Upgrading the VAB and R&D Complex with KCT Upgrade Points
NOTE: This guide is obsolete. Please check its successor.
As mentioned in the introduction, managing time is one of the keys to success in an RP-1 career. Two of the main factors affecting the progress of your space program are the rate at which new technologies are researched, and the rate at which new rockets are built in the VAB. (We'll leave the SPH out of this discussion for the moment.) While purchasing an upgraded VAB or R&D Complex will speed up both of these activities, these KSC upgrades should occur only after your career is well-established. In the early game, you'll be acquiring and spending Kerbal Construction Time (KCT) upgrade points to increase the pace of your space program's progress.
Each career starts with the player having no KCT upgrade points. They're acquired in two ways: they can be purchased at a cost of 20,000 funds each; and the player will earn a KCT upgrade point for every 20 science points collected. (Note – This is different from the old RP-0 method, which started the player out with a pool of upgrade points, and awarded an upgrade point for each tech node unlocked.) Once you've acquired some KCT upgrade points, be sure to spend them using the Upgrades button in the KCT menu. In the early game, when there are only a few science experiments unlocked, and rockets are far from reaching orbit, most players will purchase the majority of their upgrade points. It is entirely normal and expected for a player to spend the majority of their early to mid-game funds on KCT upgrade points.
Note: The corollary here is that each science point is effectively worth 1,000 funds worth of KCT upgrades – on top of its inherent value in unlocking tech nodes – which can help you decide which contracts to take based in part on how much science you might be able to acquire. That contract to fly by a particular celestial body may look just OK from a funds standpoint, but it looks a whole lot better if you put a bunch of science experiments on your probe. It's not uncommon for a well-executed interplanetary mission to result in several dozen KCT upgrade points being awarded.
While a 1-to-1 ratio is the conservative way to allocate points, many have found success in the early game by favoring VAB build rate at first, spending two or more points (sometimes many more) on build rate for every point spent on R&D. Once the build rate is up to a workable level, many players will start balancing things out and split the points more evenly between VAB and R&D. On the other hand, many others find success investing only the first one or two points in the VAB, then only buying R&D upgrades. They will continue to upgrade the R&D complex alone until their technology is at the level needed for a competent orbital launcher, and then begin investing in the VAB again.
It's not really a question of which is better, since the VAB and R&D rate are intertwined; it's more along the lines of "which upgrade investment will offer the greatest return and/or enable the most progress for my space program at this point in my career". You'll need to invest points in R&D to research new technologies more quickly, while also investing in VAB build rate to build rockets using those new technologies at a faster pace to complete more contracts. Each player will ultimately determine what balance works best for their own play style.