Week2 value management introduction
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This document introduces the concepts of value and value management. It defines value management as a structured approach to defining value for the client by establishing consensus on project objectives and how to achieve them. Value is defined as satisfying needs through efficient use of resources. Value management techniques are applied at different stages of a project to deliver required functions at lowest cost without reducing quality. Key techniques discussed include functional analysis diagrams and the job plan methodology used in value management workshops.
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Week2 value management introduction
- 1. Contemporary Economic Modelling VALUE MANAGEMENT 1
- 2. Lecture Objectives Introduce Concept of Value Define value management Identify value management interventions Discuss key techniques and their application
- 3. Introduction To Value What is Value? Value and COST Value and FUNCTION Value and BENEFIT Value and TIME “Adding Value” Value – a compromise?
- 4. Concept of Value Value = Satisfaction of Needs Use of Resources EN12973 The concept of value relies on the relationship between the satisfaction of many differing needs and the resources used in satisfying them. A relationship not an equation Source: Sweett Group
- 5. Obtaining Value COST VALUE = WORTH (worth = the lowest cost that enables the required functions to be provided) • Maximum benefit at minimal cost
- 6. Value Management • Determining Client requirements – this is not always as simple as it seems! • Delivering those requirements without unnecessary cost
- 7. Value Management History & Definitions • History Lawrence Miles, purchasing engineer with GEC in WW2 Value analysis: an organised approach to providing the necessary functions at the lowest cost This is NOT cost cutting - quality is not reduced.
- 8. Value Management History & Definitions(2) • Value analysis - an organised approach to the identification and elimination of unecessary cost. • Unecessary cost - cost which provides neither USE, nor LIFE, nor QUALITY, nor APPEARANCE nor CUSTOMER BENEFIT(S)
- 9. Development of V(M!) • US Dept of Defense • UK – 1960s use in manufacturing • Formation of VE Assoc. in 1966 (IVM in 1972) • Common use throughout Europe • Growth in UK Construction (BAA, Whitbread,London Underground) • Guidance Notes (e.g. BRE 1997; CIB 1997; HM Treasury) • British Standard BS EN 12973 2000 Value Management • Egan • Best Value
- 10. Value Management Interventions Timing Issues dealt with Structure of VM Team The Barriers to VM
- 11. Timing Source BS EN 12973:2000
- 12. Overall process
- 13. Processes
- 15. Value Management OPTIONS APPRAISAL BUSINESS CASE OUTLINE DESIGN FINAL SKETCH PLAN DETAIL DESIGN 1st REVIEW 2nd REVIEW 3rd REVIEW CONCURRENT STUDIES CONSTRUCTION HANDOVER CONTRACTORS CHANGE PROPOSALS POST PROJECT EVALUATION
- 16. Value Management Interventions Source: Standing, N (2001) Value Management Incentive Programme Telford
- 17. Issues dealt with(1) • Value Planning (Value Management) • VM1 – pre-brief/briefing – Is a built solution required – Stakeholder requirements – Priorities • VM2 – Outline proposals – Reviewing criteria – Selection of best value alternative
- 18. Issues dealt with(2) Value Engineering Engineering the developing design to eliminate unecessary cost Workshop(s) Contractor’s Change Proposals Value incentive clauses Value Analysis Analysing value in finished product to inform future decisions
- 19. Structure of VM Team Independent VM team Early American Approach Advantages and dis-advantages Using Project Team Members Depends on nature of project and timing of intervention Importance of Client top management support and appropriate representation on VM team
- 20. Source: Cyril Sweett & Ptnrs No Time Waste of Time Too Expensive Too Difficult Too Complex I Do It Anyway Not Interested Don’t Want Outsiders The Barriers The Barriers
- 21. Value Management Workshop Methodology • Pre-study Phase • Study(Wokshop) Phase Alternative approaches The Job Plan • Post Study Phase
- 22. Pre-study Phase • Briefing – VM (understanding client’s requirements) –Participant’s • Practical preparations – Venue etc – Documentation • Information pack/briefing document
- 23. Study(Wokshop) Phase • Alternative approaches – Degree of structure may depend on project, participants (and their experience), time available The Job Plan – Based on Lawrence Miles original approach
- 24. Value Management Methodology(2) • The Job Plan Information Phase Creative Phase Evaluation Phase Development Phase Presentation Phase
- 25. Post Study Phase • Report –summary of decisions and actions • Further development • Follow-up
- 26. Techniques Functional Analysis FAST diagram (Charles Blytheway) • Functional • Analysis • System • Technique
- 27. Fast Diagram (2)
- 28. Example of Fast Diagram Scope Line
- 29. What is VM • Value Management – A structured approach to defining what value means to a client in meeting a perceived need by establishing a clear concensus about the project objectives and how they can be achieved • Value Engineering – A systematic approach to delivering the required functions at lowest cost without detriment to quality, performance and reliability
- 30. Lecture Objectives Introduce Concept of Value Define value management Identify value management interventions Discuss key techniques and their application
Editor's Notes
- Pre- workshop The research indicates two aspects of pre-planning- the value manager briefing and the briefing of workshop participants. The former is necessary to ensure that the value manager understands the clients key “functionality aspects[i]” Such clarity will enable the facilitator to more effectively manage the workshop participants. The latter is felt necessary to ensure that participants, who are influenced by their own professional traditions and background and who are often “solution driven”, understand both the need for a broader, functional, analytical approach to value management and the essential multi-disciplinary nature of the activity. The approach to, and outcomes of, such pre-planning vary though the objectives are common. Approaches involve, discussions with the client representative and workshop participants, either in a pre-workshop meeting, individual meetings or, at the very least a series of telephone calls, the latter more likely for later workshops in a series of interventions. Discussion with the client helps identify priorities and formulate objectives for the workshops. In some instances this will involve functional analysis, particularly where workshop time is limited. If you’re going to maximise the use of the people in the room, then you’ll need to do preparation on functional analysis with the client. If you go into the workshop with the functional analysis clearly understood, and tell the team what it is, then they can do their ideas generation and evaluation quite well.[ii] Pre- meetings with participants enable them to come to the workshop, reassured and effectively prepared. We sit down with designers to re-assure them that it’s not just going to be a hatchet job.[iii] The outcome of such preparatory activity varies, though normally includes some form of information pack or briefing document. The detail will depend on circumstance but will generally include organisational details of the workshop together with an agenda, objectives of both the workshop and the project as a whole, and any available data on cost or design (where appropriate). For workshops later in the project life cycle, the outcomes of previous workshops would be circulated. As well as providing practical details, the briefing pack, which may be no more than two or three sheet of paper[iv], seeks to guide participants to issues that they should be considering prior to the workshop though such pre –preparation can cause a tension between guiding and directing which may narrow down thought processes and limit “lateral thinking” in the workshop itself. [i] VM Capita page 1 [ii] F&G Page 5 [iii] Capita page 2 [iv] DLE page 4
- Pre- workshop The research indicates two aspects of pre-planning- the value manager briefing and the briefing of workshop participants. The former is necessary to ensure that the value manager understands the clients key “functionality aspects[i]” Such clarity will enable the facilitator to more effectively manage the workshop participants. The latter is felt necessary to ensure that participants, who are influenced by their own professional traditions and background and who are often “solution driven”, understand both the need for a broader, functional, analytical approach to value management and the essential multi-disciplinary nature of the activity. The approach to, and outcomes of, such pre-planning vary though the objectives are common. Approaches involve, discussions with the client representative and workshop participants, either in a pre-workshop meeting, individual meetings or, at the very least a series of telephone calls, the latter more likely for later workshops in a series of interventions. Discussion with the client helps identify priorities and formulate objectives for the workshops. In some instances this will involve functional analysis, particularly where workshop time is limited. If you’re going to maximise the use of the people in the room, then you’ll need to do preparation on functional analysis with the client. If you go into the workshop with the functional analysis clearly understood, and tell the team what it is, then they can do their ideas generation and evaluation quite well.[ii] Pre- meetings with participants enable them to come to the workshop, reassured and effectively prepared. We sit down with designers to re-assure them that it’s not just going to be a hatchet job.[iii] The outcome of such preparatory activity varies, though normally includes some form of information pack or briefing document. The detail will depend on circumstance but will generally include organisational details of the workshop together with an agenda, objectives of both the workshop and the project as a whole, and any available data on cost or design (where appropriate). For workshops later in the project life cycle, the outcomes of previous workshops would be circulated. As well as providing practical details, the briefing pack, which may be no more than two or three sheet of paper[iv], seeks to guide participants to issues that they should be considering prior to the workshop though such pre –preparation can cause a tension between guiding and directing which may narrow down thought processes and limit “lateral thinking” in the workshop itself. [i] VM Capita page 1 [ii] F&G Page 5 [iii] Capita page 2 [iv] DLE page 4
- Report It is common practice to produce a report or summary of decisions and actions following the workshop. Whilst this is seldom a presentation for decision, as the decision makers would normally be present at the workshop, it is important that both the decisions and the reasons for them are recorded. The rationale for decisions is felt to be particularly important. It is absolutely essential because, you can imagine, a year down the line, a party saying, “why didn’t you do that…”[i] If you don’t record them (decisions) and something goes wrong….how did we get to this[ii] One respondent reported on a project in which appeals from a planning enquiry went to the Secretary of State. The first thing they went for was the VM journal. Where was the decision made to go to this site?”[iii] Whilst the report is essential, it should be concise, focussed and timely I’ve received voluminous reports, mountains of paper showing every single thing that you talked about, it doesn’t really get you anywhere. [iv] I try to get an action list out within two days and the report out within a week[v] Post-workshop The post-workshop activities are essential to the success of the value management activities. Ideas may need further development prior to a decision, and the implementation of decisions made needs to be followed through. Follow-up/wrap-up meetings may be held two to three weeks after the workshop. Follow up is sometimes through the normal, regular, design team meetings or is undertaken by the project manager or value manager. These(meetings) are not as common as we’d like. Perhaps 60% of projects have a meeting though for 100% of projects we will take it upon ourselves to make a few nagging follow up calls.[vi] Follow- up is crucial to ensure that ideas are not dropped, either because individual participants responsible for the development of a specific proposal were not fully committed to the initial decision, or they are too busy to undertake the development work. [i] VMWT page 113 [ii] VMMDA p110 [iii] VMCapro p115 [iv] VMMDA p110 [v] VMCB p107 [vi] VML p126