivery methods, the project cost is an early concern, with collaborators working together to devise the total cost and then find solutions to deliver the project within budget. Integrated project delivery, which emphasizes early collaboration and shared risk, often uses TVD for stakeholders to improve quality and minimize waste. 

TVD is also often used in design-build projects, with the cooperation between the design and construction teams providing an easy venue for managing costs. Any project delivery method that allows design and construction teams to work together can incorporate TVD.

8 Benefits of Target Value Design

Target value design (TVD) integrates cost considerations from the outset and offers many advantages for enhancing construction project delivery.

1. Optimized Costs

   Including cost variables from the beginning of planning helps find ways to minimize project costs and achieve project objectives with the lowest budget.

2. Enhanced Innovation

   Adding a cost-conscious mindset to the design and execution drives teams to find creative ways to realize project goals and uncover efficiencies.

3. Improved Communication and Collaboration

   Teams are required to work together to balance the project's cost, quality and schedule aspects. This fosters frequent communication and cooperation, leading to higher productivity and better problem-solving.

4. Reduced Waste

   TVD helps teams identify and eliminate design elements that increase costs without adding functional value.

5. Customer Satisfaction

   TVD helps teams deliver meaningful value to owners by focusing on meeting a target budget while realizing the client’s objectives.

6. Minimized Rework and Delays

   The smooth flow of information and the early involvement of construction teams minimize the need for rework and reduce delays in the construction phase.

7. Reduced Risks

   Anticipating construction processes and planning for efficient execution helps teams avoid problems that could cause rework, delays, safety hazards and cost overruns.

8. Faster Delivery

   With more potential problems addressed during design and better communication and collaboration, teams reduce the effort and time required to complete the project.

Tips for Implementing TVD

Like other collaborative construction approaches, TVD entails robust communication to leverage the knowledge of all team members.

Construction Management Technology and TVD

Integrated software solutions allow teams to incorporate real-time estimating, design options and communication into one platform. For collaboration on TVD projects, easy access to data can help teams make better decisions to optimize quality while staying within the target budget.

Construction project management software makes implementing TVD easier for all types of construction, from straightforward traditional builds to more complex healthcare or data center projects. For example, BXP uses software to meet net-zero budget change goals when developing premier workplaces in major US cities.

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Increasing Efficiency with Target Value Design

With material and labor costs increasing, delivering value to clients using processes like target value design can make projects feasible in a challenging economic environment. TVD allows teams to work with owners to make the most cost-effective data-driven decisions while still designing structures that will fulfill the project's desired functionality.

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