The Power of Value Management

Friday, July 24th, 2015
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Value management is often taken to mean “cutting corners to maximise savings,” but when properly implemented, it can lead to better outcomes all around.

I must declare an interest here. Barton and his colleague Alan Butler were two of my instructors when I learned the ins and outs of being a value management facilitator over 20 years ago. I’ve stayed in touch with them and have used them as value management facilitators for diverse projects, including a planned freight railway, and the corporatisation of the Snowy Mountains Hydro Electric scheme.

Barton’s article is almost a VM101 in some ways – a clear, lucid, and logical exposition of the value of value management. Importantly, he stresses that “there is enormous value in building shared understanding amongst project team members and also amongst stakeholders.”

Barton points to the shared learning that comes from the value management process. It’s as well here to distinguish the “real” value management process and that which masquerades as value management. Too often so-called value management, particularly with design and construct contracts, is treated as cover for finding the cheapest way to do something, regardless of long-term consequences. Real value management is an essential, critical planning and review process which is distinctively different because of its structure of using a prescribed “work plan” and its analytical focus to achieve best value or, where appropriate, best value for money.

I’ve been banging on for years about the need for project teams to be integrated as early as possible in the life of a project to drive collaboration and better project outcomes. ACIF and the Australasian Procurement and Construction Council (APCC) have spent a lot of time and effort reinforcing that point over the last two years in producing a suite of documents to help start projects well regardless of delivery strategy. Project team integration and the creation of project environments that are conducive to collaborative, non-confrontational, working are keys to achieving project outcomes that meet or exceed client and end user expectations.

Here’s where the collaboration comes in, in Roy’s words.

“An essential quality of a Value Management study is the way in which learning is facilitated amongst the participating people; intentionally building shared knowledge and understanding of the different perspectives represented,” he wrote.

“The Value Management process itself provides the structure in which this can happen. As the group works together to define the value of the entity being considered, we build shared knowledge and understanding of requirements, beginning with a statement of primary purpose, followed by a list of expected benefits achieved by fulfilling the agreed purpose (or purposes) and then going on to capture all of the important features of the entity (this process is discussed in more detail in the IVMA White Paper about definitions of value and value for money).

“It is vitally important to understand that this is not a ‘desktop’ process where individuals simply write down their requirements in terms of purpose, benefits and important features and then submit those individual requirements to someone who collates the individual requirements into one combined document. No. It is a learning process.”

I’m not suggesting that every day spent on every project should be run as a value management workshop. I do argue, though, that there are key phases in the life of every project where the modest cost of a properly structured and facilitated value management workshop will have a significant cost-benefit dividend. In every case, the workshop itself will deliver a practical, physical and financial benefit, or an enhancement in functionality. In every case, the process of bringing in all stakeholders relevant to a particular project phase builds shared understanding, enables stakeholders to be involved in agreeing objectives, and creates a commitment to achieving those objectives.

These project phases are described in a guide to be released in July by ACIF and APCC. The Guide to Successful Project and Asset Delivery is a conspectus of existing resources available to guide project proponents, consultants and constructors, from needs identification to post-occupancy evaluation and facility management. The guide points to the critical importance of collaboration during project initiation, project team establishment, and project business planning. The collaboration that is inherent in those phases is best achieved by using a value management work plan, logically gathering and building knowledge and understanding.

Again, Barton puts it better than I could.

“Shared knowledge and understanding amongst project team members and stakeholders is essential. The structure of the Value Management process will provide a framework in which to achieve this, but it requires effective facilitation to bring about the desired outcomes,” he wrote.

“It is from such shared knowledge and understanding, achieved through an intentional learning process, that opportunities can be spotted and omissions and over-provision recognised.”

The federal and some state governments tell us they are about to start becoming “infrastructure governments.” Infrastructure Australia and other agencies are working diligently to try and ensure we, as taxpayers, get best value for money from the economic and social infrastructure that will be delivered. The value that value management could add to those major infrastructure projects is immense. Importantly, it won’t happen unless project proponents are clear-eyed about the need for collaborative behaviour and what they need to do about achieving it, and the power that structured, professional value management can bring to delivering collaboration.

They could do worse than have a look at the Knowledge Hub on the IVMA web site, which has a wealth of information to help achieve value for money outcomes. They could also learn from Barton’s concluding words: “Learning takes intentional effort – individually and corporately. If we’re serious about achieving ‘best value for money’, then we need to be serious about learning.”

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