Chapter 3: Value management
Provides a structured framework in which requirements are evaluated against the means of achieving them as the project develops thereby insuring that money and effort is spent where it is most needed and best value for money is achieved. VM is primarily about enhancing value and not cutting cost, cost is reduced as a byproduct of VM. VM embraces the whole value process and includes value planning, value engineering and value reviewing and includes; determining the functional requirements of the project or its parts, identifying alternatives and examining cost and value of each alternative to enable the best value selection. Value analysis It describes a value study of a project that is already built or designed and analyzes the project to see it can be improved. The purpose of VA is to give a second look to the design of product with the aim to reduce cost without reducing its value. VA is applied after all aspects of design is ready or project completed by a separate team not involved in the design or implementation of a project. Value engineering: Value engineering is a discipline comprising a series of techniques aimed at an organized, systematic efforts directed at analyzing functions of items, products, equipment, process and procedures for the purpose of accomplishing all the required functions at the lowest total cost. Unnecessary cost built in design will have to be cut. Functional balance between cost, performance and reliability by VE review. The goal of VE is to ensure a design that meets the owner's required function at the most reasonable life cycle cost. All designs have unnecessary costs - project is usually formed and designed under pressure of meeting with the deadlines the designer will not be able to review it for unnecessary cost. The designer must understand that unnecessary cost in a design are not a reflection on his abilities as a professionals, but rather a management problems that needs to be addressed. Poor and wrong decisions can be made under the competing pressures of time, budget and quality. As a result all projects are likely to include unnecessary costs.
The reason for poor value occurs: The challenge is to cut unnecessary costs or to keep at minimum level. Endless reasons for poor value in designs. VM and cost reduction VM is positive, focused on value rather than cost, seeking to achieve an optimal balance between time, cost and quality. VM is structured, auditable and accountable VM is multi-disciplinary, seeking to maximize the creative potential working together.
Life cycle costing (capital costs, operating costs includes staffing, energy consumption, maintenance, cleaning, insurance etc and disposal cost) is a vital element when seeking to optimize value for money. VM aims to eradicate the need for late changes, VM should not encourage them. The first review of VM should include - list of objectives identified, objective hierarchy by ranking, feasibility of options and valuable option and selection of most promising option. Second review should include - review of validity of the objectives, evaluate feasibility of options, examine most promising option, develop a project brief based on most promising option, program for developing the project. Third review could be during design development (30-40% of design complete) and that include - review project requirements and objectives, check key design decisions taken are relevant, review key decisions against project brief, evaluate options, identify and develop the most valuable one to enhance value, agree a plan for the continued development of the design. Who to involve: The value manager - client's professional advisor, project manager, construction manager The project team An external team Techniques Information gathering Cost analysis Pareto rule Basic and secondary functions Cost and worth
FAST ( functional analysis) Creative thinking through brain storming Life-cycle costing Criteria weighting Analysis and ranking of alternatives value tree Weighted value tree etc
Benefit to promoter Improvement in value Reduction in risk Reduction of capital, operation and maintenance cost Improvement in delivery dates Negative approach could be VM is already included in the service contract Uncertain about the process Thinking of increased risk through innovation Benefit for the designer Reduction of his/her risk exposures Innovative and better design Integration of design with construction and safety Good professional reputation Finical gains through additional fees Marketing benefits for new methods and techniques Negative approach could be Thinking that by VM the owner is criticizing his design capability Cost cutting exercise may result in reducing high quality elements expensive with no offsetting financial benefit risk may increase through innovation Benefit for contractor Incentive through sharing of savings Improved relations Less interfaces and disruption to work Improved buildability and safety Expansion of experience Reduction in contract period and overhead costs Marketing benefits for new methods and techniques. Negative approach could be
Increased risk with new design Unwilling to loose high opportunity through variations and claims Thinking that the process may delay the construction start
