A common understanding of the design problem and design objectives and a group consensus on the comparative merits of courses of action are essential to the successful definition of project aims and objectives. Value management and value engineering are fundamental to establishing such an understanding.
value, value management, value engineering, client needs, project brief, design
- Recognise how client needs arise and how they must be articulated if they are to provide a sound business case.
- Appreciate the factors that clients must consider when embarking upon a project.
- Understand what is meant by value management.
- Describe the value management process.
- Be able to differentiate between value management and value engineering.
- Understand and be able to apply value engineering principles to a design problem.
For clients and customers, the search for best value is more than a slogan: it is something that has to be demonstrated. Thus, value is without doubt one of the key concepts within project management. This article examines two of the primary tools and techniques by which clients and customers can extract best value from their decisions.
Determining the case for a new building or facility is implicitly about demonstrating need and the value to the core business that can be derived from embarking upon the project. Value management provides the focus for determining the strength of the case for a new building or facility, and value engineering ensures that best value for money is achieved in its design. The tools and techniques that they represent have become common for many clients, project sponsors and project managers, as they can be used to structure thinking, analysis, decisions and actions. They provide the means by which they can make credible decisions, often involving options whose implications may not even be known.
Understanding the client
There are several ways of categorising or grouping clients, some of which clearly are more relevant than others. At times it could be sufficient to categorise clients as either public or private whilst at other times it would be more relevant to look at commercial interest, i.e. profit; or not for profit. The latter is perhaps the most realistic way of differentiating clients, as the profit motive tends to affect much of an organisation’s strategy. However, no such generic categorisation is made here. Instead we are content with stating that there are different kinds of clients with different needs.
Strictly speaking, the client is the individual or corporate body that contracts with another party for the supply of a good or service. This can be an individual acting on his or her own, though it is more likely to mean someone representing the interests of a larger body – the project sponsor.
Few clients are in business to profit from building. Indeed, many consider that construction-related activities are something they would like to do without. Accordingly, clients rarely, if ever, arrive at the decision to initiate a building project without clearly demonstrating the need for it. A fair assumption is, therefore, that new buildings or facilities are required because they enable the client organisation to achieve something that has a value. This added value may be hard to quantify, but that does not make it any less real for the organisation. The benefit or gain derived by being able to produce more or a new range of products that increases turnover and profit point towards the new building or facility as adding value. In most cases, however, clients will see construction as a cost to be avoided.
At the micro-economic level, value could be understood as representing a direct relationship between cost and quality – this expression of value might be easy to understand, but measuring and comparing two or more different combinations of cost and quality may not be so straightforward. Nonetheless, there are ways in which it is possible to demonstrate that better value is likely to be earned by one particular decision over another.
Understanding the client’s needs
Understanding client needs is a subject in its own right. Understanding client needs is about developing an affinity for the client’s particular business interest, products or services. Even for non-commercial clients, there is a process, activity or reason for providing the new or refurbished facility. In the AEC sector evidence of recent research suggests that, although it is a truism to say that the subject should be of prime concern to a sector that must deliver what its clients want, it is still not observed in practice.
No one expects, nor would any client allow, a project manager, architect or engineer to dictate on policy in regard to the running of his business. Clients do, however, expect to have advisors (i.e. project managers, architects and engineers) and contractors who appreciate and are sensitive to their needs. Although there is no doubt that, for instance, an architect can design and a builder can build, many consultants and contractors appear to have little notion of the client’s needs, motivations or concerns. Research has revealed some appalling examples of where little or no effort has been made to appreciate the client’s requirements. In one case, a contractor working in an existing facility saw no problem in giving a very low priority to halting production. Some clients have been scathing about the naïveté of some consultants and contractors who plainly should have known better. On the other hand it is also claimed that clients often do not know what they want. There may be many reasons for this, but the problem suggests that there is a case for those in the sector to be involved as early as possible in the project process.
Defining project aims and objectives
Establishing the client’s aims and objectives is not always straightforward. Many clients are, for example, multi-faceted, meaning that they represent organisations that in turn comprise a variety of different groups, each with its own interests, priorities and perceptions as to what is required. There may not even be agreement on the need to build. Indeed, even though there is a business requirement, the solution to satisfying that requirement may not be immediately obvious: the need for a building may not yet have been determined. In these circumstances, trying to establish the exact nature of the problem becomes extremely difficult, but some means of reaching agreement on requirements in a clear and explicit way is essential.
In order to establish clearly the client’s aims and objectives the project manager should review all available data and then discuss requirements with the project sponsor (or other authority), carefully recording in writing all of the items requested. This will be the first effort at preparing the strategic project brief. The criteria used to define the project are generally as follows:
- is there is a measurable capital expenditure?
- is additional space required or new facilities?
- is there is an agreed timetable or deadline?
- is a reorganisation of personnel or facilities required?
- do procedures need to be updated or renewed?
- do quality systems need to be established?
- do health and safety procedures need to be established?
Value management process
There are, indeed, many questions the client needs to settle in order to brief the project team accordingly. Value management offers the client a forum for providing the answers to some of the questions that need to be asked.
Value management is primarily concerned with ensuring that the client’s needs are clearly defined and that a true scope of work is produced for the project. The primary objective is to develop a common understanding of the design problem, identify explicitly the design objectives, and synthesise a group consensus about the comparative merits of various courses of action.
Some books and articles on value management imply that it is applied once in a project’s life. This is not the case! Value management is a process that is used at various stages in a project’s life. Various tools and techniques are available, which are applied at different stages to meet the particular requirements of the respective stage.
The actual value management process comprises five stages as outlined below.
In the early stages of the project the information required is typically stored mentally, rather than formally documented. The complex issues that give rise to the need for a project are often held in the minds of the people who are running various functional departments within the client organisation. To get the true picture of the problem this information needs to be extracted and documented in such a way that it becomes available to the project team.
The most appropriate method to access the core information that will form the client’s statement of needs is to use a facilitated workshop. This forum brings together all the key stakeholders from within the client organisation and the project team. The workshop will typically last for two days, which provides the time needed to discuss the project properly. It is often the case that senior executives are not prepared to take time out of their busy schedule to discuss a project that could be vital to the future well being of their company. They will, however, be forced to make time later on should the project go wrong.
Once discussion has been allowed on the objectives, constraints and risks of the project, the next phase is to organise this information into a graphical representation called a value tree. The analogy to a tree should be clear enough – bifurcation leads to individual objectives, constraints and risk, enabling the logical relationship between them to be followed in either direction.
The value tree is a way of organising the information in such a manner as to allow people to identify the most important elements of the project. Another key feature of the value tree is the ability to show the scope of the project. Often there are elements of a project upon which the client cannot decide until some initial design and costs work has been undertaken. By making explicit the areas that the client would like to include but which are currently considered to be outside the scope of the project, the design team has a clearer remit upon which to work.
During this stage the team focuses on generating ideas as to how to provide the key elements identified in the previous stage. The principal feature of the speculation stage is to stimulate creativity. The four golden rules are:
- suspend judgement – no criticism; that comes during the next stage;
- freewheel – the odder the ideas the better;
- quantity – the more ideas the better; and
- cross-fertilise – combine and improve on the ideas of others.
The main technique used in the speculation workshop is brainstorming, where the team generates ideas, which are written onto flip charts. Creative thinking is essential to this stage if the situation where the same old ideas are used to solve design problems is to be avoided. A constrained, conservative environment is detrimental to innovation. It is therefore necessary to ensure that the opposite environment prevails.
In the evaluation stage, ideas are sifted to identify those that might be worth investigating further. It takes time and money to develop ideas and therefore only the most promising can be chosen. Justification is the keyword of the evaluation stage. The exercise should focus on justifying why an idea should be developed and, if no justification can be found, then it can be rejected. This process ensures that ideas are not simply dismissed because they will not work: the dismissal must be justified by a rational explanation of why they will not work.
During this stage the ideas that survived the evaluation stage are developed further. Sufficient development work needs to be done to refine potential solutions to the point where they can either be rejected or taken further still.
This is the final level of the five-stage plan. The findings of the value management exercise are written up into a formal report for presentation to the client. The purpose of the report is to provide an accurate record of the exercise for future reference. The report will often form the basis of the client’s statement of need and therefore its accuracy is paramount.
Value management does not profess to find optimal answers; it is solely concerned with establishing a common decision framework around which participants can think and communicate. Value engineering is generally seen as a technique that forms part of the wider concept of value management. Put somewhat differently, value management provides a common decision framework within which value engineering can provide optimal design solutions. Thus, value engineering is more prescriptive in that it involves a search for an optimal design solution. It should be considered as a systematic procedure directed towards the achievement of required functions at least cost.
Fundamental to this definition is that it is based on the assumption that all parties involved share the same understanding of the functions to be provided by the production of a product or facility. It is also assumed that all feasible design alternatives provide the same level of functional performance, and can therefore be assessed on the basis of cost alone. An increase in value can therefore be directly related to a reduction in cost.
Value engineering is essentially a problem-solving methodology that provides a process by which the design objective can be challenged to make sure it is correctly expressed. The challenge to the objective might identify a more appropriate, function-oriented objective, which opens up new possibilities and allows a break away from item-oriented considerations.
Value engineering process
One of the features of value engineering is that a design or initial solution is generally in place prior to undertaking the process. This initial design is used throughout the value engineering process to generate optional approaches.
The process of actually performing value engineering takes place in a variety of circumstances. In the US, in what is called a 40-hour workshop, a design prepared by the client’s design team is re-engineered by another, independent team. This team spends a week in a workshop environment looking at the original design and suggesting substitute solutions. There is normally only one 40-hour workshop on any single project. In Europe, this 40-hour workshop has been adapted to become a two-day session using the original design team. The members of the design team come together specifically to challenge the team’s own design and seek feasible options. This workshop is usually repeated during different phases of the design process and can carry on into the construction phase, where the expertise of the contractor can be exploited in the search for alternatives to a particular design solution.
In similar fashion to the value management process, described above, value engineering could also be implemented through a five-stage plan, where each stage is aligned to a generic problem-solving procedure.
Stages in value engineering
An information gathering process that focuses attention on the client’s business drivers for the project. Particular importance is given to the use of facilitated workshops.
Define and understand the nature of the problem.
Creative-thinking techniques are utilised to generate alternative ways to provide the business drivers identified in stage 1.
Generate alternative ideas as to how the problem may be solved.
The solutions generated are evaluated in terms of their feasibility and cost. Ideas are combined and consolidated to produce a list of perhaps five or six that are worthy of further consideration.
Evaluate the feasibility of the ideas so generated.
The surviving ideas are developed in detail, ensuring that all of the interfaces with the client’s business are taken into account.
Fully develop and test the ideas judged to be the most suitable.
The most suitable solution is identified and a formal recommendation made to the client for implementation.
Decide upon the best solution, and action it.
Value management is an important tool in the exercise of defining the client’s actual requirements. It should be implemented in the earliest stages of the project process to allow it to have maximum impact on the outcome of the project. The five stages of a value management exercise are information, speculation, evaluation, development, and recommendation/implementation. The process formalises the essential client requirements and retains the correct focus throughout the project lifecycle.
Value engineering is a systematic procedure directed towards the achievement of required functions at least cost. Unlike value management, it aims to provide an optimal answer to a design problem. Value engineering progresses from an initial solution to provide function-oriented alternatives generated in an unconstrained, creative environment.
- What information do you imagine would be required to begin the process of preparing the business case for the extension of an existing process plant located within a built-up area?
- What experience or knowledge do you have of the application of value management to a project? Where it has been applied, has it been used early enough in the process; and was it used regularly afterwards?
- In your experience, have you found it difficult to attract the attention and time of senior executives to discuss their proposed project? Comment on how their involvement or absence may have affected the outcome.
- What examples can you think of now where value engineering might have helped solve a design problem sooner rather than later had it been used?
- Assuming that value management is not practised comprehensively on your projects, how would you ensure that it is introduced so that it becomes a routine feature? What arguments against its use might you encounter and how would you deal with them?
References and bibliography
Barrett, P. and Stanley, C. (1999) Better Construction Briefing. Oxford: Blackwell Science.
BSI (2010) BS 8536:2010 Facility Management Briefing – Code of Practice. London. British Standards Institution.
Construction Industry Board (1997) Briefing the team: A guide to better briefing for clients. London: Thomas Telford.
CIOB (2009) Code of Practice for Project Management for Construction and Development, Fourth edition. Wiley-Blackwell.
Kelly, J., Male, S. and Graham, D. (2004) Value management of construction projects. Oxford: Blackwell Science.