target value delivery value delivery 10.17.17 pikel.pdf · lean construction institute target value...

© LEAN CONSTRUCTION INSTITUTE

T A R G E T V A L U E D E L I V E R Y

OCTOBER 17, 2017

© LEAN CONSTRUCTION INSTITUTELCI Education& Training

Target Value DeliveryChristian Pikel, The ReAlignment Group



Lean Construction Institute Provider Number H561

LCI Training Block: Target Value DeliveryLCITB.TVD

Presenter NamePresentation date



8 LU Credit(s) earned on completion of this course will be reported to AIA CES for AIA members. Certificates of Completion for both AIA members and non-AIA members are available upon request.

This course is registered with AIA CES for continuing professional education. As such, it does not include content that may be deemed or construed to be an approval or endorsement by the AIA of any material of construction or any method or manner ofhandling, using, distributing, or dealing in any material or product._______________________________________Questions related to specific materials, methods, and services will be addressed at the conclusion of this presentation.



Participants will learn what is meant by Target Value Delivery, how it differs from more traditional delivery approaches and some key tools and techniques to implementing the approach.

The training will include hands-on workshops to teach the approaches for more integrated learning.

Course Description



01.At the end of this presentation, participants will be able to describe the culture required to support Target Value Delivery.

02.At the end of this presentation, participants will understand how to align project deliverables and customer-defined value.

03.At the end of this presentation, participants will be able to describe the major phases in the Target Value Delivery process and how they relate.

04.At the end of this presentation, participants will be able to describe the tools that support the Target Value Delivery process.

Learning Objectives



7

Learning Objectives

Participants will be able to describe the attributes of a team culture required to support Target Value Delivery.

Participants will understand how to align project deliverables with customer-defined value.

Participants will be able to describe the major phases in the Target Value Delivery process and how they relate.

Participants will be able to have some first-hand experience with the types of challenges and decisions which typically arise in TVD.



8

Unaware

Awareness

Understanding

Mastery

Competency

Continuous Learning Loop

Lean Journey Road to Mastery



9

8:00 AM –

8:30 AM –

9:45 AM –

12:00 PM –

Introductions

Target Value Delivery Presentation/Simulation

Break 15 minutes

Lunch

Target Value Delivery



10

Target Value Delivery

1:00 PM –

3:00 PM –

4:45 PM –

5:00 PM –

Continue

Break 15 minutes

Wrap up and Plus/Delta

Adjourn



12

Impeccable Coordination

Production System Design

Collective Enterprise Operating System

A New and Coherent way to Manage Work in Projects

T H R E E C O N N E C T E D O P P O R T U N I T I E S

P R O J E C T E L E M E N T S



13

1

2

3

4

5

6

Respect for people

Optimize the Whole

Generate Value

Eliminate Waste

Focus on Flow

Continuous Improvement

Six Tenets of Lean Construction



14

References



15

Introduction of simulation

Participants to decide on contract arrangement:• Lean Integrated Project Delivery (LIPD)• Design-Build• Other

1 0 M I N U T E S

Target Value Delivery Simulation



16

Business CasePlanningChapter 2

ValidationChapter 3

Value Delivery: Steering to Target in Design and ConstructionChapter 4

Value PostConstructionChapter 4

BIG ROOM Chapter 8

PROJECT PLANNING Chapter 9

COST MODELING: PREDICTING COST AND VALUE Chapter 10

CONTINUOUS ESTIMATING Chapter 11

CONCEPTUAL DESIGN Chapter 12

PRODUCTION DESIGN Chapter 13

TEAM FORMING/ORGANIZATION Chapters 6 & 7

CORECOMPONENTSOF TVDPROCESS

PHASES OF TVD

CONSTRUCTION Chapter 14

Image courtesy of InsideOut Consulting & Southland Industries

Target Value Delivery (TVD) Overview



17

A disciplined management practice to be used throughout the project to ensure:• The facility meets the operational needs and values of the users

• The project is delivered within the allowable budget

• That innovation is promoted throughout the process to increase value and eliminate waste.

Target Value Delivery (TVD)



18

TVD is to be applied holistically to obtain maximum value.

Regardless of the project delivery framework, the owner, designers, builders, and key trades must be fully engaged from the onset.

TVD Culture



19

ValidationChapter 3



BIG ROOM Chapter 8








PHASES OF TVD


Business Case Planning Phase





20

• The operational use/benefit proposition described by the owner that initiates the development of the project.

• The owner-provided purpose or “why” that becomes the anchor of the project.

• Sets the Allowable Cost.• Includes Value Definition Statements by the owner

for the project.

Business Case



21

Could we build X thing for $Y and have it by Z date?

• Could we open a replacement hospital in Castro Valley, CA for $300 million by early 2013?

• Could we find a way to increase overall visitor count by X% for a capital expenditure of $1 billion by 2020?

Framing the Business Case



22

• The absolute maximum Project Cost based on the Business Case.

• It becomes the subject of the Validation Phase

Allowable Cost:



23

The following slides outline “The Project” Business Case & relevant information

15 minutes total

The Project



24

O W N E R :Anytown Arizona Community Social Services Group

M I S S I O N S TAT E M E N T:“Strengthen our community by creating living condition stability, economic opportunity and supporting services

to those in need.”

Owner Business Case



25

• $4,500,000 Allowable Cost• HUD grant and private donations

• ‘Tiny Home’ low income housing community of 45 units• Approximately 40’x100’ lot sizes• Unit diversity 250 – 750SF

• (Single, Single Parent, Couple + 1 Child)

• 10 year rent to own model• Minimize Utility Costs (100 energy units / month)

Owner Business Case



26

Rent-To-Own: $1/SF for 10 years, simple payback

• Max allowable cost = 10 year rent – 5% Admin/HOA

• E.g. 550SF X $1 X120 = $66K – 5% = $62,700 ($114/SF)

Allowable Cost Breakdown

Land Purchase $1,141,000

Entitlements, Clearing/Grading & Utilities $550,000

Project Administration $225,000

Construction FundingBuilding, Landscape/Hardscape & Furnish $2,574,000



27

• 4.6 Acre Parcel• 40’x100’ Lot subdivisions• Main site, utility and roadworks by owner

Project Site



28

100’40’ 100’

40’

Project Plot



29

Total SF 225Notes Includes 40 SF Loft$/SF $109

Total Cost $24,525

Foundation & Framing $3,188 13%Skin & Roofing $3,679 15%

Glazing $1,962 8%Systems (MEP/E) $4,415 18%

Interiors (Incl Carpentry & Doors) $4,905 20%Finishes, Fixtures Furnish & Equip $2,943 12%

Design & Permitting $1,962 8%Landscape & Hardscape $1,472 6%

Year Completed 2015Inflation to 2017 5%

Location Cityville, MIGeographic Cost Index Diff to Anytown,

AZ -8%

Yearly Energy Costs $55

Owner Provided Benchmark Project



30


Total SF 390Notes Includes 90 SF 2nd Fl$/SF $116

Total Cost $45,240







AZ -8%




31

Total SF 360Notes Single Floor$/SF $108

Total Cost $38,880







AZ -8%





32

• Define what the customer wants from the process. • Are composed of high level statements that

describe expected outcomes, or “value” that the project will deliver.

• Should not be ranked or weighted.• Should include all stakeholder input.

Value Definition Statements



33

To Create:• Community & environment fosters respect and restoration of self

esteem.• Sustainable design for reasonable future costs to residents and

association. • Economic stabilizing opportunity for community residents.• Safe environment for residents.• Equity building opportunity based on target rent model.• Stakeholder alignment from from all CCSS programs (Housing, Food,

Jobs, Health, Publications).• Create added value opportunities through savings.

Value Definition Statements



34

Transition to Validation Phase



35




BIG ROOM Chapter 8








PHASES OF TVD


Validation Phase


ValidationChapter 3



36

• The project team determines whether the project is viable based on the outputs of the Business Case Phase.

• Output is team understanding and alignment:• Scope definition• Value Definition & CoS• Target Cost

Validation Phase



37

• The cost goal established by the delivery team as the “target” for its design and delivery efforts.

• Should be set at less than best-in-class past performance.

• Creates a sense of necessity to drive innovation and waste reduction into the design and construction process.

Target Cost



38

• Value Definition Statements

Steps to Defining Success

• Value Definition output informs Conditions of Satisfaction (CoS)



39



ValidationChapter 3



BIG ROOM Chapter 8







PHASES OF TVD


Core Components




40


ValidationChapter 3



BIG ROOM Chapter 8






PHASES OF TVD


Team Forming/Organization






PD SD CD PR CA OPDDTime

Effort/Effect

PD: Pre-designSD: Schematic designDD: Design developmentCD: Construction documentationPR: ProcurementCA: Construction AdministrationOP: Operation

Graphic courtesy of Patrick MacLeamy AIA / HOK

Ability to impact cost and functional capabilities1

1

Cost of design changes2

2

Traditional design process33

4

IPD design process4

Early Team Involvement



42

A high performing team is built on a strong foundation of trust among all members.

There is a culture of respect that enables members to effectively delivery against CoS.

High performing teams break down barriers through innovation and continuous improvement.

They break down traditional silos to maximize skills and optimize performance.

Characteristics of High Performing Teams

1

2

3

4



43

How would you go about building your team?What characteristics would be important?What interview questions might you ask?

1 5 M I N U T E S

Team Forming Exercise



44

• Are developed by the team informed by the Value Definition Statements.

• Measureable statements that inform a project team about which tests a project must pass to be accepted as a success.

• Inform the decision-making process of the team.

Conditions of Satisfaction (CoS):



45

Conditions of Satisfaction Exercise:

1 5 M I N U T E S

Develop some CoS for the project



46

Quantitative• Energy efficient design

• Low monthly utility cost• High % of daylighting• Innovative water management system

• Meet the Allowable Cost• 25% workforce inclusion (Underemployed /

Community Residents – min. 10% each)• Community engagement:• Regularly (weekly) updated progress signage

at visible location• Social Media Updates (min. 3 per week)

0 5 M I N U T E S

Team-Developed CoS:

• Regularly (weekly) updated progress signage at visible location

• Social Media Updates (min. 3 per week)• “Town Hall” community feedback events (min. 1

per quarter)• Robust, proactive protection of the safety of our

workers and community:• Weekly team safety walk-throughs• Short-falls remediated immediately (no more

than 24 hours)• System for immediate reporting of safety

problems identified by workers and community members

• All team members earn a fair profit



47

Qualitative:• TVD team actively builds and sustains a

culture of respect for all team members

• TVD team creates design that supports a culture self-respect for customer

• TVD team actively seeks innovation to reduce waste and wasteful activities, streamline processes, and improve the flow of work

Method of Measuring Success:Monthly measurement of progress against CoS:

• Quantitative – Current results calculated and reported by CM

• Qualitative– Survey completed by all TVD team members

• Continuous Improvement session held to review results, and determine steps to correct short-falls against targets

Team-Developed CoS:



48

Core Team

Senior or Executive Management

Work Clusters – cross discipline representation

Project Team Organization



49

Develop an initial Work Cluster organization based on the next slide.

Assign cross discipline roles.

1 0 M I N U T E S

Work Cluster Exercise



50

0 5 M I N U T E S

SMT

Core Group

WC1L

A

WC2L

A

WC3L

A

WC6L

A

WC5L

A

WC4L

A

SMT - Facilitators Core Group - All

Landscape & Hardscape

Skin Roofing & Insulation

Plumbing Heating/Cooling & Energy

Interiors

Finishes Fixtures & Furniture

Windows

Work Cluster Organization



51


ValidationChapter 3









PHASES OF TVD



Big Room


BIG ROOM Chapter 8



52

• Mindset of intense focus on advancing work.

• Enables cross-functional team collaboration.

• Refers to the collaborative behavior of a team and the work they are producing.

Big Room is:

Big Room is a commitment to a project, the team, and to working together!



53

Big Room

For the remainder of the day, we will operate as a Big Room:

Represent Core Team as a whole

Break into Work Clusters to problem Solve

Hold Core Team Integrating Events

0 2 M I N U T E S



54



ValidationChapter 3



BIG ROOM Chapter 8






PHASES OF TVD


Project Planning





55

Milestone Planning

Phase “Pull” Planning

Make Ready Planning

Weekly Work Planning

Learning/Improving

Set milestones

Specify handoffs

Make work ready

Make promises

PPC/Variance

SHOULD

CAN

WILL

DID

Last Planner® System in Construction

5 Connected Conversations



56

L P S C O N S T R U C T I O N :

• Is linear and the flow is “tangible materials”

• Milestones must be clearly defined by expected outcome which will be observable

• Pull Plans identify work structure and duration

L P S D E S I G N :

• Is continuously emerging based on newinformation and the flow is “information”

• Milestones must be clearly defined by expected outcome which will describe what we expect to know

• Milestones should include work product and work deliverables and may be “decision points” as mini-milestones.

• Pull Plans identify work needed and date needed

LPS For Design



57

Last Planner® System in Design

5 Connected Conversations

Milestone Planning

Phase “Pull” Planning

Make Ready Planning

Weekly Work Planning

Learning/Improving

Set milestones

Specify handoffs

Make work ready

Make promises

PPC/Variance

SHOULD

CAN

WILL

DID



58

Milestone Planning



59

What might some of the milestones be for the project starting with end of project and working backwards?

1 0 M I N U T E G R O U P D I S C U S S I O N

Project Milestone Plan



60



ValidationChapter 3



BIG ROOM Chapter 8






PHASES OF TVD


Cost Modeling





61

• Model of the cost components & systems of a project.• Structured to allow the costs to be continually updated. • Provides the team with a constantly up to date cost

model. • Should allow for projecting ‘what-if’ scenarios based on

value decisions that have yet to be made.

Cost Modeling



62



ValidationChapter 3



BIG ROOM Chapter 8






PHASES OF TVD


Continuous Estimating

CORECOMPONENTSOF TVDPROCESSCONTINUOUS ESTIMATING Chapter 11



63

SD DD CD Pricing Construction

T R A D I T I O N A L P R I C I N G / V A L U E E N G I N E E R I N G M O D E L

T V D D E S I G N M O D E L

TVD Continuous Estimating Model



64

Cost Benchmarking

Conceptual

Production

Types of Estimating

1

2

3



65

Level of Accuracy: Best +/- 10% Good +/- 15%• Starts at Business Case Phase• Refined during Validation Phase• Informs the Cost Model• Establishes project assumptions• Normalizing project to allow comparison• Identify risks• Informs team of what ‘can be done’

Cost Benchmarking



66

What systems and components ?What benchmarks to create the model?

What should a cost model track?

2 0 M I N U T E S

Develop Cost Model



67

Component BenchmarkModel % Base Cost

(Knowns) Risk TVD Options(Range)

Path Back(Opportunity) Current


Skin & Roofing (& Insulation)

Windows

Plumbing, Heating/Cooling & Energy

Interiors

Finishes, Fixtures & Furniture

GCs, Design Fees & Profit

Total

Cost Model



68

Risk

Path Back

Hot Topics

CWE/ Cost Model Tracking

Cost Model (Simple Approach)



69

Level of Accuracy: Best +/- 5% Good +/- 10%• Goal is to provide cost information before the team moves forward

with decisions based on conversation, sketches, and conceptual information.

• Convert CoS & Business Case (Program) into a budget – what we desire.

• Gain just enough detail to inform team decisions.• Implemented with Set-based Design approaches.

Conceptual Estimating



70

Component Current Projection Allowable Target Delta +/-


Skin & Roofing (& Insulation)

Windows

Plumbing, Heating/Cooling & Energy

Interiors

Finishes, Fixtures & Furniture

Total

Budget Tracker Summary



71

Level of Accuracy: Best +/- 1% Good +/- 3%• Most traditional form of estimating.• Driven by what has been documented in the design phase and

confirms estimates developed during earlier conceptual stages.

Production Estimating



72



ValidationChapter 3



BIG ROOM Chapter 8






PHASES OF TVD


Conceptual Design





73

Criteria development

Organize information

Set-based design

Integration Photo Credit: InsideOut Consulting, Inc.

Conceptual Design

1

2

3

4



74

“Product Development for the Lean Enterprise”, Michael Kennedy

Set-Based Design



75

From CPR Program

Set-Based Example



76

From CPR Program

Integration Event



77

Project Team

Work Cluster

Set Log• Identify ideas/sets• Status• Date of LRM Decision

Work Cluster

Set/Idea

Create A3 • Set Alternates• CoS Alignment• Cost Model Impact• Schedule Impact

Recommendation Integration Event• Evaluate

Recommendations• Integrate into design

Brainstorm• Identify ideas/sets• Create Set Log

Project Team

Work Cluster

Set/Idea

Work Cluster Flow



78

Create

Initiate Ideas

IdentifyStake-holders

Analyze Options

Include$$$

Impact

AnalyzeTo

CoS

RecommendTo

Core Team

AnalyzeTo

Cost Model

AcceptRejectRevise

Analyze Converge Decide

Work Cluster

Integration Event

Decision Flow Model



79

5 0 M I N U T E S

Each table represents a Work Cluster to study a component.

Work Clusters study and evaluate sets per the Cost Model:• Target Cost • CoS• Alignment with Business Case• Schedule• Other

Validation Phase



80

Report by Work Cluster• Align on 1 concept to move into Value Delivery Phase• Align on Target Cost

Challenge QuestionAre there any changes to the original Business Case that would create a more compelling value proposition?

3 0 M I N U T E S

Validation Phase Integration Event



81

Transition to Value Delivery Phase



82



ValidationChapter 3


BIG ROOM Chapter 8








PHASES OF TVD


Value Delivery: Steering to the Target




83

• Work progresses in small batches toward intermediate milestones/decision points.

• The design is continually evaluated to the Target Cost & CoS.

• Teams explore innovative ways to achieve goals and add more value.

Value Delivery Phase



84

5 0 M I N U T E S

Work Clusters explore extreme ideas for carrying the concept forward

Challenge Questions• Are there design options at the system level that can be designed to

meet the CoS within the Target Cost?• What implications for overall value and costs should be explored during

Design?• What design, procurement and construction options should be

considered to generate value & eliminate waste?

Value Delivery Phase



85

Work Clusters share outcomes

3 0 M I N U T E S

Integration Event



86



ValidationChapter 3



BIG ROOM Chapter 8






PHASES OF TVD


Production Design





87



ValidationChapter 3



BIG ROOM Chapter 8







PHASES OF TVD

Construction





88

Transition to Value Post Construction



89



ValidationChapter 3


BIG ROOM Chapter 8








PHASES OF TVD


Value Post Construction

Chapter 4

Value PostConstruction



90

• For the owner, value is realized only after the facility is constructed and serving it intended purpose.

• The business case and values are reviewed for actual outcomes.

Value Post Construction



91

Business outcomes

• Final cost of design & construction

• Final schedule• Operational performance

of finished building• Quality & use

Project process outcomes

• Project quality, safety & appropriate integration of stakeholder input

Value outcomes

• Revisit the value-based decisions team made throughout process

Measuring Outcomes



92

What new actions or ideas that you learned today can you take back to your project?

Write down on Take Away Sheet 5 M I N U T E S

Share with your neighbor 5 M I N U T E S

Discussion Question



93

Unaware

Awareness

Understanding

Mastery

Competency

Continuous Learning Loop

Lean Journey Road to Mastery



94

Plus/Delta



95

This concludes The American Institute of Architects Continuing Education Systems Course

Lean Construction Institute [email protected]

target value delivery value delivery 10.17.17 pikel.pdf · lean construction institute target value...

Documents