The cost of ‘best value’ construction

Dean Kashiwagi, John Savicky

Research output: Contribution to journalArticlepeer-review

12 Scopus citations


One of the major objectives of facility owners is to get the ‘best value’ in construction, renovation or maintenance of facilities. Owners are reluctant to pay more for best value if they do not understand what the value is. Research now proposes that the use of best value procurement can actually reduce the first costs of delivering the construction. The research looks at the transaction costs or the first costs of construction. The research uses the procurement of roofing in the State of Hawaii because of the availability of data on both the low-bid and best value procurements. The State of Hawaii used transaction cost analysis to identify the cost of best value construction. The costs considered were planning and programming, design, procurement, construction management and inspection costs. Owing to the number of projects and the access to budget figures, construction cost figures, design costs and construction times, the State was able to identify the relative transaction costs and performance for both processes. The first costs or transaction costs of the best value procurements were lower than the transaction costs of the traditional design-bid-build costs. The actual performances of the roofing systems procured, which included warranty period, performance of the contractor and performance of the roofing systems, were far superior. The result was an increase in value for a lower cost.

Original languageEnglish (US)
Pages (from-to)285-297
Number of pages13
JournalJournal of Facilities Management
Issue number3
StatePublished - Jul 1 2003
Externally publishedYes


  • Construction management
  • Financial management
  • Transaction cost

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management
  • Management of Technology and Innovation

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