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C5682 VALUE MANAGEMENT W. MOHD HANIFF BIN W. MOHD SHAUPIL QUANTITY SURVEYING DIVISION DEPARTMENT OF CIVIL ENGINEERING POLYTECHNIC KOTA BHARU Lecture 1
Lecture 1
C5682 VALUE MANAGEMENTW. MOHD HANIFF BIN W. MOHD SHAUPILQUANTITY SURVEYING DIVISION DEPARTMENT OF CIVIL ENGINEERING POLYTECHNIC KOTA BHARU
CONTENTS1. Introduction to Value Management 2. History of Value Management 3. Concepts of Value Management
INTRODUCTION TO VALUE MANAGEMENT Value Management originated in the United States emerging as a result of components and materials shortage in the manufacturing sector. The technique is very much accepted in various industries that includes construction industry.
INTRODUCTION TO VALUE MANAGEMENT
The fundamental contribution by the Value Management is to eliminate unnecessary costs, which does not contribute to the value of the services, products, systems and projects. Value Management generates these cost improvements without sacrificing the needed performance levels.
INTRODUCTION TO VALUE MANAGEMENT
Value Management has proved to be successful in many developing countries and its significant contribution lies in the unique study process that leads toward enhancing value of the projects.
A DEFINITION OF VALUE MANAGEMENT
Value Management is the name given to a service in which the sponsor of a project, the client, transmits a clear statement of the value requirements of that project to the project designers.
A DEFINITION OF VALUE MANAGEMENT
VM has been defined in a number of ways such as:Dell Isola (1982):
the creative organized approach whose objectives are to optimize the cost and/or performance of a facility or system.
A DEFINITION OF VALUE MANAGEMENT
Kelly & Male (1991):
Value Management is an oriented effort to attain optimum value in product, system or service by providing the necessary functions at the lowest cost.
A DEFINITION OF VALUE MANAGEMENT
Australias Department of Defense:
Value Management is the systematic effort directed at identifying the function of systems, equipment, facilities, procedures and supplies for the purpose of achieving the essential functions at the lowest cost, consistent with the needed purpose, perfomance, reliability and maintainability.
A DEFINITION OF VALUE MANAGEMENT
Mohd Mazlan Che Mat (2004):
a rigorous, systematic and innovative methodology with multi disciplinary approach to achieve better value and cost optimization for projects, products, facilities, systems and services without sacrificing the required performance levels.
A DEFINITION OF VALUE MANAGEMENT
The Institute of Value Management, United Kingdom:
Value Management is a style of management particularly dedicated to motivating people, developing skills and promoting synergies and innovation, with the aim of maximizing the overall performance of an organization.
A DEFINITION OF VALUE MANAGEMENT
A useful one sentence definition of Value Management in terms of construction industry is: A service which maximize the functional value of a project by managing its development from concept to completion and commissioning through the audit (examination) of all decisions against a value system determined by the client.
Kelly & Male (1991) characterized VM as: System oriented that uses a formal job plan to identify & remove unnecessary costs. A multi-disciplinary team approach, i.e. teams of experienced designers, estimators & VM Consultants. Life cycle oriented that examines the total costs of owning and operating a facility. A proven management technique. Function oriented that relates the function required to the value received.
CONCEPTS OF VMAccording to Carlos Fallon, the relationship between Value, Function (worth), Quality and Cost can be symbolized as follows:worth cost
value
=
Worth = the least cost of providing the needed function and the required performance is found by means of comparison of the costs of units which are functionally equivalent. Cost = the life cycle cost of the product/ project.
According to Carlos Fallon, value can be classified into three categories namely: Esteem Value Exchange Value Use Value1.
Esteem ValueThe monetary sum an owner or user is willing to pay for prestige or appearance The motivated desire to process for the sake of possession The worth of a sell function
2.
Exchange ValueThe monetary sum for which a product or service can be traded or exchanged Also the market value at a given point in time
3.
Use ValueThe cost of basic function only The monetary measure of usefulness of a product or service
Another relationship by Dell Isola , Value = F + Q C (F) Function = (Q) Quality = (C) Cost = The specific worth that a design/ item must perform. The owners or users needs, desires and expectation. The life cycle cost of the product/ project.
Value = The most effective way to reliably accomplish a function that will meet the users needs, desires and expectation.
Value can be increased by the following approaches:(F) + (Q) Value = (C)Cost Reduction approach Function increase approach
(i)
(ii)
(iii)
(iv)
Compound approach
Expanded growth approach
Reducing cost but maintaining the function Increasing either the function or quality or both but maintaining the cost Reducing the cost and at the same time increasing the function and quality iv) Increasing the cost but at the same time improving function and quality at a higher proportion
i) ii) iii)
Value Management
Value Planning
Value Engineering
Value Analysis
The VM Family
Eric Adam (1993) relates the Value Analysis, Value Engineering and Value Management at the various stages of application. Value Analysis is applied on the existing product or systems, Value Engineering is applied during the design stage whereas Value Management systems approach is applied at all level.
Terminology This is term used to describe the entire philosophy and range of techniques. Value Management Therefore, value planning, value engineering and value analysis form a subset of value management.
Terms
Terms
TerminologyThis, as the term may suggest is carried out in the early part of the project prior to the decision to build or at briefing or at outline design stage. Value techniques are use to reach a group decision in term of the criteria for a proposed design or the criteria for a business strategy. It is possibly a common misconception that the used of value techniques is intended for problem solving, typically for the remedying of a budget over-run, following the production of a scheme design.
Value Planning
Terminology This is term used to describe value techniques that are adopted during the detailed Value Engineering design stage and construction stage when completed design or elements of the design is made available for the study.
Terms
Terms Value Analysis
Terminology This is term used to describe value techniques that are carried out following the completion of a building/ project.
TOTAL VALUE CONCEPT
Cost reduction
Value Analysis
Value Engineering
Value Management
Part Oriented 5 to 15% savings COMMITTEE
Function Oriented 5 to 95% on existing products system
Function Oriented Cost reduction at design stage
Function Oriented Value Management systems approach at all level
VALUE MANAGEMENT TEAM
VALUE MANAGEMENT VALUE PLANNING(Strategic)
VALUE ENGINEERING
VALUE ANALYSIS
