Getting value for money from construction …

1 Getting value for money from construction Projectsthrough DesignHow Auditors Can HelpGuidelines to help auditors take account of gooddesign in public sector built environment projectsNAO Cover 4 pdf 1/4/04 13:43 Page 1 The ultimate aim is not only to build good buildings, butalso to ensure that the rightbuildings are built to meet the requirements of all stakeholders, particularly the end Cover 4 pdf 1/4/04 13:43 Page 2 NAO Cover 4 pdf 1/4/04 13:43 Page 3 design represents a minuteproportion of the lifetime costof a building less than onepercent but done well it has a disproportionate impact onhow well the building and its surroundings Cover 4 pdf 1/4/04 13:43 Page 4 CONTENTSS ectionPageForewordThreeIntroductionFourW hole-life value for money from constructionFourValue for money and designFourWhy design quality is important and how auditors can helpFiveFramework for assessing quality designSevenThe value business effectivenessNine2.

2 Ensure effective project management and deliveryFourteen3. Achieve the required financial performanceEighteen4. Impact positively on the localityTwenty Two5. Minimise operation and maintenance costs, and environmental impactTwenty Eight6. Comply with third party requirementsThirty TwoAppendicesAppendix A value Assessment ToolThirty SixAppendix B Integrated Procurement RoutesForty OneAppendix C Achieving ExcellenceAction Areas and TargetsForty TwoAppendix D Improving Standards of design in the Procurementof Public BuildingsForty ThreeAppendix E GlossaryForty FourAppendix F Useful PublicationsForty FiveHOW AUDITORS CAN HELPONE5091-NAO-ValueForMoney-TEXT 1/4/04 13.

3 52 Page 1 Getting value FOR money FROM construction PROJECTS through DESIGNTWOThe Prime Minister s BetterPublic Building Award rewardsexcellence both in design andprocurement and is sponsoredjointly by CABE and OGC. It isopen to projects of any size,commissioned by or on behalfof the public 1/4/04 13:52 Page 2 FOREWORDThe design of public buildings is not just a technical issue or a matter of design has a key role to play in improving the quality of services provided bythe public sector. A well designed building can, for example, help patients to recoverfrom illness more quickly or encourage better learning among schoolchildren.

4 It canalso benefit the service deliverers who work within it, by contributing to staffrecruitment, retention and motivation. In short, good design can increase the valuefor money that the building provides across its whole are frequently called upon to make judgments on the quality of publicconstruction 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. Valuefor money in construction involves completing a project to time, cost and a level ofquality that meets the need. A good project will continue to provide value for moneyand meet user needs throughout its lifetime, and will contribute to the environmentin which it is located with a wide range of social and economic benefits.

5 An earlyinvestment in design quality can help deliver these guide has been developed by the National Audit Office (NAO), theCommission for Architecture and the Built Environment (CABE), and the Office ofGovernment Commerce (OGC), in association with the Audit Commission. Its purposeis to provide auditors with an understanding of the value of good design inconstruction, and a firm basis for examining whether good design has been achievedin a particular project . While not meant to replace existing audit practices, itincludes a set of simple but searching questions to evaluate construction projects,and suggests the types of evidence that will help to answer those questions.

6 We therefore hope that the audit community will find this guide useful, and thatit will contribute to the design of better buildings across the public John Bourn, Comptroller & Auditor GeneralSir Stuart Lipton, Chairman, CABESir Peter Gershon, Chief Executive, OGCJ ames Strachan, Chairman, Audit CommissionHOW AUDITORS CAN HELPTHREE5091-NAO-ValueForMoney-TEXT 1/4/04 13:52 Page 3 INTRODUCTIONThis publication is primarily intended to guide internal and external auditors tomaking sound judgements when auditing public sector construction projects at allstages of the procurement process.

7 For the purpose of this guide constructionprojects is taken to mean all public sector building projects including new build,refurbishment and maintenance of infrastructure, individual buildings and publicopen value FOR MONEYFROM CONSTRUCTIONThe guide s starting point is that lowest capital cost is not a reliable measureof value for money , since it takes no account of how well buildings policy and approach to achieving whole-life value for money fromcentrally funded construction is encapsulated in the Achieving Excellence inConstructioninitiative. The Office of Government Commerce (OGC) is driving thisinitiative and all central government departments have agreed to adhere to itsprinciples in construction projects carried out by themselves, or funded through theiragencies and auditing construction projects to assess their value for money , auditorsshould check that the Achieving Excellenceprinciples are being have agreed collectively to two strategic targets as measures for theirsuccess in achieving whole-life value for money .

8 These can be found at Appendix has suggested a range of Areas for Action that departments should consider forinclusion in their Action Plans for implementingAchieving Excellenceand againstwhich they can judge their compliance level. Auditors may consider these as astarting FOR money AND DESIGNAs has been repeatedly acknowledged by both HM Treasury and the NAO, sound andcreative design is an essential ingredient in achieving value for money . value formoney in construction is about more than delivering a project to time and good building project must also contribute to the environment in which it islocated, deliver a range of wider social and economic benefits and be adaptableto accommodate future value FOR money FROM construction PROJECTS through DESIGNFOUR I am determined thatgood design shouldnot be confined to highprofile buildings in thebig cities: all of theusers of public services,wherever they are,should be able tobenefit from gooddesign.

9 Better Public Buildings Rt Hon Tony Blair MP,Prime Minister5091-NAO-ValueForMoney-TEXT 1/4/04 13:52 Page 4 HOW AUDITORS CAN HELPFIVE It is crucial for auditorsto recognise that gooddesign can significantlyenhance long-termvalue for money inconstruction projects. Sir John Bourn,Comptroller and Auditor GeneralThe ultimate aim is to deliver construction projects that meet the requirementsof the business and allstakeholders, particularly the end users. An early investmentin design quality can make service delivery significantly more efficient and willenhance the working environment for all those who use our public on publications such as OGC s Achieving Excellence in ConstructionProcurement Guides, the joint CABE/OGC Improving Standards of design in theProcurement of Public Buildings, HM Government s Better Public Buildings, a host ofother CABE, NAO and OGC publications (see Appendix F)

10 , the latest edition of TheGreen Bookand tools such as the construction Industry Council s design QualityIndicators, this guide reflects an increasing awareness of the benefits delivered bywell designed construction projects and the need to consider whole-life design QUALITY IS IMPORTANTAND HOW AUDITORS CAN HELPGood design is not primarily a question of style and taste. It is the adherence toa set of time honoured, objective principles that determine whether or not a buildingworks well for all users and for the community. design encompasses functionalefficiency, structural integrity, sustainability, lifetime costing and flexibility aswell as responsiveness to the site and its design can be summarised as a mix of the following attributes: Functionality in use:Does it optimise the operational cost of core servicesand the productivity of staff?