This document defines value management and its key concepts in construction. It discusses that value management aims to select materials that provide the best function at the lowest cost. It also aims to unify different stakeholder perspectives to achieve project goals efficiently. Value management adopts a systematic, multidisciplinary approach to maximize return on investment and realize best value. The document outlines various value management terminologies and discusses risks and costs associated with its implementation in construction projects.

1. THE CONCEPT OF VALUE
MANAGEMENT
Tan Vyn Shoon
Gan Khai Sand
Lim Wei Teck
Siou Hon Ming

2. DEFINITION OF VALUE MANAGEMENT
Value Management (VM) was introduced to examine
and analyze alternative materials for the purpose of
selecting the one that provided same, better, or best
function at the least cost.
Value Management was conceived and practiced at
the early of project conceptualization as a result of
the need for innovation, novelty and advancement of
existing practice.
There are possible different views of values from
various construction participants, but the aim of value
management practice is to unify these differences in
order to achieve the project’s stated goals using
minimum resources.

3. AIM OF VALUE MANAGEMENT
The objective of VM therefore is to provide the best
function at the lowest possible overall cost, including
the following:
 Management process
 Systematic approach
 Teamwork and multi-disciplinary principle
 Best Value Concept and Whole life cost concept
 Stages of project or product
 Value for money principle
 Issues relating to investment return

4. PERSPECTIVE OF VALUE MANAGEMENT IN
CONSTRUCTION INDUSTRY
 Can be described as an orderly, organized and
systematic construction project management.
 Adopts multi-disciplinary and diverse approach
 Aim of maximizing return on investment
 Realizing best value fro money for construction
client

5. TERMINOLOGIES
Value Methodology
 Process, principles and techniques adopted in the
conduct
 Practice of value management
 Includes those practised at value planning, engineering,
and analysis phases
Value Planning
 Associated with achieving project value during the
planning stage
 Value at early stage, namely, conception, inception and
so on
 Subset of value control
 Derived from principle of cost planning and cost control

6. TERMINOLOGIES
Value Control
 Concerned with managing value
 Direct link to cost control
 All stages of a project where cost control is practised
Value Analysis
 Associated with post-construction or completion phase
 Inclusive of the use and re-use stages of a project
 Improvement and assurance, implying that ‘value
improvement’ and ‘value assurance’
Value Engineering
 Closest term to “value management”
 Study of value at the design, construction, and engineering
stage of a project
 Explains all the concepts, principles, processes, and
participants

7. RISK OF VALUE MANAGEMENT IN
CONSTRUCTION
 Sufficient time for the study
 Risk to the adoption and acceptance of value
management in initial period
 Completeness of Cost Information
 Lack of full and necessary information
 Uniqueness of Construction Period
 Distinctiveness of a project affects the function of some
element and component
 Quality of End Product
 Concern availability of historical data and required
information on the product

8. RISK OF VALUE MANAGEMENT IN
CONSTRUCTION
 Selection of Team Members
 Selection of the wrong people who may contribute
nothing
 Representation of Original Design Team
 The existing team members are unwilling to agree and
accept changes of the project
 Choice of Facilitator
 Importance if a good and knowledgeable facilitator
cannot be over-emphasized as the choice can
determine the success or failure of the exercise

9. COST OF VALUE MANAGEMENT IN
CONSTRUCTION
 The cost are incurred before, during, and after the
value management exercise.
 This is one of the challenging area when adopt
value management exercise .
 Cost of a value management exercise is relatively
cheap.

10. COST OF VALUE MANAGEMENT IN
CONSTRUCTION
1. Cost of Facilitator
2. Cost of Other Participants
3. Cost of Venue
4. Administrative Cost
5. Information Gathering Cost
6. Indirect and Other Costs