ABSTRACT
This chapter provides a history of Target Value Delivery’s (TVD’s) development, explains its relationship with Integrated Project Delivery, how TVD works in the definition, design and construction phases of projects, and its benefits. In the TVD process, when a client starts thinking about a possible project, they decide what they want and what they’re willing and able to pay to get it – the allowable cost. However, there is no guarantee that the allowable cost is enough to actually pay for the project, so the gap between allowable and expected must be evaluated. If allowable exceeds or equals expected, the project is financially feasible. If not, and if the client thinks the gap is too great to be erased, they must rethink what’s wanted or increase their allowable cost. That continues until the project is abandoned, or a target cost is set, matched with what’s wanted. The next step is to actively steer design and construction towards that target. In 2005, Sutter Health, a Northern California healthcare company completed a medical office building for 18.6% below what they had paid for similar facilities in the past. That persuaded Sutter Health to apply TVD and the entire Lean philosophy to the delivery of its entire capital program. The focus and discipline that TVD brings to management of projects, routinely reduces cost without sacrificing desired benefits, and the client’s share of cost savings can fund value-adds.
