Value for money in a construction project has to be defined before it can be meaningful
In construction, we are under great pressure to deliver best value – and prove it. Our tenders are assessed on a value-for-money basis. But do we, or those issuing the tenders, know what exactly is meant by "best value"?

Ask a group of construction professionals what value is and they usually come to the broad conclusion that it is not the same as lowest cost. But push them further, and they get stuck. The textbook answer is that value = benefit/cost. In other words, if you get a lot of benefit for little cost, then value is high and vice versa. This equation helps if you happen to like neat equations, but the answer is not that simple. Value, like beauty, is in the eye of the beholder.

Where there is a single client, say a developer, it can be fairly simple to define because the client can be quite clear about what represents benefit and value for it: profit – so in this case, value = profit. However, in order to maximise return, the project team cannot simply build at lowest cost because a low-cost building would not maximise rental value.

Perceptions of value depends on your background, both personal and professional, and the stake that you have in the project – what you want to get out of it. This creates problems on any project with multiple stakeholders.

Some time ago I worked on a project to provide a new transport interchange in a rundown area of London. There were several client organisations, each one controlling a different pot of public funding. To fund the project, the pots had to be combined, but each client body had very different values. This pulled the project in different directions, and made it hard to manage. The groups clung to their own project value drivers – such as architecture, regeneration of the area, traffic improvement and so on. Predictably, bits of the job proceeded independently.

This situation is not uncommon, so parties must build a consensus. Listing a common set of project values that all stakeholders can understand, live with and work to achieve, is the first stage. The key benefit of creating this list is not just in the list itself but in the conversations that must be had in order to create it. It is a process that forces the stakeholders to state what represents value for them and to listen to what is important to others. This builds a consensus among the project team and provides a firm basis from which the project can proceed.