VALUE MANAGEMENT AND VALUE ENGINEERING STUDY REPORT

Authors Avatar by mlebbe (student)

VALUE MANAGEMENT AND VALUE ENGINEERING STUDY REPORT

Mixed-use Recreation and Commercial Centre for SBEInnovations Ltd

PREPARED BY

United Project Management (UPM)

Registration No: 071330800

Course: MSc Construction Project Management

Module: D31VR Value and Risk Management

Assignment 2011/12

Part 1 – VM and VE Study Report

Executive Summary

This Value Management and Value Engineering (VM/VE) Study Report summarizes the benefits of various proposals for a strategic level Value Management process followed by Value Engineering Study in order to obtain a better Value for Money (VFM) for any projects. This report is prepared specially for our Client M/s. SBEinnovations Ltd for the construction of the Mixed-Use Recreation and Commercial Centre Project.

Value Management and Value Engineering is a technique on any projects that can be delivered in the most economical way. Normally, Value Management processes are carried out before Value Engineering Study to determine how it can add value to the Client business by a delivery of a project which is carried out during the initial Client brief of a project. It is an integral part of any projects. Whereas Value Engineering is a technical study on a selected design for its technical viability and cost studies which is carried out during detailed design stage.

United Project Management (UPM) believes that VM and VE have the greatest influence and impact at the strategy and design stage respectively. It requires reliable and appropriate cost data, design information, ideas, past experience and uses brain-storming workshops by our team of experts under the direction of the Project Manager. Value Management is a continuous process from inception to completion.

The purpose of conducting the Value Management workshop is to set up an effective partnership agreement which should seek to achieve the scope and benefits of the project with respect of time, cost and quality. The benefits of Value Management contribute towards this project especially since the project is still in its early stages. Some of the concepts through which SBEinnovations Ltd can obtain value for money (VFM) are mentioned below;

  1. Reduced Learning Curve
  2. Improved communications and decision procedures
  3. Improved quality and programming

This report also includes a recommendation on Value Engineering Study conducted before the completed design stage and construction activities. Issues targeted during VE study include:

1. Design Optimization

2. Selection of Procurement Route

3. Cost, Quality and Time

4. Organizational Breakdown Structure (OBS) Study

5. Stakeholders Coordination


1. Introduction

This report explains how Value Management and Value Engineering studies can contribute value to the Client before commencement of a project. The report summarises the key principles of Value Management and Value Engineering in the context of construction project of mixed-use recreation and commercial centre for SBEInnovations Ltd. This report is prepared for SBEinnovations Ltd on their request for proposals for a strategic level Value Management and Value Engineering studies.

The aim of Value Management Study is to assess the project requirement in terms of functionally and efficiency of achieving the requirements. Prime consideration needs to be given to the importance of Time, Cost, Quality, Safety and Client's satisfaction. The specific issues to be evaluated at the VM Study are divided into two categories.

  1. Strategic Issues (which will be considered in Value Management)
  2. Tactical Issues (which will be considered in Value Engineering)

 

3.1 Strategic Issues 

The following are considered as project strategic issues:

  • Project Drivers
  • Project Type
  • Size and Location
  • Procurement
  • Initial Cost Estimate
  • Esteem
  • Politics
  • Organisational Management
  • Change Management

3.2 Tactical Issues

The following are considered as project strategic issues:

  • Design
  • Structure of the Project Organisation
  • Detail of accessibility and planning procedure
  • Time and Quality:
  • Outline Specification
  • Coordination

2. Value Management Study

This is the first process where carefully selected team members from various parties get together to discuss various aims, objectives, constraints and risk associated with the Project in order to formulate Client objective of the need of such project.

Value management usually incorporates a series of workshops, interviews and reviews involving diversified teams members through whom the project requirements are evaluated against the means and methods of achieving them. VM process will be dependent on the procurement route selected for the project.

VM and VE Studies are very important for successful delivery of any project. Failure to carry out these studies will cause problems at subsequent design and construction stages causing cost overruns, project delays, claims etc. Value Management can help to avoid or minimize these problems.

At the outset of a project, Value Management provides an exceptionally powerful way of exploring the client’s needs in-depth by addressing inconsistencies and expressing these in a language that all parties, whether technically informed or new to the construction industry, can understand.

The Value Management process works top-down, starting with needs and strategic goals and focusing on root causes, not symptoms. An early consensus is developed between the key stakeholders about the need for the project or service, the scope, deliverables, key functions and risks, in the context of the wider business objectives. Opportunities for innovation are explored and the most cost effective means of implementation developed, consistent with desired time and quality requirements. VM considers the whole project rather than components and the process are underpinned by consensus.

A typical Value Management Study has the following characteristics:

  • A systematic, staged approach
  • Clear definition of objectives and scope at the outset - focus on the customer requirements
  • Consideration of the organizational environment - internal and external influences
  • Multi-disciplinary team effort - positive human dynamics
  • Function Analysis System Technique
  • A workshop format with a structured job plan that separates creativity from evaluation and development.
  • Effective use of methods and tools - independent facilitation

2.1 Early Application of Value Management and its benefits

The design is still at the very early stage. The Client has not yet committed with any design teams for project design. The client aims to innovate with creativity and to enhance the health, wellbeing and quality of life of its citizens. It is very important to get a feedback of its citizens of the Client intentions for such a project, because the clients’ and the citizens’ aim and objectives are totally different and conflicting ones. Therefore it is recommended that Value Management study at such early stage is carried out involving the all parties who have interest on the projects so that later in the projects the problems and risk will be minimized to a greater extent. As such the following benefits can be expected by applying Value Management to this specific project.

Join now!

  1. It defines what both the client and the citizens of the local area mean by value, and provide the basis for making decisions, throughout the project, on the basis of value. It provides a means for optimising the balance between private developer and public sector local authority having different aims and objectives out of the project.

  1. It provides the basis for clear briefs that reflect the client’s priorities and expectations, expressed in a language that all can understand. This improves communication between both stakeholders so that each of them can understand and respect other’s constraints and ...

This is a preview of the whole essay