Value for Money

On April 9th, a professional delegation from Denmark visited TuDelft to discuss “Value for Money” in governmental building projects. The discussion was based on the proposition that “the private sector, unlike the government, gets more value for money”.
In Dutch press a raging debate about governmental projects is going on. This debate stems from negative publicity around projects due to cost overruns and delays. For instance, Het Stedelijk Museum, Het Rijksmuseum and the Amsterdam Subway system ?NoordZuid lijn?.
Value for money. I wonder whether a government gets lesser value for money than the private sector. I doubt it. My experience shows that if projects are tendered well government will get competitive prices. In recent years, even more than in heydays before the crisis. If you are currently not able to get value for your money, I think something else is extremely wrong.
To be?success?full, a number of conditions are of great importance. I call them “the golden rules” of procurement:

  • Provide an excellent set of building specifications. And, as principal or project manager, ensure that these specifications are excellent before tendering is started.
  • Make sure that during construction legal provisions are strictly applied. Don?t forfeit your rights.
  • Ensure that a professional team acts on behalf of the client. All too often I see clients cut back on the management or supervision while high additional work is to be paid to the contractor afterwards. Penny Wise and Pound Foolish is what the English call it, and unfortunately it is very common.
  • Set a realistic construction time, agree on it with your client and put realism in your contracts. It will be difficult because the whole world wants it quick and people tend to be optimistic. But realism is what counts if you are in charge. And if you don?t want any negative publicity to haunt you during construction, realism is the solution.
  • This realism also counts for the budget.
  • Don?t change the design! This is easier said than done. But everyone knows that changes will impede progress and you always pay too much. Furthermore changing plans will distract management, architect and consultants from the main contract. Don?t do it!
  • See after a perfect administration.

I am sorry to say that, not all your problems will be over. Even with the above rules sometimes things go wrong. That?s life! But with an excellent team solving problems can be joyful.
If you want to add a rule please let me know.

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