Value and Risk Management - Research Paper Example

Capital projects such as being considered to be undertaken by SBEInnovations Ltd. for the purpose of developing a mixed-use recreation and commercial center (MRCC) to stimulate development and enhance the local community is unique, unlike repetitive processes like manufacturing. Therefore, to avoid the high level of confrontation resulting from poor communications, low margins, and customer dissatisfaction, it is proposed that effective VM programme is implemented which would obviate these shortcomings and lead to much higher levels of all-around satisfaction.

As in the case of the value management study team, in the context of the present MRCC project, value engineering study would be undertaken by a special team to examine the functions and quality of projects to generate practical cost-effective alternatives that meet customer requirements. Even though VE can be applied during any stage of a project’s design development cycle, yet it is recommended that it should be applied early in the developmental and conceptual stage, where the greatest benefit and resource saving can be availed.

The reason being at this point in time the basic information of the intended project is established, but before major design and development resources are spent. In a construction project such as MRCC, value engineering can be applied at multiple occasions during the lifecycle of the MRCC Project. While the early application of VE would get the project move in the right direction, repeated applications based on new or changing information will help MRCC project to refine its direction. Moreover, the later a VE study is conducted, the higher the cost of change will be to implement the improvements.

It is recommended that for the present MRCC project, VE follows up study would be to implement at three different design stages as mentioned in the figure below. The first VE study (VE1) is to be ideally undertaken during the design planning stage to define project functions, goals, objectives, requirements, design criteria and scope of work (SOW). It is then to be followed up with the second VE study (VE2), which is to be applied when 15 -30 percent of the design is over.