Value Toolkit

Industry-crafted guidance to help clients make value-based decisions.

Last updated: 12th November 2020

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Innovation Lead: Fintan Hastings

Website:
constructioninnovationhub.org.uk


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Summary

The industry has come together to end the culture of cheapness that is shaping the way we build, and instead introduce a new approach that is focused on whole-life value. More than 120 organisations, led by the Construction Innovation Hub, have developed the Value Toolkit - a suite of tools and processes that will embed value-based decision making throughout the investment lifecycle. The Value Toolkit takes clients through four modules that cover how to define value; how to index and measure value; how to creating a business case and shape a commercial strategy; and how it can inform a value-based procurement process and subsequent delivery. This creates transparency and accountability for the entire value chain and is more likely to result in a building that meets the needs of the client and those who will use it. Fundamentally, it puts people and places at the heart of UK construction.

Innovation type: Digital, Energy, Kit of parts, Manufacturing, Offsite, Process, Procurement, Skills
Organisation type: ACE (Architect / Consultant Engineer), Construction tier 1 contractors, Government client, Innovative SME, Manufacturer, Research centre, Supply chain

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Project pioneers

Over 120 construction clients, companies, professional bodies and membership organisations have come together with a common belief: that there is an urgent need to fundamentally transform the way we make decisions that impact on our built environment. These pioneering organisations are offering up their time, experience and energy to lay the groundwork for an industry where the choices we make for our built environment will actively improve quality of life and help future-proof the sector, whilst reducing its environmental footprint.

The problem

Value in construction has too often been reduced to cost, and this in turn equates to doing things cheaply. This has led to building techniques and processes that aren't fit for anyone. Approaches are often inconsistent, not aligned through the supply chain and driven by short-term savings rather than long-term benefits. Too little attention is given to the broader value that buildings and infrastructure can provide, such as improving quality of life for those who use them and reducing our carbon footprint. As a result many projects fail to realise their intended value. Even for projects that are delivered on time and on budget, the anticipated benefits do not always materialise.

Vision

The future of construction must be rooted in smarter, better-informed, value-based decisions so the sector can deliver better outcomes for all, and be part of the solution not part of the problem. If the sector can turn its back on outdated practices rooted in cost minimisation, and embed this value-based decision-making approach then it will become easier to optimise the social, environmental and economic benefits that could come from investments in the built environment. Having a consistent, consensus-based process for defining value will create transparency and give the market an opportunity to develop innovative, value-adding solutions, which directly address client needs. The lives of construction workers should also be improved if value-based decisions are made on how assets are delivered and who they are delivered by.

Key Insight

There has been a growing recognition for a number of years that things need to change as many construction projects, including those that are delivered on time and on budget, are still not delivering anticipated benefits for their end users. The Transforming Infrastructure Performance Strategy from government in 2017 identified the need for a greater emphasis on procuring for value to support the transition to modern methods of construction. And the Transport Infrastructure Efficiency Strategy in the same year called for investment decisions based on the value of whole lifecycle costs and benefits. But this groundswell of change was crystalised in the Construction Sector Deal in 2018 which committed to developing an industry-wide definition of value that takes into account more than capital cost - backed by the Transforming Construction Challenge Fund, the biggest investment in the sector for a generation.

First step

In 2020, the Reinvent phase of the Construction Leadership Council’s Industry Roadmap to Recovery explicitly outlined the need to accelerate the development and rollout of the Construction Innovation Hub’s Value Toolkit and industry business models work. The Value Toolkit is a consensus-based process, digital tool and guidance to support better and more informed decision-making throughout the whole investment lifecycle, from business case through to procurement, delivery and operation. It builds on the solid groundwork already put in place by the CLC’s Procuring for Value working group, led by Ann Bentley of Rider Levitt Bucknall. The first step involved laying the foundation for an agreed definition of value. Industry professional bodies RICS, RIBA, CIOB and Social Value UK took on the role of bringing together groups of industry experts to build a consensus approach to the definition and measurement of value under four capital models of Natural, Social, Human and Manufactured.

Barrier

Construction has had too narrow a focus on controlling cost and transferring risk in the capital phase. The selection process at all stages along the supply chain is often focused on the cheapest bid, often drawing on wasteful processes and sustaining a system that works for no-one. By focusing solely on cost, the industry is foregoing broader societal and environmental benefits that a building can deliver.

Whole life innovation

The Value Toolkit will support a shift towards smarter, better decision-making which ensures that buildings are delivering whole-life value. The wasteful, unproductive and inefficient practices, which have long been standard for the sector, need to give way to value-based construction. As well as promoting modern methods of construction and data-driven processes, the Value Toolkit ensures end-users benefits and social and environmental impacts are baked into the way programmes are planned and delivered. The four capital value categories - People, Social, Natural and Manufactured - will broaden decision-making beyond cost and capital risk. The value indicies and measurement tools create transparency and accountability around delivery and impact. The Delivery Model and Client Selector tools allow clients to weigh up risk and benefit and create a viable commercial strategy with whole-life value at its heart. And the Procuring for Value tool supports purchasing decisions with long-term impact not short-term savings.

Collaborators

There are over 120 organisations working with the Construction Innovation Hub to develop and test the Value Toolkit. These include the Departments for Education, Transport and Health, the Ministry of Justice, the Defence Infrastructure Organisation (DIO), the Welsh Government, Environment Agency, YTL Developments, Landsec, NACF, and SFT. In addition, there has been wide support from businesses, industry experts and Government such as the Business Minister, Nadhim Zahawi; Government MMC Tsar Mark Farmer; and small and large businesses across the Constructing Excellence Network.

  • Constructing Excellence Network
  • Construction Innovation Hub
  • Defence Infrastructure Organisation (DIO)
  • Department for Education
  • Department for Health
  • Department for Transport
  • Landsec
  • Ministry of Justice
  • NACF
  • SFT
  • Welsh Government
  • YTL Developments

Lead support

Without the Transforming Construction Challenge there would be no Value Toolkit. The TCC programme provided the funding and brought the resource together to allow the Construction Innovation Hub to address a industry issue that has long been acknowledged.

Long Term Vision

The industry-wide collective over over 120 construction organisations spearheaded by Construction Innovation Hub has been driven by a long-overdue need to address cost and capital risk decision-making that has led to wasteful processes in the sector. Their ambition with the Value Toolkit is to reinvigorate a sector and embed value-based decision making into programme planning and delivery so it will be easier to optimise the social, environmental and economic benefits that could come from investments in the built environment.

Human Stories

Fundamentally, this project is about delivering better buildings and infrastructure which are kinder to our environment and improve how we live our lives. The value-led approach should see activity energy homes become the standard and not only reduce carbon emissions but lift people out of fuel poverty. And schools of the future will be designed and built in a way which better meets the unique needs of the children who learn in them. Those same schools would also have a much lower carbon footprint, helping to protecting the environment for our children and future generations.

Powerful Processes

The Value Toolkit is a consensus-based process, digital tool and guidance to support better and more informed decision-making throughout the whole investment lifecycle, from business case through to procurement, delivery and operation. It builds on the solid groundwork laid by Ann Bentley and the Construction Leadership Council 'Procuring for Value' working group. The four modules of the toolkit - Value Definition; Delivery Model, Procuring for Value; Ongoing Measurement - walk any client through the much-needed considerations they should make to put whole-life value at the heart of UK buildings and create clear benchmarks and indicators of success. Finally, with an emphasis on procurement modelling, the Value Toolkit has the potential to transform the way construction programmes are bought - and tendered for - prompting much need change in the sector.

Fascinating Facts

Over 120 organisations have committed their time, expertise and energies into developing the Value Toolkit.

Benefits

Assurance
The Toolkit will ensure that decisions around desired outcomes are built in and executed from the earliest possible opportunity and through the life of the asset. This will make it easier to identify: 1) Why decisions were made; 2) Who made the decisions; and 3) When (if applicable) perceptions of ‘value’ were changed during the lifecycle. For example, if a design element is changed, it should be changed with full view of the impact it will have on the outcomes of the project and assets.

Collaboration
The Value Toolkit is being developed through collective innovation. There are over 120 organisations working in partnership with Construction Innovation Hub to create it. There is a significant programme of market engagement, targeting thousands of supply chain partners, which will ensure the wider sector have a voice in the development and are prepared to respond to value-based decision-making.

Cost
The Value Toolkit sets to redefine value away from financial value and instead introduce capital categories of People, Social, Natural and Manufactured. This mean that while cost and capital risk are still key considerations in decision-making when planning construction programmes, they should not be the only factor. The Value Toolkit will help clients reach procurement decisions based on whole-value and not solely on lowest price.

Emissions
Environmental impact is a critical element of the Natural Capital category in the Value Definition module, meaning the Value Toolkit supports decisions that will drive a reduction in carbon emissions through every project delivered, both in construction and operation phases. It prompts decisions around air quality, land quality, water quality, and biodiversity and will help the industry accelerate towards its target of NetZero emissions as a sector by 2050. The continuous measurement of value performance throughout delivery and operation will not only help clients and industry to maximise value on each project, but the performance data collected can be used to inform both future projects and also policymakers.

Health
Wellbeing is a crucial area of focus within the Human Capital category of the Value Definition module, which will support decisions that benefit the health of both construction workers and end-users of buildings.

Trade Gap
The Construction Innovation Hub is working closely with the Capitals Coalition to explore international opportunities for the Value Toolkit.

Uptake
The Value Toolkit is focused around improving the procurement process so that value-based decisions sit at its heart. The Procuring for Value module draws on an Investment Value Index (IVI) which is determined at the Value Definition stage, and acts as the primary means to evaluate choices between suppliers. It will provide transparency to the market on how purchasing decisions have be made. The Construction Innovation Hub and its partners are engaging actively with clients across government departments and the private sector, through a Client Advisory Group. Those involved in development and trials include the Departments for Education, Transport and Health; the Ministry of Justice; the Defence Infrastructure Organisation (DIO); the Welsh Government; Environment Agency; YTL Developments; LandSec; NACF; and SFT.

Whole-life Value
The Value Toolkit is entirely built around the need for a shift towards whole-life value. The wasteful, unproductive and inefficient practices, which have long been standard for the sector, need to give way to value-based construction where benefits for the end users, and social and environmental impacts are baked into the way programmes are planned and delivered.