Langford, D, Martinez V and Bititci U S, (2003), Best Value in Construction: Towards an Interpretation of Value
from Client and Constructors Perspectives, Journal of Construction Procurement, vol. 9, no. 1, PP 56-67, (ISSN
1358-9180).
Best Value in Construction – towards an interpretation of value from client
and constructor perspectives
D.Langford, V.Martinez & U.Bititci
Abstract
This paper is about the way in which ‘best value’ may be delivered to and from
parties involved in the construction process.
It seeks to identify different
perspectives of value from an economic, marketing and business strategy schools of
thought. It then seeks to model the flow of value between participants in the
construction process and how the concept of value has been used in the construction
industry. It postulates that value is a social construct and that different firms in the
construction supply chain, depending upon their position and power will interpret
value in different ways. Here the categorisation of firms is made using hard and
soft value proportions. Finally the paper projects a critical review of the familiar
instrumental and positivist interpretation of what is meant by value.
INTRODUCTION

Barr Professor of Construction, University of Strathclyde, Department of Architecture & Building
Science, 131 Rottenrow, Glasgow, G4 0NG.

Research Fellow, University of Strathclyde, Department of Design, Manufacture and Engineering
Management.

Professor of Technology and Enterprise Management, University of Strathclyde, Department of
Design, Manufacture and Engineering Management.
1
Langford, D, Martinez V and Bititci U S, (2003), Best Value in Construction: Towards an Interpretation of Value
from Client and Constructors Perspectives, Journal of Construction Procurement, vol. 9, no. 1, PP 56-67, (ISSN
1358-9180).
The concept of Best Value has recently been introduced to the construction industry
recently. Some billions of pounds of government and local authority construction
work will be evaluated on the basis of best value. Various attempts have been made
to define what constitutes best value and the UK’s Ministry of Defence (M.o.D.)
have, through their Building Down Barriers procurement programme, come closest
to defining the constituent elements of value.
This 'best value' perspective
approaches the issue from the position of the client. Little research has been done
which links best value for the client and provides a sound business framework for
construction contractors.
This paper seeks to engage in defining value in the
context of the UK governments 'best value' initiative from both the client and
constructors’ perspective.
BACKGROUND TO VALUE
Value has been an object of definition since the times of the ancient Greeks. Since
then, the understanding of the measuring of ‘value’ has been changing and ‘value’
in construction is the latest interpretation.
The modern school of interpreting value was started by Marx (1886) who was one
of the early proponents of the labour theory of value, who argued, in his classical
work Capital, that “value was gained by the application of labour in the production
process.” Then during the 1950 and 1960’s, engineering adapted the labour theory
into what we now know of as value analysis and value engineering. These
engineering theories perceive value as the maximisation of the business efficiency
through elimination of waste (Gage, 1969). In the middle of the 1980’s, Porter
(1985) applied the labour theory in operations by the introduction of the value-
2
Langford, D, Martinez V and Bititci U S, (2003), Best Value in Construction: Towards an Interpretation of Value
from Client and Constructors Perspectives, Journal of Construction Procurement, vol. 9, no. 1, PP 56-67, (ISSN
1358-9180).
added activities at the business process level i.e. each activity of the business
process add value to the product.
The objective of this section is to undertake a comprehensive literature review of the
different perspectives of value as defined, adopted and practised in various forms in
fields such as economics, finance, marketing, services, business strategy and
operations management.
Economics and Finance
Economics has been one of the first fields to approach value and most other
disciplines have derived their understanding of value from economics. These have
included exchange utility and labour value theories. In economics, the transaction
theory defines value as “consumers spending their incomes proportionally as they
maximise their satisfaction from acquired products” (Bowman and Véronique,
2000). Not so far from the economic theory of transaction, marketing has
approached value as the process of exchange, as a transaction between two different
parties (Kolter, 1972; Bagozzi, 1975; Brandenburger and Stuart, 1996).
Economists have proposed some tools, such as economic value added (EVA) to
measure the value generated; although, these tools have failed because they do not
measure intangibles such as service, relationships, trust etc. (Hatlestad, 1998). In
contrast, marketing approaches go deeper in the study of the factors that make a
buyer select one product over others. Hence, marketing is seen as a process to
support the creation of perceived value for customers (Grönroos, 1997).
3
Langford, D, Martinez V and Bititci U S, (2003), Best Value in Construction: Towards an Interpretation of Value
from Client and Constructors Perspectives, Journal of Construction Procurement, vol. 9, no. 1, PP 56-67, (ISSN
1358-9180).
Marketing and Selling
Woodruff and Gardial (1996) have found that products with superior qualities
(aesthetics), functionality and service are associated with perceived value. Monroe
(1991) states that customer-perceived value increases proportionally as the
perceived benefits grow and decreases as the perceived benefits are sacrificed.
Whereas perceived benefits refer to attributes such as physical, service and technical
support; and perceived sacrifices refer to difficulties to acquire the product such as
price and availability of the product (Ravald and Grönroos, 1996).
Ravald and Gronroos (1996) state that in the transaction, an important factor is the
relationship, because it can influence the customer's perception of value and the
final customer decision. As a result, they extended the previous formula to:
Episode1 benefits + relationship benefits
Total episode value =
Episode sacrifice + relationship sacrifice
Crosby, et al (1990), Gumerson, (1999) and Tzokas and Saren (2001) state that
value is created as a result of interactions and relationship between customers,
suppliers and different stakeholders. Wilson and Jantrania (1994) state that any
relationship creates value to both partners and how this value is shared is likely to
be a major factor in the life of the relationship (Payne and Holt, 2001).
Gronroos (2000) states that too much research has been carried out on a
transactional context of value and not sufficient on value creation and value delivery
(Payne and Holt, 2001).
1
Ravald and Gronroos (1996) refer to episode as offerings, e.g. goods, physical attributes and
services.
4
Langford, D, Martinez V and Bititci U S, (2003), Best Value in Construction: Towards an Interpretation of Value
from Client and Constructors Perspectives, Journal of Construction Procurement, vol. 9, no. 1, PP 56-67, (ISSN
1358-9180).
Business Strategy and Operations
Hamel and Prahalad (1989) state that value emerges from the creativity,
inventiveness, and versatility of organisations to build competitive advantages.
Value follows the theory of creative destruction, from Joseph Schumpeter, to
vitalise the stakeholders’ value. Thus, companies that take quantum leaps achieve
this by making the competition irrelevant by continuously redefining the problem
and offering new and superior value; in other words by creating new demand (Kim
and Mauborge, 1999).
The creation of value requires a free traffic of cross-functional knowledge to create
skills, which later become expertise in a network or constellation (Normand and
Ramirez, 1993; Ciborra, 1995; Ramirez R, 1999).
Prahalad and Ramaswamy (2000) point out that the market has become a forum
where customers play an active role in creating value. Customers are co-creators by
helping organisations to shape their expectations (products/services).
This is the beginning of the ending of value definition from an organisational point
of view. Ramirez (1999) proposes that value is synchronic, dynamic, interactive, coinvented and co-produced along with the customers and suppliers. Ciborra (1995)
states that value should be studied as a whole system where all the dynamic
relationships are interconnected to create value (Ramirez, 1999).
Treacy & Wiersema (1996) bring a fresh approach by placing strong emphasis on
the integration of operational issues as well as on customer’s expectations. They
5
Langford, D, Martinez V and Bititci U S, (2003), Best Value in Construction: Towards an Interpretation of Value
from Client and Constructors Perspectives, Journal of Construction Procurement, vol. 9, no. 1, PP 56-67, (ISSN
1358-9180).
propose a model focused on the business results as well as on the things that
different customers value. This is discussed later in the paper.
BEST VALUE IN CONSTRUCTION
A review of the academic journals (American Society of Civil Engineers, Journal of
Construction Engineering and Management, Construction Management and
Economics, Engineering Construction and Architectural Management) revealed an
interesting interpretation of value in construction. Where ‘value’ appears, and it
does so infrequently, it is universally coupled with value engineering or value for
money on PFI projects. The concept of value in a philosophical sense is a seriously
under-researched area. In one of the few attempts to define value in a construction
setting Male (2002) sees a value system as being perceptual and the view of what
constitutes value is dependant upon a persons role in the construction process. Thus
each participant has a value system which sees a construction project creating value
in the corporate sense by adding to the clients principal goal. This can be as varied
as making ball bearings or delivering primary education; this will be complemented
by a business value where value is measured at the level of the strategic business
unit. Secondly the value chain is evaluated in a multi value system where each of
the stakeholders evaluate value from their perspective.
Finally the user value
system where users take over the facility and it becomes evaluated from the
perspective of its fitness for purpose. Typically the analysis sees ‘value’ in a
utilitarian fashion where ‘benefits’ to each party are perceived as value. Earlier
work on ‘Value for Money’ (Atkin et al 1995) equated value for money in terms of
cost reduction and higher quality thresholds which lead to greater client satisfaction.
This view is challenged by Male (2002) who sees a value chain delivering
6
Langford, D, Martinez V and Bititci U S, (2003), Best Value in Construction: Towards an Interpretation of Value
from Client and Constructors Perspectives, Journal of Construction Procurement, vol. 9, no. 1, PP 56-67, (ISSN
1358-9180).
symmetrical values to all involved.
Atkins et al are clear in whom should
appropriate ‘value’. It is the clients to own. Although to soften this view the
authors point to a relationship which necessarily exists between cost and quality.
The issue of cost and value are frequently seen as synonymous but evidence of
wider considerations is available and there are of course multiple contributors to the
discussion of gaining value in contractor selection by using multi-attribute
techniques such that issues of price become melded with other issues in contractor
selection. (Fellows and Langford 1979, Kashiwagi 1999, Holt, et al 1994). Such
performance based contractor selection requires ‘value’ to be evaluated in a clear,
justifiable and documented way to allow decision makers to move away from
lowest price procurement. It has been long recognised that value and lowest cost do
not go hand in hand. Ruskin (1889) observed “It is unwise to pay too much but it is
worse to pay too little. When you pay too much you lose a little money that is all.
When you pay too little you sometimes lose everything because the thing you
bought is incapable of doing what it was bought to do. If you deal with the lowest
bidders it is well to add something for the risk you run. And if you do that you will
have enough money to pay for something better”.
Despite this wise observation construction is still frequently dominated by a view
that value is obtained through the lowest tender. In public works this was said to
engage transparency and probity when government officials were placing public
contracts. The position is changing and now local and national government in the
UK has been charged with a “duty of (obtaining) best value” through the Local
Government Act 1999. This legislation (not applicable in Scotland) replaced the
compulsory use of Compulsory Competitive Tendering (CCT) for local authority
7
Langford, D, Martinez V and Bititci U S, (2003), Best Value in Construction: Towards an Interpretation of Value
from Client and Constructors Perspectives, Journal of Construction Procurement, vol. 9, no. 1, PP 56-67, (ISSN
1358-9180).
works. It will be recalled that the CCT provisions were put in place in 1989 to
encourage market mechanisms to apply to the supply of public services. Local
authorities had to market test the provision of services such as waste disposal,
building maintenance, gardening etc. Best value has replaced this regime but the
mechanisms for realising best value are diverse. The legislation is of necessity
permissive rather than prescriptive. It would seem that Best Value procurement
seeks to secure ‘continuous improvement’ (Scottish Executive, 1999). The sense of
an instrumental definition emerges since combinations of economy, efficiency and
effectiveness are seen as the cornerstones of Best Value appraisals.
Issues of
quality, equality and public involvement are occasionally aired as factors that
deliver Best Value, but these are secondary issues. The UK Government was an
early participant in the drive for Best Value with two major spending departments
tailoring their procurement to Best Value principles. The Ministry of Defence
presented an Eganite model of procurement (Building Down Barriers) with prime
contracting as being its preferred model. In the National Health Service, Procure
21, presented a similar vision of Best Value driven procurement.
The accelerated use of PFI contracts deliver services formerly provided by local and
central Governments has blurred public accountability and the transparency of what
constitutes best practice is harmed by the commercial confidentiality that
underscores PFI provision.
In the private sector Best Value, freed of public sector scrutiny, was best obtained
by the use of collaborative arrangements such as alliancing and partnering. Whether
the principle of best value is in the private or public sector a generic definition is
8
Langford, D, Martinez V and Bititci U S, (2003), Best Value in Construction: Towards an Interpretation of Value
from Client and Constructors Perspectives, Journal of Construction Procurement, vol. 9, no. 1, PP 56-67, (ISSN
1358-9180).
that it provides an optimum combination of whole life costs and quality (fitness for
purpose) to meet the user requirements (Fenn, 2001).
Common features will
include:

Integrating value management & risk management strategies by – defining the
project to meet user needs;

Providing whole life costings;

Managing effective change control procedures;

Teamwork to reduce waste and conflict; and

Wide variety of measures to be used to evaluate contractors.
The Best Value movement has not been without difficulties. There have been legal
challenges to its application and in a classic case Harmon CFEM Facades (UK) Ltd
vs. the Corporate Officer of the House of Commons the question of how Best Value
is defined was under question. The case was set in the construction of Portcullis
House, an office block for UK Members of Parliament. The procurement method
used was construction management and Harmon was a tenderer for the cladding
package. As the project was publicly funded the package had to be advertised in the
official Journal of the European Union. The bid invitation noted that the contract
would be awarded to the bidder which represented overall value for money.
Harmon submitted the lowest tender but the contract was let to another firm.
Harmon sued the client. The court held that the phrase ‘overall value for money’
was ‘nebulous & imprecise’ and that the award should have gone to the lowest
tenderer.
Harmon received compensation in three distinct areas; tender costs
reimbursed (£0.4m), loss of profit (£5m) and legal costs (£2m). The underlying
9
Langford, D, Martinez V and Bititci U S, (2003), Best Value in Construction: Towards an Interpretation of Value
from Client and Constructors Perspectives, Journal of Construction Procurement, vol. 9, no. 1, PP 56-67, (ISSN
1358-9180).
point is that where Best Value is to be used in procurement then the criteria to be
used need to be specific.
Other challenges to the Best Value concepts comes from the operation of
opportunistic clients. Building magazine reports (2002) that increasingly clients are
using Dutch auctions to let work packages with tenderers submitting a tender on the
web, the lowest bid, but not the bidder, is posted and bidders have 40 minutes in
which to amend their bid to see if they can undercut the firm holding the winning
tender. Naturally associations representing specialist contractors have condemned
the practice.
This section has provided a wide panorama on the state of the art on Best Value in
construction, i.e. general definitions of best value from private and public sectors,
its features and its surrounding laws.
In conclusion, the best value can be summarised as an optimum combination of
whole life costs and quality, which could be achieved by the use of collaborative
arrangements and simultaneously looking for continuous improvement. Although
this definition is simple and precise, it is quite narrow in scope. Because it just
addresses two elements of value -cost and quality it is of little value to researchers,
but what if the customer wants innovation in construction (e.g. combination of new
materials, new styles, eco-friendly construction, etc.) or a customised solution.
This review on value led us to the conclusion that a theoretical understanding of
value in construction is in the early stages and it has been mainly limited to the
10
Langford, D, Martinez V and Bititci U S, (2003), Best Value in Construction: Towards an Interpretation of Value
from Client and Constructors Perspectives, Journal of Construction Procurement, vol. 9, no. 1, PP 56-67, (ISSN
1358-9180).
transaction and operations point of view, particularly to cost reduction. Moreover
the benefits of the best value approach are asymmetrically assigned with clients
obtaining the greatest share of the best value approach. If best value is to take root
then it must be viewed in terms of the benefits received by all of the stakeholders in
a construction project. By seeing value as a system some of these unevenness of the
benefits can be resolved.
VALUE SYSTEMS AND VALUE FLOWS
Until this moment, we have seen that the word 'value' has two different meanings.
One focuses on clients (external) receipt of value and another on contractors
(internal) as providers of value to satisfy its own objectives.
The aim of this
section is to discuss the interpretation of value, in terms of an entire system on the
construction business context. As its current level of development the idea of best
value is interpreted in the context of instrumental rationality. This is challenged
later in the paper.
The Value System and Value Flows try to give a new approach to the value
definition from two different perspectives, namely "clients" and "contractors". It is
also important to bear in mind that value is not static, it is dynamic and it is created
as it flows (Norman and Ramirez, 1993). Thus; value flows from suppliers
(contractors) to clients as well as from clients to contractors.
The model driving these reflections (Figure 1) hypotheses the flow of value as well
as the definition of value from two different perspectives – client and contractor.
The diagram is divided in two main parts; the left side (organisation) of the diagram
11
Langford, D, Martinez V and Bititci U S, (2003), Best Value in Construction: Towards an Interpretation of Value
from Client and Constructors Perspectives, Journal of Construction Procurement, vol. 9, no. 1, PP 56-67, (ISSN
1358-9180).
presents the organisation and its environment.
The right side (value) presents
values from both perspectives. The contractor side is subdivided into two. One
column to show "the internal organisational environment", and the other side shows
"the external environment of the organisation".
The definition of value from “an organisational perspective” is highlighted on
Figure 1 by the flow of the square arrows (the inner circle of the diagram). This
value stream runs from Organisation anticlockwise. This definition reads as "The
construction organisation measures value through profits that it creates, which is
gained from clients through construction products or services supplied.”
EXTERNAL
Construction
Organisation
INTERNAL
The final Target… VALUE
Resides in
Clients
Competitors
Suppliers
Through
Gained from
£ = SP-VA-T
Reputation
Supply chain
Clients
Perception of
the Benefits
Construction
market
External forces that
make influence
Satisfaction
of clients
Expectations
Design
Reputation
Suppliers
Company
Gain market development
Supplied
Clients
Substitutes
(refurbish rather
than new build)
Profit
VALUE
Construction
Measure
Organisation
Fulfilled through
Achieved by
The value of the product is determined by the clients
Satisfaction via Clients expectations.
Organisational Environment
The value of a product is given in relation to the
Benefits perceived.
Adapted from: Martinez and Bititci 2000
Figure 1. The Value System and Value Flow
The definition of value from “the client perspective ” is illustrated in Figure 1 by the
flow of curved arrows (outer cycle) beginning at clients and flowing clockwise.
12
Langford, D, Martinez V and Bititci U S, (2003), Best Value in Construction: Towards an Interpretation of Value
from Client and Constructors Perspectives, Journal of Construction Procurement, vol. 9, no. 1, PP 56-67, (ISSN
1358-9180).
This definition reads: "value resides in the Satisfaction of the client expectations,
which is achieved by the contractor through fulfilment of the clients perceptions of
the benefits provided by the building.”
Treacy & Wiersema (1996) highlight the importance of customers' perceptions in
the establishment of the value delivered to the clients. Thus, insight suggests that
there are strong links between:
-
the value that the clients demand and the benefit supplied by the organisation.
-
the satisfaction of the clients’ expectations and the perceptions of the benefit
acquired by the clients.
It can be inferred that Value for the construction organisation is Wealth,
whereas Value for clients is Satisfaction of their expectations (Martinez and
Bititci, 2000). Thus, the value creation should be a win – win situation for
both parties.
Still the remaining question is, who gets what?
Who Gets What ?
Figure 2 illustrates both perspectives in terms of who gets what. On one hand, the
Constructors create value through reputation over competitors, gain clients, margin
and company development (left side of the Figure 2). These four benefits, in the
short or long term, produce wealth for the firm. On the other hand, we should start
with the premise that clients recognise value in distinct ways. Some of them
recognised Value by the design or through minimised running costs, or from
quality-performance at low price or service and so on (right side, Figure 2). At the
13
Langford, D, Martinez V and Bititci U S, (2003), Best Value in Construction: Towards an Interpretation of Value
from Client and Constructors Perspectives, Journal of Construction Procurement, vol. 9, no. 1, PP 56-67, (ISSN
1358-9180).
end of the day, clients demand value for their money (Ruggles, 1998). They look
for "satisfaction of their expectations" whatever those are (Martinez and Bititci,
2000).
Two Perspectives
VALUE
PERCEPTIONS
Contractor
G = SP - VA-T
Client
V = fulfilment of the customers expectations
Life long costs
£ Margin
Design
Gain respect/
clients
Prestige over
competitors
Benefits Perceived
Organisation
Different
perception
Company
development
Services
Low cost of
standardised
components
Value for clients
Wealth
G = Gain
T = Taxes
SP =Price of construction
VA = Value activities
V = Value perceived
New
construction
techniques
Quality,
Performance
Satisfaction of the
Expectations
Value for
money
(Adapted from: Martinez and Bititci, 2000)
Figure 2. Who gets what
The value system and value flow as well as who gets what have brought new
insights to best value in construction by expanding the scope to clients and
construction organisations and recognising that there are different types of value
(clients needs) beyond cost reduction.
Treacy and Wiersema (1996) propose that different clients look for different kinds
of value. Some clients will see value delivered by the use of specific procurement
routes, alternatively the technology used to deliver the building will be the essence
of the value they receive. Therefore, different clients’ requirements will shape
14
Langford, D, Martinez V and Bititci U S, (2003), Best Value in Construction: Towards an Interpretation of Value
from Client and Constructors Perspectives, Journal of Construction Procurement, vol. 9, no. 1, PP 56-67, (ISSN
1358-9180).
different types of constructors.
These constructors may be driven by a value
proposition, which may be defined as seeking.
1. Operational excellence - these companies compete on price and produce
appropriate quality buildings. E.g. speculative warehouse buildings.
2. Product leaders - these firms push performance boundaries through innovative
research.
3. Customer intimacy - these organisations focus upon the satisfaction of the
clients needs by delivering customised solutions. They will be likely to appoint
'key-client' managers to build and sustain relationships with repeat order clients.
THE VALUE MATRIX
Research done by Martinez (1999) finds Treacy and Wiersema’s categorisation
reduced in scope, so she proposed an extension, i.e. a new dimension “hard value
dimension” and “soft value dimension”.
Hard value dimension is focussed upon innovations on materials and designs,
improvements in productivity or performance on site or in the head office. In
contrast, soft value dimension is much more focussed upon marketing image,
management and reputation that the constructors seek to promote and develop their
own prestige, reputation and users ego and sense of superiority to build direct
relationships with clients.
As a result of the introduction of these two dimensions to Treacy and Wiersema
value propositions, six value propositions were created. These value propositions
form the value matrix (Figure 3).2
2
For more information about the construction of the value matrix see Martinez and Bittici 2000
15
Langford, D, Martinez V and Bititci U S, (2003), Best Value in Construction: Towards an Interpretation of Value
from Client and Constructors Perspectives, Journal of Construction Procurement, vol. 9, no. 1, PP 56-67, (ISSN
1358-9180).
The value propositions are implicit promises that a construction company makes to
clients to deliver a particular combination of values. Each proposition searches for
the unique value that it alone can be delivered to a chosen niche market. Thus, the
value propositions help organisations to focus on a selected driver of value and
narrow its operational focus (Treacy and Wiersema, 1993).
The Value Matrix in Construction
Values
Value Propositions
Operational
excellence
Hard
Soft
Price Minimisers
Simplifiers
Low Bidders
Simplifying life for Clients
(no hassles)
Innovators
Innovation
leaders
Client
Intimacy
Brand Managers
Reputation Managers
Innovators
Technological Integrators
Socialisors
Technological Managers
Socialisors
(Adapted from: Martinez and Bititci 2001)
Figure 3 The Value Matrix
Taking the original value propositions of the value matrix (Martinez and Bititci,
2001) and applying them to construction, best value in construction could be
enriched. The following paragraphs will provide a definition of each proposition of
the value matrix into the construction environment by taking into account the two
perspectives – client and constructor.
Price Minimisers =Low bidders
The strategic objective of Price Minimisers is to focus on the production growth
reaching high quality levels in the most cost-effective and waste free way (Martinez
16
Langford, D, Martinez V and Bititci U S, (2003), Best Value in Construction: Towards an Interpretation of Value
from Client and Constructors Perspectives, Journal of Construction Procurement, vol. 9, no. 1, PP 56-67, (ISSN
1358-9180).
and Bititci, 2001). As Price Minimisers, Low bidders in construction use traditional
procurement forms and are likely to be selected on price. This would correspond to
third tier contractors in the MoD's prime contracting arrangement. Their customers
look for low cost and good quality. This definition is quite close to the definition of
Best Value in construction.
Simplifiers =No hassles
The strategic objective of Simplifiers is to build streamlined processes to make life
simple and un-complicated for clients. Traditional procurement routes better suit
this requirement and systems support to enter all the requirements from clients.
Clients are not required to be strongly engaged in the process (Martinez and Bititci,
2001).
Organisations which engage in turn key construction operations where the client
merely identifies a need and leaves it to a major international firm to arrange the
site, finance, consortium, fitout etc would be an example of this kind of value
proposition.
Innovators = Innovators
The strategic objective of Innovators is to provide breakthroughs through
continuous generation of new designs, features, materials and techniques.
Innovators’ clients look for exciting solutions to building challenges. Clients in this
group are likely to be experienced and able to manage the risks that are presented by
innovative building designs.
Brand Managers = Reputation Managers
17
Langford, D, Martinez V and Bititci U S, (2003), Best Value in Construction: Towards an Interpretation of Value
from Client and Constructors Perspectives, Journal of Construction Procurement, vol. 9, no. 1, PP 56-67, (ISSN
1358-9180).
The strategic objective of Brand Managers is to expand the market reinforcing the
solid brand image of the product and the company. Clients recognise those firms
that build stylish designs by overcoming conservative planning & regulatory
regimes. These characteristics and the preparedness of clients to share risks enable
them to build their outstanding reputation. In the case of commercial property, their
clients are confident that the buildings will work in functional and commercial
terms as well as being aesthetically controversial and technically challenging.
Technological Integrators = Service Integrators
The strategic objective of Technological Integrators is to tailor specific solutions for
selected clients on the basis of a continuous relationship.
The extension of the use of partnered contracts is an illustration of this value
proposition.
Socialisors= Socialisors
The strategic objective of contractors who are Socialisors is to build confidence and
trust in the client (Martinez and Bititci, 2001). Clients look for an interpersonal
relationship, attention from designers, contractors, constructors, etc. in the context
of a long term relationship.
BEYOND RATIONAL INSTRUMENTALISM
The foregoing has seen best value as part of a programme of benefit sharing
between client and constructors. This analysis has a long way to go to see value as
having meaning to all participants in the construction process.
critical section can move the discussion forward.
18
Hopefully this
Langford, D, Martinez V and Bititci U S, (2003), Best Value in Construction: Towards an Interpretation of Value
from Client and Constructors Perspectives, Journal of Construction Procurement, vol. 9, no. 1, PP 56-67, (ISSN
1358-9180).
The insights presented in this paper have identified that current Best Value
programmes are largely located in one of the value propositions of the value matrix
presented, i.e Low bidders/Price Minimisers. Whilst it is recognised that Best Value
encompasses a wide range of performance driven criteria where certain features of
the traditional world of construction remain if:
a) clients seek low prices in construction; and
b) best value, with a dominant emphasis upon price, is the favoured option offered
by constructors.
This value paradigm in construction retains strong features of the optimising
features of the ‘hard value’ characteristics such as price minimization. ‘Best Value’
is seldom a point of agreement between client and contractor and an interpretation
of best value is that it is a perceptual construct relying upon an appreciation of
shared meaning between client and construction of what constitutes best value in a
particular context or individual project.
This search for meaning is at the heart of an understanding of best value. Hitherto
the interpretation has leaned upon a philosophy of instrumental rationality to
explain the concepts of best value. Such ideas depend upon an efficiency argument
such that Best Value offers greater efficiencies in the long run, for the client and
greater freedom from the tyranny of winning work at the lowest price for the
contractor. The rhetoric of best value is tied up with business process improvement,
re-engineering and other management fads.
19
Langford, D, Martinez V and Bititci U S, (2003), Best Value in Construction: Towards an Interpretation of Value
from Client and Constructors Perspectives, Journal of Construction Procurement, vol. 9, no. 1, PP 56-67, (ISSN
1358-9180).
Advocates of the current instrumental interpretation of Best Value see symmetrical
benefits to client and constructors. Constructors being given better margins at the
price of delivering ‘efficiency’ to the construction and project process.
Yet
constructors still note that margins are tight and clients demand shorter project times
and better value. Such philosophies according to Green, (1998) serve the needs of a
‘dominant management elite’ in the context of bi-polar client/constructor
relationships – the needs of the client.
The economic underpinning of Best Value is neo-liberal capitalism – a regime in
which all stakeholders are said to share the outcomes of value improvements. There
is little evidence that the best value ideology as it is currently interpreted acts as an
equaliser of benefits, it is more likely to benefit clients over contractors.
Consequently this paper seeks to draw attention to the quest for a new definition of
value beyond that of value for the construction organisation being interpreted as an
increase in wealth and that for clients as being satisfaction of clients’ expectations.
Many more value propositions need to be satisfied and sets of socially and
politically constructed interpretations of best value construction needs to be found.
Moreover this new definition needs to go beyond being rooted in the philosophy of
instrumental rationality.
CONCLUSIONS
This paper provided a wide panorama of the state of the art on ‘value’ as well as
‘best value in construction’ from private and public sectors. The definition of value
as proposed in this paper reads “Value for the construction organisation is Wealth,
20
Langford, D, Martinez V and Bititci U S, (2003), Best Value in Construction: Towards an Interpretation of Value
from Client and Constructors Perspectives, Journal of Construction Procurement, vol. 9, no. 1, PP 56-67, (ISSN
1358-9180).
whereas Value for clients is Satisfaction of their expectations.” This will serve at
the moment to equalise the benefits of best value but it must be recognised that this
ideology is socially constructed. This definition suggests that the value creation
should be a win – win situation for both parties and beyond the asymmetrical
distribution of benefits.
The paper identifies that current definitions of value in construction have a narrow
scope, it addresses just two elements of value ‘cost’ and ‘quality’. It concludes that
value in construction is in early stages and has been limited to the transaction and
operations points of views rather than being based on a win-win situation that leads
to a balanced partnership between the client and the constructor.
The ‘value system and value flow’ as well as ‘who gets what’ analysis have brought
new insights to best value in construction by expanding the scope to clients and
organisations and recognising that there are different types of values (clients needs)
beyond cost and time reduction.
The six value propositions proposed in this paper, i.e. the value matrix, have shown
their potential to focus on a selected market and direct a particular offer to the
chosen market such as innovators and reputation managers do. Thus, this paper
contributes to practice by providing a new framework that guide and support the
decision makers to participate in the changing culture of construction – moving
away from low bidding to best value is in the foothills of the subject. In the longer
term a more sophisticated analysis of how best value is negotiated and agreed by all
parties in the construction process is necessary.
21
Langford, D, Martinez V and Bititci U S, (2003), Best Value in Construction: Towards an Interpretation of Value
from Client and Constructors Perspectives, Journal of Construction Procurement, vol. 9, no. 1, PP 56-67, (ISSN
1358-9180).
22
Langford, D, Martinez V and Bititci U S, (2003), Best Value in Construction: Towards an Interpretation of Value
from Client and Constructors Perspectives, Journal of Construction Procurement, vol. 9, no. 1, PP 56-67, (ISSN
1358-9180).
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