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Stage 1: Value DefinitionGenerating Value IndicesTo convert the Value Profile into an overall InvestmentValue Index (IVI), each Value Category is assignedone or more metrics and a benchmark representinggood practice. This could be number of jobs createdper million pounds, annual operational energy permetre squared, or cost per square metre to build, withmetrics and benchmarks tailored to the project typeand its location.A baseline IVI score of 1000 represents the benchmarkperformance being met for all value categories, withthe number of points associated with each categorybeing determined by the weightings outlined in theValue Profile. For example, a value category with a10% weighting will score 100 points if benchmarkperformance is achieved.Default performance ranges will be generated foreach metric based on the asset type, which may befurther refined for each specific project. This providesthe client with the ability to set minimum performanceCapitalProjectWeighting(%)BaselineIVI d20200Financial30300100%1000ValueCategorystandards against certain metrics to reflect projectspecific priorities and targets. For example, a clientmay wish to disregard any options which do not meeta planned opening date or exceed affordability limits.Whilst the IVI reflects performance across all thevalue categories and metrics, additional ValueIndices can be generated from a subset of the samedata. For example, by combining factors includingaccessibility, inclusivity and indoor environmentalquality, a Design Value Index is automaticallygenerated. Such indices provide an additional meansfor comparison, reflecting the specific needs of aclient, investor or region.At the end of the Value Definition module, the clientwill have produced a project specific Value Profile, abaseline IVI, plus any additional value indices. Thesewill be used at every stage, at every intervention, tohelp inform whether choices and options are valuecreating or value destroying.ProjectWeighting(%)BaselineIVI PointsCarbon & GHG4080Resource Embodied CarbonProjectWeighting (%)BaselineIVI PointsBenchmarkPerformance5040800504043100%80(Kg CO2eq/m2)Operational Carbon(Kg CO2eq/m2/year)Generating the project Investment Value Index (IVI)Note: Metrics and performance figures for example onlyAn Introduction To The Value Toolkit   constructioninnovationhub.org.uk3

Module 2: Delivery Model and Commercial StrategyThe second module contains two tools to help clients select a DeliveryModel and build a Commercial Strategy which best fit the value driversof the project, maximising the chances of successful outcomes.The Delivery Model describes how the client proposesto work with market to deliver value and to managethe risks that may prevent the realisation of thatvalue. Every project is faced with a choice of differentDelivery Models, including traditional consultantled delivery, through design and build, alliancingapproaches such as Project 13 and new andinnovative models such as the platform approachbeing developed by the Construction Innovation Hub.Step 4 - Market context: The fourth step drawson market sounding to evaluate the currentappetite, capacity and capability of the market inrelation to each of the remaining delivery models.Tool 2 - Commercial Strategy DeveloperWith a delivery model selected, the client cannow build the commercial strategy, tailoring thepackages, contracts and reward mechanisms todeliver value and mitigate their risk profile.Tool 1 Client Delivery Model Selector 1SHYPI :EPYI (IʘRMXMSR Step 1 – Packaging approach: The packagingStep 1 - Value Drivers: Drawing on the outputs of the8LI :EPYI (IʘRMXMSR QSHYPI LEW X[S OI] XSSPW [LMGL WYTTSVX XLI GVIEXMSR SJ E :EPYI 4VSʘapproach defines the specific contracts/first module, the first step maps the available deliveryERH XLI KIRIVEXMSR SJ :EPYI -RHMGIW XS IRWYVI XLEX IEGL TVSNIGX MW EPMKRIH [MXL FSXL XLI packages to be delivered, these are selected tomodels against the project’s Value Profile to identifyclient’s value drivers andbroaderstrategicobjectives.fit withinthedeliverypolicymodelfrom the cataloguethose that best deliver the client’s key value drivers.of consultancy and contractor business models.This catalogue categorises the business modelsStep 2 - Risk Profiler: The second step helpsto'VIEXMRK E :EPYI 4VSʘPIAir Quality, Land Quality,WaterandQuality, Biodiversityonbasisof the Value NaturalProfile they deliveridentify potential barriers to the realisationof value.Each projector programmewillthehaveitsCommunity - Citizens, CommunityS[R YRMUYI :EPYI 4VSʘPI–risksa shapethatcansets mitigate – supportingtheyinformedThis tool will assess the level of risk facinga projectSocialEnterprise, Equality, SourcingSYX XLI :EPYI (VMZIVW JSV XLEX GPMIRX JSV XLEX choices in the design of the packaging strategy.and again identify those delivery modelswhich willSafety & Security, Employment, STVSNIGX MR XLEX PSGEXMSR 8LI :EPYI 4VSʘPI MW established by setting the relative importanceStep 2 – Contractof industry-wide Value Categories, basedhelp mitigate the risks.,YQER 8VEMRMRK 1IRXEP 4L]WMGEP ;IPPFIincentives, risk & rewardCarbon & GHG, Resource Use,1ERYJEGXYVIH4VSHYGXMSR 4VSHYGXMZMX]Step 3 - Client Profile: The third step considerson the Five clientCapitals Model.structure:These can beThe second step tailors the packagesCapital Cost, Operational Cost,XLSYKLX SJ EW WPMHIVW SR E KVETLMG IUYEPMWIV to the project specific risk*MRERGMEPprofile, establishingspecific factors such as asset ownership,repeatability6IZIRYI )GSRSQMG &IRIʘXWwhocanmitigatetheidentifiedrisksandwhatof solution, funding model, governance,experience;LMPWX XLI :EPYI 4VSʘPI MW YRMUYI XS IEGL TVSNIGX 8LI 'ETMXEPW 1SHIP ERH :EPYI 'EXIKSVMIWnational,policy ambitionsthatincentivemechanismwill support them in doingand capability (i.e. have they deliveredtherethisaresortof strategic5 Capitalsmust be considered. Such strategic ambitionsso. It also sets out the principles of the payment/project before).could include net-zero carbon, levellingrevenuestructure such as fixed price, open book.up or driving manufacturingapproaches, Strategic Minimum WeightingPortfolio Minimum WeightingMarketductivityonProductiltapiCa stCoProDMceResourUsenrboCa HG&GManufacturedDMDiscardWaQu IRIʘXWAirtionPolluSo4 urcing&y&rityityalunmmCo terpEnsill ingSk ainTruEql&ntaMe sicalgyPh beinlleWentNaturalRisk020%%WWMKRMRK 'ETMXEPW ;IMKLXMRKWComCitizbe used make informed choices throughout theinvestment lifecycle. The second tool converts015%DMancFin8LI TVSNIGX RS[ LEW MXW YRMUYI :EPYI 4VSʘPI 8LI constructioninnovationhub.org.ukVIPEXMZI [IMKLXMRKW SJ XLI :EPYI 'EXIKSVMIW [MPP 025% An Introduction To The Value Toolkit10%100tyTool 2 – Client Delivery Model Selector0DMFManufactured100siDiscard100erivDMThis process provides the market with a clear,DM transparent articulation of theconsistent andGSVI :EPYI (VMZIVW EW XLI] ETTP] REXMSREPP] ERH DMDMJSV WTIGMʘG GPMIRXW TVSNIGXW SV TVSKVEQQIW Such consistencywill allow industry to invest DiscardDiscardstrategically for the market, not just tacticallyfor each project - bringing forward products,services and solutions which deliver better value.100odBiDMClientDMValueDMIn addition, individual departments, clients orfunders may have portfolio-level drivers andtargets which further inform the weightingsSJ GIVXEMR ZEPYI GEXIKSVMIW *SV I\EQTPI MX DMDMmay be that a department wishes to placeincreased emphasis on Productivity in orderto accelerate a portfolio of projects.HumanSocialNaturalymEPP SJ [LMGL QYWX FI VIʙIGXIH MR XLI VIPEXMZI [IMKLXMRKW ERH XLIVIJSVI XLI :EPYI 4VSʘPI

Module 3: Procuring for ValueHaving set the Value Profile, Value Indices and chosen a Delivery Modeland Commercial Strategy, the project is ready to go to market using atransparent procurement process that selects on best value.Module 3 enables clients to use the IVI as the primarymeans to evaluate choices between suppliers,embedding the Procuring for Value tool into theprocurement process, and providing transparencyto the market on how decisions will be made. Whencombined with the outputs from Module 2, this willcreate a streamlined process that delivers faster,better informed decisions.that they are submitting their best option – one thatcomplies with all key value criteria required for thatproject and with the maximum IVI.Tender returns are measured against their respectiveIVI scores and – alongside a streamlined commercialassessment and risk review – a decision is madebased on the tender return with the highest IVI, andwhich meets the minimum standards set out in anyadditional value indices.The selection process is seeking to identify thesupplier(s) that offers the highest overall value - notsimply the cheapest bid. By clearly communicating tothe market the value drivers for the project, biddersare better able to tailor their responses; innovatingand differentiating based on the principle of addingvalue rather than minimising cost.A contract is signed which supports whole life valuedelivery, and based on the output from Module 2,encapsulates the terms and conditions, appropriateinsurance products, approaches to IPR andincentivisation.Not only will the PfV tool help to produce a fair,transparent and swift procurement decision forthe project, it will also establish a broader marketwhere value is increasingly understood, consistentlymeasured and better delivered across multipleprojects and different sectors.As bidders are provided with a clear set of quantifiablemetrics, measures, benchmarks and performanceranges against which decisions will be made, theProcuring for Value tool will enable bidders to test andoptimise their proposals prior to submission, confidentCapitalBaselineSupplier 1Supplier 2Supplier tal IVI Score100094012651075Design Quality250200 (Fail)230 (Pass)260 (Pass)Additional Index 2300310 (Pass)405 (Pass)350 (Pass)Procuring for Value – Comparing Bids by IVI and Additional IndicatorsAn Introduction To The Value Toolkit   constructioninnovationhub.org.uk5

Module 4: Ongoing Value MeasurementOngoing measurement and benchmarking are key to ensuring that value drivers are beingmet. Not only can individual project and operational performance be measured, but whencombined with benchmarks from other projects, it is possible to improve decision-making forfuture schemes, using data to understand which approaches or drivers can maximise valueacross the wider investment portfolio.There are three tools in Module 4. The first measuresproject performance – during design, constructionand up to handover – where project metrics andbenchmarks allow a live IVI score to be calculated,based on both leading and lagging indicators.A live IVI allows clients and the industry to understandwhat is working well and whether there are elementsthat may need intervention or improvement tomaintain value.Incentivisation in the contract may be linked to theIVI achieved at handover and will be based on actualproject performance and predicted operationalperformance. As a project transitions from deliveryto operation, those measures associated with ‘projectoutcomes’ will no longer be measured but will becomeembedded as part of the asset’s DNA.The second tool measures operational performance.Whilst the value drivers remain the same, the metricsand the methods of measurement will vary – in somecases using sensors and remote monitoring toestablish actual performance.drawsVSNIGX nt GPMIRX market innot meetmodels.MX] PMQMXW XLI eecansameng theYHMRK sms tontalI l meansgingSJ E The third tool uses metrics fed back from multipleprojects to build a rich data set of overallperformance across a portfolio, for example buildingunderstanding of which value drivers are beingdelivered well, which interventions have consistentlyproven to improve value or which suppliers arecreating the most added value.Using this data can help policy-makers and clientsimprove evidence-based decision-making. Moreover,businesses can understand their own performance,helping them to identify opportunities forimprovement and differentiation.1SHYPI 4VSGYVMRK JSV :EPYIInvestment ValueIndex (IVI)egyThroughout the investment lifecycle, the Value Profileprovides a reference point for informed decisionmaking, with the IVI providing clients and buildingoperators with a mechanism to identify whether valueis being maintained, where value can be optimised,and when new capital interventions are required.,EZMRK WIX XLI :EPYI 4VSʘPI :EPYI -RHMGIW ERH GLSWIR E (IPMZIV] 1SHIP and Commercial Strategy, the project is ready to go to market using atransparent procurement process that selects on best value.Baseline IVI (1000)1SHYPI IREFPIW GPMIRXW XS YWI XLI -:- EW XLI TVMQEV] means to evaluate choices between suppliers,embedding the 4VSGYVMRK JSV :EPYI tool into theprocurement process, and providing transparencyInitial Investmentto the market on how decisions will be made. Whencombined with the outputs from Module 2, this willPre-ProjectProjectcreate a streamlined process that delivers faster,better informed decisions.The selection process is seeking to identify theWYTTPMIV W XLEX SʗIVW XLI LMKLIWX SZIVEPP ZEPYI RSX simply the cheapest bid. By clearly communicatingData feedback loopto the market the value drivers and ZEPYI TVSʘPI forthe project, bidders are better able to tailor theirVIWTSRWIW MRRSZEXMRK ERH HMʗIVIRXMEXMRK FEWIH SR XLI principle of adding value rather than minimising cost.that they are submitting their best option – one thatGSQTPMIW [MXL EPP OI] ZEPYI GVMXIVME VIUYMVIH JSV XLEX TVSNIGX ERH [MXL XLI QE\MQYQ -:- Investment LifecycleTender returns are measured against their respective-:- WGSVIW ERH Ț EPSRKWMHI E WXVIEQPMRIH GSQQIVGMEP Operationassessment and riskreview – a decision is madeFEWIH SR XLI XIRHIV VIXYVR [MXL XLI LMKLIWX -:- ERH which meets the minimumstandards set out in anyRefurbishmentadditional value indices.Pre-ProjectA contract is signed which supportswhole life value Projectdelivery, and based on the output from Module 2,encapsulates the terms and conditions, appropriateinsurance products, approaches to IPR andincentivisation.ted toEPSKYI I GPMIRX odels.2SX SRP] [MPP XLI 4J: XSSP LIPT XS TVSHYGI E JEMV SʘPI E Monitoring Value throughout the Investment Lifecycle%W FMHHIVW EVI TVSZMHIH [MXL E GPIEV WIX SJ UYERXMʘEFPI modelstransparent and swift procurement decision for 8LIWI metrics,measures,benchmarksandperformanceIV ERH the project, it will also establish a broader marketion, toagainstdecisionswill be made, themedAn IntroductionrangesTo ukwhere value is increasingly understood, consistentlyvalue4VSGYVMRK JSV :EPYItoolwillenablebidderstotestandategy.measured and better delivered across multipleSTXMQMWI XLIMV TVSTSWEPW TVMSV XS WYFQMWWMSR GSRʘHIRX TVSNIGXW ERH HMʗIVIRX WIGXSVW H Operation6

About the Construction Innovation HubThe Construction Innovation Hub brings together world-class expertise from theManufacturing Technology Centre (MTC), BRE and the Centre for Digital Built Britain(CDBB) to transform the UK construction industry.With 72 million from UK Research and Innovation’s Industrial Strategy Challenge Fund,and working around the four core themes of Value, Manufacturing, Assurance and Digital,we are changing the way buildings and infrastructure are designed, manufactured,integrated and connected within our built environment.We are a catalyst for change. We are driving collaboration to develop, commercialiseand promote digital and manufacturing technologies for the construction sector. We arehelping build smarter, greener and more efficient buildings much faster and cheaper thanwe currently do.Research is helping us understand how the industry needs to change in terms of skills,product standards, capacity and innovation. This is combined with an academicprogramme to create the security-minded frameworks and rules that will underpin thefuture digital built environment and grow exports for UK know-how.We are working closely with other initiatives as part of the Government’s TransformingConstruction challenge programme. Through collaboration across the sector, we canprovide a better-built environment for future generations.Further informationFor further details about the Construction Innovation Hubor the Value Toolkit, please contact:Construction Innovation uctioninnovationhub.org.ukDisclaimerThis disclaimer governs the use of this publication and by using this publication, you accept the terms of this disclaimerin full. The information contained within this publication does not constitute the provision of technical or legal advice bythe Construction Innovation Hub or any of its members and any use made of the information within the publication is atthe user’s own discretion. This publication is provided “as is” and neither the Construction Innovation Hub nor any of itsmembers accept liability for any errors within this publication or for any losses arising out of or in connection with the useor misuse of this publication. Nothing in this disclaimer will exclude any liability which cannot be executed or limited by law.An Introduction To The Value Toolkit  

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