Value Management
- 1. VALUE MANAGEMENT WONG TIONG YUNG I14005802 LEW YAO ZHONG I14005791 LIM YANG TYIN I15009202
- 2. 1.0 DEFINITION • A management process that involves… 1. The control, monitoring & managing of project team members. 2. Redesigning of spaces & components; appropriate selection of materials 3. Optimisation of the process of producing a product in order to meet the stated project goals. • A holistic process of managing all forms of resources; this differentiates the practice from other cost-cutting/cost-saving exercises. • It adopts a systematic approach that is logical, methodological & organised so that members of team can easily participate & approach can adapted for subsequent exercises.
- 3. 2.0 AIM/OBJECTIVE • Purpose of selecting the one that provided same, better, or best function at the least cost. • Provide the best function at the lowest possible overall cost. • To unify these differences view of values from various construction participants in order to achieve the project’s stated goals using minimum resources
- 4. 3.0 TERMINOLOGIES USED IN VALUE MANAGEMENT • The concept of practice with the emphasis on the origin & meaning of various terms that have been used to describe VM. • Included value engineering, value planning, value analysis, value control, value methodology, value improvement, and value assurance.
- 5. 3.1 VALUE METHODOLOGY • It refers to the process, principles & techniques adopted in conduct and practice of value management. • It includes those practised at value planning, engineering & analysis phases.
- 6. 3.2 VALUE PLANNING • An aspect of value management that is associated with achieving project value during the planning stages of a project. • Value planning is a sub-set of value control and they are both derived from the principle of cost planning and cost control, which are common terms for management of developmental projects.
- 7. 3.3 VALUE CONTROL • To concerned with managing value throughout all stages of a project where cost control is practiced. • This indicates a direct link to cost control which is not the same as value management, justifying the reason why the term is not common among value management experts, analysts or researchers.
- 8. 3.4 VALUE ANALYSIS • Associated with the post-construction or completion phase, indicating that the practice is related to the value of completed project. • This inclusive of the use and re-use stages of a project.
- 9. 3.5 VALUE ENGINEERING • It described as the study of value at the design, construction & engineering stage of a project. • Value management explains all the concepts, principles, processes, and participants required for each stage of the discipline in a project.
- 10. 3.6 VALUE MANAGEMENT AND CONSTRUCTION INDUSTRY • First introduced to the manufacturing industry but it has gained wide popularity in other sectors of the economy, including construction industry. • Clients, professionals, contractors & other stakeholders in construction industry have benefitted considerably from application of value management where it has been accepted and adopted. • Value management can be described as an orderly, organized & systematic construction project management process that adopts a multi-disciplinary & diverse approach, geared towards the achievement of best functions of elements, materials & other construction resources at the least possible overall cost.
- 11. 4.0 RISKS OF VALUE MANAGEMENT IN CONSTRUCTION • Sufficient Time for the Study • Completeness of Cost Information • Related Functions of Components or Elements • Uniqueness of Construction Projects • Quality of End Product • Selection of Team Members • Representation of Original Design Team • Choice of Facilitator • Support for the Practice • Timing of the Exercise • New Concept for Stakeholders
- 12. 4.1 SUFFICIENT TIME FOR THE STUDY • The concern over the period of time it takes to complete an exercise. • 40-h workshop which is about a working week (using normal eight working hours in a day). • Difficult to be away from their day-to-day activities for a whole week – three-day workshop. • Adequate time should be devoted to complete each of the recognised stages.
- 13. 4.2 COMPLETENESS OF COST INFORMATION • Lack of full and necessary information of all the costs associated with an element or component. • Some investment appraisal technique helped to mitigate. • But, project planning and evaluation techniques, investment appraisal and life-cycle costing, is based on the probability of occurrence. • Difficult to predict inflation and other economic indices that affect the cost and price of materials and resources. • Possible to make incorrect assumptions.
- 14. 4.3 RELATED FUNCTIONS OF COMPONENTS OR ELEMENT • Items or elements with related function are difficult to quantify. • Two reasons: 1. components or elements of building that serve more than one unique function. 2. difficult to determine their primary role for specific projects as it may vary from one project to another. • Eg: wall has its basic function but windows and doors are expected to perform a wall function in addition to their original function. • Makes it difficult to apportion the right function.
- 15. 4.4 UNIQUENESS OF CONSTRUCTION PROJECTS • No two construction projects are the same. • The distinctiveness of a project affects the function of some elements and components of the project. • Eg: column can be aesthetic feature or serve as structural members. • Able to identify the functions of various elements bearing in mind the uniqueness of the project in consideration.
- 16. 4.5 QUALITY OF END PRODUCT • Determining a product that will perform the best function at the least possible cost through examination of current & past situations • However… 3 issues: 1. availability of historical data and required information on the product 2. analysis of the difference in exposure to weather and other conditions between the present or past and the current situation 3. examining the conditions of the use of the products.
- 17. 4.6 SELECTION OF TEAM MEMBERS • Multi-disciplinary in that members of the team are varied. • Unlikely to be drawn from the same area of practice or sector of the economy. Selection of the wrong people who may contribute nothing or negatively. Team members accept the practice and have previous experience of value management. • Depending on the nature of project and the set of people. • Difficult to choose from team members, more difficult to select who is not part of the original team.
- 18. 4.7 REPRESENTATION OF ORIGINAL DESIGN TEAM Existing design team members of the project are included as members of the team. • They might be unwilling to agree and accept changes. • Selection of members of the original team since not all can be invited to be part of a value management team. • Because number will be too large = ineffective team, and cost of paying = unnecessary. • Ensure who have the time and ability to contribute positively to the success of the exercise are considered as members.
- 19. 4.8 CHOICE OF FACILITATOR • Key characteristic - knowledge, understanding, and experience of a value management workshop. • A person should be able to direct, guide, and control other team members in line with the principles and practice of the discipline. • Facilitator cannot over-emphasized as the choice can determine the success or failure of the exercise.
- 20. 4.9 SUPPORT FOR THE PRACTICE • Level of support from clients, statutory or regulatory bodies as well as from top management staff of an organisation. • Cost-cutting exercise geared towards extorting more money from clients, the outcome and recommendations from the team may even be discarded. • Whole process a waste of time and resources with no impact on the project.
- 21. 4.10 TIMING OF THE EXERCISE • Choice of the right stage of a project at which to implement it. • Before final drawing - insufficient information for the team to work with and make reasonable suggestions and recommendations. • After final drawing – 2 issues 1. project need to be delayed for at least a week for the exercise to be conducted. 2. recommendations will lead to amendments and alterations of the design which will cost extra costs to the design team. • Right timing may depend on projects’, clients’ and other stakeholders’ characteristics.
- 22. 4.11 NEW CONCEPT FOR STAKEHOLDERS • initial acceptance of the practice of value management by stakeholders, especially members of the original design team for a project. • conclusions and recommendations of VM can alter or change the proposals • May not be welcome, as they will perceive it as challenging their professional competence and capability
- 23. 5.0 COST OF VALUE MANAGEMENT IN CONSTRUCTION • Various costs associated with a value management exercise. • These costs incurred before, during, and after the exercise. • the challenging areas when convincing clients and other stakeholders to adopt a value management exercise for their project.
- 24. 5.1 COST OF FACILITATOR 1. Value manager responsibilities • Planning, controlling & managing a value management exercise. • Reporting the outcome to clients. 2. Cost may include a professional fee, transport costs, and the like. 3. Payment may depend on several factors • experience of the facilitator • type and nature of the project • mode of engagement • size and cost of the project. 4. The payment may be made according to an approved scale of fees basis, based on man-hour rate or other method which must agreed and approved prior to the commencement of exercise.
- 25. 5.2 COST OF OTHER PARTICIPANTS • The participants are other members of the value management apart from the facilitator. • Identified attributes affect the cost of the individuals and their payment may depend on the same factors as fir the facilitator. • Payment method decided and settled before the exercise; can be through any of the remuneration.
- 26. 5.3 COST OF VENUE • A conducive environment with basic facilities and amenities is fundamental to conducting productive meetings. • Judging by expectations from the value management exercise. • Venue is expected to be good enough for members of team; to perform their function without any form of hindrance. • Cost of venue not only include cost of securing or renting ; also siting the venue in the right environment. • An alternative is an E-workshop where discussions are held via the Internet; eliminating the cost of a venue.
- 27. 5.4 ADMINISTRATIVE COST • Provision of basic social amenities; also to allocate cost for administration. • Include insurance, office supplies, wages and benefits of accounting staff, wages and benefits of secretary, wages and benefits of legal personnel.
- 28. 5.5 INFORMATION GATHERING COST • Implies that the more alternatives and detailed information available about them; the better the ability of the value management team to brainstorm & identify the best alternative by using the principle of function and cost. • One of the costs associated is collecting information regarding function, cost (initial, annual, running, maintenance), lifespan, and physical characteristics of elements or components to facilitate deliberation by team members.
- 29. 5.6 INDIRECT AND OTHER COSTS • Costs that are not directly associated with the actual value management exercise but necessary in achieving the overall goal of the practice. • The indirect cost may include cost of buying equipment to actualise recommendations emanating from the value management exercise. • The costs required in altering/changing the original or existing design to accommodate proposals from the exercise & the general cost of following up on the understanding & implementation of recommendations.
- 30. 6.0 CONCLUSION Value Management includes: • Control, monitoring and managing of project team members. • Redesigning of spaces and components, appropriate selection of materials. • Optimisation of the process of producing a product in order to meet the stated project goals. • Concept is to selecting the one that provided same, better, or best function at the least cost. • Value management is a organized & systematic construction project management process that adopts a multi-disciplinary which leads to achievement of best functions. • Some risk require attention in order to achieve the purpose.
- 31. THE END