Value and Risk Management
Value management (VM) is a management strategy applied in organisations aimed at articulating the value of a project in terms of its long term benefits and linking such benefits to the most cost effective design strategies. In simpler terms, value management may be defined as a well established method of analysing, defining and maximising the value of money invested in a given project by an organisation.
A value management study is used to evaluate projects which an organisation is planning to undertake and the effectiveness of this study is independent of the size or the time-frame of the project in question (Victor, Dieter 2004). TechWatt Corporation, a small but fast growing IT company producing both computer hardware and software systems is considering investing in a new regional HQ as part of an ambitious expansion plan, and are about to commission a major project for this.
Funds of approximately ? 5M have been allocated for this purpose. No major decisions have been made yet regarding a possible site or the specific facilities to be provided. However, TechWatt expect the proposed scheme to include the following: • Office accommodation for management and administrative employees (12 staff). • A workshop for hi-tech light manufacturing processes
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The key to having a successful project first of all calls for a clear understanding of the value and what it means to the clients in order to establish the project objectives (McGeorge 2002). Specific issues to be addressed by the VM study. A value management study for TechWatt will be seeking to identify the most appropriate site for the establishment of the three projects for the proposed scheme project and the respective sizes which will fit within the limits of the given budget as well as help to determine the specific facilities to be provided by the expansion scheme once it has been implemented.
In addition, value management study will be aimed at addressing the following three specific issues: • overall awareness of how much value is available for the organisation defining appropriate estimates for the value as well as closely monitoring and controlling the value of the project. • Clearly understanding the objectives and the targets for the organisation before seeking appropriate solutions. • Providing key strategies aimed at maximising the innovations with achieving practical outcomes.
Who should be involved in the study? The value management study should involve a design team or an external team of people who have no previous involvement in this particular project to ensure that their views on the project are unbiased. The team should comprise of: • Four staff members from the client organisation three of whom should be quantity surveyors. This will serve to provide a relevant in-sight into the functions of the project and rough estimates on the expected cost of the proposed scheme.
• In addition to the design team chosen to carry out the VM study, two team leaders or a facilitators will be required to lead the design team. These people must have a good and deep knowledge concerning the function analysis of the scheme, proper team building skills, a basic knowledge on the proposed project of construction and be in a position to come up with several project alternatives which will serve as backup. • Two architects from the architectural consultants firm to provide proper structural design for the project. • A mechanical and an electrical engineer.
It is also important to note that the value management study team should be limited to a maximum of eight members who should be at the same or closely related level of seniority because junior staff members are likely to offer little or no contribution to the study and this might make them end up feeling intimidated (Boehm, Bose 2002). Those involved in this study must also be given the power and authority to pass major decisions concerning the project such as its proposed site, amount of labour to be employed, the source of the building materials required for construction and so forth.
In the UK, the technique of employed for VM study involves a 40 hour workshop which requires the value management team to come together for a period of about forty hours on a schedule plan located away from the usual working environment so as to study the project with minimum interruption. This will enable the team to come up with creative ideas concerning the proposed scheme as well as constructive alternatives to the project.
On completion of the workshop, the team is expected to provide to the client with the full documentation of all the proposals it has made together with the approximate costs for each of the proposals. Client information. Before the workshop commences, the client (TechWatt corporation) will be expected to provide necessary information concerning their best suited site for the establishment of the new regional headquarter, the amounts of funds available for the project, the expected time plan and a rough idea of the size of the project.
The client should also volunteer information any background information to enable the team to visualise the exact picture of what is expected from the proposed project. Proposed agenda for the study. A study to be carried out over a period of two days (48hours) as per the British/European standard of value management should have the following agenda. Day one:
Introduction to basics of Value Management, presentation of background project information to the team members by the facilitators, analysis of the strategic issues, study of the time, costs and quality factors of the project as well as the time schedule and finally, the team should carry out a function analysis on the project. Day two: A review of day one discussions, construction of user flow diagrams, definition of the functional space for the project, a through study of the quality and the environment in which the proposed scheme is to be implemented, location/site of the project and finally, a review and conclusion of the VM study.
At the end of the two day workshop, the team leaders or facilitators should present the documented proposals and estimate-budget plans to the corporation managers from which the management is expected to decide on the way forward. If the project is viable, the contract will then be awarded and soon after, a risk management study should be carried out to identify the potential threats and uncertainties associated with the project.