Apo Nid124756 PDF

NAO Cover 4 pdf 1/4/04 13:43 Page 1
Getting Value for Money

from Construction Projects
through Design
How Auditors Can Help

Guidelines to help auditors take account of good
design in public sector built environment projects
The ultimate aim is not only

to build good buildings, but
also to ensure that the right
buildings are built to meet
the requirements of all
stakeholders, particularly
the end users.
Design represents a minute

proportion of the lifetime cost
of a building – less than one
percent – but done well it has
a disproportionate impact on
how well the building and
its surroundings perform.
5091-NAO-ValueForMoney-TEXT 1/4/04 13:52 Page 1
CONTENTS
Section Page
Foreword Three
Introduction Four
Whole-life value for money from construction Four
Value for money and design Four
Why design quality is important and how auditors can help Five
Framework for assessing quality design Seven
The Value Drivers Eight
1. Maximise business effectiveness Nine
2. Ensure effective project management and delivery Fourteen
3. Achieve the required financial performance Eighteen
4. Impact positively on the locality Twenty Two
5. Minimise operation and maintenance costs, and environmental impact Twenty Eight
6. Comply with third party requirements Thirty Two
Appendices
Appendix A – Value Assessment Tool Thirty Six
Appendix B – Integrated Procurement Routes Forty One
Appendix C – Achieving Excellence Action Areas and Targets Forty Two
Appendix D – Improving Standards of Design in the Procurement
of Public Buildings Forty Three
Appendix E – Glossary Forty Four
Appendix F – Useful Publications Forty Five
HOW AUDITORS CAN HELP ONE

The Prime Minister’s Better

Public Building Award rewards
excellence both in design and
procurement and is sponsored
jointly by CABE and OGC. It is
open to projects of any size,
commissioned by or on behalf
of the public sector.
www.betterpublicbuildings.gov.uk
TWO GETTING VALUE FOR MONEY FROM CONSTRUCTION PROJECTS THROUGH DESIGN
FOREWORD
The design of public buildings is not just a technical issue or a matter of aesthetics.
Good design has a key role to play in improving the quality of services provided by
the public sector. A well designed building can, for example, help patients to recover
from illness more quickly or encourage better learning among schoolchildren. It can
also benefit the service deliverers who work within it, by contributing to staff
recruitment, retention and motivation. In short, good design can increase the value
for money that the building provides across its whole life.
Auditors are frequently called upon to make judgments on the quality of public
construction projects at various stages of the procurement process. When doing so,
it is important that they consider wider issues than just the initial capital cost. Value
for money in construction involves completing a project to time, cost and a level of
quality that meets the need. A good project will continue to provide value for money
and meet user needs throughout its lifetime, and will contribute to the environment
in which it is located with a wide range of social and economic benefits. An early
investment in design quality can help deliver these benefits.
This guide has been developed by the National Audit Office (NAO), the
Commission for Architecture and the Built Environment (CABE), and the Office of
Government Commerce (OGC), in association with the Audit Commission. Its purpose
is to provide auditors with an understanding of the value of good design in
construction, and a firm basis for examining whether good design has been achieved
in a particular project. While not meant to replace existing audit practices, it
includes a set of simple but searching questions to evaluate construction projects,
and suggests the types of evidence that will help to answer those questions.
We therefore hope that the audit community will find this guide useful, and that
it will contribute to the design of better buildings across the public sector.
Sir John Bourn, Comptroller & Auditor General
Sir Stuart Lipton, Chairman, CABE
Sir Peter Gershon, Chief Executive, OGC
James Strachan, Chairman, Audit Commission
HOW AUDITORS CAN HELP THREE

INTRODUCTION
This publication is primarily intended to guide internal and external auditors to
making sound judgements when auditing public sector construction projects at all
stages of the procurement process. For the purpose of this guide ‘construction
projects’ is taken to mean all public sector building projects including new build,
refurbishment and maintenance of infrastructure, individual buildings and public
open space.
WHOLE-LIFE VALUE FOR MONEY

FROM CONSTRUCTION
The guide’s starting point is that lowest capital cost is not a reliable measure
“I am determined that of value for money, since it takes no account of how well buildings perform.
good design should Government policy and approach to achieving whole-life value for money from
centrally funded construction is encapsulated in the Achieving Excellence in

not be confined to high
Construction initiative. The Office of Government Commerce (OGC) is driving this
profile buildings in the
initiative and all central government departments have agreed to adhere to its
big cities: all of the principles in construction projects carried out by themselves, or funded through their
users of public services, agencies and NDPBs.
When auditing construction projects to assess their value for money, auditors
wherever they are,
should check that the Achieving Excellence principles are being followed.
should be able to
Departments have agreed collectively to two strategic targets as measures for their
benefit from good
success in achieving whole-life value for money. These can be found at Appendix C.
design.” OGC has suggested a range of Areas for Action that departments should consider for
inclusion in their Action Plans for implementing Achieving Excellence and against
Better Public Buildings –
which they can judge their compliance level. Auditors may consider these as a
Rt Hon Tony Blair MP,
starting point.
Prime Minister
VALUE FOR MONEY AND DESIGN

As has been repeatedly acknowledged by both HM Treasury and the NAO, sound and
creative design is an essential ingredient in achieving value for money. Value for
money in construction is about more than delivering a project to time and cost.
A good building project must also contribute to the environment in which it is
located, deliver a range of wider social and economic benefits and be adaptable
to accommodate future uses.
FOUR GETTING VALUE FOR MONEY FROM CONSTRUCTION PROJECTS THROUGH DESIGN
The ultimate aim is to deliver construction projects that meet the requirements
of the business and all stakeholders, particularly the end users. An early investment
in design quality can make service delivery significantly more efficient and will
enhance the working environment for all those who use our public buildings.
Building on publications such as OGC’s Achieving Excellence in Construction
Procurement Guides, the joint CABE/OGC Improving Standards of Design in the

Procurement of Public Buildings, HM Government’s Better Public Buildings, a host of
other CABE, NAO and OGC publications (see Appendix F), the latest edition of The
Green Book and tools such as the Construction Industry Council’s Design Quality
Indicators, this guide reflects an increasing awareness of the benefits delivered by
well designed construction projects and the need to consider whole-life values.
WHY DESIGN QUALITY IS IMPORTANT “It is crucial for auditors

AND HOW AUDITORS CAN HELP to recognise that good
Good design is not primarily a question of style and taste. It is the adherence to
design can significantly
a set of time honoured, objective principles that determine whether or not a building
enhance long-term
works well for all users and for the community. Design encompasses functional
efficiency, structural integrity, sustainability, lifetime costing and flexibility as value for money in
well as responsiveness to the site and its setting. construction projects.”
Good design can be summarised as a mix of the following attributes:
● Functionality in use: Does it optimise the operational cost of core services Sir John Bourn,
and the productivity of staff? Comptroller and Auditor General
● Build quality: Is the building built to last and easy to maintain?

● Efficiency and sustainability: Is the building designed in a way that will allow
it to be completed on time, to budget and to specification? Is the building
environmentally efficient, in terms of where it is located, how it is constructed
and how it will be used and disposed of?

● Designing in context: Is the building respectful of its context, strengthening
the identity of the neighbourhood in its landscape?

● Impact: The procurer may have architectural requirements that will form an
essential element of the design process. These could include distinguished
architecture, or the need for a building to harmonise with existing buildings.
HOW AUDITORS CAN HELP FIVE

Design Quality Indicators
The Design Quality Indicator (DQI) is an online tool that helps define and
evaluate design. It is based on the three aspects of design quality:
1. Impact – the building’s ability to create a sense of place and have
a positive effect on the local community and environment.
2. Build Quality – the engineering performance of the building, which
includes structural stability and the integration, safety and robustness
of the systems, finishes and fittings.
3. Functionality – the arrangement, quality and interrelationship of spaces
and how the building is designed to be useful to all.
Clients, designers and stakeholders rate these aspects of a project on a simple

The more overlap there is between six point scale by completing a short questionnaire. The DQI can be used to
these three quality fields the higher help set design quality as a project progresses from a brief to construction and
the quality. use. The process can help communicate and share values, clarify design
strengths and weaknesses and identify opportunities for improvement.

“Design represents
Good design is fundamental to achieving high quality public buildings. HM Treasury
a minute proportion
and the NAO agree that good design helps generate value to the business and
of the lifetime cost of taxpayer by creating environments that support public service delivery and by
a building – less than producing buildings and spaces of lasting civic value. Good design can also
one percent – but contribute to staff recruitment, retention and motivation and increase value
for money across the life of the asset.

done well it has a
Auditors should consider the whole-life value generated to the business and
disproportionate
taxpayer and not simply focus on minimising initial capital costs. This impact on
impact on how well service delivery can be seen clearly if we breakdown a building’s costs. Over the
the building and its lifetime of a building, the construction costs are unlikely to be more than 2-3% of
total costs, but the costs of running a public service will often constitute 85% of the
surroundings perform.”
total. On the same scale, the design costs are likely to be 0.3-0.5% of the whole-life
Sir Stuart Lipton, costs, and yet it is through the design process that the largest impact can be made
CABE Chairman (2001) on the 85%1.

Delivering value means maximising the benefits delivered by a project by
satisfying or exceeding the needs of the various stakeholders whilst simultaneously
minimising the use of resources. Value can be described as the function of the
relationship between the ‘satisfaction of needs’ (business benefits and requirements)
and the resources needed to deliver them i.e. Value = Benefits/Resources.
1. Improving Standards of Design in the Procurement of Public Buildings (CABE/OGC)
SIX GETTING VALUE FOR MONEY FROM CONSTRUCTION PROJECTS THROUGH DESIGN
The Value of Good Design
How buildings and spaces create economic and social value
This report, published by CABE, draws together key research from the UK and abroad to
demonstrate how investment in design quality impacts on outcomes in the areas of:
● Healthcare ● Educational environments
● Housing ● Civic pride and cultural activity
● Business ● Crime prevention
One way of describing the factors critical to the delivery of value through the project is through the use of value drivers.
The details of these and their relative importance will vary from project to project depending on the benefits required from the
building. The degree to which the design satisfies each of the value drivers is a measure of the quality of the building design.
The better the quality of design, the higher will be the satisfaction of the value drivers.
Auditors need to be able to assess how well the project value drivers are satisfied in order for them to assess the value
delivered by the project. To enable them to do so, this guide sets out key questions for each of the main value drivers.
FRAMEWORK FOR ASSESSING QUALITY DESIGN

How to use this guide
This guide should be used as a contribution to the framework around which audits are conducted. It is not meant to replace
existing auditing practices, nor is it exhaustive. It will not, therefore, supplant or supersede an auditor’s experience. The guide
includes some key questions to explore the extent to which ‘value for money’ is delivered. Auditors should use the guide to help
them direct their analysis towards subject areas that are important to a particular project, using the guide’s contents to inform
further questioning, should this be needed.
The guide contains four tools to help auditors
1. A description of six value drivers that, together, will deliver value through good design.
2. A list of key questions for each value driver. The questions will stimulate a response to help the auditor assess whether
each of the value drivers has been considered and how well it has been met. The auditor should use these questions
as a starting point. If not fully satisfied by the responses, the auditor should ask supplementary questions, drawn from
his/her experience.
3. Case studies highlighting projects where some or all of the value drivers have been met.
4. A Value Assessment Tool (Appendix A) that helps auditors to assess the relative importance of each value driver to
a particular project and the extent to which each value driver has been met. The tool provides a weighted assessment
of value for money overall as well as the performance against each individual value driver. A worked example of the
assessment tool demonstrates how it should be used. It should be stressed, however, that the tool represents just one
way of assessing performance against the value drivers, and should not be seen as a mandatory approach.
HOW AUDITORS CAN HELP SEVEN

VALUE DRIVERS FOR GOOD DESIGN

The following value drivers cover the benefits of good design. These are applicable at all stages of the procurement process, from
initial business case assessment to readiness for service and post-occupancy. They will help auditors assess the most appropriate
balance between benefits and resources and should be seen to complement existing Government initiatives and policies such as
Achieving Excellence in Construction and the Better Public Building Initiative.

In order to assess the degree to which each value driver is satisfied, it is necessary to have appropriate metrics in place.
Some metrics are easier to quantify than others. For example a value driver relating to financial performance is easy to quantify
using a metric such as "Net Present Value". Non-monetary value drivers, such as ‘Impact positively on the locality’, rely on more
subjectively assessed metrics such as surveys. Conducting a survey over a large sample can confer a degree of objective
confidence in the outcome.
The value drivers and some suggested metrics are outlined below. Taken together, they may be used to balance the financial
and functional requirements of a building to deliver best value for money. They are listed in no order of importance.
Value Driver and Short Description Suggested Metrics

1. Maximise business effectiveness
Describes how the facility delivers the benefits required by the business case. ● Staff satisfaction
This includes issues relating to staff productivity, unit costs of production and ● Operating costs per head
ease of working. It also includes creating environments that employees and ● Post-occupancy analysis
users enjoy and that encourage effective business processes. ● Staff turnover
● Churn costs
● Sickness absence
● Disability Access Reviews
2. Ensure effective project management and delivery

Relates to the management processes used, and the selection of an integrated ● Compliance with Achieving
team working throughout the supply chain. Excellence targets
● Construction Industry
Standard KPIs
● OGC Best Practice Project
Management Guidelines
● OGC Gateway Review
3. Achieve the required financial performance

Defined by the business case for the project. It includes achieving the ● Net Present Value
optimum balance between capital costs, a building’s operating and ● Internal Rate of Return
maintenance costs and residual whole-life value. ● Whole-life Cost
4. Impact positively on the locality

Describes issues that relate to the building’s aesthetics, the way it conveys the ● Post Occupancy Evaluation
organisation’s corporate image, and the building’s relationship to its context. ● Design awards
● Design Quality Indicator
● Response of planning authority
EIGHT GETTING VALUE FOR MONEY FROM CONSTRUCTION PROJECTS THROUGH DESIGN
Value Driver and Short Description Suggested Metrics

5. Minimise building operation and maintenance costs, and environmental impact
Issues to do with maintaining, operating and cleaning the facility once ● Whole-Life Cost
it is in use. This also includes minimising impact on the environment and ● Facilities Management Estimates
environmental sustainability. ● BREEAM assessment or
equivalent
● Sustainability index
● Construction Excellence
Sustainability KPIs
(Environment)
6. Comply with third party requirements

Describes statutory and other requirements including planning consent. Covers ● Public survey
all aspects of Health and Safety both during and after construction, and ● Planning approval
addresses adherence to Central Government guidance. ● Industry KPIs
● Accident rates
● Health & Safety statistics
1. MAXIMISE BUSINESS EFFECTIVENESS

Most buildings are built to enable people to conduct specific activities within them. The type of activity undertaken can vary hugely
but the building should allow it to be undertaken efficiently, economically and effectively.
Good design should ensure that the building is readily accessible by all who use it, and that the inter-relationship of spaces
encourages efficient use. The building should be easily adaptable for future uses and be flexible to accommodate short, medium
and long-term changes.
While the costs of owning and operating a building will vary, research has shown that they can be expressed by an approximate
ratio of 1:5:2002, where 1 represents the cost of construction; 5 the cost of building operation and maintenance (e.g. lifetime costs
of heating and lighting); and 200 the business operating costs (e.g. staff and service delivery costs). With business operating costs
outweighing construction costs by as much as 200 times this value driver has a significant impact on whether the building provides
long-term value for money.

● The building’s suitability for the activities to be conducted within it will include a consideration of the functions it
accommodates and the interrelationships between different functional zones and spaces. Circulation spaces should be places in
their own right allowing efficient circulation within an uplifting environment. Increasingly there will be spaces in buildings that
may be part of the circulation and / or be multi-functional. Evaluating the efficiency that these spaces provide for and how they
help the users should be considered.

● The building should provide good access for all who use it. The layout should be legible with clear signage so that it is easy to
navigate around the building. The external landscape should contribute to the ease of accessibility. There should be good access
to public transport and/or sufficient parking, depending upon the location of the building and facilities for the delivery of goods,
and disposal of waste should be safe and secure.
2. Evans R, Haryott R, Haste N & Jones A, ‘The long-term costs of owning and using buildings’, p.5
HOW AUDITORS CAN HELP NINE

● The building should provide a comfortable, healthy environment. Factors affecting the internal environment include the temperature,
air quality, acoustics, space and storage. There should be a good balance of daylight and artificial lighting reflecting the
different user requirements. The building systems should be easy to operate by those who are authorised to do so and be
robust and efficient.

● The building should easily accommodate any changes in activity that are likely to occur both through its use over the course of
a day, week or year, but also into the future as user requirements change. This will include short and medium term changes as
well as possible expansion or subdivision.

● Facilities management techniques should be in place to monitor building effectiveness to allow for continuous improvement to
meet changing needs.
Key Questions
1. Will the building satisfy the operational requirements of the brief? Will it work well? Do spaces in the building have a rationale
for their use and design and contribute to the users’ requirements, helping them be efficient?
2. Will the building be legible and easy to navigate?
3. Will the design aim to enhance how staff feel and behave, and improve morale and quality of life?
4. Will the building be easily adaptable to meet the future needs of users including expansion and change of use?
5. Are the vision and objectives for the design of the building clearly set out to enable effectiveness to be maintained throughout
its life?
TEN GETTING VALUE FOR MONEY FROM CONSTRUCTION PROJECTS THROUGH DESIGN
Possible metrics Examples of

value metrics
● Unit operating costs ● Net operating cost
● Productivity per employee per unit/employee
● Revenue per unit area ● Output/revenue per employee
● Footfall (number of visitors) ● Number of staff changes
● Number of complaints per year
● Satisfaction Surveys ● Visitor/employee ratios
● Churn costs per person ● Speed of transactions
● Days lost through sick leave ● DQI
● Recruitment and exit surveys ● Revenue generated
● Disability Access Reviews ● % staff working flexibly
● Utilisation surveys ● % staff in open plan
● Ratio of staff numbers
to desks
● Space utilisation ratio
● Productivity rating eg. using
Office Productivity Network
Survey
HOW AUDITORS CAN HELP ELEVEN

CLIENT Exchequer Partnership

DESIGNER Foster & Partners
COST £141 million
PROCUREMENT PFI
FURTHER DETAILS www.betterpublicbuildings.gov.uk
TWELVE GETTING VALUE FOR MONEY FROM CONSTRUCTION PROJECTS THROUGH DESIGN
CASE STUDY 1. MAXIMISE BUSINESS

EFFECTIVENESS
HM Treasury, London
Refurbishment of the HM Treasury building has brought a new lease
of life to what was an under-utilised Grade II* listed building, reversing
a period of progressive deterioration and unsympathetic, piecemeal
additions. The new accommodation brings all Treasury staff together
in one building for the first time in over 50 years.
The design challenge for the architects was to re-model the building
to make use of the myriad corridors, unused light wells, staircases and
unproductive spaces, whilst remaining sympathetic to the heritage
constraints. The result is a flexible, modern office space that delivers
significant environmental gains through the use of natural ventilation
and increased amounts of daylight.
The refurbishment, which involved the removal of over seven miles
of internal walls, has provided an extra 25 per cent of useable space for
over 1,200 Treasury and Central Support staff. Views through the building
have been improved thanks to the refurbishment and strengthening of
1750 windows and removal of bomb-blast nets. Eight unused light-wells
have been brought into use for communal facilities by installation of
transparent roofs. A large rectangular courtyard at the centre of the
building has been modestly and sympathetically landscaped with trees
and water features to create an internal garden area that can be used
by staff and visitors.
HOW AUDITORS CAN HELP THIRTEEN

2. ENSURE EFFECTIVE PROJECT MANAGEMENT

AND DELIVERY
There are opportunities to maximise value and minimise waste at every stage of the
construction and procurement process, from the minute that the need for a building
is identified to when it is ready for use. Effective management by an integrated
project team is essential to achieving this value.

● All Government funded projects should implement the Achieving Excellence in
Creating Excellent Buildings: Construction principles. Departments, their Agencies and NDPBs should be able
A Guide for Clients to demonstrate compliance, such as by evidence of the use of OGC’s suggested
CABE’s comprehensive guide Action Areas to monitor progress.
helps clients through the ● Non-expert clients should ensure that they draw on the services of an
development process. It Independent Client Adviser in the very early stages of the project.
identifies ten keys to being a ● The project team should be selected because they have the necessary technical
successful client: competence to produce a building that is well designed and constructed. They
1. Provide strong client should not be selected on the basis of cost alone.
leadership ● The project team should exhibit a high level of integration, coordination and
2. Give enough time at the communication to cover all aspects of a complex construction project.
right time ● The project team should be involved from the earliest stages of the project.
3. Learn from your own and ● In addition to working well together, the project teams should communicate well
other successful projects with all stakeholders. They should involve users, contractors and other members
4. Develop and communicate of the supply chain at appropriate times throughout the design and construction
a clear brief of the project to benefit from their expertise.
5. Make a realistic financial ● The project team should follow recommended best practice for the construction
commitment from the outset industry.
6. Adopt integrated processes ● The project team should develop a project execution plan, describing what is
7. Find the right people for the required from the building (the brief or output specification), the organisation
job of the project team and the plan for executing the project.
8. Respond and contribute to ● The effectiveness of processes should be assessed using industry standard key
the context performance indicators.
9. Commit to sustainability ● Gateway reviews should be undertaken at the relevant stages of the project.
10. Sign off all key stages
FOURTEEN GETTING VALUE FOR MONEY FROM CONSTRUCTION PROJECTS THROUGH DESIGN
Key Questions
1. Is the project team using Achieving Excellence in Construction
procurement guidance to deliver the project?
2. Is the project team:
● An integrated project team that has been selected on the basis of their
OGC’s guidance
competence as well as cost;
suite builds on departments’
● Sufficiently skilled and resourced to deliver the project successfully;
experience of implementing
● Responsible and accountable for their design inputs?
Achieving Excellence and
3. Does the project team demonstrate a commitment to continuous improvement?
reflects recent developments in
4. Has sufficient time been allowed to ensure that the design meets user requirements,
construction procurement. It
that design options and iterations were fully tested and that the client signed off the
consists of three core and eight
design at key stages? Was the design and construction process thoroughly planned?
supporting guides together with
5. Is there effective communication with stakeholders? Has the project team consulted
two high level briefings.
with users, outside bodies, contractors and members of the supply chain?
6. Has the design, construction and delivery programme been complemented by a
programme of engagement with users to help them adapt and adopt practices to
ensure they get the most value out of the new facility? Has the process helped Possible metrics
ensure positive cultural change and development for the client organisation?
7. Has the project team considered ease of construction, use of sustainable ● Good project management
materials, prefabrication and standardisation of elements or processes to achieve processes
better whole-life value? ● Compliance with Improving
8. Is the project being procured using one of the three preferred procurement routes? Standards of Design
9. Does the project team regularly measure its effectiveness in terms of process recommendations
and outcomes? (see Appendix D)
10. Are Gateway Reviews being applied to the relevant stages of the project?
11. Does the design team apply construction industry best practice?
12. Is there a Project Execution Plan (PEP) describing the key features and Examples of
organisation of the project? Does the PEP include: value metrics
● The project objectives; ● Achieving Excellence
● The brief or output specification; Action Areas
● A project directory; ● Achieving Excellence strategic
● A communication plan; targets
● Lines of decision-making; ● Construction industry standard
● A logic-linked programme? key performance indicators
13. Have all risks been identified and assessed? Is risk being effectively managed? ● Successful Gateway Reviews
Is risk allocated to appropriate parties?
14. Was the design reviewed by the client and third parties at key stages to test that
quality was being offered and delivered?
HOW AUDITORS CAN HELP FIFTEEN

CLIENT Tamar Bridge and Torpoint Ferry

Joint Committee, Plymouth City &
Cornwall County Councils
DESIGNER Hyder Consulting Ltd
PROJECT VALUE £35 million
PROCUREMENT Quality and Price Evaluation,
Partnering, NEC Target Price
Contract
SIXTEEN GETTING VALUE FOR MONEY FROM CONSTRUCTION PROJECTS THROUGH DESIGN
CASE STUDY 2. ENSURE EFFECTIVE PROJECT

MANAGEMENT AND DELIVERY
Tamar Bridge, Plymouth

This project, simultaneously strengthening and widening a major
suspension bridge while the bridge remained open to 40,000 vehicles
per day, was a world first that wouldn’t have been achieved without the
client, designer and contractor acting together in partnership as a single
Integrated Project Team.
Temporary lanes were erected alongside the existing deck while
it was replaced. These eventually became two permanent lanes, one
providing a local traffic lane, the other a combined cycle path and
pedestrian route. An alternative proposal – to construct a second river
crossing – would have cost in excess of £300 million.
As well as being technically advanced, this project was contractually
innovative in its approach to procurement. From its inception it was
conceived as a partnership, with risk identification and sharing for
greater certainty of completed cost. Thus the designers, principal
contractor and main civil sub-contractor were involved in:

● Design development – ensuring an innovative, economic and
buildable design
● Development of the target price
● Refinement of the detailed design
HOW AUDITORS CAN HELP SEVENTEEN

3. ACHIEVE THE REQUIRED FINANCIAL PERFORMANCE

This value driver is about the affordability of the building and how to optimise costs
and benefits to the organisation that uses it. The budgeted cost figure should
accurately reflect the optimum balance between the required functionality and the
cost of providing it.

● Buildings cost money. To justify their construction the business case should
identify how much the organisation can afford to invest in the construction,
operation, maintenance and eventual disposal of the building in present value
terms. It should also account for how the design will impact on the business
effectiveness issues considered in value driver 1.

● Regardless of cost, there is a fundamental requirement that the stated design
of the building must deliver the functionality required of it. The details of this
functionality are described within the other value drivers.

● Buildings that cost more to build and/or run than is budgeted will adversely
affect the user business. The budgets for both capital and whole-life costs,
should be stated in the business case and be sustainable and affordable over
the life of the asset.

● The investment appraisal should address capital and whole-life costs. It should
address the various options available for delivering the anticipated benefits and
state the whole-life cost of each option.

● Auditors should note that the lowest cost option may not provide the best value
for money. The whole-life value of wider benefits generated by an investment
in good design may outweigh small differences in initial capital and whole-
life costs.
EIGHTEEN GETTING VALUE FOR MONEY FROM CONSTRUCTION PROJECTS THROUGH DESIGN
Key Questions
Possible metrics
1. Is there a robust business case with a clear and agreed budget that defines the
capital and whole-life costs of the building? Are whole-life cost estimates
Appropriate financial metrics are:
realistic and based on reliable evidence?
● Capital Cost
2. Is the capital cost estimate affordable and within budget? Are all resources and
● Building operating and
internal funds in place?
maintenance cost
3. Are the building operating and maintenance cost estimates within the budget?
● Net Present Value
4. Have the integrated project team defined the balance between capital spend and
● Internal Rate of Return
building operating and maintenance costs?
● Payback
5. Is there a clear brief expressed in the required output terms?
● Robust business case
6. Is there a clear statement of the economic and social values to which the project
should respond?
7. Does the investment appraisal address various options for delivering the required Examples of
benefits? value metrics
8. Has the decision to proceed taken into account the benefits of good design and ● Cost per desk/employee
whole-life values? (benchmarked against
9. Does it compare itself to cost and quality benchmarks? appropriate comparables)
10. Was the project completed within budget and programme? ● Capital Cost (benchmarked
against appropriate
comparables)
● Net useable area to gross
area ratio
● £ per unit area or £ per unit
of functional area
● Net Present Value of building
● Whole-life cost of building
operation and maintenance
HOW AUDITORS CAN HELP NINETEEN

CLIENT Defence Estates

DESIGNER Percy Thomas
COST £40 million
PROCUREMENT Prime Contract
TWENTY GETTING VALUE FOR MONEY FROM CONSTRUCTION PROJECTS THROUGH DESIGN
CASE STUDY 3. ACHIEVE THE REQUIRED

FINANCIAL PERFORMANCE
Defence Logistics Organisation Headquarters,

Andover North
The first major capital Prime Contract to be let by Defence Estates, this
£40 million development accommodates the Headquarters of the Defence
Logistics Organisation (DLO). The 30 acre site contains:

● An Office Building for 780 staff with 90% open plan office space
● A Warrant Officers’ and Sergeants’ Mess
● A Technical Building with 11 vehicle bays with an over-head gantry
crane for testing anything from a Landrover to Main Battle Tank

● A Crèche for 40 pre-school children.
The site contained many mature trees, all of which have been
retained and will be complemented by an extensive landscaping scheme
together with a new lake and wildlife garden. The design meets strict
energy targets with the Office, Mess and Technical Buildings achieving
a BREEAM rating of ‘Excellent’.
At the very beginning of the project the core contractors and client
developed and agreed a project charter setting out the key objectives
for the project. This easily understood document was backed up by an
Integrated Project Agreement, detailing working relationships and
empowering a joint steering committee to oversee project progress. This
process allowed risk and reward to be shared by client, designers and
constructors alike, an arrangement reinforced by the fact that the core
contractors would receive a single profit, while a project bank account
ensured that all parties, regardless of size, were paid at the same time.
The commission was awarded in January 2001 and the close involvement
of the core contractors meant that demolition and construction took just
15 months.
HOW AUDITORS CAN HELP TWENTY ONE

4. IMPACT POSITIVELY ON THE LOCALITY

This value driver describes the impact of the building on the surrounding area and
the people who use or visit it. Good quality architecture and urban design creates
places with distinctive character, streets and public spaces that are safe, accessible,
pleasant to use and inspiring. A well designed building will also make a positive
social and economic contribution to its immediate neighbourhood and improve
communal facilities.
In some cases, positive impact may arise from the very act of rehabilitating a
building that had fallen into disrepair, thus demonstrating to the local community
that they are worth the effort and investment. It is therefore important to identify
the previous use of the building or space, and to take account of the broader
benefits to the community.

● Projects should seek to create places, rather than isolated buildings. They should
respond to its context with the landscape surrounding it positively contributing
to the neighbourhood. The joint CABE/DTLR publication, By Design, states the
objectives of urban design as being:
– Character: to promote character in townscape and landscape by responding
to and reinforcing locally distinctive patterns of development, landscape
and culture.
– Continuity and enclosure: to promote the continuity of street frontages and
the enclosure of space by development, which clearly defines private and
public areas.
– Quality of the public realm: to promote public spaces and routes that are
attractive, safe, uncluttered and work effectively for all in society, including
disabled and elderly people.
– Ease of movement: to promote accessibility and local permeability by making
places that connect with each other and are easy to move through, putting
people before traffic and integrating land uses and transport.
– Legibility: to promote legibility through development that provides recognisable
routes, intersections and landmarks that people find their way around.
– Adaptability: to promote adaptability through development that can respond
to changing social, technological and economic conditions.
– Diversity: to promote diversity and choice through more compatible developments
and uses that work together to create viable places that respond to local needs.
● The building’s character comprises such issues as the way it looks, whether it
TWENTY TWO GETTING VALUE FOR MONEY FROM CONSTRUCTION PROJECTS THROUGH DESIGN
pleases the senses and the mind and whether it provides a stimulating visual
Possible Metrics
and sensory environment that staff, users and visitors enjoy. The building may
be widely acclaimed for its quality, because it provokes thought and/or gives
● Public or private survey results
a positive impression. The building should demonstrate that there is a clear
● Views of local planning
vision behind its design.
authority
● There should be a clarity of composition of the building in terms of form,
● Views of CABE Design Review
materials used and the quality of the detailing. It should be well detailed and
Committee
there should be an appropriate use of colour and texture.
● Design skills of delivery team
● Internally the building should be pleasing to the senses and generate an
enjoyable experience. The natural and artificial light in the building should be of
high quality, creating patterns that enhance its use. It should capitalise on the
Examples of
views available from its location. Textures and sounds within and around the
Value Metrics
building should be interesting and help create a pleasing sensory impression of ● The building has won design
the space.
awards
● Many buildings are designed to convey the occupier’s image to the wider public ● Design Quality Indicator
and users alike. It should reflect the occupier’s organisational branding, culture
and values. The form and general building composition should reflect the
purpose for which it is built.

● Many buildings’ design and construction may be innovative through the use of
new technical solutions, pioneering use of materials or new management
techniques. The level of innovation may enhance the image of the organisation
who sponsored the building through public recognition.
Key Questions
1. Does the building look good and will it be a positive environment within which
to work?
2. Are the plans, sections, elevations and details of the building visibly related
to each other and to underlying design ideas?
3. Does the building deliver social and economic benefits for the surrounding
community?
4. Does the building enhance the neighbourhood and its environment?
5. Does the building make a generous contribution to the public realm, to benefit
people in general as well as the building user?
6. Does the building project the image that the occupier/users wish to convey?
7. Is the building design and construction of high quality, including the detailing?
8. Can one imagine the building becoming a cherished part of its setting?
HOW AUDITORS CAN HELP TWENTY THREE

CLIENT Tower Hamlets Borough Council

DESIGNER Bisset Adams
COST £2 million
PROCUREMENT Design and Build
FURTHER DETAILS Better Public Libraries, CABE
and Re:source
www.ideastore.co.uk
TWENTY FOUR GETTING VALUE FOR MONEY FROM CONSTRUCTION PROJECTS THROUGH DESIGN
CASE STUDY 4: IMPACT POSITIVELY

ON THE LOCALITY
Bow Idea Store, Tower Hamlets

The Bow Idea Store is the first in a network of Idea Stores that will
combine popular elements of traditional libraries and adult education,
with opportunities to learn and relax in modern, high-street settings.
The Bow Idea Store has transformed library usage and the take up of
adult learning since it opened in May 2002. Until then, only 16% of
residents used their local library. Now, three times as many people in
the Bow area use the Idea Store than the previous library facilities.
This has been achieved by creating a modern, high-tech
environment and ambience that is more in line with up-to-the-minute
high street retailing than the traditional library. Users can explore the
Internet, read newspapers and magazines in the Idea Store Café, learn
a new skill together with their children or read a book on one of
the sofas.
HOW AUDITORS CAN HELP TWENTY FIVE

CLIENT Dorset County Council

DESIGNER Dorset Property Management
COST £757,000
PROCUREMENT Traditional
FURTHER DETAILS Better Public Libraries, CABE
and Re:source
TWENTY SIX GETTING VALUE FOR MONEY FROM CONSTRUCTION PROJECTS THROUGH DESIGN
CASE STUDY 5: IMPACT POSITIVELY

ON THE LOCALITY
Bridport Library, Bridport

With a traditional urban pattern and large conservation area containing
many listed buildings, Bridport presented Dorset County Council with a
challenging project when they decided to convert an 19th century
building into the town’s library. Originally a house, and later a police
station, the last use of the building was as the town’s fire station.
The brief stressed the importance of balancing the need to create a
functional library, which sells itself, with the need to be sympathetic to
the character of the building, street and surrounding urban form.
The result is a sensitively restored façade behind which sits a large
modern structure containing a well equipped, airy library, arranged on an
open plan ground floor and galleried first floor. It was awarded the
Public Libraries Group (of CILIP) Public Library Buildings Award 1999 for
best converted small library.
HOW AUDITORS CAN HELP TWENTY SEVEN

5. MINIMISE OPERATION AND MAINTENANCE COSTS,

AND ENVIRONMENTAL IMPACT
This value driver has a significant impact on value for money, second only to
business operating costs. It covers impact on the natural environment and issues
of sustainability (including the use of sustainable materials in its construction),
as well as all those things that the occupier must do to maintain the internal
environment, keep it clean and maintain the fabric internally and externally.
● Day to day, the building should be easy to clean, maintain and operate due to its
finishes, layout, structure and engineering systems. The design of the building
should respond to the site microclimate and should minimise carbon dioxide
emissions and the energy consumed for lighting, heating, cooling and ventilation.
The effect of future environment change should be considered when designing
the building.
In the longer term the building’s finishes and components should be durable
and resist wear and tear, and be easily replaced when necessary. To minimise
periodic maintenance, equipment should be robust and easy to service.

● The purposes for which the building and the parts of a building will be used
are likely to change over its lifetime. The technologies it contains will change
as well. A good design will be flexible – able to accommodate changing
requirements without major alterations where possible – and adaptable, that is,
capable of being altered or extended conveniently when necessary.

● The methods and materials used in construction should be well thought through,
particularly with regard to ease of construction and safety. The building should
be designed for minimum waste and energy use during construction. Water
should be conserved and strategies for potential pollution from the construction
process implemented. Care should be taken to protect and enhance biodiversity
during and after construction. The design should take account of ease of
demolition and the ability to recycle materials.

● Facilities Managers should be using feedback tools and techniques to actively
manage building performance. Wastage can be reduced, sustainability improved
and effectiveness maintained through vigilant and active monitoring and
management of the building performance.
TWENTY EIGHT GETTING VALUE FOR MONEY FROM CONSTRUCTION PROJECTS THROUGH DESIGN
Key Questions
Possible Metrics
1. Will the building be energy efficient?
2. Is the building easy to clean and maintain?

● Annual cost of cleaning and
3. Will the building embrace the principles of environmental sustainability and use maintenance
renewable materials? ● Annual cost of heating, cooling
and lighting
4. Have steps been taken to minimise waste and energy use during construction? ● Total Occupancy Cost Code
5. Are the finishes durable, resisting weather, wear and tear? (TOCC), or equivalent, in use
● Frequency of periodic
6. Will the design take full account of maintenance, operating and disposal costs?
maintenance
7. Have sustainability requirements been set out in the brief? ● Availability of
8. Will the project comply with current sustainability initiatives? spares/replacement
components
9. Has the completed project met or exceeded targets for sustainable use of the
● Results of environmental
facility, including utility consumption? sustainability assessments
● Use of positive feedback
10. Will the building be actively managed using monitoring and user feedback
techniques in line with OGC
techniques? guidance
11. Will the project location encourage use of public transport? ● Responses to monitoring and
feedback
12. How will the building protect and enhance biodiversity?
● Integration of Facilities
13. Has “whole-life cost” assessment been used? Management team within the
14. Has the project evaluated the competence, resources and commitment briefing process
of designers and contractors in relation to Health & Safety, training and
engagement with local communities?

Examples of
15. Has the project been carried out under the Considerate Contractors Scheme?
Value Metrics
● Annual cleaning, energy and
maintenance costs per unit
area
● Frequency and cost of periodic
maintenance per unit area
● BREEAM or equivalent
● Total Occupancy Cost
compared with benchmarks in
Total Occupancy Cost Survey
(TOCS)
● Result of PROBE survey (Post-
occupancy Review of Buildings
and their Engineering)
● Constructing Excellence
Environment KPIs
● DEFRA’s Framework for
Sustainable Development on
the Government Estate
HOW AUDITORS CAN HELP TWENTY NINE

CLIENT King’s Lynn and West Norfolk

Borough Council
DESIGNER Jeremy Stacey Architects
CONTRACT VALUE £2.5 million
New development in historic
areas, CABE and English Heritage
THIRTY GETTING VALUE FOR MONEY FROM CONSTRUCTION PROJECTS THROUGH DESIGN
CASE STUDY 6: MINIMISE OPERATION AND

MAINTENANCE COSTS, AND
ENVIRONMENTAL IMPACT
Juniper House, Kings Lynn

An innovative approach to the development of a low energy public
building on an extremely sensitive site in a conservation area, this
mixed use development combines housing and offices around a new
public garden. The metal roof houses solar panels which provide hot
water, while the south-facing top storey has a strip of windows running
along its whole length, providing excellent light for those working in the
office. These are sheltered from excessive heat gain by projecting eaves
and internal blinds within triple glazed windows.
The environmental strategy and construction methods adopted have
enabled the office building to be mechanically ventilated with fresh air
rather than air conditioned. High insulation levels and the use of
concrete planks to store and circulate heat and ventilation are employed
to create a comfortable working environment with minimal energy
needs. This has produced predicted energy costs of £5,000 per year,
rather than the £23,000 per year which would be expected for a
conventional office building of this size, thus providing a considerable
reduction in the life-time cost of the whole project.
HOW AUDITORS CAN HELP THIRTY ONE

6. COMPLY WITH THIRD PARTY REQUIREMENTS

This value driver is concerned with the impact of the building on stakeholders and
vice-versa. It also addresses compliance with legislation through the project life
cycle, including use.

● A stakeholder is anyone who has a stake or an interest in a building, who will be
affected in some way by it and so has an interest in influencing it. They may or
may not be directly involved in its design, construction or use.

● Appropriate levels of consultation with third parties, beginning early on in a
project, are very important in ensuring that the building satisfies stakeholder
requirements. If third parties are consulted too late in the construction process,
their requirements cannot be easily accommodated in the design without abortive
work, often at significant cost.

● Appropriate consultation with stakeholders during the post-completion ‘bedding-
down’ period, and on-going while the building is in use is very important to
ensuring that the building satisfies stakeholder requirements and continues to
do so, and can respond to changing needs.

● The project team should develop good working relationships with the Statutory
Authorities that encourage dialogue and exchange of ideas.

● Consultation should include stakeholders’ views on the building’s impact on
the community.
● The use to which the building will be put may require conformity to specific
statutory requirements.
● General Health and Safety issues are the responsibility of all the project team,
including clients. The CDM guidelines (Construction, Design and Management
Regulations 1994) must be adhered to.

● All central Government clients should adhere to relevant guidance and policy
including Achieving Excellence in Construction and the Better Public Buildings
Initiative.
THIRTY TWO GETTING VALUE FOR MONEY FROM CONSTRUCTION PROJECTS THROUGH DESIGN
Key Questions
Possible Metrics
1. Have the design team consulted widely with stakeholders and taken their views
into consideration? Have tools such as DQI been used to assess how well
● Public surveys
stakeholder requirements have been met? Are feedback mechanisms in place
● Ease of achievement of
to ensure ongoing consultation with stakeholders/users?
planning consent
2. Does the building comply in all respects with statutory requirements including
● Use of Construction Industry
planning, building and other regulations?
KPIs and DQIs
3. Has the client appointed a competent Planning Supervisor?
● Accident rates
4. Is the guidance given in OGC’s Procurement Guide number 10 – Achieving
Excellence Through Health & Safety – being implemented?

5. Is there a properly constructed Health and Safety Plan, conforming to Examples of
Construction, Design and Management Regulations (CDM) and enforced Value Metrics
by a competent planning supervisor? ● Design Quality Indicators
6. Are the contractors and their supply chain rigorous in their attention to ● Number of reportable incidents
Health and Safety during construction? ● Percentage of days lost
7. Is the completed building a healthy and safe place in which to work and operate? through accidents
● Operating days lost through
sickness
● PROBE survey results
● ‘Soft Landings’ process in use
HOW AUDITORS CAN HELP THIRTY THREE

CLIENT Derbyshire County Council

DESIGNER Derbyshire Consulting Engineers
COST £525,000
FURTHER DETAILS Celebrating Innovation, CABE and
Rethinking Construction
THIRTY FOUR GETTING VALUE FOR MONEY FROM CONSTRUCTION PROJECTS THROUGH DESIGN
CASE STUDY 7: COMPLY WITH THIRD PARTY

REQUIREMENTS
The Torrs Millennium Walkway, New Mills,

Derbyshire
An imaginative and technically challenging project to construct an
elevated walkway along a sheer face of the Torrs Gorge in the Peak
District National Park. The complexity of the site – above a fast flowing
river and against a rock face – demanded an exceptional design and
engineering response.
For a scheme with a number of sensitivities, from safety to heritage,
it was seen as important to adopt a partnering approach from the
earliest stage. The project team included a heritage specialist and
a health and safety officer; numerous bodies were consulted, including
the Environment Agency, English Heritage and the Fieldfare Trust
(representing the disabled).
The lack of good and continually safe site access, the very limited
working space and the fast flowing water meant that minimisation of
future maintenance was a significant design and detailing influence.
Careful consideration was therefore given at the start of the project to
choice of materials, detailing and steelwork protection. The involvement
of the contractors was vital in specific areas such as buildability,
resolving access problems and the development of safe building
methods, particularly in the use of pre-assembled components.
HOW AUDITORS CAN HELP THIRTY FIVE

APPENDIX A: VALUE ASSESSMENT TOOL

The following process can be used to assess the value of a project. It takes
into account cost as well as the value added through good design. It may be used
by auditors or members of the project team to assess progress towards achieving
good value.
The key steps in the process are:
1. Establish the project specific value drivers with the project team.
2. Weight the importance of the value drivers to the client and end users (this must
be done with the client and end users rather than the design team, but the
discussion provides useful learning for the team).
3. Agree, with the client and the project team, the metrics for each value driver and
the method for measurement.
4. Establish the limits for each metric (the lower limit being the lowest acceptable
and the upper limit being that which will deliver excellence). Use these limits
to establish a 1-10 scale (1 unacceptable, 10 excellence).
5. Establish consensus within the team on the current predicted performance level
against each value driver using the 1-10 scale.
6. Calculate the value score using each measure by multiplying the weighting by
Process
the performance level (this also provides a good indication of where to apply
effort most effectively to increase value).

Establish the
7. Add up all value scores to arrive at the value index (a weighted measure of
Value Drivers
performance against all the value drivers).
Agree importance 8. Plot progress.

weighting
The following pages include:

Agree ● A Proforma Value Assessment Tool
performance metrics
● A worked example for a Court Building
● An example of tracking added value over the life of a project
Assess
performance level
Calculate
Value Index
Repeat at
Key milestones
THIRTY SIX GETTING VALUE FOR MONEY FROM CONSTRUCTION PROJECTS THROUGH DESIGN
PROFORMA – VALUE ASSESSMENT TOOL
Bad End Good End
Value Driver Importance Measures used by the 1 2 3 4 5 6 7 8 9 10 Weighted
HOW AUDITORS CAN HELP

5091-NAO-ValueForMoney-TEXT
• Project Weight% project or establish Value

Objectives score using answers Score
to questionnaire
1/4/04
1. Maximize business
effectiveness
13:55
2. Ensure effective
project management
Page 37
and delivery
3. Achieve the required

financial
performance
4. Impact positively
on the locality
5. Minimise operation
and maintenance
costs, and
environmental impact
6. Comply with third
party requirements
Value Index (=Sum of all Value Scores)
Guide to value for money: Total Value Index >850 Excellent >750 Good >500 Room for improvement >350 Requires improvement
THIRTY SEVEN
SCENARIO – EXAMPLE FOR A COURT BUILDING
Value Driver Weighting % Scenario Targets

1. Maximise business 30 Problems with achieving segregated Judged poor, say 3/10
effectiveness circulation leading to overly long
corridors and unwanted changes
2. Ensure effective project 15 Gateway 3 Review was critical of the Judged in middle of
management and delivery rigour of risk and value management range, say 5/10
3. Achieve the required financial 20 Cost plan currently indicates £18.5m Yardstick £15m with
performance allowances for about
£20m
4. Impact positively on the 10 Stunning external looks conveying a Judged very good, say
locality very dignified image 8/10
5. Minimise operation and 15 Innovative naturally ventilated BREEAM Rating
maintenance costs, and courtrooms are expensive to build but Excellent.
environmental impact inexpensive to operate.
6. Comply with third party 10 Proposals well received at presentation Judged good, say 7/10
requirements to public. Planners very supportive.
THIRTY EIGHT GETTING VALUE FOR MONEY FROM CONSTRUCTION PROJECTS THROUGH DESIGN
EXAMPLE FOR A COURT BUILDING – COMPLETED PROFORMA – GATEWAY 3 REVIEW STAGE – VALUE ASSESSMENT TOOL
Bad End Good End
Value Driver Importance Metric 1 2 3 4 5 6 7 8 9 10 Weighted
HOW AUDITORS CAN HELP

5091-NAO-ValueForMoney-TEXT
Weight% Value
Score
1. Maximize business 30 DQI 1 (3) 10
1/4/04
effectiveness 90
*
13:55
2. Ensure effective 15 Successful Gateway Reviews 1 (5) 10

project management 75
and delivery *
Page 39
3. Achieve the required 20 Capital Cost £20m £18.5m £15m

financial 60
performance *
4. Impact positively 10 Judgement 1 8 10

on the 80
locality *
5. Minimise operation 15 BREEAM Fail Good Excell-

and maintenance ent 120
costs, and *
environmental impact
6. Comply with third 10 Public Survey 1 (7) 10
party requirements * 70
Value Index (=Sum of all Value Scores) 495

Guide to value for money: Total Value Index >850 Excellent >750 Good >500 Room for improvement >350 Requires improvement
THIRTY NINE
FORTY GETTING VALUE FOR MONEY FROM CONSTRUCTION PROJECTS THROUGH DESIGN
APPENDIX B: INTEGRATED PROCUREMENT ROUTES

Since April 2000, government policy has been that construction projects should
be procured by one of the three recommended procurement routes (PFI, Prime
Contracting or Design & Build). Before concluding the preferred integrated
procurement route, Departments should consider the HMT report ‘PFI: Meeting the
Investment Challenge’. This suggests that construction projects whose capital cost
does not exceed £20m are not likely to achieve value for money under the PFI route.
Traditional procurement routes should only be used if they demonstrably add value
in comparison to the three recommended routes. Assessing value for money is a
central process in procurement. For PFI projects the Government will institute a new
assessment of the potential value for money of procurement options when overall
investment decisions are made; reform the Public Sector Comparator (PSC) (an
alternative route may still be chosen); and set up a final assessment of competitive
interest in a project.
PFI
Where the public sector contracts to purchase quality services, with defined
outputs from the private sector on long-term basis, and including maintaining
or constructing the necessary infrastructure so as to take advantage of private
sector management skills incentivised by having private finance at risk.
Prime Contracting
Using a single contractor to act as the sole point of responsibility to a public sector
client for the management and delivery of a construction project on time, within
budget (defined over the lifetime of the project) and fit for the purpose for which
it was intended, including demonstrating during the initial period of operation that
operating cost and performance parameters can be met in accordance with a
pre-agreed cost model.
Design and Build
Using a single contractor to act as the sole point of responsibility to a public sector
client for the design, management and delivery of a construction project on time,
within budget (taking account of whole-life costs) and in accordance with
a pre-defined output specification using reasonable skill and care.
HOW AUDITORS CAN HELP FORTY ONE

APPENDIX C: ACHIEVING EXCELLENCE ACTION AREAS AND TARGETS
Strategic Level Targets
Target Description Target Date

1. 70% (by volume) of construction projects reaching Gate 5 in the period 31 March 2005
1 April 2003–31 March 2005 to be delivered:
• On time
• Within budget
• To exceed consumer and stakeholder expectations; and
• With zero defects
2. For each key sector to reduce the average time period from start of procurement (Gate 2) 31 March 2005
to award of contract (Gate 3) by:
• 25% for construction projects taking over a year between Gates 2 and 3; and
• 15% for all other construction projects.
Action Areas for Departments, 2003-2005
1. Sign up to and implement Clients’ Charter, including KPIs. Sign up to and implement DQIs.
2. Implement the “Achieving Sustainability in Construction Procurement Sustainability Action Plan”.
3. Use integrated procurement routes (PFI, Prime Contracting or Design & Build) for new property and construction projects,
based on a best value for money approach.
4. Use whole-life costing on all new property and construction projects.
5. Implement the recommendations of the joint CABE/OGC Report “Improving Standards of Design in the Procurement of Public
Projects” on all new projects.
6 Achieve an 85 per cent supplier satisfaction rating.
7. Achieve a 10 per cent annual reduction in reportable accidents on construction sites.
8. Introduce partnering into all property and construction projects.
9. Report annually to OGC on value for money gains on property and construction projects.
10. All departments, their agencies and NDPBs involved in grant funding should review their procedures for ensuring property
and construction projects achieve best value for money.
11. All clients with an annual spend of over £0.5 million on property and construction projects, including rent, maintenance and
refurbishment, should sign up to Achieving Excellence.
FORTY TWO GETTING VALUE FOR MONEY FROM CONSTRUCTION PROJECTS THROUGH DESIGN
APPENDIX D: IMPROVING STANDARDS OF DESIGN IN THE PROCUREMENT OF PUBLIC

BUILDINGS
The joint CABE/OGC publication Improving Standards of Design in the Procurement of Public Buildings sets out 11 recommendations
for improving the design quality of building and infrastructure projects procured by the public sector. The recommendations are:
1. Every public sector client undertaking one or more capital projects above an agreed threshold should appoint a senior design
champion for the project.
2. All Departments should also have in place clear procedures to ensure that schemes that do not achieve an acceptable level
of design quality do not receive public funding and do not proceed until they do.
3. Government Departments should repeal or update procurement guidance to bring it into line with the Government’s policy
on design and sustainability issues.
4. OGC should keep under review in its Gateways and Project Review Group processes, and in Departmental review processes, how
design issues are addressed, to ensure that the design process is properly managed within the procurement process, including:
● the use of appropriate design advice
● the benchmarking of design standards
● the evaluation of design quality
● endorsement and approval processes.
5. Departments should ensure that clients adopt an appropriate mix of minimum design standards or quality thresholds, outputs
and desired outcomes, within their project specifications, sufficient to reflect and protect the legitimate interests of the public
sector client as an ongoing service provider.
6. Within their design action plans, Government Departments should demonstrate how they will devote appropriate time, training,
research, resources and expertise to individual construction clients falling under their responsibility, including design
management issues.
7. Departments should ensure that clients use PFI only where it offers best value for money, taking account of a properly
constructed and realistic Public Sector Comparator which reflects current best practice and conformity to all relevant
Government policy, including its commitment to design excellence.
8. CABE (and OGC) should publish specific guidance on involving users of buildings in the procurement process, including the
design stages.
9. Public sector clients procuring project bundles under a single contract should demonstrate to the satisfaction of the relevant
Department and, where applicable, the Gateway process and Project Review Group, how they will address the design challenges
involved.
10. CABE and OGC should investigate further the benefits and demerits of the use of design exemplars in real cases, wherever
undertaken.
11. Departments should ensure that clients are signalling the importance of design quality as a project selection criterion from the
outset of the selection process through the documentation, in the weighting given to design and design capability in the bid
evaluation criteria, and finally in the development of contractual documentation and sign-off procedures.
HOW AUDITORS CAN HELP FORTY THREE

APPENDIX E: GLOSSARY
BREEAM: Building Research Establishment Environmental Assessment Method
www.bre.co.uk
Construction Design and Management Regulations (CDM): These regulations require a client to appoint a planning supervisor
to check that construction, site and project Health and Safety are taken into account throughout the planning and design phases
and to co-ordinate the production of the Health and Safety file.
Design Quality Indicator (DQI): An online tool that allows design quality to be evaluated at all stages of the construction process
from inception through to post occupancy analysis. Using an on-line questionnaire, DQIs allow everyone involved in a project,
from construction and design professionals to users and visitors, to give an opinion on design quality.
www.dqi.org.uk
Key Performance Indicator (KPI): The measure of performance of an activity that is critical to the success of an organisation
or project, KPIs can be used by organisations to benchmark their performance against the rest of the industry or sector. KPIs
can form the basis of a more comprehensive set of performance measures. Regular measurement using appropriate KPIs enables
an organisation to set and communicate its performance targets, and to measure whether it is achieving them.
Senior Responsible Owner (SRO): The senior manager in the business unit that requires the project who has status and authority
to provide leadership.
Whole-Life Costs (WLC): The full costs of all the parts that go to make up a building, including initial capital costs, replacement
costs, maintenance and repair costs. Sometimes referred to as life cycle costs.
PROBE Survey: First published in “Building Services – the CIBSE journal” from 1995 to 2002, it aims to provide a rounded
understanding of how a building performs, and what its occupants and managers think of it.
Office Productivity Network: An information resource for managers of office-based businesses to improve the productivity of their
workforce through their office environment (www.officeproductivity.co.uk)
Total Occupancy Cost Code: The Occupiers Property Databank (OPD) International Total Occupancy Cost Code defines costs and cost
ratios for most standard types of property such as offices, retail, factories and warehouses.
Total Occupancy Cost Survey: An annual survey conducted by consultants Actium Consult and CASS Business School, with input from
a range of facilities services providers. It captures and validates the latest office occupancy cost data against cost definitions, to
allow users to measure the real cost of office occupation and enable effective comparison.
‘Soft Landings’ Process: An approach designed to smooth the transition leading up to handover of the building, and on into
beneficial use. It concentrates on “aftercare” services by extending design and building team duties for up to three years after
practical completion.
FORTY FOUR GETTING VALUE FOR MONEY FROM CONSTRUCTION PROJECTS THROUGH DESIGN
APPENDIX F: USEFUL PUBLICATIONS

Achieving Excellence in Construction Procurement Guidance Suite, OGC
● Achieving Excellence in Construction: A manager’s checklist
● Achieving Excellence in Construction Projects Pocketbook
● Achieving Excellence in Construction Procurement Guide 1: Initiative into action
● Achieving Excellence in Construction Procurement Guide 2: Project Organisation
● Achieving Excellence in Construction Procurement Guide 3: Project procurement lifecycle
● Achieving Excellence in Construction Procurement Guide 4: Risk and value management
● Achieving Excellence in Construction Procurement Guide 5: The integrated project team
● Achieving Excellence in Construction Procurement Guide 7: Whole-life costing and cost management
● Achieving Excellence in Construction Procurement Guide 8: Improving performance project evaluation and benchmarking
● Achieving Excellence in Construction Procurement Guide 9: Design quality
● Achieving Excellence in Construction Procurement Guide 10: Health and Safety
● Achieving Excellence in Construction Procurement Guide 11: Sustainability
● Achieving Excellence in Construction – Integrated Project Teams
● Achieving Excellence in Construction – Using Feedback to improve building performance
Better Civic Buildings and Spaces CABE
Better Public Buildings HM Government
Building in context: New Development in historic areas CABE/English Heritage
By Design: Urban design in the planning system towards better practice CABE/DTLR
Celebrating Innovation: Innovation and integration in design and construction CABE/Rethinking Construction
Creating Excellent Buildings: A Guide for Clients CABE
Design review: guidance on how CABE evaluates quality in architecture and urban design CABE
Gateway Review Leadership Guide OGC
Getting value for money from procurement: how auditors can help NAO/OGC
Government Communications Headquarters (GCHQ): New Accommodation Programme, NAO report HC955 2002–03
Green Book (Appraisal and Evaluation in Central Government) HM Treasury
Improving standards of design in the procurement of public buildings CABE/OGC
Modernising Construction, NAO report HC87 2000–01
Operational Performance of PFI Prisons, NAO report HC700 2002–03
PFI: Construction Performance, NAO report HC371 2002–03
PFI: The New Headquarters for the Home Office, NAO report HC954 2002–03
The Value of Good Design: How buildings and spaces create economic and social value CABE
Treasury Taskforce Technical Note No 7: How to achieve design quality in PFI projects HM Treasury
Websites:
www.audit-commission.gov.uk
www.cabe.org.uk
www.nao.gov.uk
www.ogc.gov.uk
HOW AUDITORS CAN HELP FORTY FIVE

Value for money in

construction is about more
than delivering a building
to time, cost and specified
quality.
Good design also contributes

to staff recruitment, retention
and motivation, issues that
increase value for money
across the life of the asset.
Prepared by:
Davis Langdon & Everest
MidCity Place
71 High Holborn
London WC1V 6QS
Tel: (020) 7061 7000
Fax: (020) 7061 7017
www.davislangdon.com
March 2004
Designed by:
Stairway Communications Ltd.

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NAO Cover 4 pdf 1/4/04 13:43 Page 1

Getting Value for Money

How Auditors Can Help

The ultimate aim is not only

Design represents a minute

Whole-life value for money from construction Four

Value for money and design Four

Framework for assessing quality design Seven

The Value Drivers Eight

1. Maximise business effectiveness Nine

2. Ensure effective project management and delivery Fourteen

3. Achieve the required financial performance Eighteen

4. Impact positively on the locality Twenty Two

6. Comply with third party requirements Thirty Two

Appendix A – Value Assessment Tool Thirty Six

Appendix B – Integrated Procurement Routes Forty One

Appendix C – Achieving Excellence Action Areas and Targets Forty Two

Appendix D – Improving Standards of Design in the Procurement

of Public Buildings Forty Three

Appendix E – Glossary Forty Four

Appendix F – Useful Publications Forty Five

HOW AUDITORS CAN HELP ONE

The Prime Minister’s Better

investment in design quality can help deliver these benefits.

is to provide auditors with an understanding of the value of good design in

in a particular project. While not meant to replace existing audit practices, it

includes a set of simple but searching questions to evaluate construction projects,

Sir John Bourn, Comptroller & Auditor General

Sir Stuart Lipton, Chairman, CABE

Sir Peter Gershon, Chief Executive, OGC

James Strachan, Chairman, Audit Commission

HOW AUDITORS CAN HELP THREE

refurbishment and maintenance of infrastructure, individual buildings and public

WHOLE-LIFE VALUE FOR MONEY

centrally funded construction is encapsulated in the Achieving Excellence in

users of public services, agencies and NDPBs.

VALUE FOR MONEY AND DESIGN

A good building project must also contribute to the environment in which it is

to accommodate future uses.

Building on publications such as OGC’s Achieving Excellence in Construction

Procurement Guides, the joint CABE/OGC Improving Standards of Design in the

WHY DESIGN QUALITY IS IMPORTANT “It is crucial for auditors

and the productivity of staff? Comptroller and Auditor General

● Build quality: Is the building built to last and easy to maintain?

it to be completed on time, to budget and to specification? Is the building

environmentally efficient, in terms of where it is located, how it is constructed

and how it will be used and disposed of?

the identity of the neighbourhood in its landscape?

essential element of the design process. These could include distinguished

architecture, or the need for a building to harmonise with existing buildings.

HOW AUDITORS CAN HELP FIVE

Design Quality Indicators

evaluate design. It is based on the three aspects of design quality:

1. Impact – the building’s ability to create a sense of place and have

a positive effect on the local community and environment.

2. Build Quality – the engineering performance of the building, which

includes structural stability and the integration, safety and robustness

of the systems, finishes and fittings.

3. Functionality – the arrangement, quality and interrelationship of spaces