The Value Agenda
2011We all want to make our investments in building deliver the outcomes we seek. Yet for many clients there is not sufficient time or resource to begin the project on a sound basis. Too many projects discover what they should really be like after they are well on the way, with inevitable effects on cost and time and many disappointments as goals are missed. The importance of starting well cannot be over emphasised.
I want to share with you some work on using what I call The Value Agenda, to demonstrate good practice at the preparation stage of a project, the ‘front end’. I will cover:
- The ‘value’ in the built environment
- How you define your project’s ‘value proposition’ at the start?
- Two case studies
- Four principles to follow
The Built Environment is a concept which embraces all the man-made world of buildings and infrastructure, not just as static objects but as serviced contexts for our lives. The life cycle of each building, from defining need, through design and construction to operation and review, absorbs resources and supports outcomes. Value I define as ‘What you get over what you give’: the benefits traded for costs of all kinds, but seen through the subjective lens of the values of the beholder. The most important word is ‘You’. All the stakeholders in a building have benefits they seek and things they sacrifice. The successful project finds a win-win for them all, a compromise between often competing values.
Buildings create value by supporting the performance and image of their occupiers, enhancing the asset value of themselves and their location, and bringing wellbeing and a cultural experience to users and the public. They incur costs in financial and environmental terms. I define value in a building in six product dimensions and one process dimension. The features of a building can contribute to Use, Exchange and Image value, aspects with some financial content. They also have Environmental, Social and Cultural value, all less tangible but significant. Process value is that created by the skill with which a project is managed: effective process will deliver to
plan; ineffective process will squander resources and miss outcome goals.
Value lies not only in the building as artefact but in its use, animated by service and energy flows. Like the Zen description of a pot, the value lies in the void within, not merely in the shell. Quality in the design and making of a building lies in how it delivers required value, enhancing outcomes and reducing costs.
The opening task in a building project is therefore to define the Value Proposition, the outcomes required and the resources justified to achieve them, no small task in the multi-stakeholder, resource-limited environment of today.
Effort put in at the front end has enormous leverage on outcomes achieved. If the capital cost of constructing the proposed building is taken as 1, the cost of operating and maintaining the building over 20 years can be 3 times that. The value, social or commercial of the work done in the building over 20 years can be 30 times construction cost. The building enables the performance of its users and burdens them with its capital and operating costs. The design and management of the construction will be about one tenth of the construction cost and the early thinking to set up the brief and process will be no more than a tenth of that. So the leverage between front end thinking and long-term occupier performance is around 1:3000.
As project time passes, the ability to make valuable change declines and the cost of making changes rises. Thinking done at the front end is the most cost effective of all. Indeed, modern project leadership stresses the importance of making all the important decisions nearer to the start than has been typical: for example, using Building Information Modelling and early contractor input before settling on the design.
The UK built asset consultant EC Harris has a four-point mantra to show how front end decisions should be made. It suggests Four Optimisations:
- Optimise the asset performance, so that it supports its purpose fully and sustainably;
- Optimise the operating cost falling on the occupier and owner;
- Optimise the capital cost to achieve the first two goals with proper return on investment;
- Optimise how the asset is held: as owner-occupied, rented or as a service provision, to suit the stakeholder goals.
Setting the Value Proposition means engaging with stakeholders in a structured way. The Value in Design (VALiD) method devised at Loughborough University suggests a way of negotiating towards the Value Proposition and the ability to judge proposed design solutions against it.
All front end thinking needs to be informed by feedback from previous projects. This is a great area of weakness in UK practice as little serious feedback is collected by consultants or clients. There is a lack of evidence of what works and what doesn’t, and of how actual performance matches designed intentions. Evidence-based building design is advancing in health care and there needs to be similar progress to inform decision makers and designers across other building types. The Soft Landings method is emerging in the UK to prompt project leaders to think about how they will occupy and operate the building from the start, following up with support to Facility Managers from the designers and builders through the ‘shakedown cruise’ of the first months in occupation. A well commissioned building actually does what you asked it to do. Most do not. The new Leesman Index is a way of measuring workplace performance which is gaining admirers in the UK.
My two case studies are a small private bank and a large hospital. Hoares Bank is over 300 years old and still family owned. Their protected 1830 building in central London is splendid but too small as they grow. They bought four neighbouring buildings in a maze of historic passages and rights and needed advice on what to do and how to do it. I acted as Client Adviser. The process of uncovering what they needed and what was worth doing involved exploring with everyone how they used space, how they were changing with new technology and how they projected their special nature to customers. It also involved testing the permissible and affordable options. A new building proved not to be feasible and the project ended up as a conversion of the largest of the adjacent properties, lowering sights to fit the value proposition. Designers and contractors have now been appointed and the work is in progress. The result will be a seamless expansion with the character of the bank, and its balance sheet, intact.
The 3Ts hospital in Brighton is by comparison, huge. It will sit prominently above the sea-front, replacing 200 year old property to provide an advanced health-care environment. It will be one of the first UK hospitals to have single-bed rooms as standard. The preparatory work by the client was rigorous and lengthy, defining the business case for innovative design and project working method. It is pioneering what the Americans call Integrated Project Delivery, a collaborative team process with designers and contractors close to the client and sharing a building information model. That model, a virtual building, will eventually allow the client to manage the facility much more easily than is typical, after getting a building with much lower risk of defects or cost and time overruns. The well prepared client can sign-off on their requirements at the right moment on the curve.
The UK public client finds it hard to find resources for preparatory work unless they are experienced and know they should hold back funds from previous projects. Private clients often see cost more clearly than benefit and think the project starts when the diggers arrive. Briefmaking and design are undervalued, both by clients and the professions. My goal as a Client Adviser is to help make sense of the front end, preparation stage and allow the client to define and deliver the most value possible. The principles that I suggest you follow are:
- Resource the front end properly
- Get rounded advice and stakeholder input to find your Value Proposition
- Set up the project to deliver the Value Proposition through all the stresses and strains and into successful use
- Measure outcomes to provide feedback for everyone’s next time.
Keynote Paper delivered to the Danish Association of Construction Clients
Copenhagen, June 9th 2011. Richard Saxon CBE.
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Be Valuable: A guide to creating value in the built environment
2005
‘Be Valuable’ is the report of a working group of ‘Be: collaborating for the built environment’. This ginger group, chaired by Richard, was the successor to the Reading Construction Forum and the Design-Build Foundation and is one of the earliest studies of the true value of built assets.
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A Question of Values
2006
Each year the Worshipful Company of Architects (the Architects’ Company) holds a public lecture, initially called the Milo Lecture after the first Company Clerk. The Masters of other Livery Companies are invited to attend. In my year as Master (2005-06) I gave the lecture myself. The subject was the tension within the profession between the roles of artist and of professional. The lecture was delivered at RIBA Headquarters where I was Vice President at the time.
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The Well Advised Client: improving project effectiveness through strategic advice.
2011
The success of any construction project depends on the client. However good the rest of the team is, the knowledge, strength and wisdom of the client are decisive for the achievement of goals. This is well evidenced by the difference between the results achieved by ‘professional clients’: developers, large companies and some universities, and those produced by clients who do not build continuously or have standing, expert teams. This group are by far the majority however. How are they to get what they need from the construction industry?
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The Value Agenda
2011
We all want to make our investments in building deliver the outcomes we seek. Yet for many clients there is not sufficient time or resource to begin the project on a sound basis. Too many projects discover what they should really be like after they are well on the way, with inevitable effects on cost and time and many disappointments as goals are missed. The importance of starting well cannot be over emphasised.
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Towards Value-based Procurement
2020
I return to this topic again as it advances continuously. Government struggles with its procurement policy as forces pull in opposite directions. On the one hand, established practice is to seek lowest capital cost for design and construction in order to spread available resources over the most constituencies possible. On the other hand, there is growing awareness that processes seeking lowest first cost tend to produce poor value. Value is not just price, but a more complex concept embodying benefits and costs created for stakeholders over the life of an asset. These benefits can be economic, but also social and environmental. Lowest first cost can be at the expense of whole-life cost as so-called ‘value engineering’ downgrades specification to hit Capex targets or make more profit than is possible at the bid price. Low capital cost can also be at the expense of environmental performance standards, with building regulations still being a low bar to cross and nowhere near ‘Net-Zero’. Social value is increasingly a focus in procurement, defined as benefit to the community in which a development is planned, creating local jobs, skills and amenities.
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The size of the Built Environment sector
2021
The scale of the construction industry is regularly understated in statistics as they omit professional services, manufacturing, materials extraction, and embodied energy. The more important understatement is that construction is a narrow definition of the services providing our built environment. This is a blend of property, design, manufacturing, construction, and management services with an annual share of GDP of over 17%. Most recent RICS figures, before the distortions of 2020, suggest the following:
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Thinking About Building
1985
NEDO commissioned BDP to create a client guide to the procurement of design and construction, based on the NEDO research report ‘Faster Building for Industry’. It included a gameboard of options for assembling the team, together with a scoring approach to help choose an option.
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The JCT Povey Lecture: Vision for the Industry
2003
Introduction
On Wednesday, 29th October 2003 Richard Saxon CBE, Vice-President of the RIBA, Director of BDP and Chairman of Be gave the following lecture entitled ‘Vision for Industry (formerly known as construction)’ to invited guests of The Joint Contracts Tribunal at the Jarvis Hall, Royal Institute of British Architects.
This lecture was the inaugural JCT Povey Lecture, an event by way of a public acknowledgement and tribute to Philip Povey, who served the JCT for over fifty years.
The JCT Povey Lecture is to be an annual event at which an eminent person will be invited to give his/her thoughts on significant matters that are relevant to the construction and property industry.
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Integrated Project Delivery: the new Plan of Work
2009
The American architectural profession has discovered Integrated Project Delivery (IPD) and is enthused by it. At the recent AIA Convention in Boston there were numerous meetings about it and its closely related subject, Building Information Modelling (BIM). The AIA has just published its guidance on IPD at www.aia.org/ipdg
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Is Offsite Construction the Answer?
2017
The construction industry is heading for the buffers. Capacity is draining out as skilled tradesmen retire and few enter as apprentices. The go-to supply of EU migrant tradesmen is likely to be restricted soon and is already less interested as the pound falls. Construction quality is declining in the housebuilding world. Mark Farmer’s message: Modernise or Die, is clear that a major move to offsite construction is needed to keep the industry from decline. The core problem is low productivity growth in construction, globally under 1% per annum when manufacturing achieves 3.6%. There are many causes of this, but the making of buildings on site, in all weathers, is one of them.
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Re-Integration
2018
The collapse of Carillion is probably another nail in the coffin of the current UK model of main contracting where virtually all the trade work is subcontracted. Over fifty years in the industry, I have seen the change from traditional contractors with their main trades in-house to the current, unsustainable pattern. The vertically integrated contractor was brought down by recurrent business cycles which punish employers. Once the idea spread that trade specialists could be hired in just when needed, taking them off the contractor’s books, that approach spread fast. Tier Two firms could be left with the work of recruiting and training people, innovating in their specialism and managing the risk handed down to them. They could also provide working capital to the main contractor by accepting slow payment for their work. Most of the business cycle impact became ‘subcontracted out’. In practice, with Tier Two firms bidding at low margins to win work from the Tier One contractor, the scope for innovation and proper training was driven out. One of the stubborn failures of the industry since this pattern became the norm has been the lack of any productivity growth. Scratch teams, built up per project, learn nothing from experience and waste considerable resources in the procurement process. The critique of the method reads:
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Lucky 13?
2018
Construction is many industries within one classification. It stretches from the mammoth to the minute, from infrastructure work like HS2 to household repair tasks. Any critique of construction therefore needs to recognise the part of the industry to which it refers. The statistical classification of the industry also fails to include its clients and consultants, essential parts of the cultural and economic system of the built environment. All that having been said, new initiatives at one end of the scale spectrum could create momentum for change across much of the industry.
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Professional Futures
2018
Every part of the construction industry is challenged by rapidly evolving threats: stagnant productivity, falling human resources, failing business models, climate change, globalisation, advancing computer power, to name some of them. Most attention is paid to the plight of contractors and specialists, but the world of consultancy also faces these same issues. Professionals additionally face falling credibility and authority as respect for expertise declines. Their professional institutions seem powerless to communicate the value of the professional contribution to the public, to clients and to government.
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The Question of Quality
2019
When a construction client signs a contract to deliver a project, they usually have three targets in mind: to deliver the required facility on budget, on time and to required quality. Cost and Time have proved relatively manageable, with objective evidence and increasingly clever tools with which to manage. Quality has never been so simple. There is a perceived degree of subjectivity about it and it is quite hard to monitor the progress of work to ensure that all standards are being maintained. The result has been that whenever there is pressure on cost or time, it’s usually quality that suffers. Value Engineering has become an ironic term as it usually means cost reduction by reducing the quality that delivers required value.
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Construction: service or product?
2020
The Office for National Statistics lists the construction industry as part of the service sector. This makes some sense in that we provide bespoke facilities to customers rather like a restaurant provides meals. However, our output is not a transient meal but delivers a very concrete asset which needs looking after for its whole life, a service we do not provide except reactively. We treat our output like a product, leaving the buyer to look after it. Owners are not often expert at this, generating waste and depreciation. Our landlord and tenant legislation dumps repair and maintenance responsibility on unskilled tenants, charging them to restore the property to its original state on departure or pay ‘dilapidations’.
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Construction’s new Playbook
2021
You may not know that I have been a long-time fan of American Football. The game is sometimes called ‘violent chess’ as it’s based on pre-planned ‘plays’ by one side’s offence team and the other’s defence team. The plays are radioed into the quarterback, the leader of the offence, by a coach on the side-line and the whole team must remember the moves implied by the coded name of the play, then execute it flawlessly. All the team’s plays are set down in their playbook, a secret document that team members must learn by heart and practice continuously. New plays are devised all the time too. No wonder the game originated in colleges.
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Changing our Industry: three Horizons, four Capitals
2023
A generation has passed since the excitement of the 1990s as first Latham and then Egan called for radical change in the construction industry. Initiatives seemed to pour out of both government and the industry, yet here we are still with an industry which seems much the same, racked by cost pressures, defensive, risky, unsustainable and unattractive to the workforce that it needs. We seem to live in Groundhog Day, repeating the traditional process with scratch teams, collaborating weakly and producing poor results.
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High Street Schools
2007
Britain is building or rebuilding all its thousands of primary and secondary schools to fit them for today’s needs. Many new schools are being founded, especially in areas of population growth. The location and design of these schools is not however being considered as part of the drive to more sustainable communities. This article looks at what could and should be happening.
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Valuing Sustainability
2007
Sustainability is the greatest challenge faced by our civilisation, in that, as other speakers in this distinguished series have said, and as Sir Nicholas Stern’s report has recently demonstrated, its current trajectory cannot be indefinitely sustained, economically, environmentally or socially. The transition to a sustainable path is however beset by barriers, of which the most entrenched is the perception that long-term environmental sustainability, the most urgent issue, is not achievable without short-term economic loss and politically unacceptable lifestyle change. Whilst the triple-bottom-line concept of Sustainability implies that economic and social sustainability cannot exist without environmental sustainability, the reverse is also true. We cannot hope to achieve a sustainable environment unless we can afford it, through continuing economic success and increasing social equity across the planet. This suggests a concentration on seeking low-cost techniques to reduce emissions and on increasing our economic ability to fund less affordable methods.
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Just the Facts: article on Sustainable Energy – without the hot air, by David J C MacKay
2009
“Have you read David MacKay’s book? It’s great and so useful,” said one of the several fellow sustainability enthusiasts who pressed me to take it in. So, I did and it is. And I thought you should know about it too. It helps a lot with sorting the myths from the wishful thinking and the really good ideas.
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Going Soft
2017
We need to be harder on ourselves as an industry and admit that most of our new buildings reach the end of their defects liability period without ever delivering the performance that they promised. BREEAM ratings at design stage do not predict carbon emissions commensurate with the grading. Sometimes, the certificated building burns several times the expected energy consumption. And typically, we don’t go back to analyse the performance, nor the workability of the design for the purpose intended. We move on to the next project. Clients rarely complain, as their expectations were never high, nor clearly stated.
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Is a sustainable built environment possible?
2019
The Extinction Rebellion movement has certainly rekindled the awareness of everyone that climate change is real, and that drastic action is essential. But what can we in the built environment do differently other than the slow, incremental changes that are in train? Recent books point the way and give rise to some optimism.
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Australia sweeps Test series
2019
No, this isn’t about cricket. Its about learning from Australia how to deliver buildings that perform as specified. In October 2017 I wrote about the ‘Soft Landings’ concept as a way for designers and builders to incorporate facility management needs into their process and ensure that buildings perform properly. This tool is part of the Government’s version of BIM Level 2, but not widely understood or used beyond that. We remain a country with published aspirations to achieve high physical performance in buildings but with a woeful record of underachievement. Why is this?
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Might building performance become contractual?
2020
At present, building contracts are designed to manage the completion of a capital project on budget, on time and without defects, dealing with failures should they arise. The new situation, driven by concern for climate change and for occupant safety, is that buildings must also perform as promised, over time.
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Net Zero: harder than it looks
2021
The push to decarbonise the built environment by mid-century can be portrayed as simply going all-electric and relying on the grid to become carbon free. But that does not consider the difficulty of meeting the resultant electricity demand from net-zero sources. UK FIRES (ref) estimates that electricity demand by 2050, from industry, transport and buildings, would be double the level of potential net-zero supply if expected usage patterns duly emerge. Ramping up carbon-free power supply from all sources is happening at a good rate, but it is not credible that this growth rate can be raised much more in the next 29 years. Even generating green hydrogen as a fuel competes at peak hours with using more efficient carbon-free power directly.
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Growth Through BIM
2013
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One Building or Two?
2016
The conventional client for a construction project has focussed on achieving success in getting their requirements delivered to quality, on time and on budget. It has been a capital project mind-set, measuring achievement over the period up to the final account. Those clients who own the building tend to change the accounting status and the leadership involved at the end of the capital phase, handing the facility manager, who is rarely involved before this point, a bundle of information from the contractor to help them start to set up the Operation and Maintenance system they will need. Those who sell the building on after completion and letting have even less interest in the life of their creation, passing responsibility to the investor and tenants to make the best of it.
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BIM for Construction Clients
2016
In 2016 the RIBA’s then-subsidiary, NBS, published Richard Saxon’s book, BIM for Construction Clients, to mark the start of the UK government mandate that government projects should use BIM. The book explains the advantages of BIM in client terms and provides case studies of pioneering projects. The content is based on the UK provisional standard PAS 1192 and the then-current concept of Level 2 BIM. In 2019 this standard was replaced by an international one, ISO 19650. This was founded on PAS 1192 but changed a lot of the language and some of the assumptions. Extensive guidance to the use of the ISO standard was then published as the UK BIM Framework. The book is therefore no longer a useful guide to current practice, though it does give a picture of the pioneering stage of UK BIM.
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Briefmaking for Better Information Management: adding information matters to the briefing process
2016
The architectural process starts with extracting the brief from the client and related stakeholders. Traditionally briefmaking has concentrated on the design requirements for the building, plus the time and cost issues to be met. Now we have a further dimension to manage, the information requirements which will enable the client and team to benefit from using digital Information Management (IM). This article offers an approach to gathering the information brief which fits onto the familiar matrix of briefmaking.
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The Digital Twin: why, what and how
2018
The built environment is officially regarded as an enabler of the economy and of our quality of life. By the ‘built environment’ I mean the complex of economic sectors which plan, regulate, develop, design and build, operate and maintain the physical fabric of our civilisation, its buildings and infrastructure. These sectors total between 15 and 20% of the total economy and the current government view is that the success of built environment investments should be measured by the outcomes they support for the economy and society.
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BIM and JCT Contracts.
2019
JCT is in favour of BIM. It can reduce risks and disputes whilst increasing effective collaboration on projects. But it does have to be applied with knowledge and skill. A new guidance document from JCT attempts to fill a gap identified in the skills of clients and their advisers, moving us towards the goal of making BIM ‘business as usual’.
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Better Information Management
2020
Readers may be familiar with my interest in Building Information Modelling or BIM. Since the turn of the century, I have been involved with the concept, helping to spur the government to make it their policy to mandate its use. In 2012 I was commissioned to produce a report for what is now BEIS on ‘BIM for Growth’, the potential effect on economic growth of the uptake of BIM in the UK. I became ‘UK BIM Ambassador for Growth’ in 2012-13. A place on the Steering Committee of the BIM Task Group was also provided as it evolved what became BIM Level 2 and the PAS 1192 set of draft standards in 2013. British BIM shot forward and became the world leader as the government mandate arrived in 2016.
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Disappointed Party
2020
ISO 19650, the world standard for using BIM, is a great UK achievement. The guidance produced by the UK BIM Alliance on how to use the standard is also excellent, except for one area where it leaves me gasping, taking jargon to new depths of obscurity.
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Right First Time: a major payback from Better Information Management
2021
Construction project teams shoot themselves in the foot all the time. A minority of projects come in on or below cost and time targets. Errors cost them far more than the typical industry profit margin. The Get It Right Initiative (GIRI) (1), an industry group focussed on the error issue, reckons that 5% of project cost is directly down to mistakes, with 21% in total after indirect costs, unrecorded waste and latent defects are counted. The top ten causes of this mayhem are listed as:
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Information Management: What, Why and How
2022
You have heard of BIM, but what is IM or Information Management? And why has it replaced BIM as the focus of digital processes for the built environment? Thirdly, how do you use IM to deliver the desired outcomes?
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Taming The Tsunami
2023
‘Taming the Tsunami’ is the Deploi client guide to information management for projects and assets.
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Book : Atrium Buildings – Development and Design
1983
During the 1970s Richard became interested in the newly revived concept of the atrium building, one where space is arranged around an indoor courtyard. Travels and research showed that the idea had a complex history and many influences. The 1983 book maps these influences and considers the technical challenges of designing stimulating and safe atrium buildings. The book was revised in 1986 for a second edition.Continue Reading -
Book : The Atrium Comes of Age
1984
The first book was in black and white only. Many spectacular atrium buildings were created in the 1980s and the second book provides colour images of the most important examples, grouped by building use. There is also a stronger historical background, updated fire safety advice and a gazetteer of the best examples worldwide. This book was also re-published in the US and Japan.
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