1. COST CONTROL 2
VALUE MANAGEMENT
Group Members:
Chau Bing Yee I14004795
Ng Liang Huat I14004844
Kok Lei Yee I14005612
Chin Karen I14005606
Lecturer: Madam Noorhidayah
2. DEFINITION
Examine and analyse alternative materials for purpose of choosing one that
provided best function at the least cost
Conceived and practised at the early stage of project conceptualisation as a result
of the need for innovation, novelty and advancement of existing practice
3. AIM
To unify the differences of various construction participant’s views of
values in order to achieve the project’s stated goals using minimum
resources
4. Important variables considered in the value management
1. Management process
- Involves control, monitor and manage of project team members, redesigning of spaces and components,
appropriate selection of materials, as well as the optimisation of the process of producing a product in order to
meet the stated project goals
2. Systematic approach
- Logical, methodological and organised
- Easily participate by team members
- Approach can be adapted for subsequent exercises
3. Multi-discipline technique
- Individuals from various background and diverse dispositions are selected and assembled in a team
- To brainstorm and agree on the optimisation of function and cost
5. 4. Analysis of function technique
5. Best value concept
6. Stages of project or product
7. Whole-life cost concept
8. Value for money principle
9. Issues relating to investment return
6. TERMINOLOGIES USED VALUE MANAGEMENT
Value Methodology
• Refer to the process, principles & techniques adopted in conduct and practice of value management.
Value Planning
• Is an aspect of value management that is associated with achieving project value during the planning stages.
• Associated with value at the early stage, namely, conception, inception, feasibility, viability, and other planning-
related activities.
• Is a sub-set of value control
• Both derived from principle of cost planning & cost control.
7. Value Control
Is respect to value management in concerned with managing value throughout all stages of a project where cost control
is practiced.
Indicates a direct link to cost control which is not the same as value management.
Value Analysis
Is associated with the post construction or completion phase
Indicates that the practice is related to the value of completed project.
It is inclusive of the use and re-use stages.
Management is a general term inclusive of improvement and assurance.
It is implying “value improvement” and “value assurance” are synonymous with value management.
8. Value Engineering
Value engineering mostly like value management
Described as the study of value at the design, construction and engineering stage.
Explains all the concepts, principles, processes, and participants required for each stage of the discipline in a
project.
This is necessary for the successful implementation of the discipline
Underscores the reason for its adoption in this research book.
10. Risk of Value Management in Construction
RISK FOUND IN ACTIVITIES :
1) MANAGING
2) CONTROLLING PEOPLE
• Management principles propose of planning,
controlling and regulating people, events,
procedure or practice.
• Value management is beneficial, to make sure the project is smooth, therefore, risks that
need to be monitored, evaluated, and responded.
• Worthwhile and successfully applied in the construction industry.
11. Sufficient Time for Study
One of the major risks to the adoption and acceptance
of value management in the initial period is the
concern over period pf time it takes to complete and
exercise.
1. 40h workshop is normal 8 hours working hours.
2. Some have argue that this workshop is difficult to be away form their day to day
activities for a whole week and as result.
3. For a value management excercise to be productive, time should be devoted to complete
each of the recognize stages.
12. Completeness of Cost Information
Lack of full and necessary information of all the costs associated with and
element.
Some investment appraisal techniques helped to mitigate this risk but the
fundamental principle.
As a result of these challenges, it is possible to make incorrect assumptions
regarding alternatives which can mark the success of the management exercise.
13. Related Functions of Components or Elements
Items are usually hard to be quantify because:
1. Some components of the building that serve more than one unique function
2. Relates to 2 or more elements performing the same function.
The two scenarios sometimes makes it difficult for a value management team
to apportion the right function to specific elements, which is a potential risks
that can render the whole process
14. Uniqueness of Construction project
Not all project are the same even with same characteristics in terms of similarity.
The distinctiveness of a project affects the function of some elemets and components of
the project.
15. Quality of End Product
Quality of the project must be given necessary attention in determining a product that will
perform the best function at the least possible cost.
3 major issues with this methods:
1. Historical data
2. Analysis of the differences in exposure to weather
3. Conditions between the past and present
16. Selective of Team Members
A major attribute of value management id that it is multi disciplinary in that members of the team are
varied and unlikely to be drawn from the same area of practice or sector of the economy.
Therefore, risk are found when wrong team members are selected, so team members are better to have
proper training in the field.
Besides, select team members based from previous working experiences which help in cooperation.
17. Representation of Original Design Team
1. Have an existing design team
2. It become a risk when are unwilling to accept changes to the project.
3. It is necessary to ensure that only important members are
18. Choice of Facilitator
One of the key characteristics expected of a facilitator is the knowledge, understanding,
and experience of a value management workshop.
Depending on the value management methodology adopted
The importance of a good and knowledgeable facilitator cannot be over-emphasized as
the choice can determine the success or failure of the exercise.
19. Support for the Practice
A major risk in the adoption of value management is the level of support from clients,
statutory or regulatory bodies as well as from top management staff of an organization.
The risk may not be pronounced in countries where the disciplined has been embraced and is
currently adopted as a project management tool.
21. Cost of Value Management in Construction
Incurrent before ,during, and after
The cost is low when compared to the added function to the project
By saving on the overall project cost
The major costs of conducting a value management exercise are explained as follow
22. Cost of Facilitator
A experienced value manager
Responsible for planning, controlling, and managing a value management
exercise
Cost incurred:
1. Professional fees
2. Transport costs
Payment ( approved scale fees basis )
-man hour rate
23. Cost of other participants
May or may not be experienced in
1. value management
2. Professionals
3. Experienced in construction
4. Members of original team
Payment may be depend on the factors as for facilitator
-before the exercise
24. Cost of venue
Venue is expected to be good enough for members of the team to be able to
perform their function
Depend on
1. Client
2. Nature of project
3. Cost of venue
Preferable ( hotel or guest room)
25. Administrative Cost
Besides basic social amenities, it is also needed to allocate cost for administration
purpose
Includes:
1. Insurance
2. Office supplies
3. Wages benefits of accounting staff
4. Wages and benefits of secretary
5. Wages and benefits of legal personnel
26. Information Gathering Cost
Comparative analysis of alternative
Brainstorm and identify the best alternative using the principle of function cost
Collecting information :
1. Function
2. Cost (initial, annual, running, and maintanices
3. Lifespan
4. Physical characterizes
More alternative to choose form (selection)
27. Indirect and Other Costs
Cost that are not directly asocial with actual value management exerciser
Indirect cost includes cost of buying equipment to actualize recommendations emanating form
value management exercise.
Required to alter or change the original design
General cost following up the understanding and the implementation of recommendations
28. Conclusion
• Value management is controlling and managing project
through a systemic method.
• The main purpose is to get better value for money,
smooth, flexible and best function at the lower possible
overall cost of project.
