Target value design in the public sector: evidence from a hospital project in San Francisco, CA

ABSTRACT

Target Value Design (TVD) is a management practice that steers the design and construction of the project to the customer's constraints while maximizing the value delivered within those constraints. TVD practice has been mostly pursued in private projects on which the client and key members of the project team all sign one multiparty contract. The use of TVD in public sector projects may differ widely in terms of application process and achievable results if compared to its use in private projects. This in-depth case study investigates how a public owner applied TVD given public procurement restrictions. Evidence from this case study suggests that TVD can be applied in public sector projects in which multiparty contracts are prohibited. Although it was not possible to apply all of the elements of the current TVD process benchmark on the project due to regulatory or legal restrictions, evidence from this case study suggests that a not full-fledged application still provides significant cost savings and allows design to be steered towards a target cost on a public project.

KEYWORDS:

• Target value design
• target costing
• public sector
• cost management
• design management

Acknowledgements

Thanks are due to the São Paulo Research Foundation for the concession of a scholarship to the first author. All support is gratefully acknowledged. Any opinions, findings, conclusions, or recommendations expressed in this paper are those of the authors and do not necessarily reflect the views of the P2SL members. The authors would like to thank the company that provided data for this study.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This research is funded in part by gifts made to the Project Production Systems Laboratory (P2SL) (http://p2sl.berkeley.edu).