Value Management

Business organisations strive to provide value to their customers, whether it is internal or external. Unfortunately, the concept of value is never permanent. Customers may consider a product of high value.

Over time, some of these customers may feel they have already outgrown the value that they once derived from the product. It is for this reason that such an organisation should be able to manage the unique relationship between satisfying its customers’ needs and perceptions of what is valuable and the required resources for satisfying those needs. This is the principal essence of value management.

Value Management Process and Procedures

Organisations can look at value management as a scientific platform that includes processes, tools, and techniques that will guarantee high-value benefits at the lowest possible cost. When implemented at the beginning of a project, value management can make project costs seem almost negligible and insignificant.

The value management work plan should always adhere to the standards and guidelines set by the Australian Standard for Value Management. The AS 4183 stipulates 5 key phases with their respective activities or procedures.

• Information Phase

The value management process starts with a facilitated workshop that involves key stakeholders or their respective representatives. The goal of this phase is to generate as much information as possible about what is valuable to stakeholders and other key persons in the organisations. Some of the key procedures include the following.

• Clarification of project objectives
• Clarification and evaluation of the value planning scope
• Identification of concerns, issues, and risks
• Determination of performance and function requirements
• Summarisation of project schedule, design, and cost data

• Analysis Phase

At this stage of the value management process, the value data summarised in the information phase undergoes closer scrutiny. Of importance here is the analysis of the different functions that are important in the idea of value management. The tasks during this phase can include the following.

• Rationalisation of value data, including functions
• Clarification of stated functions
• Function analysis using different techniques
• Cost and worth assessment and analysis of different functions

• Ideas and Options Phase

The third phase of the value management process involves the generation of ideas and options. The main goal here is to come up with as many options as possible that will ensure great overall value. The procedures are as follows.

• Brainstorming and employment of different creative thinking techniques
• Determination of viable options for lowering costs without undermining quality
• Generation or performance criteria
• Assessment of environmental requirements
• Generation of an ideas and options database

• Evaluation Phase

The third phase of the value management process can produce hundreds of viable options that increase value. The fourth stage subjects each of these options to determine their practicability and cost-effectiveness. The procedures in this stage include the following.

• Clarification of the generated options
• Assessment of each option as to its associated risks
• Prioritising generated options
• Deciding on the best possible option when there is more than one attractive option, using appropriate decision analysis techniques

• Development Phase

Value management planning concludes with the development of a value management implementation plan. It calls for the creation of a unique solution that stems from the different best possible options. The phase calls for the following tasks.

• Re-assessment and refinement of the best possible options identified in the evaluation phase
• Formulation of a unique solution that combines different best options
• Assignment of costs, cost savings, risks, and other benefits to each option
• Recommendation of value propositions
• Development of agreed value management plans

Benefits of Value Management

Value management allows organisations to embark on a continuous improvement by allowing them to set very clear and well-defined goals. The process also allows organisations to foster creativity, improve productivity, and ensure a more robust return on investment. The following are the benefits of value management.

• Provides a clearer focus on the objectives of any given project
• Allows the organisation to come up with a more efficient and more effective product design
• Facilitates the identification of better and more suitable methods of production or service delivery
• Promotes the discovery of project issues, risks, and constraints in a timely manner to facilitate constructive discussion
• Provides a clearer and more defined decision-making process and project brief
• Allows for the identification and removal of unnecessary costs that may undermine a project
• Can serve as a cost reduction tool, while promoting the organisation’s ability to achieve optimum value for money
• Promotes the more efficient measurement of value by taking into consideration the different nonmonetary benefits of the project
• Demonstrates the achievement of value for money
• Ensures the cost-effective implementation of any project
• Can serve as a serious challenge to flawed assumptions
• Allows for the development of more innovative design solutions
• Eliminates unnecessary and unproductive design elements
• Reduces wastes associated with production and project activities
• Enhances the overall value and benefits derived by end-users
• Facilitates the more comprehensive and more accurate assessment of the organisation’s profitability in the future
• Reduce the chances of project abandonment
• Provides a competitive edge for the different contractors that the organisation is partnering with

Key Persons involved in Value Management

The process of value management planning requires the involvement of several groups of key persons. Each of these groups has a very important role to play in the creation of an effective value engineering programme.

• Key Stakeholders

Stakeholders may have different viewpoints as to what can be considered of high value. A facilitated workshop helps serve as a venue for the identification and elaboration of these different viewpoints. This allows the value management team to create a solution that best embodies all the value concepts of each stakeholder.

• Clients

Business owners are also important in value management. The aim of many business owners and executives is the improvement of the bottom line, while lowering costs and reducing risks.

• Project Managers

Value management can be made an integral part of an efficient project management programme. Project managers will have a very clear idea of what the project needs to produce without incurring unnecessary costs and wastes.

• Value Analyst

It is the value analyst’s responsibility to work with the different groups in the facilitated workshop. He must be the glue the binds everyone else together, so that they can formulate a comprehensive and effective value management plan.

Consumers require better outcomes and better results in any of their transactions. By employing value management processes, organisations can help deliver products and services that are better and offer more value to their consumers without taking unnecessary risks and incurring unwanted costs.