Cost consultants asked to focus on value to stop stifling innovation

A report this week criticised the industry for focusing on cost rather than value and called for a new fee structure for QSs.

The report, published by Constructing Excellence in the Built Environment, singles out cost consultants and says their fee system should be changed so they are paid based on the value and performance of the project.

It said cost consultants “presume customers know what they need and start work from familiar models”, a process that was stifling innovation.

Instead, cost consultants must “devise value-based reward structures suitable for each sector of the market, to reward themselves for developing higher performance solutions based on better brief making”.

The report asks for a “revolution” in the way buildings are planned, constructed and managed.

It said the amount spent on buildings in initial capital and use was small compared to the value added by their occupants. The focus should therefore be on improving occupier performance and minimising whole life costs shown by the Design Quality Indicator, provided by the Construction Industry Council.

Malcolm Dodds, research director at Constructing Excellence, said “the industry should replace out-dated concepts of measuring the success of buildings by how quickly or cheaply they can be built”. He said the emphasis should be on the value they would create for people throughout the building’s life. “It is no longer possible to let the standard of the buildings be ruled by the lowest cost,” he added.

Designers were criticised for the same reason as cost consultants. “Being paid on a cost-derived basis, either in relation to project cost or on a lump sum basis, drives down the potential for innovative thinking,” the report said. Designers would also benefit from working on a performance-related pay basis.

Being paid on a cost-derived basis drives down the potential for innovative thinking

Be Valuable report, Constructing Excellence

However, Constructing Excellence said clients need to be brought up to speed with the value versus cost debate as well. To achieve this they should systematically record all facilities costs and analyse the performance of their business in relation to facilities and real estate issues.

A new government agency called the Academy for Sustainable Communities should be created to promote “value-seeking behaviour”.

Property investors, developers and agents need to focus on the long-term outcome of projects, the report said. It suggested this could be achieved through tools to value intangibles, such as the benefits of a project to the community.

Facilities managers must also raise their game by improving their “status and rigour”. They should pursue academic research on their work to build up a body of knowledge on benefits and sacrifices involved in supporting clients of all types.

The Be Valuable report was written by architect Richard Saxon, a former boss at Building Design Partnership.

Constructing Excellence plans to take the report forward by developing a range of industry tools to support people making business decisions based on value. The body will also set out a learning and skills agenda to promote focusing on value rather than cost.