Value Management (Alternative Assessment) - Understanding and Learning outcome

1. VALUE MANAGEMENT
QSB 60203
Alternative
Assessment
April
2020
School of Architecture, Building and Design
Bachelor of Quantity Surveying (Honours)
NAME
WAN YEE LEN
STUDENT ID
0330764
SUBMISSION DATE
9 JULY 2020
Semester 6

2. Introduction
Back in 1961, Lawrence D Miles initiated Value Management (VM) with its foundational conceptualization of
value and function. The strategic management approach is initially known as Value Analysis (VA). Such
establishment was developed as a mechanism for improving the value of a product or process (Tosca, 2018).
Essentially, VA served the fundamental objectives of identifying unnecessary costs and resolved it through
elimination. Unlike the conventional approach with the comprehension of cost, quality and materials as basic
requirements, VM developed as an enhanced theoretical evaluation to value, which encapsulated distinct
elements of technical proficiency, knowledge, time, performance as well as cost (Tohooloo, 2017).
Correspondingly, VM is initiated from the inception to completion stages of a project as a comprehensive
evaluation.
Figure 1: Value Management in construction
(Source: Dean, 2019)
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3. Accordingly, VM is a team-oriented approach with systematic management in problem solving as to achieve
effectiveness of construction expenditure in the aspects of value improvement and/or monetary savings.
However, VM has always been wrongfully conceptualized as a cost-cutting exercise (Norton & McElligott,
1995). Particularly when VM is not properly handled, it can turn out as the latter which it is not supposed to be.
On that account, VM made emphasis on ‘function’ as described being the achievement of precise objectives set
out for a project in comparison to what was initially set out in a proposal (Jaapar, Endut, Bari, & Takim, 2009).
Whereas ‘value’ represents the most practical solution in performing a function that fulfills the needs and
expectations of end users (Mat & Shah, 2006). Henceforth, VM study is undertaken through team working and
communication of a multidisciplinary group with the inclusion of construction professionals and stakeholders
who possess distinct contributions to the overall success of a project.
Figure 2: The concept of Value Management in the construction industry
(Source: Tanko, Anigbogu, & Molwus, 2015)
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4. Significant contributions
In reference to Thiry (2001), VM remarkably brings together positive human dynamics wherein a mutual
agreement between the client and end users with regard to respective needs and expectations are synchronously
established through prioritization. Thereafter such factors are perceived as a yardstick for decision-making on
the subject of value and function along the project life cycle. VM further enhances communication in respect of
mitigating conflicts stemming from limitations pertaining to expectations and project requirements as specified
through a clear consensus of strategic brief. As a key takeaway of this benefit, VM ensures a beneficial project
delivery without dismissing business needs.
In the furtherance of functions yielded from VM practice, it serves as the grounds for design development
through the assessment of engineering information, thereby making an appropriate material selection decision.
Substantially, an effective implementation of VM study in such aspect will contribute enhanced technical
solutions perceived in terms of upgraded quality and improved performance. Ultimately, the principle of VM
study is the maximization and achievement of value for money.
Following the testaments of VM adoption in Malaysian construction industry, particularly in public projects,
both the Economic Planning Unit (EPU) and the Construction Industry Development Board (CIDB) have
perceived the benefit of better value for money, thus made emphasis on the utilization of such approach
thereafter. Subsequently in 2009, a “Value Management Guidelines Circular 3/2009” was published and served
as a mandatory standard for public projects rated at RM50 million and above upon VM application (Jaapar,
Zawawi, Bari, & Ahmad, 2012). The result was in favour considering that 71 public projects and programmes
advantaged a significant savings of 23.53% on total project cost (Ahmad, 2011).
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5. Value Management and Cost Management
Oftenly, Cost Management (CM) is brought into the picture when a project decision-making is in process.
Henceforth, a side-by-side comparison is delineated:
Value Management Cost Management
Principal A systematic approach in achieving best
balance between project objectives,
stakeholders’ views and indispensable
resources (cost). Significantly, it does not
revolve entirely on cost cutting.
Primarily concerned with planning and
controlling of project’s budget. An
effective management reflects project
completion on a budget and within its
outlined scope.
Determinant Value. Relates to the satisfaction by a
decision brought about with regard to the
resources expended in its realization.
Function and the whole life cost thereof
are comprehensively expressed in the
context of construction projects.
Cost. Generally represents the amount to
be disbursed as a return of goods or
services. In the context of construction
projects, cost refers to capital costs as
associated with acquisition, construction,
as well as operational.
Techniques • Function analysis
• SMART methodology
• Priority setting matrix
• Weighted scoring matrix
• Cost control
• Cost budgeting
• Cost estimating
• Resource planning
Personnel A multidisciplinary approach with the
involvement of client and full consultant
team.
Project cost manager or Quantity
Surveyor.
Critical time frame
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6. Justification for Value Management to be merged
Dissertation findings of Lai (2006) identified ten barriers to the implementation of VM in the Malaysian
construction industry. Chiefly, there is a lack of awareness and knowledge about VM, deprivation from
authorized parties including the government and construction employers, as well as the absence of VM
implementation guidelines locally. Notwithstanding the enactment of “Value Management Guidelines Circular
3/2009” thereafter, private projects still indicate little evidence of VM adoption. On the contrary, CM is
conventionally and widely executed as a means of resolving the fundamental concern of project budget.
Needless to say, cost is eventually prioritized with or without the party’s intention, and thus veiled the
significance of highlighting project values. Given that VM by implication reflects the principal of CM yet with
added merits, therefore it is recommended for the initiation of VM as a branch of CM in Malaysian construction
industry. As a consequence, construction parties will be familiarized with VM and simultaneously apprehend its
adoption in meeting the best value for money.
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7. Conclusion and recommendation
VM has proved its vitality through previous adoptions in several construction projects and programmes. Despite
that, there exists barriers which hinder acknowledgement and recognition of construction organizations and
relevant parties in regard to VM practice. Thus, following recommendation upon the development and increased
adoption of VM in Malaysian construction industry whereby it transpires as the umbrella body of CM.
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8. References
Ahmad, N. (2011). Keynote Speaker for Value Management Seminar, Economic Planning Unit of Prime Minister Department,
Putrajaya International Convention Center. 24 May 2011
Afsharghotli, A., & Rezaei, A. (2013). Value Management in Building Construction Industry of Northern Cyprus: Addressing a Theory
and Practice Gap. In AEI 2013 (pp. 84-93). American Society of Civil Engineers. doi:10.1061/9780784412909.009
Jaapar, A., Endut, I., Bari, N. A., & Takim, R. (2009). The Impact of Value Management Implementation in Malaysia. Journal of
Sustainable Development, 2(2), 210-219.
Jaapar, A., Zawawi, M., Bari, N. A., & Ahmad, N. (2012). Value Management in the Malaysian Construction Industry: Addressing a
Theory and Practice Gap. Procedia-Social and Behavioral Sciences, 35, 757-763.
Lai, N.K. (2006). Value management in construction industry. MSc diss. Universiti Teknologi Malaysia.
Male, S., Kelly, J., Fernie, S., Grönqvist, M., & Bowles, G. (1998). Value Management: The value management benchmark: A good
practice framework for clients and practitioners. Thomas Telford.
Mat, S. D., & Shah, H. Z. (2006). Valuemanagement as an effective and efficienttool for space management. Seminar paper, Institute
of Value Management, Malaysia (IVMM). Retrieved from http://vm-academy.com/seminar_paper_01.pdf
Norton, B. R., & McElligott, W. C. (1995). Value Management in Construction: A Practical Guide. London: Macmillan Press.
Perera, S., Karunasena, G., & Selvadurai, K. (2003, August). APPLICATION OF VALUE MANAGEMENT IN CONSTRUCTION.
Built-Environment-Sri Lanka, 4(1), 3-12. doi:10.4038/besl.v4i1.7647
Tanko, B. L., Anigbogu, N. A., & Molwus, J. (2015, June). THE NEED FOR VALUE MANAGEMENT IN THE NIGERIAN
CONSTRUCTIONINDUSTRY. Nigerian Journal of Construction Technology and Management, 13(I), 89.
Thiry, M. (2001). The new European value management standard: how will it change the way we practice VM? Proceedings of the 4th
European Project Management Conference. London: PMI Europe 2001.
Tohooloo, Y. (2017, December 5). VALUE MANAGEMENT IN CONSTRUCTION: The Process and Benefits. Retrieved from LinkedIn
Web site: https://www.linkedin.com/pulse/value-management-construction-process-benefits-yashwant-tohooloo/
Tosca, C. (2018, April 23). What is Value Analysis / Value Engineering. Retrieved from Bruschi Web site:
https://www.bruschitech.com/blog/what-is-value-analysis-value-engineering
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