The Bartlett School of Construction & Project Management
Term Paper BCPM0044: Capturing and Delivering Value (20/21)
Dr Grant Mills
Background Literature
Healthcare infrastructure requires significant levels of capital and countries across the world are looking to deliver new
infrastructure reconfigurations. Health infrastructure is a key resource that must be sustained (Cowie et al. 2020).
Healthcare systems require constant reconfiguration to meet current and future health challenges and to build system and
service resilience (Fallah-Aliabadi, et al. 2020). Yet, we do not yet have shared models for their modular delivery – that
create and deliver value. There is increased recognition of the need to improve the efficiency and effectiveness of health
systems across the continuum from prevention to palliation (Rechel et al., 2009). This often results in upward pressure on
health expenditure. Within the UK, the government’s Health Infrastructure Plan (HIP) outlines a five-year rolling
programme of investment. Central to this programme is modular hospital delivery (DHSC, 2019). Beyond the healthcare
system, there are a series of organisations that see the value in modular construction. Firms are investing in new
manufacturing processes such as Katerra (2019), Broad (2020a and 2020b), Mace (2018), Laing O'Rourke (2015 and
2018). Others are joining together to create a wider platform of design, manufacture and assembly solutions (MTC, 2020
and Construction Innovation Hub, 2021).
The Brief
In this assignment you should consider how a modular hospital can be developed to capture and deliver value. This will
involve you:
1.
Identifying a theory or theories that support modular hospital value capture and delivery. For example you may
decide that you would like to use your understanding of supply chain management, procurement, alliances,
requirements management or stakeholder engagement. Or you might like to consider how you would develop a
new approach to systems integration or use advanced design tools such as DSM, DfMA or pDfMA 1.
2.
Selecting and describing the specific characteristics of modular hospital manufacture. You might describe the
nature of the industry, a specific case study and capability, or how a client or project-based organisation are
innovating. You should remark on the specific characteristic that make it complex to capture and deliver value.
3.
Making recommendations on how to design and implement a modular hospital concept and an evaluation of the
benefits that it might deliver. You might describe what the next steps are and who should be involved to
facilitate and orchestrate the capture and delivery of value.
Taking your knowledge of the lectures and your private reading, contextualise and frame your use of theory to evaluate a
practical modular hospital deployment situation. Think carefully about the focus (remember that it is expected that you
do 60 hrs of private reading and 80 hours doing the writing). Use the assessment criteria below to guide you in writing
your assignment.
Assessment Criteria
Statement of Problem
/30
A descriptive account of how a specific country healthcare system
captures and delivers value through its built assets. This should establish
the need for an advanced modular hospital approach that increases
value.
Analysis
/40
The critical evaluation of a new way(s) to capture and deliver value
through a new modular hospital design. It will describe the approach
(e.g. lean, off-site manufacture, systems integration, supply chain
management, logistics, advanced configuration models). Your
implementation of the approach should critically describe, justify and
evaluate the benefits of the approach. There should also be a clear
1
Dependency structure Matrix (DSM), Design for Manufacture and Assembly (DfMA) or Platform Design for
Manufacture and Assembly (PDfMA)
The Bartlett School of Construction & Project Management
theoretical framework that describes the effectiveness of the approach
with a clear discussion that is supported by literature (within the
healthcare sector, or a comparable sector).
Conclusions
/20
There should be a clear description of what you have done, what you
have found and why it has relevance in terms of its implications and
recommendations.
Presentation
/10
Tables/figures are used effectively and consistently. It should be clear
when you are using descriptive, reflective and critical styles of writing.
There should be correct referencing of literature.
Word limit: 3,000 words
Deadline: Monday 26th April 2021 at 3:00PM (UK Time).
References
Broad (2020a) BROAD Ships COVID Hospitals to South Korea Powered by Tele-construction Cloud (online). Available
at URL: https://www.youtube.com/watch?v=zBVkEWvZ3r4 [Accessed 18 February 2021].
Broad (2020b) Can we build a hospital in 48 hours? (online). Available at URL:
https://www.youtube.com/watch?v=jLYp7YUE9DE [Accessed 18 February 2021].
Construction innovation Hub (2021) Platform Design Programme: Defining the Need (Online). Available at URL:
https://the-mtc.worldsecuresystems.com/Construction%20Innovation%20Hub/Construction%20Innovation%20Hub%20%20Defining%20the%20Need%202021.pdf [Accessed 18 February 2021].
Cowie, J., Nicoll, A., Dimova, E.D. et al. The barriers and facilitators influencing the sustainability of hospital-based
interventions: a systematic review. BMC Health Serv Res 20, 588 (2020).
Fallah-Aliabadi, S., Ostadtaghizadeh, A., Ardalan, A. et al. Towards developing a model for the evaluation of hospital
disaster resilience: a systematic review. BMC Health Serv Res 20(64) (2020).
Katerra (2019) Katerra | Reimagining the Construction Site (online). Available at URL:
https://www.youtube.com/watch?v=4jkhwRCNXPo&feature=youtu.b [Accessed 18 February 2021].
Laing O'Rourke (2015) Design for Manufacture and Assembly (DfMA) at the upgrade of Blacktown Hospital (online).
Avilable at URL: https://www.youtube.com/watch?v=c3UWHrhMk6M [Accessed 18 February 2021].
Laing O'Rourke (2018) Inside the Centre of Excellence for Modern Construction (online). Available at URL:
https://www.youtube.com/watch?v=CvBUAL8uRDI [Accessed 18 February 2021].
Mace (2018) East Village N08 - The Jump Factory (online). Available at URL:
https://www.youtube.com/watch?v=xx7CMoSDUzs [Accessed 18 February 2021].
MTC (2020) Our Platform Design Programme defines the need (online). Available:
https://constructioninnovationhub.org.uk/platform-design-programme-defines-the-need/ [Accessed 18 February 2021].
Rechel, B., Wright, S., Edwards, N., Dowdeswell, B., McKee, M. Investing in hospitals of the future. Observatory
Studies Series No. 16, World Health Organization on behalf of the European Observatory on Health Systems and
Policies, Copenhagen, Denmark (2009).
DHSC Health Infrastructure Plan: A New, Strategic Approach to Improving our Hospitals and Health Infrastructure.
London: Department of Health and Social Care.
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/835657/healthinfrastructure-plan.pdf (accessed 24 June 2020) (2019).
LONDON’S GLOBAL UNIVERSITY
Capturing and
Delivering Value
BCPM0044 (2020/21)
School of Construction and Project
Management
Dr. Anne Symons
Theoretical Foundations
Business Model /
Ecosystem
Delivering Major Hospital Projects
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Governance
Requirements
Stakeholders
Delivery Models
Systems Integration and Supply Chains
Why are healthcare and hospitals different
from other building types?
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Large complex buildings with multiple departments
Highly serviced
Expensive equipment and medical infrastructure
Advances in technology
Many stakeholders
Public funding
Long design and construction periods
Public sensitivity – NHS image
Complex language not understood by all stakeholders
Governance and Requirements
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Role of the Department of Health/ NHSI
Standards and Guidance
Mandatory Requirements
Compliant and non-compliant
Stakeholder Involvement
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Client and users
Designers
Contractors
Financiers
Public
Stakeholders - Tree Swing 1 : 1970s
Stakeholders - Tree Swing 2: 2010
Stakeholders - Mock ups 1
Stakeholders - Mock ups 2
Stakeholders - Mock ups 3
Delivery Models
• Capital Funded: Architect Led: Traditional
Design Bid Build
• Capital Funded: Contractor Led: Design and
Build
• Private Finance Initiative: Contractor Led:
Design and Build
Capital Funded: Architect Led 1975-1993
1. Nucleus : Systems Building Programme
2. Chelsea and Westminster: Conduit for
change
3. Perth Royal Infirmary: Non- nucleus
template
1. Nucleus Hospital Building System
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Fixed template for a ward or department
Templates connected together with a ‘hospital street’ to create a hospital
Optimum two floors on a flat site
Standard departmental configuration of rooms (and sizes) within each
template
Structural frame (concrete) concealed within the external walls
Standard structural grids
Standard structural floor to floor heights
Standard ceiling heights
Separate zones within the ceiling for electrical services, drainage and
mechanical services
Designated services risers
Designated electrical distribution cupboards
Lifts and stair cores located on the hospital street
1. Hospital building quality system
• Capable of expansion
• It was one of the most comprehensive and integrated hospital design
data bases
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Activity Data Base (ADB) standard Room data sheets (RDS) and layout sheets (‘C’
sheets) Equipment categories
Hospital Building Notes (HBN) Departmental requirements
Hospital Technical Memoranda (HTM) Building component and Engineering
standards
Ready made briefing material for complete hospital departments
The standard brief helped to restrain unrealistic demands
Planning and design time could be reduced by up to 2 years
Considerable cost savings could be made by reduction in fees to
design consultants, reduction in involvement of NHS staff, reductions
in capital cost and running costs
1. Typical Nucleus Layout : Plan
1.Typical Nucleus Layout : Section
What went wrong?
• 1993 the Chelsea and Westminster hospital on a site
which could not accommodate nucleus
• NHS Trusts replaced the Regional Health Authorities and
in 1990 became self governing independent businesses
• 2002 approval of business cases transferred to the new
Strategic Health Authorities
• Introduction of patient choice
• Single rooms and infection control
• Payment by results
• Increasing sub specialisation – tertiary facilities
2. Chelsea and Westminster
2. Chelsea and Westminster
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Nucleus philosophy – non standard template
Management Contracting
Financed through sale of properties
Negative equity of late 1980s – early 1990s
Allowed freedom of choice
Set the precedents for large public spaces and
atria
3. Perth Royal Infirmary
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Traditional architect led project
Non- nucleus template
Adoption of HTMs and HBNs
Use of standard components
Long user group consultation
Client changes incorporated
Architect Systems Integrator
3. Perth Royal Infirmary
Capital Funded: Contractor Led
• Design and Build
• Architect and design team novated to the contractor
• Early examples in the 1990s
• West Fife District General
• Oban Hospital
• Children’s Surgical Unit 2012
Design & Build : Children’s Surgical Unit
2012
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Architect novated to contractor
Trust appointed external Project Manager
Trust appointed specialist equipment supplier
Brief frozen at contract award
Client changes discouraged
Functionality issues at handover
No evidence of systems integrator
Design & Build :Children’s Surgical Unit
Private Finance Initiative: Contractor
Led Design and Build 1992-2018
• Architect and Design Team appointed by the
contractor as ‘subcontractors’
• Competitive designs amongst bidders
• Difficult user engagement dealing with different
teams
• Four generations of the initiative
New Royal Infirmary of Edinburgh: First
Generation Scheme: completed in 2000
Salford Royal: Third Generation Scheme:
completed in 2012
Comparison of First and Third Generation PFI
Royal Infirmary of
Edinburgh
• Steep ‘design’ learning curve
for contractor
• No architect in contractors’
organisation
• Little user stakeholder
involvement – no user group
meetings
• No ‘mock-ups’
• Functionality issues with
completed project
• No systems integrator
Salford Royal
• Second project for both the
contractor and the client’s
management team
• Architect led design
management
• Well managed user groups
• Mock ups of single and ITU
beds
• Site visits for users during
construction
• Contractor systems integrator
Systems Integration and Supply Chains
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Client Organisation
Design Team
Construction Teams
Subcontractors
Suppliers
Advisory Consultants
Primary systems in healthcare construction
Client
organisation
Design
Team
Building
Contractor
Client Organisation: Level 1
Management
Staff
Patients
Client Organisation: Level 2
Trust capital
project
Team
• Hard Facilities Management
– building fabric
– environmental services
• Soft Facilities Management
Hard FM
Team
Soft FM
Team
–
catering
– cleaning
– porters
Hospital System : Level 3 Project Stakeholder
User Groups
• Clinical user groups
– departments
– medical specialities
Trust
Project
Manager
Clinical
user
groups
• Non-clinical groups
Nonclinical
user
groups
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catering
cleaning
porters
estates team
engineering services
equipment procurement
Complexity
• Hospitals have around 50 departments = 50 user
groups
• 50% of the construction cost relates to the
provision of engineering services
• Continuous clinical developments in terms of
• Models of care
• New technologies, equipment
Building Design and Construction System
Structure
External
envelope
Services
Internal Fit-out
Building Design and Construction Internal Fit-out
subsystem
Partitions
Fixtures
and fittings
Medical
equipment
Specialist Suppliers, Subcontractors and
Advisory Consultants
• Suppliers:
• Robotics
• Medical Gas pendants
• Subcontractors:
• Pneumatic Tube Systems
• Advisory Consultants
• Healthcare Planners
• Fire Engineers
Complexity of Systems Integrations
• Integrating design with new technology
• The development of medical and non medical
infrastructure
• Integrated equipment systems involving
stakeholder groups across the principal system
• Introduction of ‘experts’
Medical Technology: Pharmacy Robots
Non-medical Technology/ Infrastructure:
AGVs distributing bulk pharmaceuticals
Medical Infrastructure: Pneumatic Tube
Systems
Medical Equipment Technology: Automatic
Dispensing Cabinets (ADC)
Nurse opening controlled
drugs compartment
Integration Issues
• AGVs provide a complete materials management, waste
collection and catering transport system
• Overall hospital strategy – involves multiple stakeholders
• Major impact on hospital design – basement required
• Pneumatic Tube Systems can provide for both pharmacy
and pathology
• Need to agree this before the start of the project as a greater tube
diameter is required for pathology
• Major impact on service runs within the building
• Locations of PTS stations
• ADCs can reduce expenditure
• Changes nurse working practices
Integration of Robotics and Pneumatic Tube
System: Swisslog: PillPick
Integration Process
Pneumatic
tube
system
• Pharmacy
• Pathology
Infrastructure
decision –
hospital wide
Location
Installation
• Clean utility
• Staff base
• Corridor
• integrated
• freestanding
Clinical planning
issue and
infection control
Design and
construction issues
Cost and control of
infection
An Example of Integrated Equipment
Group 1: Medical Gas pendants
• Definition of Group 1 Equipment: supplied and installed by the
contractor
• In the 1980s and 1990s pendants were simple and the designers
specified them in accordance with HTMs (Hospital Technical
Memoranda)
• By the 2000s service delivery pendants have developed from a
mechanical services item into medical equipment and the client
wants to select model
• Redefined as Group 1+ in the PFI agreement with a timescale for
selection
• Contractor sets up an approval process with a sub stakeholder
group
Development of Medical Gas Pendants
1980s
• Flexible pendant
• Medical gases
• Group 1
• Single fix
• Standard ADB
code
1990s
• Rigid pendant
• Medical gases and
electrical socket
outlets
• Group 1
• Minimal user
involvement
• Standard ADB code
2010
• Articulated pendant
• Medical gases, data,
electrical outlets and
equipment
• 4 phase fixing programme
• Group 1, 2, 3 and 4
equipment
• Multiple stakeholders
• Bespoke ADB code
Procurement of Medical Gas Pendants
• Multiple stakeholders – up to 15
• Multiple stakeholder groups
• Trust project team – decision makers
• Trust clinicians – requirements specification
• Trust facilities management – maintenance and
servicing
• Contractor – procurement and installation
• Design team – spatial, environmental and structural
Design and Installation Process
Process
Construction
Stage
Select manufacturer
1st fix steelwork support
Select model
2nd fix base plate
Select components
3rd fix ceiling grid and
tiles
4th fix cover plate and
pendant
Stakeholders
Trust : Clinicians
Equipment Manager
Trust FM and Medical
Physics
Architect
Mechanical Services
Engineer
Electrical Services
Structural Engineer
Contractor:
Construction Manager
Commercial Manager
Specialist
Subcontractor
Pendant Manufacturer
Examination Light
Manufacturer
Installation of Medical Gas Pendants
Stage 2: Fixing baseplate to
structure
Stage 4: Completed
Installation: pendant & ceiling
The Need for a Delivery Model which
Supports Systems Integration
Benefits of systems integration
• ‘You cannot co-operate with somebody if you do not know
him and do not know his outlook and how he thinks’ T.E.
Chester, Professor of Social Administration, University of Manchester, 1960
How integrated are the projects?
Who are the systems integrators in the delivery models?
What can Integrated Project Delivery Offer?
How Integrated are Projects?
• The failure of the PFI process and the collapse of
Carillion indicates a serious situation in the UK
construction industry
• There is no shared risk, the client transfers risk to
the contractor who then transfers the risk to their
subcontractors
• No incentive to work together
• Designers have become reactive rather than
proactive
Who are the Systems Integrators?
• In the Architect led projects, only one person participates
throughout the design and the delivery process – the
architect. The contractor may integrate the subcontractors
but the overall contract administration is carried out by the
architect
• In Design and Bid with novation of the architect, the role
transfers to the contractor
• In PFI Design and Build, the role lies with the contractor
What can Integrated Project Delivery Offer?
• A tripartite agreement where designers and
contractor have a direct relationship with the client
and each other.
• Shared risk
• Opportunity to integrate systems and supply
chains
• Lean approach to design and construction
Integrated Project Delivery at Sutter Health
• Cathedral Hill Project – a major hospital
development in California
• Based upon AIA (American Institute of Architects)
form of Contract
• Comparable in size and complexity to many
recently completed UK hospital projects
Reference: Lostuvali, B. Alves, T.C.L. and Modrich, R-U. (2014)
Is Integrated Project Delivery the Answer?
• Not tried in the UK
• UK Government has issued documents in 2014 in relation
to Integrated Project Insurance
• Initiatives such as Project 13 – Alliance Based Projects
have been used for major engineering project but they still
exclude direct client access for designers
• Hospital Projects are not infrastructure projects as in
roads, railways, utilities
References
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Cacciatori, E. and Jacobides, M.G. (2005)
Davies, A and Mackenzie. I. (2014)
Den Otter, A. and Emmitt, S. (2007)
Habraken, N.J. (2000) The Structure of the Ordinary
Hansen, G.K. and Ollson, N.O.E. (2011)
Jorgenson, B. and Emmitt, S. (2008)
Lichtig, W.A. (2005) Sutter Health
Locatelli,G., Mancini, M. and Romano, E. (2013)
Lostuvali, B. Alves, T.C.L. and Modrich, R-U. (2014)
Mesa, H.A., Molenaar, K.R. and Alarcon, L.F. (2016)
Olsson, N.O.E. and Hansen, G.K. (2010)
UK Cabinet Office (2014) The Integrated Project Insurance Model
Zaitun, A.B., Noriati, B. and Yaacub, M. (2000) Systems Integration and
Project Management
LONDON’S GLOBAL UNIVERSITY
Capturing and
Delivering Value
BCPM0044 (2020/21)
School of Construction and Project
Management, Room: 243a
Dr. Grant Mills
Tel: 41815, Email:
g.mills@ucl.ac.uk
Value(s) - Topical
Value(s) in Hospital - Topical
LONDON’S GLOBAL UNIVERSITY
Structure
- Recap on the Assignment Brief
- Modular Construction
- The Operating Theatre Example
Assignment – The Brief
In this assignment you should consider how a modular hospital can be developed to
capture and deliver value. This will involve you:
• Identifying a theory or theories that support modular hospital value capture and
delivery. For example you may decide that you would like to use your
understanding of supply chain management, procurement, alliances,
requirements management or stakeholder engagement. Or you might like to
consider how you would develop a new approach to systems integration or use
advanced design tools such as DSM, DfMA or pDfMA1.
• Selecting and describing the specific characteristics of modular hospital
manufacture. You might describe the nature of the industry, a specific case study
and capability, or how a client or project-based organisation are innovating. You
should remark on the specific characteristic that make it complex to capture and
deliver value.
• Making recommendations on how to design and implement a modular hospital
concept and an evaluation of the benefits that it might deliver. You might
describe what the next steps are and who should be involved to facilitate and
orchestrate the capture and delivery of value.
1
Dependency structure Matrix (DSM), Design for Manufacture and Assembly (DfMA) or Platform Design for Manufacture and Assembly (PDfMA).
Assignment – The Brief
Requirements
management
Health system
Modular hospital
Stakeholder
engagement
Manufacturing
processes
Systems
Orchestration
Platforms
Supply chain
management
Procurement
Systems integration
Innovation
Alliances
DSM, DfMA or pDfMA
Assignment – The Brief
•
Taking your knowledge of the lectures and your private reading,
contextualise and frame your use of theory to evaluate a practical
modular hospital deployment situation. Think carefully about the focus
(remember that it is expected that you do 60 hrs of private reading and
80 hours doing the writing). Use the assessment criteria below to guide
you in writing your assignment.
Word limit: 3,000 words
Deadline: Monday 26th April 2021 at 3:00PM (UK Time)
Assignment – The Assessment Criteria
Statement of Problem
/30
A descriptive account of how a specific country healthcare system captures and
delivers value through its built assets. This should establish the need for an
advanced modular hospital approach that increases value.
Analysis
/40
The critical evaluation of a new way(s) to capture and deliver value through a
new modular hospital design. It will describe the approach (e.g. lean, off-site
manufacture, systems integration, supply chain management, logistics,
advanced configuration models). Your implementation of the approach should
critically describe, justify and evaluate the benefits of the approach. There
should also be a clear theoretical framework that describes the effectiveness of
the approach with a clear discussion that is supported by literature (within the
healthcare sector, or a comparable sector).
Conclusions
/20
There should be a clear description of what you have done, what you have
found and why it has relevance in terms of its implications and
recommendations.
Presentation
/10
Tables/figures are used effectively and consistently. It should be clear when you
are using descriptive, reflective and critical styles of writing. There should be
correct referencing of literature.
LONDON’S GLOBAL UNIVERSITY
Structure
- Recap on the Assignment Brief
- Modular Construction
- The Operating Theatre Example
Questions
How can we
innovate to deliver
value?
What is modularity
and what is its
impact / benefits?
How can an
ecosystem be
established that
delivers value?
How can we make
decisions about
what business
model to apply?
Modular Construction
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Modern Method of Construction is the broad term that encompasses the whole
integrated process of smart construction, digital tools and techniques and
offsite-construction (MHCLG, 2019).
Design for Manufacture and Assembly (DfMA) is a system of process design
that ensures that works as amenable as possible for downstream
manufacturing and assembly (Boothroyd, 2005), which may include
standardised component and reduced design variabilities (Goulding et al.,
2015), integrating mechanical services installations (Pasquire and Connolly,
2003) and reducing the number of parts, complexity of assemblies and so
costs (Gerth et al. 2013).
Offsite manufacturing is where components, elements or modules are
constructed away from the building site and then brought to site to be installed
in position (Gibb and Pendlebury, 2013).
Modern methods of construction (MMCs) is often used to characterise an
innovation in offsite technologies, which move work from the construction site
to the factory (Pan et al. 2007).
Modular Construction
Modular Construction
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Rahman (2014) referred to a range of modular building, preassembly,
prefabrication, offsite production, offsite manufacturing, industrialized building,
and also a range of onsite and offsite construction methods (British Urban
Regeneration Association, 2005; National Audit Office, 2005; National HouseBuilding Council, 2006; Building Research Establishment, 2007).
More recent frameworks have been developed by I3P (2019) and Byden Wood
(2017) and include delivery models, novel material specifications (NMS),
modular and offsite manufacture, modern design optimisation, automation,
site-based and advanced sensors and data.
The Ministry of Housing, Communities & Local Government (MHCLG) have
further standardises MMC terminology (MHCLG, 2019) into seven categories five are categorised as ‘pre-manufacturing’, the sixth is materials innovation
and the seventh relates to site-based improvements.
Modular Construction (Business Models)
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Output per employee increased by 20% between
1968 and 1971 – due in large part to the
substitution of new materials and offsite
construction.
Activities were project and sector focused without
resource and capability backing. Diversification,
particularly vertical diversification. Many major
firms had developed or acquired companies up or
down the supply chain.
But, the management of the British-owned main
contractor has not fundamentally changed since
the Second World War.
Smyth, 2018
Modular Construction (Business Models)
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Every major review of the construction industry has in some
way recommended a move towards offsite construction.
Less than 5% of what we build in the UK utilises offsite
methods.
Clyde & Co’s report surveyed some 30 executives from the
UK’s top 50 construction firms. Invited to nominate the
biggest barriers to offsite, the top two – cost, and lack of
relevant knowledge in their companies – are within their
remit to influence. Other factors they listed signal the
industry’s passivity. They are, in order: waiting for broader
roll out across industry; increased risk; unavailable
technology; and resistance from the board.
What if main contractors, as they are currently constituted,
have no obvious role in a future industry where houses,
apartment blocks, schools and colleges, offices, healthcare
buildings and prisons are delivered mainly by OSM?
Fozard’s fear of a “Google of construction”, that could storm
the stage with capital, technology and a business model that
clients love, is not so implausible.
Smyth, 2018
Modular Construction (Business Models)
“…the traditional business model of major UK
contractors will not exist in ten years’ time. What it will
change into is not so clear, but if major contractors
are embracing change it is clear that the design team
and other stakeholders in the built environment value
chain will need to adapt their own business models to
respond to new ways of assembling and constructing
buildings”.
(Roger Bayliss - Senior Vice
President Operational
Efficiency at Skanska AB)
Modular Construction (Business Models)
“The government must address questions over
intellectual property, pipeline and procurement…
there is an arms race across the sector to develop
commercially viable modular and component
construction products for specific sectors without
reference to open source standards”.
(David Rumsey - Mace)
Modular Construction (≠ What)
Modular Construction (≠ When)
DfMA issues must be considered before and during
the development of the Concept Design at Stage 2 to
achieve:
• More efficient and collaborative working (e.g.
reducing design rework / duplication through early
integration)
• More efficient component and solution
selection (e.g. Reducing procurement waste and
blending standardised, mass customised and
bespoke elements)
• Future flexibility of buildings (e.g. through the
creation of standard components readily adapted
to future changes)
• Improved quality (e.g. Higher tolerances,
accuracy, reduced error and component interface /
airtightness).
Modular Construction (≠ Why not)
• Integrator of Manufactured solution
1. Lack of industry self-awareness
2. Skills and knowledge gaps at stage 2
(funders, enablers, advisors and gatekeepers)
3. Supply chain maturity, fragmentation,
capacity and new market entrants
4. Incomplete feedback loop and uncertainty
for investors (e.g. post occupancy evaluation
for OSM)
5. Pipeline of work and market vulnerabilities.
6. In addition - Irrational barriers and OSM
decision making
Modular Construction (Investment)
Investment in Industralised
Construction (US)
Perhaps the more telling growth statistic is the amount
of venture capital (VC) attracted to many of the recent
firms highlighted in the first trend. Katerra, a Californiabased firm, raised over $980 million in 2018
Pullen, T., Hall, D. M., & Lessing, J. (2019). A Preliminary Overview of Emerging Trends for Industrialized Construction in the United
States (White Paper). Zurich, Switzerland: ETH Zurich Research Collection. https://doi.org/10.3929/ethz-b-000331901
Modular Construction (Investment)
Mace Jump Factory
Partnership with
Australian firm
Hickory
Hall, 2019 ETH Zurich
Modular Construction (Modular Clusters)
Baldwin and Clark (2000) adaptation
LONDON’S GLOBAL UNIVERSITY
Structure
- Recap on the Assignment Brief
- Modular Construction
- The Modular Operating Theatre Example
The Problem
•
•
•
•
•
Need to develop capabilities to increase the productivity, scalability and faster delivery of hospital
theatre projects. Existing manufactured, volumetric, component and traditional solutions are not being
challenged. This project aims to make comparison with spacecraft system manufacture to advance
understanding of fast-moving technologies, airtight assembly, logistics, innovation and
integration.
To research the presumption for offsite in healthcare building and advance DfMA
To explore the capabilities, business models and incentives for accelerated pathways to offsite
building manufacture and delivery
To understand how manufactured, volumetric, component and traditional solutions can be found for
this complex setting – then to deliver efficiencies and increased quality (Bryden Wood, 2017)
To challenge existing frontiers by drawing a
comparison with spacecraft system
manufacture. Both use advanced fast-moving
technologies, both require air tightness, both
are spatially complex, and have challenging
assemblies and logistics - requiring significant
levels of building services innovation and
integration
The Problem
Royal Shrewsbury Hospital (RSH), as part of a
£1.7million investment during 2017/18
The Royal Liverpool hospital, £500million 2019 (following
Carillion's Collapse)
Advance client requirements, agree standards and develop capabilities for advanced
hospital specific design platforms, kit of parts and configurators. Share innovative
capabilities, stimulate open sourcing and establish supply network integration to
reduce risk and increase innovation.
Advanced design and
modern methods of
construction specialists
Healthcare policy and
hospital service users
Advanced engineering,
asset management and
manufacturers
Define capabilities and requirements for
advanced hospital platform for DfMA.
Economies of scale and scope, IP and
open sourcing recommendations. Case
study evidence showing existing
capabilities and articulating of advanced
challenges and opportunities.
Attract investment for new customer-centric solutions and create a pipeline for repeatable projects.
Define multi-generational innovation stretch targets. Grow the market with multiple manufacturer
standardisation, simplified assembly and so reduced cost / waste.
The Evidence
Exit Lobby
Preparation
Utility
Scrub Area
Model of Care (n=25)
Bariatric Surgery (1)
Day Surgery (7)
Future Trends (4)
Theatre Use (2)
Working Practices (11)
Health & Safety (n=10)
Surgical Site Infections (SSI) (6)
Infection Control‐ Waste disposal and
cleaning (1)
Manual Handling (0)
Fire Safety (1)
Staff Safety (2)
Design & Spatial Requirements (n=20)
Room Adjacencies, layout and area
(17)
Ceilings: Layout, height, structure and
finish (0)
Walls ‐ anti bacterial coatings (1)
Doors ‐ automatic, movement,
laser/rad. Protection (1)
Windows and glazed screens –
observation (0)
Floors ‐ finish and colour (1)
Equipment (n=5)
Fixed Equipment (1)
Mobile Equipment (4)
Environmental Services (n=17)
Acoustics (7)
Daylight (3)
General Room Lighting (1)
HVAC and Laminar Flow (6)
Anaesthetic Room
Search Categories (n= number of literature
sources)
Operating Theatre Suite Rooms
Support
Operating Room
Surgical
• HBN 26 Published in 2004 and are somewhat outdated
view of MMC. HBNs are used in 56 countries.
• HFS NHS Repeatable Rooms Programme Published
in UCL Evidence Report in 2018
• Now leveraging this evidence to make the Business
Case for the SMARTEST theatre
The Experience
Workshops:
1) Components and sub assemblies
2) Design for manufacture process
3) Designing the cleanest theatre
4) Designing an advanced clinical care
pathway
5) Design the greenest theatre
6) Learning from Space Engineering
Enhancing interlinked
business model value
drivers Novelty, Lock-in,
Complementarities,
Efficiency
The Supply Chain
Combing open innovation with multi-centre business model
resource-driven, offer-driven, customer, finance-driven innovation
The Supply Chain – Open Innovation
Relational-Approach to
Open Innovation
Healthcare policy and
hospital service users
Advanced design and
modern methods of
construction specialists
Advanced engineering,
asset management and
manufacturers
The Supply Chain Market
Scale of the modular theatre design, manufacture and assembly market
The Supply Chain Market
Key parties involved in customising theatres and the existing cascading process of procurement that
may reduce the opportunities for economies of modular theatre production scale and scope.
The Business Model
(Osterwalder and Pigneur, 2010)
The Business Model
The Business Model
The Business Model
The Platform
The Platform
The Findings
• Healthcare programmes and projects have constrained
MMC innovation - leading to sub-optimal business
models, core rigidities and significant evidence gaps.
• Space engineering programmes and projects by
contrast create co-evolutionary dynamics, advanced
modular clusters and digitally-enabled design integration.
• Co-evolutionary dynamics (e.g. across business models,
capabilities and evidence) must align government,
capital and financial institutions, labour, organisational
designs and scientific and technical knowledge networks.
• An advanced modular cluster and advanced
configurator must be developed for healthcare
programmes and projects.
• A new advanced operating theatre must be nested within
a wider clinical service operation and clinical commission
system (through planning, product development, design,
construction and operation). If achieved, this could
deliver significant productivity gains.
LONDON’S GLOBAL UNIVERSITY
Many thanks for your attention.
Any Questions?
Capturing
andand
Delivering
Procurement
Design Value:
Procurement and Design
Christopher Sherwood
Contact email: c.sherwood@ucl.ac.uk
18 March
18 March
20212021
Procurement and Design
18 March 2021
I covered approximately half of the Week 4 material in the recorded
presentation. Today I will present the other half, leaving time for
discussion, questions, and answers.
I will talk about:
v Framework Contracts
v How Value means different things in different contexts, and to
different groups of people
v Value in a Design Context
v And I’ll be applying my subjective experience of the content in my
presentation, in my analysis.
Procurement and Design
18 March 2021
I’ll be utilising my experience as:
q
q
q
q
q
q
q
A Partner and Director for 17 years at Nightingale Associates, (now
part of IBI), - which was one of the largest Architectural
Practices in the UK at that time,
Managing the London Office of Nightingale Associates, for 9 years,
- during which it became the largest office within the practice,
The leader of the architectural teams on 5 successful competitive
Hospital PPP bids
A member of both the NHS Design Review Panel, and the
Architects for Health Executive Committee and
(Currently), practising independently.
Procurement and Design
18 March 2021
Elements of Framework Contracts
Pre-selection process based on qualitative and/or quantitative criteria
– results in a number of selected contractors or suppliers of services
Established “framework” –hence the name – for individual contracts –
ie an agreement about the terms and conditions that would apply to
any order placed during its life.
Individual contracts are made only when the order is placed
Selection increases chances of securing work- reduces bidding costs
Selection process for individual contracts usually streamlined
Procurement and Design
18 March 2021
Elements of Framework Contracts
Characterised by clients with large estates/development portfolios so
that advantages of repeatability, continuous improvement and reduced
costs through discounts for greater order certainty
Not necessarily best procurement for smaller / one off projects
Frameworks now being used by both Public Sector
and Private Companies.
Procurement and Design
18 March 2021
Rationale of Frameworks – UK Public Sector Frameworks
Principles
●
Replace adversarial culture with partnering/long term relationships
●
Selection increases chances of securing work- reduces bidding costs
●
●
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Cost Plus Contracts with agreed profit margins - based on open book
accounting – reduces disputes/protective measures over variations / delays
Opportunities to add value by utilising repeatability, and feedback, in repeat
work
Consistency of work can generate discounts/lower costs
Procurement and Design
18 March 2021
Rationale of Frameworks
Advantages for Client:
●
●
●
●
●
Reduced overall procurement and project cost, including internal
resources used
Capture of knowledge, feedback, best practice, and value engineering
enhances design quality, value
Ability to commence projects early on the basis of limited information
Early involvement of Design Team – which is an integral part of Supply
Chain
Procurement and Design
18 March 2021
Rationale of Frameworks
Advantages for Contractor/Supply Chain (including Design team):
•
Greater continuity of workload - ability to retain project teams and obtain discounts
•
Guaranteed Profit
•
•
•
Reduced cost of tenders, assuming that the framework delivers the promised
workload, enabling management resource to be focused on value-adding rather
than work-getting
Access to opportunities to influence project outcomes due to an earlier
appointment
Active risk allocation
Procurement and Design
18 March 2021
ProCure 21 Framework
●
●
●
Preferred Supply Chain Partners (PSCPs), selected to carry out NHS
schemes valued at more than £1billion for 5 year period
PSCP Supply Chains contained design teams, sub contractors,
suppliers
All pricing at pre-agreed rates plus profit using “open book”
accounting procedures, - eliminates tenders, claims etc.
●
Contracts included Concept and Schematic Design
●
Contracts awarded through competitive interviews, so low bid costs
Procurement and Design
18 March 2021
ProCure 21 Framework
●
●
●
●
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Most contracts had a Guaranteed Maximum Price
Design information, intellectual property, feedback to be shared,
generating continuous improvement ie CO-CREATION OF VALUE
Standardisation of some rooms, eg. ward bedrooms, and other
components, - knowledge sharing through
Projectshare
Costs benchmarked, continuous
savings targeted
Procurement and Design
18 March 2021
ProCure 21+ Framework
●
ProCure 21+ website stated:
Since the start of the original ProCure21 framework in
2003, over 600 schemes (collectively worth £3.5bn) have
been completed, with consistent time and budget
compliance of over 90%. Client satisfaction has also been
consistently over 80% and there has been no litigation on
any ProCure21 or ProCure21+ scheme – saving the NHS
over £100m. This represents a step-change for public
sector construction, where in 2001 only 26% of schemes
were delivered on time, and 28% on budget, with 3% of
the NHS Capital programme being spent on litigation.
●
●
= ADDED VALUE
Procurement and Design
18 March 2021
ProCure 22
Now ProCure 22 is under way, and by early 2020, all three ProCure
iterations had delivered over 900 projects with a total value of over
£ 9 billion.
Procurement and Design
18 March 2021
Examples of forms of Framework Contracts / Delivery Models
Project 13 – developed by the Institute of Civil Engineers (ICE), - not a
specific form of contract but a set of guiding principles:
1. Governance: Owner’s definition of value, Long-term
relationships with suppliers, and Performance
measurement
2. Organisation: Coalition of suppliers, Aligned commercial
interests, and Effective organisation
3. Integration: Effective teamwork, Production management, and
Health, safety and wellbeing
4. Capable Owner
5. Digital Transformation
6.
Further Reading: “From Transactions to Enterprises”, ICE.
Procurement and Design
18 March 2021
Examples of forms of Framework Contracts / Delivery Models
Anglian Water – @one alliance
Alliance with their consultants, 6 contractors and supply chain using
Framework agreements to develop better solutions and improve project
delivery performance
Emphasis on Collaboration, shared efficiency savings and development
of new/innovative products
Has achieved significant improvements in project costs, carbon
emissions and accidents.
Procurement and Design
18 March 2021
So when the Contractor / Project Consortium is responsible for
executing the Design, - and/or the Detailed Design, employing the
architect for these stages, WHO CONTROLS DESIGN QUALITY IN A PROJECT?
●
Procurement and Design
18 March 2021
So when the Contractor / Project Consortium is responsible for
executing the Design, - and/or the Detailed Design, employing the
architect for these stages, WHO CONTROLS DESIGN QUALITY IN A PROJECT?
Many believe that it is the Contractor / Consortium, - and that the
client loses control of the design.
Procurement and Design
But the answer is
18 March 2021
Procurement and Design
18 March 2021
But the answer is
●
THE CLIENT.
●
●
●
●
It is the CLIENT who ultimately controls what will be provided by
the successful consortium, through the Brief, and the Contract.
The CLIENT, and the Client’s advisers write the Contract, - and the
contract can control the design, - eg. it can state that|:
No design change and/or reduction in the scope and standard of
the facility can take place without the client’s approval.
Procurement and Design
18 March 2021
The Client can also prioritise design quality by:
Selecting an appropriate advisory team
●
Incorporating a design competition into the bid process, as in the UK
●
Prioritising and measuring design in the assessment/selection criteria
●
Enshrining design quality into the brief/programme documentation
●
Working with the advisory team to create a Public Sector Comparator
Design that sets a high benchmark for design
●
●
●
Procurement and Design
18 March 2021
A Summary of my experience of Procurement Methods:
ALL types of procurement can result in an adversarial culture on a
project, - but some are more likely to than others.
Traditional procurement is the most likely to, - though not
automatically, - it depends on the profitability of the project for the
players, - obviously particularly, the Contractor.
A major factor is profit-related bonus payments by the Contractor to
senior project staff – these incentivise the reduction of costs,
encouraging the use of cheaper materials, and perhaps changing /
omitting design features.
Procurement and Design
18 March 2021
A Summary of my experience of Procurement Methods:
PPP, on the projects on which I worked, worked well up to the
completion of construction, - possibly because most of the
Contractors I worked with were foreign!
Those Contractors placed a high priority on Design at the bid stage,
though sometimes there were arguments about specification during
the construction stage.
The design competitions generated long term solutions, and in
some cases innovative thinking.
Procurement and Design
18 March 2021
To Summarise:
• Traditional
procurement at best will maintain and deliver the value
●
already embedded in a project ie the design process
●
• Procurement that involves the Building Contractor may provide some
added value, mainly from greater integration of construction and
design
• PPP, despite its faults, adds value to the process with emphasis on
life cycle costs, long term value, and (in the UK), design
competition.
• Frameworks add value through reducing conflict, and enhancing
feedback and longer term integration, of the supply chain
Procurement and Design
18 March 2021
Procurement Elements that ADD VALUE:
•
●
Integration
of Design and Construction Team
●
•
Design Competition
•
Whole Life Cycle Costing / ongoing responsibility for Operation
•
Partnering / Co-creation of Value
•
Continuity of work - ability to retain project teams and supply
chains
•
Utilising repetition, standardisation and feedback, in repeat work
Procurement and Design
18 March 2021
PROTECTING Value:
Procurement and the Contracts should clearly define what Value means for
the project, and actively ensure that Value cannot be eroded through loss of
control of elements such as Design Quality.
Develop the value assessment methodology and apply it
Identify evaluation criteria for Value, not just of the final outcome but of the
process itself eg.
§
Excellent Functionality
§
The Environment for Occupants / Users of the building / facility
§
High Life Cycle Cost performance
§
Architectural Distinction
§
Sustainability
Procurement and Design
18 March 2021
Some Value Definitions
VALUE IN BUILDINGS / INFRASTRUCTURE
“EMPIRICAL” VALUE, FUNCTIONAL PERFORMANCE” VALUE. and
“ABSTRACT” VALUE (my definitions):
EMPIRICAL VALUE
FUNCTIONAL VALUE
ABSTRACT VALUE
25
Procurement and Design
18 March 2021
Some Value Definitions
VALUE IN BUILDINGS / INFRASTRUCTURE
“EMPIRICAL” VALUE, (my definition), is at least to some degree,
measurable. It is usually associated with the economics of the
construction project, including costs, and the project as a capital
asset and/or income/profit generator, - from rental or sale, eg. offices,
residential developments. Sustainability, too, if measurable.
Procurement and Design
18 March 2021
Some Value Definitions
VALUE IN BUILDINGS / INFRASTRUCTURE
“FUNCTIONAL PERFORMANCE” VALUE is also to some degree measurable,
if not empirically. It involves the performance of the project with reference to
●
●
Its function eg. a dam or road, and/or
Its users’ ability to carry out activities carried out within efficiently and
well, - eg. a factory, shop, workshop, or warehouse, - or in the public
sector, say a hospital or school. Many buildings, - especially in the
Public Sector, - are not built for profit, but to discharge a public or
community function.
Procurement and Design
18 March 2021
Some Value Definitions
VALUE IN BUILDINGS / INFRASTRUCTURE
“ABSTRACT” VALUE is less measurable, it encompasses concepts
such as
●
User well being,
●
Architectural and aesthetic quality,
●
Value to the wider community,
●
Status.
Procurement and Design
18 March 2021
Value for the Wider Community
“Abstract” Value
The value of buildings like:
• Sydney Opera House
• Guggenheim Bilbao
• Birmingham City library
• a Village School, or shop,
goes far beyond their financial value
And factors such as Environmental concerns and Local
Employment have become important, too.
Procurement and Design
18 March 2021
Value for Client Owners/Occupiers
“Status” Value
Some buildings have a “status” element to their Value, that may or
may not be integral to their Economic Value.
Examples in the Private Sector include say a Company HQ for an
international bank, “Designer” shops, “5 Star” hotels etc
In these buildings, the “Status” Value of the building may affect
customer perception of the company, influencing its performance
Procurement and Design
18 March 2021
Some Value Definitions –
The “Project Management Triangle” – Barnes, Lock.
If one part of the triangle is
fixed the other two points have
to move, so if quality is fixed,
time and/or cost may need to
increase, - or a trade off has to
be made in quality or cost to
meet a fixed date.
31
Procurement and Design
18 March 2021
Some Value Definitions
My “Project Desirables”
Triangle
Lowest Cost
One can achieve two, but, usually, not all three
variables.
Cost Certainty
Programme
32
Procurement and Design
18 March 2021
Project cost can be looked at incrementally, as:
v Capital Cost – including any costs, - (when applicable), for
§
Finance,
§
Land and buildings,
§
Design
§
Building,
vOperation including energy/utility costs
vMaintenance including replacements, repairs, cleaning etc,
vOr, - COLLECTIVELY, - as LIFE CYCLE COST.
v
There is also the ENVIRONMENTAL cost of a building or structure.
And its RELATIVE COST – could the money be better used in another way?
v
•
Procurement and Design
18 March 2021
Also, all these formulae and definitions are missing one very
important element.
TIME:
THE LIFE OF A CONSTRUCTION PROJECT DOES NOT END AT
CONTRACTION COMPLETION AND HANDOVER.
34
Procurement and Design
18 March 2021
Some Value Definitions
What is good value when a building is completed, - eg. may not
be good value in the longer term, - and vice versa.
• Operational and Maintenance Cost
• Future Value, - Capital and/or Rental – and
• Long Term status / Reputation
all affect perceptions
Venezuela: 180% inflation in 2015, = >3%/week, so Value =
Speed. Quick decision-making and action saves money.
35
Procurement and Design
18 March 2021
Value
• On every construction project, there are different
people/groups, each with differing interests, requirements,
priorities and aspirations.
• Therefore good value is variable, and depends the viewpoint of
the “beholder”.
• What constitutes good value for one, may not be good value for
another.
Procurement and Design
18 March 2021
Evaluating value in a construction project context
Procurement and Design
18 March 2021
Evaluating value in a Design context – an Example:
●
Attribute
●
Weight
●
Achieves Accommodation
requirements of Brief (Areas)
●
4
●
●
Functionality
including Access, Adjacencies, Flows
●
3
●
Environment/Wellbeing of occupants
●
3
●
Security
●
3
●
Flexibility – Change of Use / expansion
●
2
●
Architectural Distinction / Impact
●
2
●
Sustainability
●
2
●
Local/Planning/Community Context
●
2
Cost – Life Cycle
●
4
Programme
●
2
Procurement and Design
The Process
Peterborough City Hospital PPP :
Existing hospital on
site < 20 years old,
but < half required
area.
PPP brief was for a
612 bed Acute
Hospital, with
dedicated Women’s
and Children’s
Hospital + 98 bed
Mental Health
Hospital
18 March 2021
Procurement and Design
Strategic Option Appraisal
18 March 2021
Procurement and Design
18 March 2021
Procurement and Design
18 March 2021
In Germany, funding for Hospitals is per square metre of CLINICAL and
OCCUPIED SPACE – ie circulation and atria/entrance concourses do not
count in the funding formulae. This encourages efficient planning and
maximising productive space.
Atria: Do they justify their cost?
Procurement and Design
18 March 2021
Herzberg’s Two Factor Hygiene / Motivation Theory
●
●
●
●
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●
●
Factors for Satisfaction
Achievement
Recognition
The work itself
Responsibility
Advancement
Growth
●
●
●
●
●
●
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Factors for Dissatisfaction
Company policies
Supervision
Relationship with supervisor and peers
Work conditions
Salary
Status
Security
Procurement and Design
18 March 2021
Sherwood’s Two Factor Satisfaction / Dissatisfaction Theory
applied to Construction Projects:
●
Factors for Satisfaction
Increased Status
●
Architectural Distinction
●
Recognition
●
Increased Staff/Occupier
Wellbeing
●
Good Functionality Increased
Efficiency/Productivity
●
Target Profit
achieved/exceeded
●
Growth
=Asset
ADDED
VALUE
●
●
●
●
●
●
●
●
●
Factors for Dissatisfaction
Delays
Increased Design and Build Costs –
Poor Relationships eg. Design
Team/Client, Design Team/Contractor
Design Faults – eg. Leaks!
Functional Derogations
Target Profit not achieved
High Maintenance/excessive cost in
use
AVOIDANCE = VALUE ADDED
Procurement and Design
18 March 2021
Delivering value in a construction context: some pointers:
Good Hygiene:
•
UNDERSTAND AND ESTABLISH THE PRIORITIES – ie. what will
constitute good value in this project
•
DON’T MAKE MISTAKES and/ or cause DELAYS
•
DON’T SPEND / WASTE MONEY WHERE IT IS OF LITTLE
BENEFIT
•
SPEND THE MONEY WHERE IT COUNTS – (Added Value)
-
Procurement and Design
18 March 2021
(Good “Hygiene”) – minimise mistakes by
•
Checking design (and area) against brief and Statutory
regulations, - constantly.
* Don’t forget the area occupied by internal walls, as well as
by services, and vertical and horizontal circulation
•
Using tried and tested/standard details where possible
•
Utilising rigorous checking procedures for all drawings at every
stage, and ENFORCE them.
•
Utilising appropriate resources - projects that are adequately
resourced usually achieve the best results with the fewest
crises
Procurement and Design
18 March 2021
Good “Hygiene” – minimise waste, and save money where it is of
little benefit:
• Ensure rooms/spaces are not above briefed area
• Minimise Circulation - Place large rooms in corners/at ends of
circulation, it reduces the circulation area. (but NB circulation
£/sqm cost is < occupied areas)
• Save money in non-occupied/non-public areas – eg store rooms,
• Save money where appropriate on repetitive items, - eg. doors,
(>2,000 in Peterborough City Hospital), power sockets, skirtings
• Minimise unnecessary corners in external walls
• Select materials, fittings, equipment, engineering services etc.,
taking into account life-cycle costs
Procurement and Design
Flexibility
18 March 2021
Procurement and Design
18 March 2021
For example, - (Added Value)
Spend the money where it counts
• In areas where highest quality environment is desirable eg.
Entrance Concourse/Atrium
• On architectural features where impact is desired/greatest
• On finishes/fittings where performance/durability is critical, eg.
external fabric, windows , doors …..
• Maximise amenity – eg view outlook
• Exceeding brief/expectations in selected areas - eg. Atrium,
Landscaping, larger Operating Theatres, innovative design
solutions - “New Nightingale Cruciform Ward”
Procurement and Design
18 March 2021
Delivering value in a construction context: some pointers:
Added Value:
• DESIGN AN EFFICIENT BUILDING/PROJECT – EFFICIENT IN
SPACE UTILISATION, USE AND LIFE CYCLE COST.
• MAXIMISE THE AEStHETIC VALUE AND OPTIMISE USER WELL
BEING WITHIN THE PROJECT CONSTRAINTS
• FIRST IMPRESSIONS COUNT
• GOOD LANDSCAPING ALWAYS ENHANCES A PROJECT – AND
USUALLY DOESN’T COST MUCH IN RELATION TO TOTAL COST
Procurement and Design
18 March 2021
Value “Engineering”
Should be to either
• Increase – “engineer” Value, or, if necessary,
• Reduce costs while minimising any reduction in value.
•
It should NOT be simply a cost-cutting exercise, under the
pretence of Value Engineering, - but it often is.
The giveaway for the above is whether there are items to ADD to
the project, or anything else in the workshop/matrix that will ADD
Value rather than reduce it.
51
Procurement and Design
18 March 2021
Value Engineering
Often done as a workshop involving Design Team, Project
Manager, Client, and Contractor, if appointed.
A typical Value “Engineering” matrix might include columns
(or rows) for the following:
• Proposal
• Potential cost/saving
• Advantages/disadvantages – possibly weighted
• Commentary (by all members of team)
• Approval (Y/N)
• Agreed action/cost/saving
• Remarks
Procurement and Design
18 March 2021
The Value of Research, Development and Innovation
q
q
q
q
Palladio’s “The Four Books of Architecture”
Louis Sullivan – use of steel frame to construct high rise
buildings
John Portman – use of atriums in high end hotels
(On smaller scale) Nightingale IBI – Cruciform 4 bed bays, bedpods, Open Plan “Barn Theatre”
●
Procurement and Design
“Barn Theatre”
18 March 2021
Procurement and Design
18 March 2021
The Design / Construction Professional as a Value Creator /
Enhancer / Deliverer:
In my lecture, I hope that I have shown that, critically, value doesn’t
only lie in optimising the cost during the construction process, - there
are many components to value, and a building has VALUE IN USE.
My belief is that it is usually, – although not necessarily always, - the
Architect and the Design Professionals, who have the best long term
view of what represents good value in a construction project, as it is
they who understand that a construction project is a means to an end, a building has a life that STARTS at Practical Completion, - it is not a
project that is complete at Practical Completion.
55
Procurement and Design
18 March 2021
So what can YOU do to maximise value?
•
Ascertain what will constitute true value in the project
•
Establish stakeholder requirements and aspirations even if you
can’t achieve all of them.
•
Practise good project hygiene
•
Spend the money where it counts
•
Look for and advocate the LONGER TERM VALUE
•
Practise true Value Engineering not cost-cutting
•
56
Procurement and Design
18 March 2021
So what can YOU do to maximise value?
•
Specifications of buildings, equipment etc. usually rise over
time, so for futureproofing value, consider higher
specifications where possible, or facilitating higher
specifications in the future.
• USE YOUR SKILLS TO ADD VALUE, - individuals can make a big
impact, even on a large project, - and as a certain supermarket
advertises, - “Every little helps.”
57
Procurement and Design
18 March 2021
The End!
I would have liked to meet you all in person, but sadly it hasn’t been
possible. I will take this opportunity to wish you well in both your
UCL studies and in the future.
Procurement and Design
18 March 2021
A Delivery Model is a set of principles,
structures, relationships, contracts and
approaches
developed by institutions and
●
adopted and customized by inter●
organizational networks as a way of
delivering programs and projects.
Project Procurement:
The overall objective of Project
Procurement in a Design and Construction
context, is to provide a means and a
process to complete the relevant project.
Procurement and Design
18 March 2021
Project Procurememt:
Selection of the Procurement Route – if
there are options, - will be driven by the
client’s objectives and view of how
procurement can assist in achieving best
value for the project……..however best
value is defined.
It will therefore be influenced by several sometimes competing - and not
necessarily effective - drivers:
Procurement and Design
18 March 2021
Costs/Pricing
Lowest
or Best Value Price
●
●
Price Certainty
Programme
Design Quality – who controls it may be an issue
Control
Laws/Regulations eg. EU rules on Public Sector Procurement
Funding
RISK (is risk, - or its reduction, - part of value?)
Procurement and Design
18 March 2021
Older types of Project Procurement, - Traditional, (Design – Bid –
Build), Design & Build, and Construction Management procurement
routes have been used for a long time.
They “get the job done,” – they deliver – at least most of - the value
added by the Design Team, and the Contractor.
Each has positives and negatives, but in broad measure, with the
possible exception of the greater integration in Design Build, the
procurement itself does not add value in most categories that we
have described.
Procurement and Design
18 March 2021
Procurement of Design Team
Private Sector clients can select their Design Team (and their
Contractor), however they wish, ie social contact, repeat business,
no selection procedure is required by law, but shareholders may
require transparent and equitable selection procedures.
Public Sector clients must select their Design Team (and Contractor)
in accordance with regulations to minimise risk of corruption and to
maximise value.
Selection methods include approved lists, fee and qualitative
performance tenders, and design competitions.
Procurement and Design
18 March 2021
Design Competition
Competition encourages, rewards, and therefore generates improved
performance, and innovation
In several European countries, all public sector buildings are
awarded through Design competitions
A design competition multiplies the number of professionals
bringing their expertise to bear onto a project, and therefore
increases the likelihood of a design that meets the client’s
aspirations, - ie value
When competitions select the architect, not necessarily the design,
features of the unsuccessful entries can be utilised too.
Procurement and Design
18 March 2021
More recent types of Project Procurement
●
PPP – Public-Private
Partnerships (also called PFI)
Public Sector Capital Projects or Services provided,
funded and/or operated either wholly or in part by Private Sector
Companies eg.
●
Hospitals,
Equipment
Schools,
IT
Roads/Motorways,
Catering
Procurement and Design
18 March 2021
PFI (PPP) in the UK:
PFI/PPP was first pioneered in
UK in 1992.
Or was it?
The UK NHS was born in 1948, providing free health care to all.
But all doctors in General Practice/Primary Care were - and most still
are - private businesses working from health centres they owned or
rented, and managed, - in effect, thousands of “mini” PPPs!
So one could say that British PPP was born in 1948.
Procurement and Design
18 March 2021
PFI (PPP) in the UK:
But was it?
Think about the East
India Company, - and
the Hudson Bay
Trading Company…….
Now it is acknowledged that the Colonial era inflicted terrible suffering
and wrongs, but, nevertheless, Great Britain built an empire using PPP,
and so has been utilising PPP to do Government business for centuries!
Procurement and Design
18 March 2021
PFI (PPP) in the UK:
PFI/PPP as we now know it first pioneered in UK in 1992
PPP in the UK could (but didn’t always):
• Finance,
• Design,
• Construction,
• FM / Maintenance
• Equipment
• Operations – eg. Trains, some Schools and Academies, Hospital nonClinical Services and NHS Independent Treatment Centres, - though
NOT Hospital Clinical Services.
Procurement and Design
18 March 2021
PFI (PPP) in the UK:
Perceived Benefits for Government:
•
Capital development cost initially “off balance sheet”, (not
now), and spread over many years.
•
Risks lie principally with Private Sector Partner (PSP).
•
Competitive process encourages and rewards innovation,
especially in design.
•
Emphasis on life cycle costs instead of capital costs
encourages robustThe
high
UKquality
Nationaldesign/material
Audit Office hasselection
found that some
• Cost Model resulted
projects represented good value for money while
nottime completion for most projects
inothers
earlydo
/ on
Procurement and Design
18 March 2021
PFI (PPP) in the UK:
Negatives:
• Cost of borrowing – interest rates – higher for private sector than
government
• Significant affordability problems with some PPPs
• Risk transfer generates cost premium
• Contract price increases between selection of Preferred Bidder, and
Financial Close
• Value engineering due to above can drive down quality
• Wastage of resources,The
time
money
in unsuccessful
bids
a
UKand
National
Audit
Office has found
that–some
projects represented
for money while
large bid can take months/1
year+, andgood
costvalue
£ millions.
others do not
• Some projects criticised for poor design quality
Procurement and Design
18 March 2021
PPP - LIFT (Local Improvement Finance Trust)
A form of PPP but:
• Local Trusts – and in some cases Local
Authorities, partnered with
Consortium taking equity in Project
Co.
• Small schemes ‘bundled’ together e.g.
Health Centres, GP Surgeries, to
achieve economic and PPP viability
• Could be linked with other local services
and facilities eg. dental services,
physiotherapy clinics, district nursing
and health visiting, Local authority
services, third sector and private
providers, and Leisure Centres.
Procurement and Design
18 March 2021
PPP - LIFT (Local Improvement Finance Trust)
• Continuing relationship – future projects utilised repetition and
feedback.
• Opportunities for ‘3rd party’ income eg. Residential/Commercial
Development.
• 314 projects were developed using LIFT.
•
LIFT procurement represented something approaching a true Public
Private Partnership – utilizing a Partnering approach
• The National Audit Office stated (in 2005), “The local LIFT schemes we
have examined appear to be effective and offer value for money”
• Sadly the LIFT programme suffered from a re-organization of NHS
Primary Care, - which was not a Procurement / Design and Construct
issue, and so its use did not expand.
•
Procurement and Design
18 March 2021
So has PPP in the UK enhanced / added Value?
And if so, how?
Procurement and Design
18 March 2021
PPP bids are scored not only on capital construction cost, but on:
Design
Unitary Payment based on Life Cycle Cost
Facilities Maintenance Proposals
Legal Provisions
SO THEY REPRESENT A GENUINE ATTEMPT TO PROCURE
INFRASTRUCTURE PROJECTS ON THE BASIS OFVALUE, NOT
JUST COST.
Procurement and Design
Before PPP, most design decisions
ranging from
• finishes selection, to
•
strategic decisions on whether
or not to refurbish or build new,
prioritised CAPITAL COST.
18 March 2021
Procurement and Design
However in PPP,
Unitary payment is based not just on the
capital cost of the development, but on
the TOTAL COST of
• Financing, including interest,
• Building,
• FM/Maintenance including
replacements, repairs, cleaning etc
• Operations over the life of the PPP
contract,
ie LIFE CYCLE COST
18 March 2021
Procurement and Design
18 March 2021
Life Cycle Costing
• This changes the emphasis on (short term) capital cost, to long term life
cycle costs, - LONG TERM VALUE.
• It is often cheaper to use higher quality materials that will not require
replacement and/or high maintenance during the life of the building
• It can even change strategic decisions, - such as whether to refurbish an
existing building, or replace it. Although the CAPITAL COST of say
demolishing an existing building, and building new, may exceed
retention, - OVER THE LIFE OF THE PPP CONTRACT IT MAY BE
CHEAPER.
• This was the case at Peterborough City Hospital.
•
Procurement and Design
18 March 2021
PFI (PPP) in the UK: Design Quality Measures :
To ensure a high standard of design
was achieved, the NHS utilised
• A bidding process where the
bidders compete on design, - the
design is an important criterion in
the bid scoring process
• CABE and Design Review Panel
reviews
• Costs that are based on the whole
life cycle of the building
•
•
Procurement and Design
18 March 2021
Design Competition
Design competitions were an intrinsic part of British PPPs, bidders
competed on design as well as other factors such as price
Therefore much effort, time, money and intellectual expertise was expended
by:
• Clients, in ensuring that the PPP process delivers a building of high
design quality, and
• Bidders, on trying to make each bid better than its competitors in terms
of design.
Procurement and Design
Design Quality
According to many, PPP has led to a
deterioration in design quality
They would have us believe that before
PPP, good design was paramount. But
was it?
These two projects were designed prior
to the PPP era, and traditionally
procured.
18 March 2021
Procurement and Design
18 March 2021
Design Quality
And these two examples are PPP Hospitals
Do we really think we would have had
public buildings like this without PPP?
Southmead Hospital, by BDP
Golden Jubilee Wing, King’s College
Hospital, by Nightingale Associates,
now IBI)
Procurement and Design
18 March 2021
Functional Design / User Consultation / Bid Scoring
• In the UK Healthcare PPP bid process, user
consultation is regarded as an important
tool in achieving a design solution of high
quality.
• The clinicians contribute to the bid scoring
process
• It is therefore in the bidders’ interests to
“win over ”the user groups with solutions
of high quality
• ….. – Adding Value by enhancing Functional
Performance
•
Procurement and Design
18 March 2021
Case Study: West Middlesex University Hospital
• Nominated for the 2002 PFI Awards, and for Design Excellence, at the
Healthcare 2004 Awards
Procurement and Design
18 March 2021
Case Study: West Middlesex University Hospital
Procurement and Design
18 March 2021
Case Study: West Middlesex University Hospital
Feedback
●
●
●
●
The Unitary payment is approx. £10 million p.a.
For the 3 years before the Pfi, the WMUH Trust had spent > £7m
just on “sticking plaster” repairs necessary to maintain the
hospital functions.
Now for a little more than £10m each year, the Trust have a wholly
maintained new building, plus “soft FM”, - catering, porters,
receipt and distribution of deliveries and waste.
PPP certainly added value for West Middlesex University Hospital.
Procurement and Design
18 March 2021
PFI (PPP) in the UK:
•
The National Audit Office had found that some projects represented
good value for money while others do not. Nevertheless,
“We found that most PFI hospital contracts are well managed. And the
low level of deductions and high levels of satisfaction indicate they are
currently achieving the value for money expected at the point the
contracts were signed”
However subsequently, the world-wide Financial Crisis increased the
cost of credit, and the NAO expressed doubts about continued PPP
VfM.
•
•
Procurement and Design
18 March 2021
PFI (PPP) in the UK:
•
In their more recent, well publicised (January 2018) report, the National
Audit Office was much more negative about PFI/PPP.
A reading of the report shows that the main thrust of their criticism is
the cost of borrowing the money to finance the projects, - the private
sector pays higher interest than the government.
The report also criticised biased Business Cases that were slanted
towards the adoption of PPP.
Nevertheless the report also states that the case for some of the
perceived benefits of PPP has insufficient evidence and is unproven.
Procurement and Design
18 March 2021
PFI (PPP) in the UK:
•
In the face of the NAO reports, and mounting criticism both from the
public, and within the Construction Industry, PPP as described in the
preceding slides, is officially “dead”.
However,
• The Welsh Mutual Investment Model (where the government takes
an equity stake in the project) and
• Variations of the Scottish Non-Profit Distributing Model (which
operates on a fixed rate of return for contractors and lenders)
are still in operation, and elements of several large current
infrastructure projects could still be considered PPP.
Procurement and Design
Principal types of Project Procurement
Frameworks
18 March 2021
Procurement and Design
18 March 2021
Background to Rationale of Frameworks
●
●
●
●
Traditional Contracts frequently adversarial, as both Client and
Contractor/Consortium optimise / protect their financial position.
Sir Michael Latham’s 1994 report, ‘Constructing the Team’ criticised the
adversarial approach inherent in traditional construction contracts
In 2001, just 28% of public sector construction projects were delivered on time,
and only 29% were on budget.
Slough Estates’ research indicated that approximately 10% of all man hours
on a typical construction project were to either generate claims/payment for
variations, or to protect against losses for same.
Procurement and Design
18 March 2021
Background to Rationale of Frameworks
Large Clients with extensive portfolios of project work eg, the NHS,
Slough Estates, increasingly concluded that the advantages of price
competitive tendering were offset by the above.
Several adopted Construction Frameworks as a solution.
LONDON’S GLOBAL UNIVERSITY
Capturing and
Delivering Value
BCPM0044 (2020/21)
School of Construction and Project
Management, Room: 243a
Dr. Grant Mills
Tel: 41815, Email:
g.mills@ucl.ac.uk
LONDON’S GLOBAL UNIVERSITY
Structure
-
What is value?
Value in the Construction Industry
Value Theory
Types of Project Value
How is Value Delivered?
What is Value?
What is Value? (bad or good)
‘A contemptuous conception
of life’s values.’
Philosopher Roger Scruton
The Trellick Tower,
London, WC10
Now Grade
II listed
What is Value? (bad or good)
‘It… illustrates perfectly the social and
economic values of good design.’
Sir Stuart Lipton, 2003
Bournemouth library, opened 28 June 2002
What is Value? (bad or good)
Therapeutic
environments
What is Value? (bad or good)
What is Value? (Function)
Move Vertically
Contain Patients
Controlled Entrance
Quench Thirst
Drawbridge at the fort of
Ponta da Bandeira; Lagos,
Portugal
Wandsworth Recovery
Centre - MAPP
Market substitute
What is Value? (Function)
Cross Channel
Cover Body
Fasten Shoes
Dolce & Gabbana
Topshop
Ever-greater Integration
Production /
Re-engineered
substitute
European Union
Post EU System
What is Value?
•
•
•
•
•
Value – The delivery of benefits / costs
Depreciation – The loss of value
Obsolescence – The end of value
Service-life – The duration of value
Failure – The price for not creating value
LONDON’S GLOBAL UNIVERSITY
Structure
-
What is value?
Value in the Construction Industry
Value Theory
Types of Project Value
How is Value Delivered?
Value in UK construction (Past)
• The construction sector is calling for greater
efficiency and effectiveness (HM Government,
2013)
• To reduce both initial capital and whole-life cost
(33%) and halve the overall time (from inception to
completion)
Value in UK construction (Past)
• UK Cabinet Office (2011) called for
– ‘...a profound change in the relationship between public authorities
and the construction industry to ensure the Government consistently
gets a good deal and the country gets the social and economic
infrastructure it needs for the long-term…'. Morrell (2010, p. 7 - chief
construction advisor at the time)
• Morrell saw “value” as one of those notable themes that keeps
cropping up (along with collaboration, integration and innovation) and
that whole life value has been top priority for some forty years.
• “I hope it is now a cliché that real value lies in outcomes” and,
• there is a complicated matrix of interactions which means that it is not
“...good enough to point to one aspect of good design, and one aspect
of a good outcome, and claim that it proves the value of all aspects of
good design...”.
Value in UK construction (Past)
•
•
•
•
•
Too many public buildings including hospitals had not
been designed with future needs in mind.
“We tend to revere bricks and mortar in this country,” he
said. “We think buildings have to be built for a long, long
time. In other countries there is a tendency to treat
buildings as a consumable.”
He launched the government’s construction strategy. This
is designed to cut 20% off building costs by 2015 and will
see £22 billion spent on government construction projects
over the next three years, of which £2.2 billion is
earmarked for health schemes.
The minister said hospital buildings could be built “as
sheds around people and equipment that can be
reconfigured very quickly in 10 or 20 years’ time when
needs change.
We need to build in flexibility. We need to have a shell
that’s capable of being reconfigured. At the moment, we’re
building in obsolescence.”
Rogers, D. (2011). Minister Favours "Sheds" for Hospitals: Maude
emphasises future flexibility. Building Design.
Value in UK construction (Past)
Value in UK construction (Past)
Peter Hansford
(Chief Con Adv)
“Chair”
5
Don Ward (CE)
“It is more”
25 – 200
Graham Ive (UCL)
“1:2:20”
Will Hughes (Reading)
“1:2:25 – land value
Roger Madelin (Argent LLP)
“Timing, luck
and good design”
Design cost
0.1
Initial construction cost
1
Operation and maintenance
Business operation costs /
Hughes et al. (2004) Exposing the myth of the 1:5:200 ratio
relating initial cost, maintenance and staffing costs of office
buildings. In: Khosrowshahi, F (Ed.), 20th Annual ARCOM
Conference, 1-3 September 2004, Heriot Watt University.
Association of Researchers in Construction Management, Vol. 1,
373-81.
Edge Debate: Edge Debate 65 – 26th November 2014 “What is the
true ratio?: costs and value of construction”, UCL Bartlett
Value in UK construction (Past)
Assets
Operational
Failure
Capital / Cost
Fitness for
Purpose
Investments
Capacity / Demand
Mandated /
Compliance
Land Value
Benefits of
Operation
Efficiency /
Effectiveness
Future Flexibility
Whole-Life
Assurance in Project
Management
Relationship
Design
Value in UK Construction
Value in UK construction
Construction
Innovation
Hub
https://construction
innovationhub.org.
uk/wpcontent/uploads/20
20/07/20200715_B
R_09_ValueFrame
workReport_Digital
_Pages.pdf
Worldwide Asset Crisis
• Organisation for Economic Cooperation and
Development (OECD) estimates that spending to
update (in developed) or to develop new (in
emerging) is $53 trillion - between 2007 and 2030
• In the UK alone in the last decade, £150 billion is
estimated to have been invested
• Future demand is expected to rise to around £45
billion per annum until 2020.
Open Building Manufacturing: Key Technologies, Applications and Industrial Cases : book2. VTT: Manubuild; 2009..
LONDON’S GLOBAL UNIVERSITY
Structure
-
What is value?
Value in the Construction Industry
Value Theory
Types of Project Value
How is Value Delivered?
Value Theory
• Plato was probably first to distinguish between:
– Value in exchange, and…
– Value in use
• Baier has defined value as:
– Value is the capacity of a good, service, or activity to
satisfy a need or provide a benefit to a person or legal
entity (1969: 40)
• Today, there are many different definitions of
value – we will explore many of these
Value Theory
• Adam Smith, the famous 19th century economist
said:
– The things which have the greatest value in use have
frequently little or no value in exchange; and on the
contrary, those that have the greatest value in exchange
have frequently no value in use (Smith, 1937: 28)
Value Theory
• In the long run, the market must retain a
connection between exchange and use value
– Factor inputs configured in the product or service
– Outputs in terms of functional use + other more
subjective criteria around perceived value
• In project businesses requirements + time, cost
and quality/scope do not fully address value
Value Theory
• Economic models over the past three decades reflect
theoretical developments of agency theory, contract
theory, shareholder value maximization, and transaction
cost theory (Grant et al. 1994)
• These share the premise that central to the firm is the
maximisation of shareholder wealth and individual
self-interest through single-minded, rational, economic
decision making
• Governance is by economic contracts and cost efficiency
driven by contractual and structural forms, determined
either by management or market
• This is a narrow view of the firm. What about judgement,
dialogue, relationships and knowledge
Value Theory
• In the economic model, conflict and self-interest is a
natural consequence of every individual seeking to
maximize his or her economic benefit and to mitigate the
risk of failure
• In contrast to objective, and rational behaviour, human
action is un-predictable, although people may choose to
comply with values, moral codes and standards
• This is not to say that a firm should not maximise profit and
shareholder value, rather that its actions should be
pursued with a broader awareness, social responsibility
and consciousness of all stakeholders
• Individuals can be seen to be motivated by more than
economic gains (Grant et al. 1994)
What is Value? Economic
What is Value? Efficiency / OM
Outputs
Inputs
What is Value? Accountant
1
Cost
What is Value? (Value Manager)
Function
Cost
The Five
Connotations of
Increasing Value
(Male et al. 1998)
What is Value?
Satisfy a Need
Use
Resources
The Five
Connotations of
Increasing Value
(British Standards
Institute, 2000)
What is Value?
There are different
views of value
Framed by different
values, expectations
and perceptions of
what is important
LONDON’S GLOBAL UNIVERSITY
Structure
-
What is value?
Value in the Construction Industry
Value Theory
Types of Project Value
How is Value Delivered?
Types of Project Value
Consider for Example a School Project
Types of Project Value
Consider for Example a School Project
Developing
Ideas
Population
Wealth, Welfare
Wellbeing
Child Health, Safety,
Enjoyment, Achievement,
Contribution and
Economic Wellbeing
Outcomes
Education
Attainment
Activity / Capacity
Infrastructure
Investment and
Asset Inputs
ROI
Time
Types of Project Value
Consider for Example a School Project
Types of Project Value
Now Consider a Hospital Project
Types of Project Value
Now Consider a Hospital Project
Population
Wealth, Welfare
Developing
Ideas
Wellbeing
Health Status and
Health Gain
Outcomes
“First do no harm” Inman T.
Foundation for a new theory
and practice of medicine.
John Churchill, 1860
Healthcare
Intervention
Output
Activity / Capacity
Infrastructure
Investment and
Asset Inputs
ROI
Time
What is Value?
Health - Harms
Resources
Types of Project Value (Sector Dependent)
Different sectors
view value differently
Different
stakeholders in each
sector have different
priorities
LONDON’S GLOBAL UNIVERSITY
Structure
-
What is value?
Value in the Construction Industry
Value Theory
Types of Project Value
How is Value Delivered?
How is Value Delivered? (Projects)
Mills, G. R. W. and Austin, S A. (2014) “Making Sense of Stakeholder Values
Emergence”, Engineering Project Organization Journal, (4)2-3, 65-88.
How is Value Delivered? (Programmes)
How is Value Delivered?
There are different
views of value
Framed by different
values, expectations
and perceptions of
what is important
Different parties
have different
responsibilities for
the delivery of value
Project and
operational views of
value may be at
odds
Value is impacted by
the contract
Different sectors
view value differently
Different
stakeholders in each
sector have different
priorities
How is Value Delivered?
Mills, G. R. W. and Austin, S A. (2014) “Making Sense of Stakeholder Values
Emergence”, Engineering Project Organization Journal, (4)2-3, 65-88.
How is Value Delivered?
Project
Value
Value Criteria
Stakeholder
Value
Trade-off
Programme
Value
Requires a hierarchy of priorities
LONDON’S GLOBAL UNIVERSITY
Capturing and
Delivering Value
BCPM0044 (2020/21)
School of Construction and Project
Management, Room: 243a
Dr. Grant Mills
Tel: 41815, Email:
g.mills@ucl.ac.uk
LONDON’S GLOBAL UNIVERSITY
Structure
-
Foundations
Shift from project- to enterprise-based thinking (P13)
Supply Chain Management Across Three Programmes
Case Study – Anglian Water (High performing programme
and project)
Hybrid Organising
Investment in Digital Innovation
Theoretical Foundations
Business Model /
Ecosystem
Practical Foundation
•
•
•
•
•
•
Berin Brandenburg airport
Not functionally fit for purpose resulting in
significant cost overruns and time delays
from its 2011 opening.
Various scheduled openings prevented
on the basis of mandatory fire protection
and alarm system failures.
A large number of construction flaws and
problems.
Many changes in project management /
governance and operational
management (e.g. bankrupt, allegations
of bribery, dismissals and resignations).
To make way for the new airport, two
villages were removed with 370
inhabitants receiving compensation and
new homes.
Long term industry partnerships
“When you innovate, look at the forest, not the trees – and get the overall design of your activity
system right before optimising the details” (Amit and Zott, 2012)
Long term industry partnerships
Reduced Product / Service / Business Model
Innovation
We are not sharing data
and not learning
Reduced Planning
We are not investing or innovating to
develop advanced practices
Operational
Failure / Public
Disvalue
Low Margins /
Fast Delivery
Increased Error
/ Failure
Uncertainty in
Employment
Reduced
Projects
Increased
Accidents
Increased Total
Project Cost
Increased
Claims
Increased
Insurance
We are paying twice
because it is difficult to
change what we presently
do
Increased Risk
Transfer
We lack the data-driven
skills to show what is going
wrong
Typical project status
reporting for all project
information is 28 days
Vicious Construction Industry Circle (as a result of a non-data driven approach)
Long term industry partnerships
Increasing innovation and incubating
advanced business models
Increased
Margins
Increased
Performance
Increased
Employment
Increased use
of Offsite
Democratising the use of
data to change the
behaviour of the industry
Increased
Planning
Developing data analytics
skills and capabilities
Improved
Prediction and
Prevention
Research and
data-driven
Reduced
Claims
Increased No of
Projects
Reduced Total
Project Cost
Increased
Certainty
Reduced
Accidents
Establishing specific data
communities to transform
the industry
Virtuous Industry Transformation Circle (result of a data-driven approach)
LONDON’S GLOBAL UNIVERSITY
Structure
-
Foundations
Shift from project- to enterprise-based thinking (P13)
Supply Chain Management Across Three Programmes
Case Study – Anglian Water (High performing programme
and project)
Hybrid Organising
Investment in Digital Innovation
•
Researching - “the
shift from project- to
enterprise-based
thinking”
“how information flows in
such endeavors and how
digital transformation
affects programme
complexity and
governance across the
asset lifecycle”
•
•
The ICE Infrastructure Client Group (ICG)
instigated P13
ICG brings together more than 20 major
infrastructure clients (programme investment
above £2bn), from across a range of expert
sectors.
Supporting the Government's Infrastructure
Cost Review Report 2010. The following
opportunities to reduce costs and deliver
greater value have been identified:
– Improving the commissioning,
procurement and delivery of projects
– Effective collaboration at all levels of the
infrastructure supply chain
– Addressing barriers to innovation and
sustainability
“the shift from project- to
enterprise-based thinking”
The main difference between an
enterprise and a traditional construction
programme are:
•Reward/profit in the enterprise is based
on value added to the overall outcomes,
not time spent
•There is greater understanding of cost
drivers and risk across all organisations
in the enterprise, with commercial
incentives for collaboration to jointly
mitigate risk, not transfer it
•Establishing a high performing
enterprise requires a fundamental shift
in leadership, governance, behaviours
and skills to succeed
The asset owner is central
and leads the enterprise
Suppliers have direct
relationships with the owner
An integrator actively
engages and integrates
all tiers of the supply
chain
The owner, key suppliers, advisors and
integrator work as one team
Heathrow Cost of
Quality Failure
Create a scalable
AEC Production
Control Room
(£3.6m)
CASA/BSCPM
Data Trust and Task
Force
Project 13 – Development of delivery model principles [1,2,3,4] are exploited through policy [5], R&D investment
[6], new contract definition [7] and programmes/projects [8,9,10,11,12,13,14,15]
Researching “the shift from
project- to
enterprise-based
thinking”
Case Study: London Underground
Embankment and West Hampstead
Case Studies: Broomhill Sands
Coastal Defence Scheme &
Warrington Flood Risk Management
Scheme Phase 3A
Case Study: @One Alliance
Cambridge project
Pulloxhill WTW
“A team was brought together to Look at projects across
infrastructure. The team was lead by UCL…who
undertook a detailed analysis of those projects and
aggregated the characteristics that they saw in that
project to find the overall approach taken by project 13.
This is really important. It ensured that it was not a
hypothesis or theory – it was drawn from industry
research and represents current industry best practice”
LONDON’S GLOBAL UNIVERSITY
Structure
-
Foundations
Shift from project- to enterprise-based thinking (P13)
Supply Chain Management Across Three Programmes
Case Study – Anglian Water (High performing programme
and project)
Hybrid Organising
Investment in Digital Innovation
Three Major
Programmes
Hybrid A
Flood Defence
A+
(Coastal)
A £29.2M coastal defence scheme covering 2.4 km. It involved
installing a rock revetment, shingle beach, timber groynes, vehicle ramps and
extension to designated environmental site and live firing range.
Flood Defence
A-
(River)
A £6.5 million new river flood defence scheme. This scheme was the third phase. It
consisted of steel sheet piles with precast concrete cladding units, raised
embankments, precast concrete walls and wetland environments.
Hybrid B
Rail (Station
B+
Refurbishment)
A £14.5 million investment in the refurbishment of a station including M&E services,
information systems and finishes to improve customer service and make them safer to
operate and cheaper to maintain.
Rail (Platform
B-
Extension)
A £3.4m investment to extend and widen platforms at an inner city railway station. The
scheme consisted of site clearance, sheet piling, ground works, capping beam and insitu concrete.
Hybrid C
Water Recycling
C+
Centre
A £22 million investment in the installation of a pumping station and eight new
treatment tanks. Delivered to a tight 10-month construction deadline and came in £9
million below the budget.
Water Treatment
Centre
C-
A £8 million investment in the construction of a new water treatment plant on an
existing decommissioned site. It was a emergence of regional water supply and
demand issues.
Mills, G. R. W., Evans, D, Candlish, C (2020). “AnglianWater @one Alliance: A New Approach to Supply Chain
Management”. In Pryke (Ed) Successful Construction Supply Chain Management: Concepts and Case Studies,
Second Edition. London: JohnWiley & Sons Ltd. (237-249).
Supply Chain
Management
•
•
•
•
Much of the discussion has remained on
whether supply chain management should be:
Client-centric or Contractor-centric (King &
Pitt, 2009)
Rather than mutually beneficial win-win
outcomes (Cox et al 2007 and King & Pitt,
2009).
Supply chain management remains hampered
by traditional attitudes and behaviours, such
as quasi-competitive controls, mistrust and
conflict (Bresnen & Marshall, 1999; Moore &
Dainty, 2001) and by project, stage and
bidding silos.
This fails to capture the advantages of a more
collaborative alliance-based supply chain
approaches (Construction Industry Institute,
2014)
Supply Chain
Management
A key part of supply chain management outside of the construction
sector has been early supplier engagement, to access to supplier
design and manufacturing knowledge (Dowlatshahi 1998). This
involves, for example:
– Establishing long-term strategic relationships through
early procurement (to analyse make-buy decisions,
negotiate price and terms, orders, lead times, stock and
quality)
– Improving product innovation and standardisation (to
agree material standards, quality control, defects,
efficiencies, capabilities and research and innovation)
– Increasing the speed of project design and production
information (to conceptualise, define functions,
performance and material requirements, plan work
packages, identify standard components, identify costs,
minimise waste and establish the market for supply
chain partners), and
– Continuous manufacturing process improvement
(production processes, schedules and runs, to set goals
for inventory, set-up, efficiency, handling and turnover)
(Dowlatshahi 1998).
Programme A
Supply Chain
Management
Programme B
Supply Chain
Management
Programme C
Supply Chain
Management
LONDON’S GLOBAL UNIVERSITY
Structure
-
Foundations
Shift from project- to enterprise-based thinking (P13)
Supply Chain Management Across Three Programmes
Case Study – Anglian Water (High performing programme
and project)
Hybrid Organising
Investment in Digital Innovation
Programme C
Supply Chain
Management
Anglian water has a long history of
alliance supply chain management. The
Anglian Water @one alliance has since
2004:
– Halved carbon emissions
– Made time efficiencies of 40%
– Consistently out-performed Anglian
Water’s business plan target
– Increased the length of the alliance
partner contracts (now 15 years)
Programme C
Supply Chain
Management
• Key was establishing a strong
strategic direction, clear transitional
goals, fair commercial arrangements
and robust selection and governance
frameworks.
• Everyone is in the alliance together, all
alliance partners generate a return
only by collectively and continuously
out-performing the baseline.
• They directly manage and develop
capabilities and behaviours of the
supply chain partners, develop
efficient and collaborative engagement
strategies and promote early
engagement to identify effective and
innovative solutions that deliver the
required clients and customer
outcomes.
Programme C
Supply Chain
Management
•
•
•
C+
The project cost came in £9 million below the budget.
82% of suppliers on the Cambridge project were in a
long-term relationship with Anglian Water (beyond 3
years) and 60% were in stable framework or alliancing
relationships.
The Cambridge project exhibited a high intensity of
innovation relating to the use of modularised and
standard products. There was innovation in:
– the use of new materials - recycled plastic
(weholite) for tanks, overground pipework, and
fibre reinforced concrete
– new techniques - soil stabilisation techniques,
innovative platform design and ‘profibus’ control
technology
– new management system (level sensor
integration) were all deemed contributing to the
improvement in project functions.
Programme C
Supply Chain
Management
C+
The boundaries of several organisations, subsystems and activities were redrawn in order to:
–
–
–
–
–
prevent the emergence of interface issues,
to increase buildability,
facilitate the exchange of information,
to support the appropriate allocation of risks, and
to exploit all the knowledge, expertise and
innovation potentially carried by the members of
the supply chain.
The project was organized around clusters and
work packages.
–
–
Sub-system interface management (e.g. MCC,
MEICA and Civils).
Customised and standard package products (e.g.
Plant Rooms, Tanks, Pumps, Pipework, Valves,
Pre-construction and Construction Materials).
Programme C
Supply Chain
Management
C+
Integration between alliance partners / Work packages
clustering and
team integration
(Nicolini et al.,
2001)
Programme C
Supply Chain
Management
•
Strategic approach to alliance SCM
–
•
Effective environment for the early engagement of
specialist suppliers
–
C+
•
•
•
•
“…the framework is brilliant because you deal with
the same people all the time…this one must have
been the eighth or tenth…scheme of a decent
size, so all the lessons learnt from all of those
“If it wasn’t for [our early engagement] it wouldn’t
have happened”. “...
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