Value Management of Construction Projects

John Kelly, Steven Male, Drummond Graham

• Publisher: Wiley-Blackwell
• Year: 2014
• ISBN:
  9781118355145
• Edition: 2
• Topic: Technology & Engineering
• Subtopic: Construction & Architectural Engineering
• Index: Technology & Engineering

VALUE MANAGEMENT OF CONSTRUCTION PROJECTS
Second Edition

Value Management is a philosophy, set of principles and structured management methodology for improving organisational decision-making and value-for-money. It is well-established in the international construction industry and has been endorsed as good practice in a range of UK government sponsored reports.

The authors have addressed the practical opportunities and difficulties of Value Management by synthesising background, international developments, and benchmarking with their own extensive consultancy and action research experience in Value Management to provide a comprehensive package of theory and practice. Covering methods and practices, frameworks of value and the future of value management, this thoroughly updated second edition extends the integrated value philosophy, methodology and tool kit to describe the application of Value Management to service delivery, asset management and programmes, in addition to projects, products and processes. In particular, the new edition responds to:

• A range of recent UK industry and government publications; and most notably BS EN 16271: 2012 - Value management: Functional expression of the need and functional performance specification; the imminent update of BS EN 12973: 2000 Value Management; BS EN 1325 Value Management – Vocabulary, Terms and Definitions; the changes to "Value for Europe" governing the training and certification of Value Management in European Union countries; the UK Government's Management of Value (MoV) initiative, and other leading reports, international guidance and relevant standards.
• Changes in Value Management practice, particularly in programmes and projects.
• Developments in the theory of value, principally value for money measures, whole life value option appraisal, and benefits realisation.
• Initiatives in asset management covering the management of physical infrastructure, for example the suite of three standards under the generic title of BS ISO 55000: 2014 Asset Management, and its predecessor BSI PAS55 2008 Asset Management: Specification for the Optimized Management of Physical Assets.

It contains a dedicated chapter of exemplar case studies which demonstrate the new areas of theory and practice, and an extensive set of tools and techniques of use in Value Management practice.

Public and private construction clients and construction professionals such as cost consultants, quantity surveyors, architects, asset managers, engineers, and project managers will all find Value Management of Construction Projects essential reading. It will also be of interest to researchers and students on construction related courses – particularly those at final year undergraduate and at Masters level.

Part 1
Introduction and Evolution of Value Management

The value methodology as a structured management service has been recognised for almost 70 years. It began in the manufacturing industry of the United States in 1947 as an in-house service to reduce the cost in the production of existing products without compromising product quality. This activity, called value analysis, was carried out by a structured examination of the function of the product using an in-house team of designers, production engineers and purchasing agents. By the 1960s the term value engineering was being used to describe a service where the focus shifted to the function analysis of the design and estimated cost of proposed products rather than products already in production. It was during the early to mid-1960s that value engineering transferred from the analysis of manufacturing design to the analysis of construction design initially through the activity of US Navy Bureau of Yards and Docks.

The 1980s saw an increasing international interest in the use of value engineering in design and construction and included an embryonic discussion of value management. In the United Kingdom, value management in construction evolved in the late 1980s. The first UK textbook (Kelly and Male, 1993), Value Management in Design and Construction, by the authors was published in 1993. Since that time value management in construction has evolved to become an established service with commonly understood tools, techniques and value study styles. The authors' research activity which began in 1986, funded by the Education Trust of the Royal institution of Chartered Surveyors (RICS), was boosted in the 1990s by further funding from the RICS and the Engineering and Physical Sciences Research Council. The latter funded a major examination of the international benchmarking of value management practice which investigated best practice from the perspective of tools, techniques and study styles using the authors' 1993 text as the research benchmark. One significant outcome of this work was the completion of a new benchmark entitled ‘The Value Management Benchmark’ published by Thomas Telford (Male et al., 1998).

The benchmarking research was the foundation for further research into value management which confirmed that it is a service with three primary core elements:

1. A system of function analysis promoting an understanding in and a clear definition of requirements of construction projects.
2. An appreciation of the client's value system and the transference of this value system to the project effectively defining the criteria for project success.
3. The value study process involving a structured stakeholder team.

Furthermore, that research also identified that value management is operationalised as a value study process with key intervention points during the project inception and development process with three equally important generic phases:

• The Orientation and Diagnostics phase
• The Value Workshop phase
• Implementation phase

Part One comprises two chapters. Chapter 1 outlines the changes that have occurred in value engineering and value management research and practice since the first edition; with a brief overview of influential reports, the changes in construction procurement and the developments in value management, notably their application to a wider organisational context reflecting contemporary thinking in asset management.

Chapter 2 describes the three stage development of the value methodology from its inception in the 1940s to 2014. The chapter describes the evolution of value engineering and value management and concludes with the salient features of a value study in order to provide a foundation for the subsequent chapters in this book.

References

1. Kelly, J. and Male, S. (1993) Value Management in Design and Construction: The Economic Management of Projects. London: E and F N Spon.
2. Male, S., Kelly, J., Fernie, S., Grönqvist, M. and Bowles, G. (1998a) The Value Management Benchmark: A Good Practice Framework for Clients and Practitioners. London: Thomas Telford.

1
Introduction

1.1 The Aims and Objectives of the Book

The 1980s saw an increasing international interest in the use of value engineering in design and construction and an embryonic discussion of value management (VM). The climate in UK construction of the 1990s was right for the further development of innovative systems including VM.

The authors' research activity into the topic, which began in 1986 and was funded by the Education Trust of the Royal Institution of Chartered Surveyors (RICS), was boosted in the 1990s by further funding from the RICS and the Engineering and Physical Sciences Research Council (EPSRC). The latter funded a major study into the international benchmarking of value management practice that resulted in the completion in 1998 of ‘The Value Management Benchmark’ published by Thomas Telford (Male et al., 1998). The benchmark was the springboard for detailed work into three areas. First, to make clear different study styles and their application at particular stages of projects, and, relate each study style with their most commonly associated method, tools and techniques. Second, to investigate the concept of quality and value to understand their interrelationship and their application within supply chain thinking. Third, to extend the use of VM into other organisational settings and investigate other more generic study styles.

This research work was carried out by the authors, or under their supervision, using a variety of research methods. Significant findings were made through grounded theory and action research approaches. This work continued unabated, reshaping, refocusing and extending the authors' ideas about the theory and practice of value engineering and more, especially value management.

What has Changed from Edition 1

In reviewing the context and content of the first edition, published in 2004, the authors concluded a second edition needed to take account of the following:

• A range of recent UK industry and government publications, most notably BS EN 16271:2012 – Value management: Functional expression of the need and functional performance specification, the imminent update of BS EN 12973:2000 Value Management; BS EN 1325:2014 Value Management – Vocabulary; the changes to ‘Value for Europe’ governing the training and certification of Value Management in European Union countries; the UK Government's Management of Value (MoV) initiative, together with other leading reports, international guidance and standards on Value Management.
• Research in value management undertaken since 2002.
• Changes in value management practice, particularly in relation to the management of Portfolios, Programmes and Projects (P3).
• Developments in the theory of value, principally value for money measures, whole life value, option appraisal, and benefits realisation.
• New asset management initiatives covering the management of physical infrastructure, for example, BSi PAS55 2008 ‘Asset management: Specification for the Optimized Management of Physical Assets’, which has transitioned into a suite of three documents comprising the new standard BS ISO 55000: 2014 Asset Management (BS ISO 55000: 2014 Asset Management – Overview, Principles and Terminology; BS ISO 55001: 2014 Asset Management – Management Systems – Requirements; BS ISO 55002: 2014 Asset Management – Management Systems – Guidelines on the application of ISO 55001).
• A wealth of material contained within over 200 case studies undertaken by the authors as consultancy and research, and distilled into lessons learned and good practice.

The chapters in the second edition demonstrate the further contextualisation of value management within construction. This text is influenced principally by a UK-style construction culture. This book, draws together developments in value management thinking and practice, and argues that value management needs to develop further and potentially within different practice settings.

The Objectives of the Second Edition

The second edition deals distinctively with the practical opportunities and difficulties of VM set in the context of theory and good practice in a range of organisational contexts.

In writing the second edition, the authors have brought together and synthesised the background, international developments, benchmarking and action research in value management to provide a comprehensive package of theory and practice. The book is overtly concerned with value management in terms of the philosophy, process, use of function analysis and the nature of team dynamics. It proposes methods for determining the client's value system, quality criteria and whole life value. An exploration of different value management study styles is conducted, and the text proposes solutions for various activities at different stages of projects and organisational contexts. ...

Table of contents

• Cover
• Title Page
• Copyright
• Preface
• Glossary
• Part 1: Introduction and Evolution of Value Management
• Part 2: The Anatomy of a Value Study
• Part 3: Whole-Life Business Value
• Part 4: Developments in Value Thinking
• Appendix: Toolbox
• Index
• End User License Agreement