John Savicky

The cost of ‘best value’ construction

One of the major objectives of facility owners is to get the ‘best value’ in construction, renovation or maintenance of facilities. Owners are reluctant to pay more for best value if they do not understand what the value is. Research now proposes that the use of best value procurement can actually reduce the first costs of delivering the construction. The research looks at the transaction costs or the first costs of construction. The research uses the procurement of roofing in the State of Hawaii because of the availability of data on both the low‐bid and best value procurements. The State of Hawaii used transaction cost analysis to identify the cost of best value construction. The costs considered were planning and programming, design, procurement, construction management and inspection costs. Owing to the number of projects and the access to budget figures, construction cost figures, design costs and construction times, the State was able to identify the relative transaction costs and performance for both processes. The first costs or transaction costs of the best value procurements were lower than the transaction costs of the traditional design‐bid‐build costs. The actual performances of the roofing systems procured, which included warranty period, performance of the contractor and performance of the roofing systems, were far superior. The result was an increase in value for a lower cost.

Planning in Construction: Longitudinal Study of Pre-Contract Planning Model Demonstrates Reduction in Project Cost and Schedule Growth

Planning is known to enhance construction project performance in terms of cost, schedule, and quality. Yet, project teams oftentimes do not incorporate effective planning methodologies, typically citing a lack of time or capability to conduct detailed planning. This article proposes a brief yet rigorous project planning method, known as the pre-contract planning model, which is uniquely implemented between the owner and selected contractor project teams prior to contract award with the intent of increasing project team alignment and facilitating greater risk transfer from owner to contractor. Results from a multi-case longitudinal study documented the impact of the pre-contract planning model in terms of three success criteria: cost growth, schedule growth, and owner satisfaction, where cost and schedule growth were measured as percent increase of initial contract values. Projects that implemented the pre-contract planning model were compared with a control group that operated via a traditional project delivery process where the selected contractor directly proceeded to contract award without a formal planning process. Analysis revealed that the pre-contract planning model reduced cost and schedule growth by as much as 54% and 70% percent, respectively, indicating that pre-contract planning may be a viable planning mechanism to be implemented in the construction industry.

The impact of minimising specifications and management at the University of Hawaii

The University of Hawaii was searching for modifications to their construction delivery process that would increase the value and performance of construction and the efficiency of their project management group. The university had been plagued by poor construction performance (not on time, not on budget, and not meeting quality expectations). Their goal was to do more construction (with fewer project managers) and minimise the risk of construction non‐performance. The university wanted to study the impact of specifications, construction management, inspections and the existing low‐bid process on construction performance. The Performance Information Procurement System (PIPS) was selected due to its documented results in delivering high performance. There were two objectives for implementing the PIPS process. The first objective was to determine whether the university could procure higher quality construction projects by minimising management, regulations, qualifications, user specifications and inspections. The second objective of the test would be to document the impact of the PIPS process and satisfaction level of the different parties (contractors, designers, procurement personnel, lawyers, facilities engineers and university leaders) involved in this process.