An overview of the salient features of ‘Value

Management’

ADAM ROBERTS & JOHN HEATHCOTE – MAY 2014

AGENDA

• Introduction (5 min)

• What is Value Management? (45 min)

• Research experiment (20 min)

• Further discussion (40 min)

• Presentation of findings (10 min)

INTRODUCTION

 Adam Roberts - Project Manager London Underground(MAPM) Full member of the APM

Committee member of the APM VM SiGFinal year of MSc. Strategic Project

Management

John Heathcote – Senior Lecturer Leeds Metropolitan University(MBA / MAPM) Full member of the APM

Chairman of the APM VM SiG

THE ORIGINS OF VALUE MANAGEMENT

• Value Analysis was developed for procurement by a General Electric Company employee, Lawrence D Miles, in 1947

• The success throughout 92 GE departments resulted in the training of thousands of employees in the basics of Value Engineering

• The technique first came to the UK in 1957

- Source: Institute of Value Management (IVM)

DEFINITION OF VALUE?

“All cost is for function” - Lawrence D Miles (1904 – 1985)

“A measure of how well an organisation, project, product, or service, satisfies stakeholders’ objectives in relation to the resources consumed” 

- Source: EN1325 - 1

WHAT IS VALUE?

V (Value) ∝ B (Benefits + Requirements) / £ (Cost)– OGC (2010)

“Value increases when the satisfaction of the customers needs augments and the expenditure of resource diminishes”

– Source: Robert Tassinari (1995)

OBJECTIVE / SUBJECTIVE?

Value is Subjective – OGC (MoV)Value is a Subjective term – APM BoK 6th Edition

So: Is the Management of Value - Subjective or is it Objective?

MANAGEMENT OF VALUE - OGC

• Value = Currency• Value as in Portfolio / Programme / Project = Value

for money• Reflected in measurable cost

DISCUSSION

• If Value is Subjective how can we make managing Value an Objective process?

• If the Value (in currency) is specified via a consensus of all Stakeholders, can the management of this Value be managed Objectively?

• Is there a risk when attempting to manage Value Subjectively?

• Can Value be managed both Subjectively and Objectively depending on the level of requirements definition?

BALANCE

• Value is a balance of:• Risk• Resources• Quality

• Detailed requirements ∝ Objective / Subjective process

“Truly successful Project Managers understand that Projects exist only to promote and Benefit the organisation at large”

- Source: John C Goodpasture (Managing projects for Value)

APM BOK 6TH EDITION

“Value Management is an established, structured approach to both requirements management and solutions development. This is a consultative approach that focuses on the Value that can be generated by Stakeholder Requirements”

- Source: APM BoK 6th Edition

FRAMING

• Establishing high level principles • Establishes function integration to maximise Value• Develop Value profile• Relative contribution to the Value of each

requirement

- Source: APM BoK 6th Edition

GATHERING

• Focus groups, personal interviews, surveys, etc.• Agile methodology – continuous gathering • Value Management includes Lessons Learned

- Source: APM BoK 6th Edition

ANALYSING

• Combines functions with Value based techniques• Function Analysis• Function Cost Analysis

• Understanding of Requirements- Source: APM BoK 6th Edition

PROCESSING

• Provides feedback to Stakeholders• Builds consensus• Generates ideas

• Communicated through various methods• Individual consultation / group workshops, etc.

• Leads to debate- Source: APM BoK 6th Edition

WHAT IS VALUE MANAGEMENT?

“Value Management is the name given to a process in which the functional benefits of a project are made explicit and appraised consistent with a Value system determined by the client”

Value Management is a process and links the functional benefit with the client’s expectation

– Source: Kelly. J et al (2004)Value Management of Construction Projects

DEFINITION OF VM- (EN 12 973)

 “Value Management is a style of Management,

particularly dedicated to motivate people, develop skills and promote synergies and innovation, with the aim of maximising the overall performance of an organisation”

- Source: (EN12973)

DEFINITION OF VM - IVM

  “Value Management is a structured team based

approach to identify functional requirements of Projects and / or contracts to achieve Optimum Function for Minimum Cost”

- Source: Institute for Value Management website

VM SIG WHITE PAPER

• Value Management greatly Enhances Value for Money

• Benefits should not be accepted at any price• There is not always a link between TCQ and

benefits • Value Management / Engineering techniques

creates Value early in the life of a project

- Source: APM VM SiG (Peter Langley)

European Standard

“The EN 12 973 represents a consensus of views and provides a benchmark of good practice.  It is designed to provide flexibility and can be applied in a very wide range of circumstances.  It captures the essence of Value Management and provides a framework for its application.  It describes a range of useful tools and encourages the selection of the most appropriate methods to achieve the desired outcome”

- Source: EN 12 973

WHAT VALUE MANAGEMENT IS NOT

Value Management / Engineering / Analysis is definitely NOT a cheapening process!

Reliability and performance should never be sacrificed just for the sake of cutting costs…

FINDINGS

Total No of participants:

Total Number 131: Total Number 134:

Completed 131Completed 134:

% Complete 131% Complete 134

Average time 131Average time 134

% time difference

44

2222

1315

59%68%

496 s323 s

53.6%

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