What is TVD (Target Value Delivery)?
A project management strategy to minimize risks for construction projects and maximize investment efficiency
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The rapidly shortening lifecycle of products and services is becoming a big risk for investment in building construction. Construction projects involve numerous client requests and restrictions, which results in an extremely complex business model. Due to its long duration from planning to completion to operation, investment could carry big risks in an environment where the market changes rapidly and predictions are difficult. Indeed, there are many cases in which the entire project becomes subject to reconsideration due to the rise of construction costs during the design or construction phase.
To avoid such a situation, Nikken Sekkei proposes “TVD (Target Value Delivery),” a new construction project management strategy that minimizes the risk of construction projects and maximizes investment efficiency.
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TVD minimizes risks to building construction projects and maximizes investment efficiency by foreseeing problem-solving process in the early phases of the project before design begins. It is a highly effective project management strategy for investments in production facilities, logistics facilities, data centers, etc. which prioritize economic rationality under a rapidly changing market.
What is TVD （Target Value Delivery）?
A new project management strategy originated from the target costing method of the manufacturing industry and customized for building construction projects
TVD is a project management strategy for building construction projects customized from the target costing method utilized in the manufacturing industry. This method involves considering costs in parallel with investment planning, deciding on target QCD (Quality, Cost, Delivery) before proceeding to design, and conducting multiple cost reviews during the design phase to achieve target costs. TVD is an application of this method to the building construction sector and is starting to spread worldwide in recent years. The conventional method calculates cost based on design documents, so when there is a significant gap between the cost estimate and target cost, the project is subject to re-design or even a return to the planning phase to reconsider the project’s prerequisites. Meanwhile, the TVD method prevents the quality and cost from deviating substantially from the target as this balance is simultaneously considered during the pre-design phase, pursuing economic rationality before commencing on the design. It also works to prevent re-design, shortening the lead time of design and construction.
Supporting accurate decision-making through visualization and quantification in early stages of the project
Unexpected cost increases could occur during the planning of the project even after choosing the design-build delivery method, expecting to fix costs at an early stage. TVD could solve such issues.
Project management flow with TVD
Roadmap of TVD services that begin in the pre-design phase
TVD visualizes the plan with BIM prototyping and quantifies the project cost using cost modeling, helping to achieve higher accuracy and speed in the identification of issues, consensus-building, and decision-making. First, by narrowing down the design criteria from viewpoints such as thorough reduction of project cost (CAPEX, OPEX), suppression of excessive quality, early monetization, etc. and clarifying the client’s requests and restrictions, a “target model” is explored. Then a “yardstick” of economically rational quality and cost is created based on the visualized and quantified prototype. TVD provides highly accurate materials to support decision-making, through a process of visualization and quantification in the early stages of the project.
Prototyping structural and MEP performance that tends to be ambiguous in the design-build project delivery
Through a repetition of visualization and quantification in the pre-design phase using BIM and cost modeling, structural and MEP specifications and quantity of items are defined. This would otherwise tend to stay ambiguous with the design-build project delivery. In addition, the project cost is rigorously reduced by performing LCC simulation to achieve early monetization and minimize CAPEX/OPEX. Furthermore, we seek to complete a highly accurate prototype that helps to solve social issues (BCP, decarbonization, etc.) and minimize risk. Documents such as the TVD plan and TVD breakdowns are provided for the selection of design-builders. It usually takes around three months from organization of the criteria to the selection of the design-builder, depending on the size and function of the building.
Selecting the design-builder partner from a stringent and diverse perspective
The process of selecting a design-builder that will become your partner until the completion of the project is very important. Their design and construction skills must be suitable for the project, let alone the cost. The TVD plan (documents for the selection of the design-builder) prepared at the pre-design phase enables the comparison of cost estimates provided by the design-builders with high transparency and fairness, since order specifications and the basis for calculating project costs (items, quantity, unit price, etc.) are clear. Project cost, design, and technical proposals are comprehensively evaluated to support the client in selecting the appropriate design-builder.
Preventing cost increases by managing changes in the design and construction phase using a “yardstick”
Even after the design-builder is selected, TVD strictly manages the quality, cost, and schedule during the design and construction phase. A TVD breakdown created from the TVD plan and other documents act as the “yardstick,” enabling the close management of additional client requests and change orders. This ensures the transparency of change orders and prevents cost increases.
Example case of construction cost reduction
In addition to the cost reduction achieved at the pre-design phase, cost competition enabled a 35% reduction from the initial project budget. Since specifications and quantities of major items were indicated in the TVD plan, quality was secured while bringing down the cost.
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Example case of shortening lead time
The design phase was shortened by clarifying the design criteria and risks in advance. Proposals from the designer and contractor were flexibly adopted, reducing four months from the usual design-build lead time assumption.
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A wide range of advanced engineering skills is inevitable to promote TVD
Currently, several projects including production facilities are underway using TVD, for which we have received high appraisals. TVD requires a broad range of advanced engineering skills and as of now, Nikken Sekkei is the only company offering this completely new method of construction project management as a service in Japan. As one of the “world’s largest engineering firms” with expertise in architecture, structural, MEP, and civil engineering, we are able to provide the latest “TVD (Target Value Delivery)” to support clients in minimizing risks and maximizing investment efficiency.
