target value design (delivery) an · pdf file^danger: cost overruns and delays possible. scope...
TRANSCRIPT
![Page 1: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/1.jpg)
Target Value Design (Delivery)An Overview
By David Umstot, PE, CEM
Umstot Project & Facilities Solutions, LLC
© 2016 Umstot Project & Facilities Solutions, LLC 1
![Page 2: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/2.jpg)
Why Target Value Design?
© 2016 Umstot Project & Facilities Solutions, LLC 7
Traditional Project Design and Delivery Approaches are Failing at Alarming Rates!
![Page 3: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/3.jpg)
“Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later.” – Richard Korman, ENR Viewpoint January 25, 2016
© 2016 Umstot Project & Facilities Solutions, LLC 8
![Page 4: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/4.jpg)
63%
![Page 5: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/5.jpg)
75%
![Page 6: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/6.jpg)
March 18, 2015
“Costs for the Dept. of Veterans Affairs replacement hospital in Aurora, Colo., have ballooned to $1.73 billion, more than five times the project’s original cost and twice the spending cap set for it by Congress. VA Deputy Secretary Sloan Gibson delivered the bad news about revised cost estimates to congressional leaders in March 17 phone call.
The new price tag, up sharply up from the $800 million claimed by the VA in early March, comes from the U.S. Army Corps of Engineers, which is advising VA on the project. USACE will assume full management of the project this summer. The project was originally estimated at $328 million.”
VA Says Aurora Hospital Costs
Have Soared to $1.73B
![Page 7: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/7.jpg)
© 2016 Umstot Project & Facilities Solutions, LLC
FEBRUARY 2015 Study• Examined over 3,700 projects• Strong correlation between failure rate and size. 37% of projects under $750M fail. • 2/3 of megaprojects costing greater than $750M fail• Failure defined as meeting at least one of these four criteria
1. Costs grew by 25% or more2. the schedule slipped at least 25% (one year, on average, for mega- projects)3. the project overspent compared to the industry average; or4. there were severe and continuing operational problems lasting more than two years
after startup.• Errors in basic data, including engineering design and constructability, lead to the failure
of about 30% of megaprojects
![Page 8: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/8.jpg)
Source: ENR March 2/9, 2015
![Page 9: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/9.jpg)
Source: ENR March 2/9, 2015
![Page 10: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/10.jpg)
• poor specifications and planning
• frequent design changes
• unrealistic price estimates
• unrealistic schedule performance expectations
• aggressive fee bidding
• optimistic revenue projections
• contractual complexity
• inappropriate procurement, and
• an adversarial business culture
Why do projects
perform so poorly?
©Dick Bayer
![Page 11: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/11.jpg)
Target Value Design – What is it?
“A management practice that drives design to deliver customer values and develops design within project constraints.”
– Glenn Ballard
16
![Page 12: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/12.jpg)
TargetValue
Design
Definition of value
Conceptualestimating
Keys to collaboration
Concurrent Estimating
Set-based design
Target costing
Systemsintegration
![Page 13: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/13.jpg)
©2016 Umstot Project and Facilities Solutions, LLC
Who’s Using Target Value Design?
![Page 14: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/14.jpg)
What is of Value?
• Total Cost of Ownership?
• Energy Efficiency?
• Speed to Market?
• No disruption to ongoing business operations?
• Iconic design?
• Improved productivity and occupant satisfaction?
• Sustainable buildings?
© 2016 Umstot Project & Facilities Solutions, LLC 19
![Page 15: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/15.jpg)
![Page 16: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/16.jpg)
Total Cost of Ownership
50-year design life
100,000 square foot classroom building
Design and construction cost - $30 million
Capital Renewal: 2% of current replacement value (APPA benchmark)
O&M Budget $5.69/square foot
Inflation: 3%
© 2016 Umstot Project & Facilities Solutions, LLC21
![Page 17: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/17.jpg)
Total Cost of Ownership
Costs Savings
D&C: $30M Total NPV
Cap. R.: $101M $ 5M $1.1M
O&M: $149M $15M $3.4M
Total: $280M $20M $4.4M53%
36%
11%
Total Cost of Ownership
Save 5% in Cap. Renewal
Save 10% in O&M
© 2016 Umstot Project & Facilities Solutions, LLC 22
![Page 18: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/18.jpg)
Nurse Station Spaghetti Diagram
© 2016 Umstot Project & Facilities Solutions, LLC 23
![Page 19: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/19.jpg)
Understanding the Work Flow
© 2016 Umstot Project & Facilities Solutions, LLC 24
![Page 20: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/20.jpg)
© 2016 Umstot Project & Facilities Solutions, LLC 25
![Page 21: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/21.jpg)
Value-Waste Nexus
• How to create value within fixed monetary constraints?
• Eliminate waste
• Enhance value with the savings from waste reduction
© 2016 Umstot Project & Facilities Solutions, LLC 26
![Page 22: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/22.jpg)
Construction Waste in the U.S.
Current Manufacturing
Waste 26%Support Activity 12%
Current Construction
Waste 57%Support Activity 33%
Value Added 10%
Source: Construction Industry Institute
Value Added 62%
© 2016 Umstot Project & Facilities Solutions, LLC 27
![Page 23: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/23.jpg)
1. Overproduction
2. Waiting
3. Unnecessary transport
4. Over-processing
5. Excess inventory
6. Unnecessary movement
7. Defects
8. Unused employee creativity
The Eight Wastes as Definedby Toyota (and Liker)
© 2016 Umstot Project & Facilities Solutions, LLC28
![Page 24: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/24.jpg)
Typical Types of Design Waste:
• Iterative Design• Rework• Lack of Coordination Between
Disciplines• Inefficient work flow• Over design of systems
(diversity and factors of safety)
• Poor design that generates waste during construction
• Designing over allowable budget
© 2016 Umstot Project & Facilities Solutions, LLC 29
![Page 25: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/25.jpg)
Typical Types of Construction Waste:
• Rework• Requests for Information• Change orders• Inadequate Resources• Inefficient work flow• Workarounds• Multiple handling of material• Excess material• Waiting on supplies• Waiting on another trade• Safety losses• Improper sequencing of work
© 2016 Umstot Project & Facilities Solutions, LLC 30
![Page 26: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/26.jpg)
Fish-Bone Diagram – Root Causes of Rework
Source: Robin McDonald, 201331
![Page 27: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/27.jpg)
Pistanthrophobia – fear of trusting people due to past experiences with relationships gone bad
![Page 28: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/28.jpg)
Collaborative Team Is Key
![Page 29: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/29.jpg)
34
UK Construction 2025 Goals
![Page 30: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/30.jpg)
35
Understanding the Work: Traditional Processes
Com
mon
Understanding
CM/GC Hired
Major Trades Hired
Pre-Construction Services
Architect Hired
Engineers Hired
≤100%
SD DD CD
Construction
Owner
Manage Risk Collaboratively
© Dick Bayer
![Page 31: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/31.jpg)
36
Understanding the Work: LEAN IPD Project
Time
Com
mon
Understanding
CM/GC Hired
Concept Design Implementation
Construction
Architect Hired
Engineers Hired
100%
Major Trades Hired
Pre-Construction Services
Valid.
Owner
Manage Risk Collaboratively
© Dick Bayer
![Page 32: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/32.jpg)
37
Known Unknown
What we assume/ what we predict
Manage Risk Collaboratively
© Dick Bayer
![Page 33: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/33.jpg)
38
Known Risk
Insurance
Core G
roup R
isk M
anagement
Manage Risk Collaboratively
© Dick Bayer
![Page 34: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/34.jpg)
39
Manage Risk Collaboratively
© Dick Bayer
![Page 35: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/35.jpg)
40
Manage Risk Collaboratively
© Dick Bayer
![Page 36: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/36.jpg)
1. Target Costing2. A3 Problem Solving and Reporting3. Set-Based Design/Concurrent Engineering4. Choosing by Advantages5. The Last Planner® System6. Building Information Modeling (BIM)
Use of Lean Tools in Target Value Design
© 2016 Umstot Project & Facilities Solutions, LLC 41
![Page 37: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/37.jpg)
THE BASICS
Target Value Design
© 2016 Umstot Project & Facilities Solutions, LLC 42
![Page 38: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/38.jpg)
Source: Ballard
Target Value Design…
• …strives to reduce the waste and rework in the Design/Estimate/Redesign cycle.
• ...requires a fundamental shift in thinking from “expected costs” to “target costs”.
• …necessarily involves cross functional teams. No one person has all the knowledge.
• …cries out for an integrated product/process/cost model.
43
![Page 39: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/39.jpg)
• Developing the value proposition
• From values to program
• From program to interactive design
• From interactive design to selecting design options
• From design options to TVD clusters
• From clusters to systems and pricing
• To fully developed package
TVD Flow
©Dick Bayer
![Page 40: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/40.jpg)
Target Costing
Source: Cooper & Slagmulder (1997)
45
Market Conditions
Target Selling Price
Target Profit Margin
Allowable Cost
![Page 41: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/41.jpg)
After Cooper & Slagmulder (1997)46
Market Conditions
Target Selling Price
Target Profit
Margin
Allowable Cost
Market-Driven Costing
Project Level Target
Costing
Strategic Cost-
Reduction Challenge
Current Cost
Project-Level Target
Cost
Target Cost Reduction Objective
System Level
Target Cost
Specialty Trades
Assembly Level Target
Cost
Assembly/Trade Target Costing
![Page 42: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/42.jpg)
Source: Pishdad-Bozorgi, Moghaddam, and Karasulu (2013) 47
Market Benchmarking Prices Owner’s Budget
Establish Target Price (typically lower than Benchmarking)
Establish Target Value (target cost plus project objectives)
Minus profits
Project objectives (e.g. sustainability,
quality, time, life cycle costs, time to market)
Evaluate Project Performance in
Achieving Project Objectives Design to Target Value
Target Cost
Evaluate Project Cost
![Page 43: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/43.jpg)
Target Cost
Expected Cost (≥)
Allowable Cost (≥)
© 2016 Umstot Project & Facilities Solutions, LLC 48
![Page 44: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/44.jpg)
Steps During Design
• Set the target cost—typically lower than the budget that assumed current best practice
• Form Target Value Design teams by building system and allocate the target cost to each team
• Use a set-based approach, evaluating sets against target values
• Provide cost and constructability guidelines for design
49
Source: Ballard
![Page 45: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/45.jpg)
Steps During Design (cont.)
• Promote collaboration: have designers get cost input before developing design options
• Do rapid estimating; hold frequent budget alignment sessions
• Use value engineering proactively
• Hold design reviews with permitting agencies
50
Source: Ballard
![Page 46: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/46.jpg)
Value Engineering - Questions to Ask(from L.D. Miles)
• What is it?
• What does it do?
• What does it cost?
• What else will do the job?
• What does that cost?
© 2016 Umstot Project & Facilities Solutions, LLC 51
![Page 47: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/47.jpg)
Understanding the Value Proposition Additional Questions to Ask
• What is space used for?
• How do the occupants actually use the space?
• What is the energy intensity usage goal for space?
• How to use nature to your benefit?
• How will the systems be accessed for maintenance?
• Ease of cleaning or maintenance? How will these impact ongoing operations?
© 2016 Umstot Project & Facilities Solutions, LLC 52
![Page 48: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/48.jpg)
The Cardinal Rule
The Target Cost Must Never Be Exceeded!!!
© 2016 Umstot Project & Facilities Solutions, LLC 53
![Page 49: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/49.jpg)
Applying the Cardinal Rule
• Whenever improvements in the design result in increased costs, alternative, offsetting savings have to be found elsewhere without compromising value.
• Launching projects whose costs exceed their target is not allowed.
• Refusing to add scope to the project that will exceed target cost.
• The transition from design to construction is managed carefully to ensure that the target cost is indeed achieved.
© 2016 Umstot Project & Facilities Solutions, LLC 54
![Page 50: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/50.jpg)
Current Cost to Target Cost
55
System 2
System 1
System 2
Current Cost
Target Cost
System 1
After Cooper & Slagmulder (1997)
Keep Functionality Constant; Decrease Cost
Increase Functionality; Increase Cost
![Page 51: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/51.jpg)
How Multiple Systems Interact to Target Cost
© 2016 Umstot Project & Facilities Solutions, LLC 56
Building
System 1
System 2
System 3
System 4
System 5
System 2
System 3
System 4
System 5
System 1
Target Cost Reduction
Current Cost Current Cost Target Cost
![Page 52: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/52.jpg)
When to Set the Target Cost?
© 2016 Umstot Project & Facilities Solutions, LLC 57
• Early in the project process.• Don’t wait until you start construction!!!
![Page 53: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/53.jpg)
How to Set the Target Cost?
© 2016 Umstot Project & Facilities Solutions, LLC 58
• Clearly understand the value proposition and prioritization.• Don’t pick numbers out of the air without a firm business case
understanding.• Estimates based on past performance are embedded with
waste. Set a target that strives to eliminate some of the embedded waste. 20% is not uncommon.
• Have the core team members buy in to setting the target cost. • Eliminate individual buffers (waste) in historic estimating
models.• Have the right players on the core team that are empowered to
make financial commitments on behalf of their organization.
![Page 54: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/54.jpg)
EXAMPLES
Target Value Design
© 2016 Umstot Project & Facilities Solutions, LLC 59
![Page 55: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/55.jpg)
Courtesy: Tipping Mar
60
![Page 56: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/56.jpg)
San Diego Community College District
Target Costing – Project Budget Development
Space Programming
Efficiency
Targeted Cost Per Sq. Ft.
© 2014 Umstot Project & Facilities Solutions, LLC 61
![Page 57: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/57.jpg)
62
Courtesy:Rudolph & Sletten and WRNS Studio
![Page 58: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/58.jpg)
63
Courtesy:Rudolph & Sletten and WRNS Studio
UCSF Mission Hall
![Page 59: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/59.jpg)
GMP vs. IPD Risk Allocation
Source: Pishdad-Bozorgi, Moghaddam, and Karasulu (2013)
64
CM
COST
CM FEE
AEOw
ne
r
COST
CM
Target Price Target Cost
Risk Zone Risk Zone
GMP
At-Risk Fee and Shared Contingency
Estimated Max Price (EMP)
![Page 60: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/60.jpg)
Target Value Design
© Dick Bayer
![Page 61: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/61.jpg)
© Dick Bayer
![Page 62: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/62.jpg)
67
![Page 63: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/63.jpg)
68
![Page 64: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/64.jpg)
69
![Page 65: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/65.jpg)
UHS Temecula Hospital Labor Curves
70
![Page 66: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/66.jpg)
THE BASICS
Set-Based Design
© 2016 Umstot Project & Facilities Solutions, LLC 71
![Page 67: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/67.jpg)
© 2016 Umstot Project & Facilities Solutions, LLC72
![Page 68: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/68.jpg)
Set-Based Design
73
EvaluationGate 1
EvaluationGate 2
DesignOption
DesignOption
DesignOption
Concept Selected
© 2016 Umstot Project & Facilities Solutions, LLC
![Page 69: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/69.jpg)
© 2016 Umstot Project & Facilities Solutions, LLC 74
![Page 70: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/70.jpg)
Rebar Alternatives
© 2016 Umstot Project & Facilities Solutions, LLC 75
![Page 71: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/71.jpg)
Set-Based Design – Connection Example
Courtesy: Tipping Mar 76
![Page 72: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/72.jpg)
Set-Based Design – Connection Example
Courtesy: Tipping Mar77
![Page 73: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/73.jpg)
Knowledge Map
Courtesy: Buehler & Buehler
![Page 74: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/74.jpg)
Knowledge Map
Courtesy: Buehler & Buehler
![Page 75: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/75.jpg)
A3 Example
Courtesy: Buehler & Buehler
![Page 76: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/76.jpg)
Knowledge Map
Courtesy: Buehler & Buehler
![Page 77: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/77.jpg)
Courtesy: Buehler & Buehler
![Page 78: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/78.jpg)
Knowledge Map
Courtesy: Buehler & Buehler
![Page 79: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/79.jpg)
Knowledge Map
Courtesy: Buehler & Buehler
![Page 80: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/80.jpg)
A3 Report for HVAC Set-Based Design
© 2016 Umstot Project & Facilities Solutions, LLC
85
![Page 81: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/81.jpg)
© 2016 Umstot Project and Facilities Solutions, LLC
What is the Number One Builder and Owner Complaint?
The Design Management Process!!!
![Page 82: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/82.jpg)
© 2016 Umstot Project & Facilities Solutions, LLC 87
Countermeasure: Last Planner® in Design
![Page 83: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/83.jpg)
EXPERIENCE WITH TARGET VALUE DESIGN
San Diego Community College District
© 2016 Umstot Project & Facilities Solutions, LLC 88
![Page 84: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/84.jpg)
SDCCD Completed TVD Projects
City College – Central PlantTarget Cost: $10 million
Construction Start: December 2009
Completion: December 2011
The new Central Plant distributes chilled
and heating hot water to the core campus
as well as electrical power to campus.
© 2016 Umstot Project & Facilities Solutions, LLC 89
![Page 85: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/85.jpg)
City College Math & Social Sciences Target Cost: $80.9 million (incl. land acquisition)
Construction Start: January 2011
Completion: August 2012
Project involved land acquisition and
construction of new 72,000 sq. ft. classroom
and laboratory building. It will include the
District’s Corporate Education Center,
Military Education, a Family Health
Center and a six-story parking
structure with 400+ stalls.
SDCCD Completed TVD Projects
© 2016 Umstot Project & Facilities Solutions, LLC90
![Page 86: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/86.jpg)
Mesa College
Social and Behavioral
Sciences BuildingTarget Cost: $36.9 million
Construction Start: December 2012
Completion: September 2014
The Social and Behavioral Sciences
building contains 66,000 GSF of
new laboratories and classrooms.
Tracking LEED Gold.
SDCCD Completed TVD Projects
© 2016 Umstot Project & Facilities Solutions, LLC 91
![Page 87: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/87.jpg)
SDCCD Completed TVD Projects
Miramar College - Fire Science/
EMT Training FacilityTarget Cost: $16.5 million
Construction Start: July 2013
Completion: July 2014
This facility consists of approximately 22,900 SF to serve as a classroom and activetraining center for the Fire Science and EmergencyMedical Technician (EMT) programs. The facility will have labs, support space, equipment staging, classrooms, offices andan outdoor training area.
© 2016 Umstot Project & Facilities Solutions, LLC 92
![Page 88: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/88.jpg)
Miramar College – Science Building ExpansionTarget Cost: $31.7 million
Construction Start: October 2013
Completion: November 2014
The new 50,000 SF addition includesnew classrooms, faculty offices, andlaboratories for chemistry, physics,astronomy, geology, microbiology,anatomy, marine biology, biology and lab preparation rooms. The rooflevel includes a greenhouse and observatory.
SDCCD TVD Completed Projects
© 2016 Umstot Project & Facilities Solutions, LLC 93
![Page 89: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/89.jpg)
Wouldn't It Be Nice If You Could...
Average Savings of $900,000 on each of 15 projects
Reduce Average Schedule Delay by 56 days
Enhance Sustainability Objectives by 44%
Reduce Facilities Maintenance Costs by 53%
© 2016 Umstot Project & Facilities Solutions, LLC 94
![Page 90: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/90.jpg)
Public Owner Benefits
Reduced Waste in Project Delivery
Sustainable Buildings
Reduced Total Cost
of Ownership
Enhanced Value
© 2016 Umstot Project & Facilities Solutions, LLC 95
![Page 91: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/91.jpg)
Target Value Design
11 Projects
Avg. Value:
US$21.8M
83% Met Target Cost; Avg. 7% Below Target Cost
© 2016 Umstot Project & Facilities Solutions, LLC 96
![Page 92: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/92.jpg)
Sustainability as a Core ValueLEED Gold Projects
Direct Contract with Architect
Post-Lean
Target Value Design
© 2016 Umstot Project & Facilities Solutions, LLC 97
![Page 93: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/93.jpg)
Value as Reduced Maintenance Costs
$3.93/sq.ft.
$1.91
$1.73
$1.46
Over 4 Years
© 2016 Umstot Project & Facilities Solutions, LLC 98
![Page 94: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/94.jpg)
Potential Pitfalls – Do, Ballard and Tommelein
1. Imbalance of overhead and profit among team members (all must share equally in shared risk and reward)
2. Not all core team members’ profit is at risk. Align team member’s incentives with the profit pool sharing. Too little and there is no skin in the game.
3. Not moving money across cluster group boundaries. This needs to happen to optimize the whole project budget.
4. Align expected productivity rates with actual progress.
5. Untimely distribution of profits by the owner.
© 2016 Umstot Project & Facilities Solutions, LLC 99
![Page 95: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/95.jpg)
Potential Pitfalls – Do, Ballard and Tommelein
6. Trades or Designers that have a major role are not included in the risk pool.
7. Trades or Designers not in the risk pool do not engage and participate collaboratively in coordination meetings.
8. Lack of transparency in development of the target cost does not allow team members to understand how the target cost was developed.
9. If owners want the benefits, they need to be engaged.
10. Owners forcing the team to cut their profits due to changing market conditions.
© 2016 Umstot Project & Facilities Solutions, LLC 100
![Page 96: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/96.jpg)
How to Make Shared Risk and Reward Sustainable – Ballard and others (2015)
•Owners: Don’t be greedy!
•Risk Pool: Don’t be foolish!
© 2016 Umstot Project & Facilities Solutions, LLC 101
![Page 97: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/97.jpg)
Personal Lessons Learned
• Clearly define value at the beginning of the project
• Understand the business case constraints
• Specialty trade contractor involvement early is essential!
• Concurrent contemporaneous estimating is crucial!
• Report target cost status first, then design progress
• Document design decision-making process through A3 Reports
• Consider life cycle costs in design analysis
• Use Last Planner® during design
© 2016 Umstot Project & Facilities Solutions, LLC 102
![Page 98: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/98.jpg)
This concludes The American Institute of Architects Continuing Education Systems Course
Lean Construction Institute [email protected]
![Page 99: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/99.jpg)
![Page 100: Target Value Design (Delivery) An · PDF file^Danger: Cost overruns and delays possible. Scope not yet fully settled. Price to be determined later. _ –Richard Korman, ENR Viewpoint](https://reader031.vdocuments.net/reader031/viewer/2022022423/5a9e2ad07f8b9a75458b86af/html5/thumbnails/100.jpg)
Questions?
David Umstot, PE, CEM
Umstot Project & Facilities Solutions, LLCaffliated with
The ReAlignment Group of California, LLC
www.umstotsolutions.com
www.realignment.solutions
619.201.8483 (O)
619.384.3231 (M)
© 2016 Umstot Project & Facilities Solutions, LLC 105