Healthcare Project Value Defined

Posted on September 12, 2011

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Value is a word that is generic enough to be used without anyone really pinning down its meaning. It sounds good, but is used way too often without definition. For a definition of value, I offer:  “a collection of more favorable benefits gained through trade of something (usually money) with less usefulness.”  This is really the core of commerce:  increased utility through trade. The key is that both parties in the commercial exchange are happy and believe they received more than they had prior to the trade. In negotiation, this is called a win-win scenario.

So how is this defined in the case of healthcare construction? The commercial exchange is:  hospital trades capital to a design-builder in exchange for a building. In this exchange, it is assumed the building will do many base level things:  keep out water, maintain conditioned space, satisfy the hospital’s programatic needs, and meet code, among other functional needs. The building is a container for healthcare treatment, and that aspect will be provided by any competent team. Dollars-for-building is an equal trade.

Where value comes in, is when the trade delivers more benefits, or exceeds expectations—where the owner gets her functional needs met, as well as other benefits that affect her bottom line. Bottom line benefits are benefits that cause a direct, positive, economic impact, as opposed to top line benefits which provide indirect or less tangible, positive, economic impact. I choose to focus on bottom line because it is measurable. [For another take on the bottom line / top line discussion, read my post on marketing sustainable design.]

There are eight ways a healthcare building, or its method of delivery, can provide value to its owner:

  1. Risk / Safety – reduces owner risk, or provides an additional safety benefit to the building users, and thus the owner.
  2. Infection Control / Cleaning – allows for less chance of infection acquisition, or provides easier cleaning, which keeps infection reduction lower.
  3. Maintenance – decreases the time, manpower, cost, or routine effort required for maintenance.
  4. Life Cycle Cost – improves the longevity and usefulness of a product or system through improved durability, quality, design or technology.
  5. Energy / Resources – saves money for the owner through less consumption of energy and resources.
  6. Flexibility / Adaptability – allows for the ability to change a physical environment, through design, to suit future needs with reduced future effort or expense.
  7. Occupant Productivity – through ease-of-use or a combination of design attributes, allows users to produce more with the same amount of resources.
  8. Pricing Premium – aspects of the building or its design that allow the owner to charge more for a service or product than before.

Note again that these are bottom line benefits. An example of a top line benefit from a healthcare building would be an improved brand or community image. Top line benefits also have potential to provide project value; however, they are not easily measured for results.

A building must deliver on one of the eight value benefits above. In fact, to boast a team has delivered maximum project value to the owner, the building may need to touch on each of the eight on some level. These benefits are not provided in isolation though; the owner is a vital part of defining value through her preferences.

To reiterate, it is easy for a team to say it provides value, but how is that proven? All healthcare construction will do the basics:  provide a container and meet functional needs. Only a value solution will, through consultation with the owner, provide a designed, intentional benefit to the owner’s bottom line.

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