Value Management for TechWatt Corporation - Case Study Example

Value Management Study for TechWatt Corporation Executive Summary This Report focuses on TechWatt Corporation’s request for a VM study regarding itsplanned expansion program. The firm wants to build a regional headquarters, and has asked this consulting firm to provide a VM study wherein functional benefits of the construction are emphasized. A background of the project is first provided and analyzed. The members of the study group are then formed, and the agenda, the techniques to be used, and problems to be discussed, are formulated. Functional analyses in the construction of the project is of primary objective of the study. The VM study group will come up with a conclusion and recommendations to the CEO of TechWatt Corporation. Introduction Value Management (VM) is a process whereby team efforts are made to understand the functions of a system in order to realize the essential functions of that system at the lowest possible life-cycle cost (Younker 2003, cited in Mao et al., 2009, p. 417). As a definitive tool to improve the value of a system, VM has been widely used by government agencies, financial institutions, manufacturers, construction designers, and contractors. The objective of the value management study for TechWatt Corporation is construction of a regional headquarters, which will accommodate management and administrative employees, a workshop for hi-tech light manufacturing processes, a receiving area for guests and potential clients, and some tour facilities. The architects and engineers are the main participants of the VM study, but the VM workshop will include all valued stakeholders of a new regional headquarters for TechWatt Corporation. The workshop will also include branch managers and department heads, selected staff of the different departments, and other important personnel who can contribute their ideas and talents for the success of the workshop and the project. One way of creating a sound business atmosphere is to produce and show to the client and the stakeholders the good ‘valuing’ of the project/s being undertaken. This requires greater knowledge in value management. TechWatt Corporation is in the IT business, involved in computer hardware and software systems. It is still growing and needs to expand amidst the challenges of globalization. Its CEO wants to know the costs of building a regional headquarters and in attaining this, the functions in the construction have to be analyzed. This is the main focus of the agenda: the TW management wants to know how the regional headquarters can be constructed at the lowest cost, without sacrificing quality. TechWatt Corporation can benefit from value management through a careful study of the functions involved in the proposed regional headquarters. Creative minds will come from the members of the VM study group. VM Agenda The value management (VM) study will have the following agenda: A very important aspect of the study is “functional benefit,” which refers to the benefits that each of the functions in the project will be delivered to the client. This may answer the questions: what benefits will the product or service create? What will the TechWatt Corporation regional headquarters provide in terms of organisational development and competitive advantage? This benefit should be appraised as to how it is valuable and beneficial to the client, and how optimum value of the project can be attained. The value system has to be expressed and known to the client, and also according to the specifications of the client. The client’s value system can be used to audit the client’s use of a facility in relation to its corporate strategy. (Kelly and Male, 1993, p. 3) Functions of personnel involved in the VM study According to Younker (2003, p. 1), one of the most critical factors that influence the success of a value engineering team is the effectiveness of the team leader and members. Therefore, this VM study will use the services of the best from among the managers and staff of TechWatt Corporation, and also the best of this consultancy firm to provide a comprehensive and best solution study for TechWatt Corporation. 1. Designers/architects/engineers This valuable group – the designers, architects and engineers – will first conduct a feasibility study. The study will involve searching for a location of the regional headquarters, the possible costs, and all the major points and problems involved in the project. The group will make their recommendations to the VM study group, who will assess the situation. The workshop will now start their assessment of the different functions in the projects. Functions are analyzed so that unnecessary costs can be minimized or removed. 2. Managers and department heads Branch managers and department heads of TechWatt must have wonderful ideas to contribute to the success of the project. Creative ideas can be sourced out from this group because they are the direct beneficiaries of the project. Either they will have rooms or offices in the building to be constructed, or one of their personnel could be assigned to these offices, the managers and department heads are sure to have direct influence on this project. 3. Staff and personnel Staff and personnel of TechWatt who will hold office at the proposed regional headquarters should also have a say in this project. Their ideas and opinion will greatly influence the outcome of the project. Information the client needs TechWatt Corporation needs to know the functional benefits of each stage of construction. For example, the accommodations for the management and employees, the hi-tech workshop, the receiving area for clients, and other amenities, will have to be described in the workshop. The cost of each of these functions, including how unnecessary costs can be avoided or minimized, should also be stipulated in the study. The VM study for TechWatt Corporation is a part of the decision-making procedure of the firm, therefore, the analyses, assessments, and other important details, to include possible problems that may arise in the future, should be included in the report to the client. The study should focus on the real issues and clarify expectations and problems that may arise in the course of construction. VM tools and techniques to be applied in the study One of the techniques of the study is brainstorming. The study group will focus on discussions and brainstorming sessions. The primary objective here is to source out the best ideas and suggestions from the members of the study group. A primary objective of value management study is to avoid unnecessary costs. Unnecessary cost is defined as ‘cost which provides neither use nor life nor quality nor appearance nor customer features’ (Kelly et al, 2004, p. 12). We can follow the construction technique of TechWatt Corporation in avoiding unnecessary costs, by emphasizing the verb-noun function definition, a technique first introduced by Lawrence Miles, when he was asked to reduce the cost of manufacturing. Miles’s example of a function definition is a simple choice that an owner can take, and that is to select the cheapest possible means of achieving the function. The one responsible for defining the value of each function would have to determine the lowest cost to meet the functions as defined. (McGeorge and Palmer, 2002, p. 11) This process used in the VM study contains three sections: preworkshop, workshop, and postworkshop. First, a multidisciplinary team reviews the project plan and assesses the possibility of improving the project value. The process will start in the design stage because the contractor’s practical experience and expertise, innovative construction plan and construction methods, and improved construction logistics management can lead to substantial cost savings, better quality, and earlier project completion. (Mao et al., 2009, pp. 417-18) The workshop proper will start assessing the accomplishments of the preworkshop stage, until such time that all the activities shall have been polished, and every activity and stage in the construction is defined. The aim is to arrive at the best project design with all the functions addressed in the early stages. The post workshop will eliminate, if possible, all the problems to allow the construction to go on a smooth sailing. One of the mechanisms or tools being used in value management is known as functional analysis system technique (FAST) (Cariaga et al., 2007, p. 761). This mechanism is a diagram, which defines the “value” map of the design, and to find the objectives and functions of the design or facility. Another method is quality function deployment (QFD), which is used to establish a matrix that helps define the value of each option (the degree by which each option satisfies the design objectives)” (Cariaga et al., 2007, p. 761). Important tasks with which the VM team was formed are emphasized in the QFD technique. Through quality function development, the value management team can know the “whats” of the project, or the customer requirements through the use of a tool known as functional analysis system technique (FAST). Other benefits of the use of QFD include the ability to relate various design options (the “HOWS”) to each customer requirement, and the ability to provide a decision-support environment to the project decision maker to assist in selecting the most suitable alternative (the “WHYs”). (Cariaga et al., 2007, p. 761) This is an example of a QFD methodology model. SOURCE: “Integrating value analysis and quality function deployment for evaluating design alternatives,” by I. Cariaga, T. El-Diraby, and H. Osman (2007, p. 762). Quality function deployment is defined as “deploying the attributes of a product or service desired by the customer throughout all the functional components of an organisation” (Xie et al., 2003, cited in Cariaga et al., 2007). The different phases of the workshop The workshop will go through the different phases, for instance, the initiation and information wherein the VM team will agree on the project and study objectives. Phase 2 will identify constraints and opportunities, strengths and weaknesses. A functional analysis will be the speculative stage, until the team will arrive at recommendations. The VM study group will complete the final study report to the TechWatt Corporation. Conclusion/Recommendations Forming value management teams provide great innovative potential if the team is composed of individuals of multidisciplinary orientation (Fong et al., 2007). The individual members are brought together coming from the different departments of the organisation. The VM team conducts a workshop where knowledge from different stakeholders is interactively created and processed through managing teams, creating shared awareness, and developing shared understanding. At the conclusion of the VM study, TechWatt Corporation will have knowledge of the true cost of the operations, the approximate period of construction, enhanced understanding of the true costs and functions of operations, and the ability to contribute to the management of the regional headquarters construction project. References Cariaga, I. et al., 2007. Integrating value analysis and quality function deployment for evaluating design alternatives. Journal of Construction Engineering and Management, Vol. 133, No. 10, October 1, 2007. ISSN 0733-9364/2007/10-761–770/. Constructing Excellence in the Built Enironment. Available from: http://www.constructingexcellence.org.uk/resourcecentre/publications/az.jsp?azID=17244&level=0 [Accessed 12 July 2010] Dallas, M., 2006. Value & risk management. UK: Blackwell Publishing Ltd. Fong, P. et al., 2007. Dynamic knowledge creation through value management teams. Journal of Management in Engineering, Vol. 23, No. 1, January 1, 2007. 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Enhancing value engineering process by incorporating inventive problem-solving techniques. Journal of Construction Engineering and Management, Vol. 135, No. 5, May 1, 2009. DOI: 10.1061/_ASCE_CO.1943-7862.0000001. McGeorge, D. and Palmer, A., 2002. Construction management: new directions (second edition). UK: Blackwell Publishing. Younker, D., 2003. Value engineering: analysis and methodology. New York: Marcel Dekker, Inc. Read More