Design and Value Management
Value Management (VM)
Design and Value Management
Design and Value Management is a method of highlighting possible opportunities to create value within a project and subsequently managing those solutions to ensure value is continuously delivered.
It encompasses the whole life cycle of a project, from design to completion and beyond. The process is undertaken in collaboration with the project team, understanding and managing the balance between cost, time and performance. Prior to value being clear and understood, it is important for the project team to understand cost, time and the needs and wants of stakeholders (function) as explained below:
Costs, as in whole life costs, and in particular, sizeable or increased initial costs, can be justified and explained if it reduces future maintenance costs. This is therefore decreasing disruption in the future because of the reduced need for maintenance.
Time or programme issues can often be a major problem on a scheme. It could cause funding problems and in fact increase overall scheme costs.
Function (performance) is the wants and needs of stakeholders (all interested parties within a scheme). Some of these needs and wants will be ‘must haves’ and essential for the scheme to be built, but some will be less important. All options must be considered in an effort to ensure true VfM.
The main benefit of VM is that it gives each and every project a clear path to create value through the understanding of client objectives as well as the needs and wants of the stakeholders. The route to delivery is agreed and developed with the full project team, with the understanding that solutions to achieve the objectives are reliable and cost-effective.
A number of reports have documented the UK Construction Industry as being inefficient and beset with problems of performance and quality. Additionally globalisation has intensified the need for companies to seek ways of gaining a competitive edge.
Value Management takes it roots from the concept of value and functional approach which was initiated by Lawrence D Miles in 1940’s and 1950’s who developed the Value Analysis principle as a mean to improve the value of current products. Initially, Value Analysis had the primary purpose of identifying and removing unnecessary costs. However, the comparative prominence shifted from the basic requirements; material, cost and quality to an enhanced philosophical approach to value, which encased time, cost, performance, knowledge and technical proficiency.
Value Management can be a cost-effective and highly beneficial exercise if integrated into project management methodology during the initial stages of the project life cycle. This is because frequent reviews are minimized, reducing the overall cost of the process. Value Management can improve a project not only in terms of quality and cost, but also from an intangible standpoint by enhancing agreement between stakeholders through clearer objectives and reducing risks of changes in project scope through better comprehension of whole life costs. This leads to enhanced timing of processes as decisions are made swiftly with input from all parties. For example, appropriate timing of Value Management exercises can indirectly affect the ability to respect deadlines and avoid liquidated and ascertained damages.
The benefits of VM depend on the level of risk associated with a project. For high-risk projects with significant value, a complete and continuous VM process along the project life cycle is justified.
VM optimizes mutual understanding between the client and users to ensure that needs and expectations are met concurrently, based on priorities. This provides a systematic basis for decision-making regarding value and function throughout the project life cycle. For example, consulting the brief to solve design queries and ensure sustainable design.
VM ensures clarity of the project brief and enhances communication among stakeholders to mitigate clashes resulting from constraints. This process ensures that the project is delivered in the most beneficial way while addressing the business need, addressing both monetary and non-monetary attributes.
Functionally, VM provides the basis for design development that involves the close study and engineering of material selection, providing enhanced technical solutions with improved performance and quality. This approach optimizes resources, enhances environmental sustainability, and provides better value for money, such as choosing a structural steel frame over a precast frame that fulfills the same function.
VM is a technique that brings additional gain to a project, delivering value for money and additional intangible benefits when adopted at the right time and maintained throughout the project life cycle. Its success depends on its continuous process, which ensures the project has a concrete business case and aims to create value for the construction parties, the project, and the client.
CASE STUDY
Methodology The case study was based on a questionnaire. Postal questionnaires were used due to time constraints and the respondents being geographically dispersed. The original questionnaire was subjected to a pilot study aimed to eliminate ambiguity. Ten questionnaires were distributed to Architects and Contracting firms. Comments received formed the basis for the revised questionnaire, which included a brief definition of VM. This was distributed to forty firms including Architects, Consultant Value Engineers and Contractors, chosen on the basis of a random selection of large firms. The responses received were not as high as anticipated, only ten being returned. This limited the accuracy of the results obtained, and the spread of opinion, but enabled provisional conclusions to be drawn in respect of the direction of further research and the appreciation of VM within the industry. The questionnaire was in three sections. Section One required the respondents to consider whether design needs to be managed, whether this is difficult, and who should manage it. It also examined the importance of the design stage relative to the rest of the project; questioned whether early development had the greatest effect on the final outcome and asked if this was under-resourced. Further, the respondents were questioned about their perception of VM as an effective design management tool, and whether they thought VM could bridge the gap between design and construction. Section Two was devised to discover at what point in a project’s life VM should be used, by whom, and whether it is perceived as more than just a cost cutting exercise. The respondents were asked to consider the benefits of using VM as a design management tool. Section Three aimed to discover how familiar each respondent is with VM in practice and whether they thought that it should be used more often. They were asked to consider why VM is not used more often, and how the barriers to implementation could be overcome.
RESULTS
The respondents agreed that the design stage can and should be managed although this is difficult. The majority felt that a project management team is best equipped to manage this process, although this was not unanimous and with a larger sample the answer may have been different. This result reflects the literature review. Authors held a wide range of different views. The use of the client or the designers as the design managers can be defended equally as well as the use of a project management team. All but one respondent agreed that decisions made in a project’s early stages have the greatest effect on the final cost, quality and time management. They acknowledged that least money is spent on this stage as a proportion of the total project budget. All agreed that VM is an effective design management tool that can help to bridge the gap between design and construction. There was a difference of opinion concerning when VM can offer the greatest rewards, although all did agree that the least benefits would come from its application in the occupancy stage. Eighty percent felt that its implementation during the design stage would offer most reward. However, the main difference was the order in which the feasibility and design stages were placed. Sixty percent placed them second and first respectively and thirty percent reversed this. Only thirty percent stated that the earlier VM is used, the greater the benefits. The majority of respondents thought that an in-house team rather than an external team should carry out the VM study. Although a mixture of both these options was chosen by at least one respondent. A number of benefits, resulting from the use of VM, were stated by the respondents. These benefits centred on reducing unnecessary costs, improving constructability and increasing performance, quality and value. Other perceived benefits included improved decision making as a result of better team morale and focusing on the design. All felt that VM is not simply a cost cutting exercise. The sample which responded to the questionnaire were in the majority fairly inexperienced in VM, with 80% having completed between one and five VM studies in the past five years, only 20% having partaken in up to 10 studies in that period. All agreed that the industry could benefit from an increased used of VM. Eighty percent of respondents had always implemented a VM study if it was suggested.
The respondents considered the main barriers to the implementation of VM to be the adversarial and fragmented nature of the industry, ignorance, its cost and a lack of forward planning. This result parallels the findings of the literature review. However what is noticeable is that the culture of the industry and lack of education regarding VM are thought by the respondents to be more important than a lack of senior management support. Recommendations were given as to how the barriers to the implementation of VM may be overcome. The most common responses were to include it as a mandatory service as part of a consultant’s terms of engagement, emphasise front end planning of projects to ensure time is made available, to educate clients as to its techniques and benefits and a change in industry culture to promote a cohesive not confrontational working environment.
CONCLUSIONS AND IMPLICATIONS OF THE FINDINGS
The necessity of effective Design Management is generally acknowledged by the industry and the findings indicate that VM is recognised as an effective Design Management tool. Many concede that a variety of problems exist within the design process which need addressing such as the amount of complex information to be communicated.
Value management
is often criticized for being associated with cost-cutting, particularly when its core method, value engineering, is used as a euphemism for it. However, when implemented correctly by competent and trained professionals, value management can provide several advantages for an organization and its projects.
The process of value management involves defining the scope and requirements of a project, establishing clear and measurable objectives, and maximizing value. In other words, it’s about defining the right project, designing it correctly, and completing it to achieve the desired outcomes.
With specialized competency-based training, quantity surveyors, project managers, and project teams can offer best-practice value management to their clients. This approach can help organizations to achieve their goals efficiently and effectively.