Introduction
The construction project of hospitals involves many stakeholders. This makes it almost impossible for designers to satisfy all stakeholders. In fact, it is easier to capture the expectation of stakeholders who pay for the asset than those who are using them. Many studies have underlined the importance of building co-created value between paying clients and users in a construction project. While in infrastructure like hospitals, the proper approach to capturing and delivering benefits remains unclear.
This essay will use the building of Royal Liverpool & Broadgreen University Hospital as an example while aiming at proposing some ideas on what approaches will help a designer team to balance different stakeholder’s requirements. Firstly, the essay will provide some academic definitions of “value” regarding construction management. Secondly, it will apply the case of the Royal Liverpool and Broadgreen University Hospital to capture the goals and objectives of this project from different sides. Thirdly, it will explain the approaches to facilitate the capture and delivery of value to this project.
Introducing Value
There are many definitions of value. In the management area, specifically, Smyth (2016) concluded that the value of money emphazes on efficiency to reduce costs and produce efficient products and services, respectively. In such complex projects as hospitals, he also found that customers are always co-creating the value.
Firms used to believe in the significance of products, that products are the cores of one company’s performance. However, in the last few decades, more and more people suggest that services also stand in a critical position. According to Vargo and Lusch (2008), the idea is that business is exchanging more services than their goods. They argued that business should concern more on ‘service-dominant’ logic (S-D logic) than ‘goods-dominant ‘logic (G-D logic). S-D logic focuses on the exchange of service where goods act as an appliance in service provision.
This aspect implies that the service is provided directly or indirectly through products. Therefore, the process of value creation is achieved through providers’ knowledge and skills rather than the goods and services. It also dictates that a customer is the co-creator of value (Payne, Storbacka & Frow 2008).
However, it is criticized that S-D logic is not clear in concept and lacks precision (Stauss 2005). As a result, researchers suggest that the transition focus from goods to services awaits theory building on service perspective. By managing value co-creation through providing service would create a permanent value of ‘desirable customer segments’ (Payne and Frow 2005). In addition, co-creation of value is not limited to suppliers and customers since all parts of the stakeholders are involved in the network (Gummesson 2008).
Creating value also has a role in the construction context. In a building project, many stakeholders are interested in development. Four groups of people hold the greatest interests: the clients as the developer or owner of the project, design professionals, building contractors, and actual users of the project (Sherwood 2016). It should clarify that the community (or real user) is interested in the project’s functional performance value while others are attracted mainly in the economic value.
Procurement may have influences on value by elements such as pricing competition, pricing efficiency, and design quality, among others. (Sherwood 2016). Notably, the good functional value costs money that makes it unattractive. In other words, for cost control reasons, creating value from a procurement perspective can be limited, especially in the design process. Conversely, Candi and Saemundsson (2011) investigate how aesthetic design can contribute to performance improvements, probability resistance to imitation and competitive advantages.
Artistic design associated with human sense, the reaction of a receptor (customer) from emotional or sociological aspects of the design offered. The way a business selects activities and determines performance is the key to a competitive strategy (Porter, 1996). Therefore, a business will gain more competitive advantages by choosing to create aesthetically. The research concluded that the decision regarding the use of aesthetic design depends on the type of market in which a business competes. If the market is expecting services that fulfill the customer’s needs for features, performance, and reliability, the business should consider using aesthetic design as a mean of gaining competitive advantages.
Background Analysis of the Royal Liverpool and Broadgreen University Hospital (the Royal)
The proposal is about replacing the Royal Liverpool University Hospital with a new one called ‘the Royal Liverpool and Broadgreen University Hospital.’ The hospital was 35 years old, and was facing fire safety issues with business continuity risks; moreover, design of the hospital was in 1960s standard, which is obviously underdeveloped. Following a series of redevelopment options’ identification, the Trust decided that it was more profitable to build a new hospital (the Royal).
Goals and Objectives of the Project
Aims and objectives of the Royal include two aspects. Firstly, buildings need some structural changes. For instance, the fire is required to comply with the latest standards. Ventilation, heating and power system need to develop to cope with the increasing capacity of the hospital. Department locations should be re-designing to make the Royal running more efficiently. Patients require a high-quality, healing environment that meets 21-century clinical care.
The Trust is expecting a new world-class hospital to comply with principles of sustainable development. Secondly, the clinical service provision awaits changes. According to the NHS Trust consultation (2008), the Royal will make following events: dividing emergency department from planned care area to avoid competing pressures for resources; putting emergency and specialists care in the Royal Liverpool Hospital, scheduled surgery, and outpatient clinics in Broadgreen Hospital.
The Views of Operational and Project Stakeholders
There are six groups of people concerned about the performance and value creation in the project. They are: patients and carers accessing PCT services, clinicians, NHS Trust, architect and design groups, and sub-contractors.
Patients and carers will be satisfied if the hospital has enough space for patients, good medical environment, and easy access to all departments, large capacity with shortened waiting time, enough parking spaces, and sustainability of development. Similarly, clinicians would concern on effective clinical adjacencies, good functionality, good working environment, private parking spaces, and high-tech operating room for a wider range of surgeries. NHS Trust, as the actual clients who pay for the project, is looking for a hospital with 21-century standard design and structure, proper functionality, larger capacity, high standard medical environment, the sustainability of development; and most importantly, achieve all the above with minimum costs in the relatively short period.
Architect and design group are the people who are taking charge of the whole project processes. Their goals are to increase community recognition of the projects, elevate productivity and efficiency, create better infrastructure for users well-being, achieve target costs and profit, fulfill clients requirements with no delay, implement quality control, monitor health and safety, and make an environmentally friendly and sustainable building. Sub-contractors aim to understand design/architect groups’ requirements, quality control fully, and time and costs management, achieve target profit, health and safety regulation, and ‘green’ construction process.
Gaps between Users and Project Payers’ View
There are conflicting ideas between the users of the hospital to be constructed and the financiers of the project. Since the hospital construction project usually involves many stakeholders, it is almost impossible for designers to satisfy all parties concerned fully. In reality, it is easier to capture the expectation of stakeholders who pay for the asset than those who are using the asset. The expectation of the users is that the Royal complies with the laid out rules and regulation in the construction as well as construct a world-class hospital; that can be able to cope with the increasing capacities at the hospitals. Users expect changes and the hospital to be world-class and its location to be in a suitable place.
The process of designing and constructing the hospital is complicated, and a social practice needs to distinguish and organized by the views of the parties involved. The study of hospital project theory reveals the conflicting ideas witnessed and the practice evaluation process. This study provides an insight into the actuality of the hospital design assessment and questions the axioms that have rendered the project construction process be assumed to operate.
Dynamic Decision and Information
In the building of a life cycle, there is a necessity of practical decision and intelligence. Presently, there is a huge difference in the process by which self-motivated decisions and the information vanishes at a high cost. The combative culture of the construction industry plays an important role in undermining the process of decision-making.
Nevertheless, for workshops working at a certain project level while working devoid of conductive procurement context, as you would expect, adopt defensive routines that lessen the risks while at the same time closing down on the opportunities towards maximizing the already in typical existence value. Integration of ICT and embracing of suitable value management approach can hasten the progress of the project. Definitely, practical decision and intelligence could aid the hospital designer team to balance different stakeholder’s requirement.
Capturing and Delivering Value
Creating Value by Delivering Integrated Solutions
To create good value, the movement of sophisticated capital equipment into the provision of integrated solutions must be adhered to. The integrated solutions represent the distinctive combinations of products and services that articulate the problems experienced by the customers. Integrated solutions provide the platform for the development and attainment of new capabilities since they shift from being product-service centred to being customer-centred.
Creation of value for suppliers and their clients is achieved by extension of the traditional life-cycle to a whole new level that includes pre-bid and posts implementation of the activities with the help of innovative approaches. Organizational capabilities framework is necessary since it can be customized in such a way that it explains how the suppliers of complex product systems can positively affect the building of skills crucial in the expansion of the project into a new line of business.
The dynamics of implementing industrial capitalism is not enough. Therefore, there should be the inclusion of relevant complex product systems activities for the project execution in addition to its strategic function and capabilities. With the help of an organizational learning cycle, firms of complex product systems have the potential to achieve the ‘economies of repetition’ by the implementation of regulatory changes (Tran, Hsuan, & Mahnke 2011). These companies are also able to perform learning and routines process that aid in the provision of a growing number in similar bids and projects efficiently. Also, these firms are able to move from the project proposal to a whole new domain level of business.
From Goods to Service: Divergences and Convergences in Logics
When considering and motivating the transition of goods to services, two main logics are applied. ‘Goods dominant logic’, which classifies services in their state of intangibility, is the first mindset. This logic implies that there ought to be a modification in the production and distribution of goods to counteract the difference experienced intangible properties and services. Service-dominant logic, which is the other mindset, considers services as the practice of using somebody’s resources for the benefit of another person (Prahalad & Ramaswamy 2004).
Self-dominant logic is also considered as a fundamental purpose of economic exchanges and involves the call for the service-driven framework and revision for the marketing processes. This changeover to a service-centred logic is steady with a similar transition experienced in the business-marketing literature. A good example of the assumption is the shift of service-centred logic to understand the exchange about terms of value more willingly than products and networks (Prahalad & Ramaswamy 2004).
Construction Management and Economics
This chapter describes the engagement between the building industry and the clients’ management of the projects as well as the economic view of the project. In seeking a better engagement between the contractors and the clients, there are chances that the engagement can never be perfect. However, there is a need to make it better occasionally. The distinction between customers and contractors is important. Certainly, every client has his/her character where no theory can be used sufficiently to provide the distinction between the customers and industry. In construction management, understanding a construction client is very vital. The theory of understanding the client emphasizes on some primary awareness strategies applied in driving the model. For instance;
- Changes expose the gaps that contradict the views of the clients.
- Both the customers and the industry see the building in different ways.
- Building entails organizational changes to the clients.
However, the consequences of the above theory depend on the process, structure, management, and operation of the industry.
Leaders and champions for construction innovation, Construction Management
For a project to succeed, it is paramount to involve the client in the development process. In the building of Royal Liverpool & Broadgreen University Hospital, for example, the functions of the customer in the construction will include the provision of finance, defining the organization to deliver the project, defining the objectives of the project, exercising full authority over the project group, and selecting the team to lead the process.
Unavailability of good leadership to championing the construction innovation will lead to a gap between the hospital users and the management team. According to the client’s chatter; client leadership is required in the responsibilities of the industry (Thomke 2001). The chatter needs the customers participating in the organizations to be fully committed in the dealings of the industry in order to ensure that the performance is improved. To support the client’s involvement in the industry’s dealings and fulfill their roles in the sector, various guidelines ought to be considered. These include guides for setting up supply chains, integrated project teams, achieving project success, building design control, and guiding to enhance better performance.
Generally, it is doubtless that the role of clients in projects and the industry is necessary for the successes of the project. Indeed, customers can work at their level best to promote and drive forward the number of innovations in the construction process.
The Business of Systems Integration
This section shows how and why the systems integration has developed into a rising model of industrial organization whereby firms are now able to pull together and share ideas in different types of skills, activity and knowledge, software, hardware, and human resources to produce high-quality products.
The systems integration of business has proved critics wrong in the past ten years. Systems integration is a fundamental element in the planning, operations, and in reducing the levels of competitions witnessed between the major corporations in different sectors such as telecommunication, computing, aerospace, automotive, and military systems. Unlike in the past when systems integration was considered as a technological, operations task, in the current world, it is considered as a strategic undertaking that encompasses business management at the technical level and strategic and management levels. Implementation of the systems integration in companies is indeed an important aspect of the capabilities of the firms (Sherwood 2016).
Procurement of the construction of Royal Liverpool & Broadgreen University Hospital and its integration can have significant benefits in the delivering of value. Many firms have made the transition after being integrated to be involved in the activities of other companies. Since there will be involvement of many stakeholders in the hospital construction project, hence making it more or less impracticable for the designers to satisfy the stakeholders, business integration will prove viable for the project.
Early Design Management and Value Perception in Design
All building projects are unique in their designs, process, stakeholders and complexity. A construction project, therefore, requires a customized management method. There is no assumption on the similarities in these ways to describe the general model. However, products are influenced by the process in which they are made. The recurring character of a design process and the distinctiveness of a product play a significant role in making it difficult to prove the existence of the relationship.
In the construction of Royal Liverpool & Broadgreen University Hospital, it will be the task of the designer to coordinate and integrates design restrictions and come up with a way out in converting the restrictions into positive fundamentals. It is the obligation of the hospital designer to balance the quantitative and qualitative criteria in designing the construction project. The design theory, in a more clear perspective, represents the process in which the artist transforms the requirements and specifications of the clients into actual design objects.
Design management and value perception are also the flow of information that flows steadily in a controlled manner to eliminate any inefficiencies, misunderstandings, or waste (Davis 2004). Experience and common sense are very vital at this stage as they are the determining factors in ensuring that the process managed and accomplished in the right manner. Design management of the hospital project will be entrusted with a broad range of functions, from the administration of the project, self-management of the individual to the integrated building design management. The field of design management can be distinguished in several views in consideration with the particular line of the role.
The organizational approach involves the administration of the design office and the coordination of the decision making in the construction. Project approach regards the quality of the building design, but it does not offer any support in the making of the model useful (Prencipe, Davies, & Hobday 2003). The process approach involves managing the complex social design to ensure there is good teamwork. Lastly, the product strategy aims at producing the physical object, and it is responsible for translating the values in the understanding of the requirements (Carmeli 2004).
In design, the process and object frequently overlap, making it tough to differentiate between the social process starting points and the ending points of the hard objects. The management of design includes controlling, decision making, coordinating, and planning. Undoubtedly, management carries the responsibilities of involving all the stakeholders in the design of the construction process and to manage their expectations are necessary for the fulfillment of the creation of value.
Approaches Needed to Deliver Value
To sum up the above goals and objectives of the hospital organization embarking on the project, there are operational strategies that need to be applied by the project designers, in bridging the gap between the expectations of the hospital users and the project management.
- Improving the certainty and visibility of the government construction program.
- Gathering of enough information including feedback from previous projects in regards to client skills and governance.
- Setting clear criteria that ensure the constructed hospital delivers value in service to make sure cost plays a significant role in the delivering and project design.
- Exploring alternatives procurements models that encourage innovation and create an alignment of interest from the parties involved.
- Streamlining the commissioning by eliminating any wastes, procuring the construction process where appropriate.
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