Table Of ContentAchieving value for money in capital
build projects
Thisbookisthefirsttobringtogetheracademicandpractitionerviewsofvalue
for money (Vf). VfM has been used to assess whether or not an organisation
has obtainedthe maximum benefit withinthe resourcesavailable toit.A con-
ceptusedbythepublicsectortoassessthebenefitsofmajorbuiltenvironment
projects, it has become a major tenet of public private partnerships, capital
projectinfrastructureandcivilengineeringmegaprojects.
This book presents and discusses the various debates surrounding the
concept of value for money. It provides an international perspective on
VfM by drawing on the existing and fast developing body of principles
and practices for capital build projects. Readers will gain a level of
understanding of the issues involved, the challenges, opportunities and
the support mechanisms and protocols required for implementation of
VfM in capital building development.
Ultimately, the book presents a protocol that has been developed to track
and monitor the VfM of a capital project from day 1, an Equilibrium Test-
ing Mechanism (ETM) developed by the authors. This testing mechanism
allows each of the parties to a project to monitor its VfM position at any
given stage of a project from the beginning to the end of the build stage and
beyond as necessary.
This book is both a useful reference for researchers and a practical guide
for the construction and engineering industry.
Angela Vodden is a practising solicitor within her own firm but pre-
dominantly represents public sector clients, specialising in the strategic pro-
curement and legal negotiations of high value public sector infrastructure
and development projects.
Champika Liyanage is Associate Professor in Facilities Management in the
School of Engineering, University of Central Lancashire, UK.
Akintola Akintoye is a Chartered Surveyor and a Chartered Builder. He is
Professor of Construction Economics and Management and Dean of School
of Built Environment and Engineering in the Leeds Beckett University, UK.
Spon Research
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Patrick Manu, Fidelis Emuze, Tarcisio Saurin and Bonaventura H. W.
Hadikusumo
Achieving Value for Money in Capital Build Projects
978-0-8153-6119-0
Angela Vodden, Champika Liyanage & Akintola Akintoye
Risk Management in Engineering and Construction: Tools and
Techniques
978-0-415-48017-8
Stephen Ogunlana & Prasanta Dey
Achieving value for money in
capital build projects
Angela Vodden, Champika Liyanage
and Akintola Akintoye
Firstpublished2019
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Contents
List of illustrations vi
Preface vii
1 The historic development of value for money within the UK,
China, Australia, South Africa and India 1
2 Tracking VfM: concept, definition, benchmark, tracking and
testing 43
3 Stakeholder roles, responsibilities, expectations, aims, incentives
and drivers 59
4 Identification of the value for money stages 77
5 The need for the VfM tracking mechanism 97
6 Value for money protocol, bid document and contract drafting:
Final word 119
Index 125
Illustrations
Figures
2.1 A timeline of VfM tests 45
5.1 Senior debt funder 112
5.2 Senior debt funder 113
5.3 Equity funder 113
5.4 Construction contractor 114
5.5 FM contractor 115
5.6 The beneficiary group 115
5.7 Local government 116
5.8 Central government 117
5.9 Comparison of all stakeholder groups 117
6.1 Central government 123
Tables
3.1 Key drivers or incentives of each stakeholder group involvement 63
4.1 Identification of stakeholder group VfM value and fluctuations
at each key stage 91
5.1 Identification of stakeholder VfM tracking values 100
Preface
We are delighted to introduce this unique text, which debates not only how
and why the concept of value for money (VfM) became so important within
a public sector arena, but also how its interpretation has different meanings
for different people, industries and societies. Indeed, it is seen throughout
the decades that the meaning of VfM develops as time, economies and
societies advance, not just in the UK, but also within a global arena.
ItiswidelyunderstoodthattheachievementofVfMisofparamountimpor-
tancewithinpublicsectorprocurementsglobally,butyetwhenwetrulyscrutinise
thecontractualstructuresandstandardformdocumentsonwhichpublicsector
infrastructureprojectsareundertaken,thisimportancedoesnotseemtobeevi-
dent.Evenmoreshockingly,thereisnomethodorsystemimposedthroughout
thecontractperiodthatrequirestheachievementornotofVfMtobetrackedor
addressed.GiventheimportanceofVfM,thisshouldbeafundamentalelement
ofanycontractualdocument.Thistextprovidesasolutiontothislacuna.
This book has evolved from research, and consultancy works that have
beenundertakenbytheauthorsinpublic–privatepartnerships,jointventure
developments and infrastructure procurements, through a variety of con-
tractual solutions over a period of 20 years. However, in some parts of the
world public–private partnerships are a relatively new way of procuring
infrastructure and associated services, through which they have to share risk
and deliver value for money solutions.
VfM has been used to assess whether or not an organisation has obtained
the maximum benefit (in terms of economy, efficiency, effectiveness) from
the goods and services it both acquires and provides, within the resources
available to it. This is has particularly been used by the public sector in
many parts of the world to access the benefits driveable from major built
environment projects including civil engineering and building projects, In
particular, this has become a major tenet of public–private partnerships
capital project infrastructure and civil engineering megaprojects.
The contractual requirements for infrastructure development do not need
to be a trigger that results in termination, if each party approaches the main
goal, albeit for different reasons, with the same collaborative ethos. In
essence, there is no reason why each party to a project cannot achieve a
viii Preface
“win–win” value for money solution as originally envisaged by Sir Michael
Latham in his report “Constructing the Team”.
In this book, we have illustrated an approach informed by our own
research and experience of working with a diversity of parties involved in
public–private partnership projects how a VfM agenda can be achieved. The
book as a simple aim. It is written primarily to help and provide all stake-
holders involved in an infrastructure procurement to understand the salient
issues involved in achievement of VfM in projects, with an element of the
historical needs for this. This book makes no attempt to cover all aspects of
issues involved in infrastructure procurement. Our aim in this book is
essentially to make the process of achieving VfM in project setup transpar-
ent, and easily achievable for the stakeholders from both the public and
private sectors. It offers insight necessary to engage with VfM processes
effectively and develop efficiency in doing so.
ThebookprovidesafullandcoherentexplanationoftheconceptofVfMand
how that should be viewed among a number of participant groups within the
builtenvironment.ThisisuniqueasmoreoftenthannottheconceptofVfMis
onlyconsideredimportantfromapublicsectorviewpoint,yeteverycritichasa
VfMviewpointbecauseofitssubjectivity.Thechaptersinthebookhavebeen
craftedinastylisticwaywithmanydistinguishedfeatures,someofwhichare:
1 A discussion and critique of value for money from a diversity of inter-
ested parties and from many countries where value for money has been
incorporated into the public sector policy for the procurement of goods
and services (Chapter 1).
2 A review the current subjective nature VfM and lack certainty of defi-
nitionandthefactthereisnoproactiverequirementforanystakeholder
engaged within a project to track VfM and a systematic failure to
implement a mechanism to track, test and ultimately confirm whether
VfM is being achieved (Chapter 2).
3 A critical discussion of the stakeholder’s roles, responsibilities, expecta-
tions, aims, incentives, and drivers, in the way value for money is
achieved and the impact on project objects and relevance to public
sector procurement policies (Chapter 3).
4 AdiscussionofpinchpointsinVFMidentification,implementationand
achievements at various key stages of project development, with the
overallaimofunderstandingwheretheVfMpointsmightariseandhow
they can be tracked (Chapter 4).
5 Development of a VfM tracking mechanism within projects, on an
ongoingbasis,toidentify whetherprojectswereeitherachievingVfMor
not, with the expectation that the reasons could be identified at each of
the key stages for this outcome from the perspective of all stakeholders
involved in the project development (Chapter 5).
6 Development of VfM protocol and impact on bid documentation and
contract drafting with a reflection on how VfM tracking mechanism can
Preface ix
beimplementedinapracticalwayandusedwithininfrastructureproject
(Chapter 6).
ThebookprovidesaninternationalperspectiveonVFMbydrawingonthe
existing and fast developing body of principles and practices for capital build
projects by bringing together academic and practitioner views of VFM.
Within the overarching concept of capital build projects, the book draws on
experienceofhowthisisimplementedinapublic–privatepartnershipsproject
environment. Hence the book is essential reading for academics, researchers,
professionals and students in the built environment. It is also a useful tool to
those practitioners in the public and private sector who are involved in how
infrastructure projects and development projects are structured to inform the
public sector value for money agenda.
Many thanks.
Angela Vodden
Champika Liyanage
Akintola Akintoye
