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An introduction to value management


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What is Value Management?
John Heathcote, Senior Lecturer at Leeds Metropolitan University and Adam Roberts, Project Manager at London Underground discuss the salient features of ‘Value Management’ at the APM event on 22nd May 2014, in London.

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An introduction to value management

  1. 1. An overview of the salient features of ‘Value Management’ ADAM ROBERTS & JOHN HEATHCOTE – MAY 2014
  2. 2. AGENDA • Introduction (5 min) • What is Value Management? (45 min) • Research experiment (20 min) • Further discussion (40 min) • Presentation of findings (10 min)
  3. 3. INTRODUCTION Adam Roberts - Project Manager London Underground (MAPM) Full member of the APM Committee member of the APM VM SiG Final year of MSc. Strategic Project Management John Heathcote – Senior Lecturer Leeds Metropolitan University (MBA / MAPM) Full member of the APM Chairman of the APM VM SiG
  4. 4. THE ORIGINS OF VALUE MANAGEMENT • Value Analysis was developed for procurement by a General Electric Company employee, Lawrence D Miles, in 1947 • The success throughout 92 GE departments resulted in the training of thousands of employees in the basics of Value Engineering • The technique first came to the UK in 1957 - Source: Institute of Value Management (IVM)
  5. 5. DEFINITION OF VALUE? “All cost is for function” - Lawrence D Miles (1904 – 1985) “A measure of how well an organisation, project, product, or service, satisfies stakeholders’ objectives in relation to the resources consumed” - Source: EN1325 - 1
  6. 6. WHAT IS VALUE? V (Value) ∝ B (Benefits + Requirements) / £ (Cost) – OGC (2010) “Value increases when the satisfaction of the customers needs augments and the expenditure of resource diminishes” – Source: Robert Tassinari (1995)
  7. 7. OBJECTIVE / SUBJECTIVE? Value is Subjective – OGC (MoV) Value is a Subjective term – APM BoK 6th Edition So: Is the Management of Value - Subjective or is it Objective?
  8. 8. MANAGEMENT OF VALUE - OGC • Value = Currency • Value as in Portfolio / Programme / Project = Value for money • Reflected in measurable cost
  9. 9. DISCUSSION • If Value is Subjective how can we make managing Value an Objective process? • If the Value (in currency) is specified via a consensus of all Stakeholders, can the management of this Value be managed Objectively? • Is there a risk when attempting to manage Value Subjectively? • Can Value be managed both Subjectively and Objectively depending on the level of requirements definition?
  10. 10. BALANCE • Value is a balance of: • Risk • Resources • Quality • Detailed requirements ∝ Objective / Subjective process “Truly successful Project Managers understand that Projects exist only to promote and Benefit the organisation at large” - Source: John C Goodpasture (Managing projects for Value)
  11. 11. APM BOK 6TH EDITION “Value Management is an established, structured approach to both requirements management and solutions development. This is a consultative approach that focuses on the Value that can be generated by Stakeholder Requirements” - Source: APM BoK 6th Edition
  12. 12. FRAMING • Establishing high level principles • Establishes function integration to maximise Value • Develop Value profile • Relative contribution to the Value of each requirement - Source: APM BoK 6th Edition
  13. 13. GATHERING • Focus groups, personal interviews, surveys, etc. • Agile methodology – continuous gathering • Value Management includes Lessons Learned - Source: APM BoK 6th Edition
  14. 14. ANALYSING • Combines functions with Value based techniques • Function Analysis • Function Cost Analysis • Understanding of Requirements - Source: APM BoK 6th Edition
  15. 15. PROCESSING • Provides feedback to Stakeholders • Builds consensus • Generates ideas • Communicated through various methods • Individual consultation / group workshops, etc. • Leads to debate - Source: APM BoK 6th Edition
  16. 16. WHAT IS VALUE MANAGEMENT? “Value Management is the name given to a process in which the functional benefits of a project are made explicit and appraised consistent with a Value system determined by the client” Value Management is a process and links the functional benefit with the client’s expectation – Source: Kelly. J et al (2004) Value Management of Construction Projects
  17. 17. DEFINITION OF VM- (EN 12 973) “Value Management is a style of Management, particularly dedicated to motivate people, develop skills and promote synergies and innovation, with the aim of maximising the overall performance of an organisation” - Source: (EN12973)
  18. 18. DEFINITION OF VM - IVM “Value Management is a structured team based approach to identify functional requirements of Projects and / or contracts to achieve Optimum Function for Minimum Cost” - Source: Institute for Value Management website
  19. 19. VM SIG WHITE PAPER • Value Management greatly Enhances Value for Money • Benefits should not be accepted at any price • There is not always a link between TCQ and benefits • Value Management / Engineering techniques creates Value early in the life of a project - Source: APM VM SiG (Peter Langley)
  20. 20. European Standard “The EN 12 973 represents a consensus of views and provides a benchmark of good practice. It is designed to provide flexibility and can be applied in a very wide range of circumstances. It captures the essence of Value Management and provides a framework for its application. It describes a range of useful tools and encourages the selection of the most appropriate methods to achieve the desired outcome” - Source: EN 12 973
  21. 21. WHAT VALUE MANAGEMENT IS NOT Value Management / Engineering / Analysis is definitely NOT a cheapening process! Reliability and performance should never be sacrificed just for the sake of cutting costs…
  22. 22. FINDINGS Total No of participants: Total Number 131: Total Number 134: Completed 131 Completed 134: % Complete 131 % Complete 134 Average time 131 Average time 134 % time difference 44 22 22 13 15 59% 68% 496 s 323 s 53.6%
  23. 23. This presentation was delivered at an APM event To find out more about upcoming events please visit our website