The Value Management Team: Engineer Instructor and Construction Contract Administrator - Research Paper Example

 An assessment on the value enhancement possibilities for a local community in the interest of stakeholders with an aim on value for money; to enhance the health, wellbeing and quality of life of citizens and to achieve a return on investment from the commercial aspects of the project. The report addresses risk organising and also focuses on the significance of value management. The idea generation stage produced 40 results; there is a further development of those ideas into action plans A. Executive Summary A value management workshop to consider the SBEinnovations project. Various stake holders would be included. An imperative part of the workshop is to create an evaluation matrix to verify the value ratio and rank on engineering and management with evaluation criteria identified, defined and explored. The criteria applies to each option for each of the segments of the value analysis. An idea generation stage for the procedure to produced a number of ideas for refinement of the various preferred options. The ideas are then developed into an action plan. 1. Introduction: Background to value management SBEinnovations Ltd, a partnership between a private developer and a local authority adopts the methodologies of design and construction for a mixed-use recreation and commercial centre to stimulate development. The concentration is around a hub that facilitates community involvement, improves health and education within the community, and stimulates commerce through business and leisure facilities. There is also an emphasis on value for money but not to undermine innovations in the design scheme. The local authority would work hard in ensuring the community buildings are well upgraded to modern standards and that it is well accessible. Although the population growth rate has doubled over the years yet there has been no initiative to improve living conditions as this joint venture, the residents are excited at the proposal and are willing to offer their possible assistance to the project. Currently, there are no known restrictions to the project. This would be wonder comes at a £9M budget which would be well managed to offer return on investment. 2. Purpose of value management Is one of the processes that correlates or complements successful structural design implementation. The introduction of the VM offers prospects for shared understanding; what options provide the best balance across social, environmental, economic and engineering issues notwithstanding costs. This approach ensures consistency in the value derived from maximizing stake holder interest. Strategies to actually increase not just the present but future value are included in the plan as an option: creating value, if well carried out the results would be tremendous allowing room for complex consignments and profiteering. Managing for value permits governance, change management, organisational structure, communication, leadership, decision making, concise contingencies, in the best effort to achieve value for money (VFM). The process endures monitoring and crowns on valuation, measuring value. Measurement warns of any discrepancies in the process, by it we can draw worthy inferences. VM depends on corporate purpose and corporate value. 3. Benefits of value management VM can be a significant source of improvement in the construction industry. The constituents includes systemic structures that offers variances in projects based on comparison. It is useful in project forecasting ascribing cost in an efficient manner. The quantitative data has the tendency to improve competence, if relevant decisions are taken based on the data the improvements on the project are outstanding. The benefits are also seen in the speed with which problems are solved. The extra enhancement of the project with the addition of a VM shapes the industry as a whole. Value management also helps automate managerial processes with the introduction of specific class systems and frameworks. The need to automate and multiply structures in the construction process would be addressed by the VM. An alliance between on-site labourers and administration workers would further the course of the VM in achieving value and in preventing change resistance. At the early stage of the project, value management would help evaluate information systematically and routinely offering supports planning and control decisions. In effect, it encourages co-ordination and adds value to the entire project. There is easier control with the use of this tool and is worth it to include in the projects budget. The functionality of the project is improved at a reduced cost through the life -cycle. Value management ensures a second look to designs and more exploration assuring better value on the building. Moreover, emphasis on omissions reduces underestimations in the cost. Value management creates the environment for key project teams to come together in an engaging and free flow environment. 4. Project related issues There are no significant restriction in the plan of the project, therefore a wider area can be covered and more dynamic and contemporary ideas could be infused during the life-cycle. It would be beneficial to remain flexible and open to ideas. Particularly dedicated to motivating people, developing skills, and promoting synergies and improvement with the aim of maximizing the overall performance of an organisation. Starting with needs and strategic goals and focusing on root causes, it’s a top-down procedure. Key stakeholders agree on the need for the project or service, the scope, deliverables, key functions and risks, in the context of the wider business objectives. Best value Is a prime objective for a project or process, by defining those functions required to achieve value and delivering them at a reduced cost (whole life cost or resource use), consistent with the required quality and performance. Stakeholder workshops are held at key stages during the development of the project or review of a process or service. The activities involved are flexible, team-based , planned and directed by a VM facilitator and driven by consensus. The workshops are usually short in duration, about 6 hours to two days, concentrated and highly structured. 5. Value management focus The objectives of the project should reflect the entire principal needs and interests of all the stakeholders, with the owner’s needs prioritized over all others. Value management conveys certain attributes that makes it distinct. It brings together within a single framework management styles that encourage positive human dynamics, and consideration of external and internal environment. Value management focuses on function and not on cost although cost is reduced eventually. To achieve the required quality at optimum whole-life cost during the process of developing the project Identifying the requirements that will add demonstrable value in meeting pre-defined needs Ensuring right choices on obtaining the best possible balance of benefit in relation to cost and risk To maximize project value within time and quality constraints To provide a conducive environment which enable coordination between team players and achieving better results Without lessening value, to remove unnecessary or wasteful processes and practices Establish a workable value management framework for the continuous review of project development against the client's needs and objectives Apply selection and award criteria To establish the concept of value and to rely on the relationship between satisfying many differing needs Integrate project team's expertise in improving functionality to aid faster implementation To fuse together differing perceptions in an attempt to harness the positives of conflicts of interest. To ensure SMART value management as developed in accordance with the principles of group decision support Resolving ambiguity by constructing a shared consensus of the project objectives It is worthwhile to extend the benefits of a well organised value management so us to present an effective end product in the community. 6. Team selection Team selection for the workshop is fundamental to success, this will guarantee a full range of influences are properly addressed. The expertise knowledge and experience would contribute significantly to the project. The value management team (VM study team) would be effective with support of cost cutting or reduction studies performed by the value engineering team. The two functions should be done together so us to support or complement each other in a collaborative effort. It is important to select experts who are committed to ensuring user or owner satisfaction, in this case the local community and other stake holders. SBEinnovations would have a separate key management team members, who will interpret the data and various assessment modules and reports pronounced by the teams. The study teams should include the principal manager, value engineer instructor, construction contract administrator, project manager and the architect. In practice, a team would include all the key managers and would be responsible for both value engineering and value management to reduce cost. The project manager would keep in check the four basic project components; time, resources, budget and scope. This is usually administrative, most of the decisions would be left with the principal manager. The project manager acts as a liaison with top management, he coordinates and controls the project by performing regular process checks and monitoring , motivation is a tool the project manager adopts on project success. The contract administrator prepares building and soil erosion applications for permit, he is responsible for contract meeting packages and he will prepare every necessary documents prior to the meeting. Must attend such meetings and partake in the discussions, letters and memos are handle with his office or authority and any such legal documents. Included in the documents are the subcontract agreements and purchase orders. Besides all these documents, the contract administrator also prepare operation and maintenance manuals and maintain and organise plan room. The architect is responsible for planning, design and oversight of the construction of buildings, and his inclusion in the team would help give a visual evidence of the what is necessary for the completion of the project. The architect participates in developing the requirements the client wants in the building. Value can be increased by either improving the function or reducing the cost, the value engineer defines structures by which cost can reduced. He uses a combination of cost techniques to ensure the project runs within budget. Reorganisation, negotiation, operational efficiency, elimination of waste, quality improvements, all forms part of the paraphernalia of modern value engineering. 7. Proposed agenda VM studies cover three functional areas, pre-workshop preparation, workshop study and post- workshop implementation. At the preparation or the pre-workshop there would be scheduling, facility criteria is drawn, an outline of the projects focus and what it entails. Pre-Workshop. Society of American value Engineers (SAVE) proposes an international standard. Pre-workshop Scheme dexterity: Team, schedule, agenda Record footing: Competence criterion, representation, financial plan Modeling: Quality, curriculum [Cost, oomph, Risk] Workshop Information Phase: Secure facts, determine cost, fix costs on specific criteria and requirements. Function Phase: Definitions of function, evaluate relationships [FAST diagramming] and cost these functions. Creativity Phase: Institute positivity, develop creative ideas in a team setting. Evaluation Phase: Weigh up ideas by the pros, process and combine ideas Development Phase: Expand best ideas into options, identify performance improvements, estimate costs, life cycle costs, sketches Recommendation Phase: Present proposals that resolve the study issues and motivate to action. Post-Workshop Study Report VM Proposal Acceptance Meeting Implementation of Proposals Project Follow-up VM study principally depends on proper preparation and coordination. Constraints to the VM study should be addressed in broad detail to enable the team to respond to it effectively. A narrative expression of "owner expectations" for the project is in order. Key issues on the subject of: operational efficiency, engineering performance, security, schedule, expenditure, flexibility, employee comfort, environment. There should be great vigilance to ensure a wider and more extensive area is covered, checking and rechecking scrupulously with owner interest in mind. 8. Tools and techniques To define what value is an analysis based on tools and techniques is carried out in that high quality at a low cost is the prime objective. Value to each stake holder may mean different, it is up to the partnership and the community to clearly mark out its definition for value. Cost benefit analysis is a tool used to compare cost , this places a limit on the use of resources, resource that are used must tally with the objectives of the project. The objectives of the project are weighed and compared with a figure placed on each, the high ranking figures or options are selected, termed as the criteria weighing technique, an effective tool in decision making. Fast analysis (function analysis system technique) necessitates a comprehensive approach by contrast, tools that identify each function and places a demand on the value content it produces. This is to understand how effective the process is, or has been. In identifying possibilities to system failure , the risk analyses tool is used to perform checks in order for recommendations to be effected, costs involved, time constraints and other variables when marked up closely determine whether or not an alternative should be considered. Risk analysis helps in making decisions and investment based on quantitative data and not just intuition. Several other tools are employed in the project, there should be room for contingencies in an event such us a delay or failure in the process. The available tools would help foster high yielding turnouts. 9. Follow up value engineering study Value engineering may be applied at any point in time during the project life-cycle. The process should be continuous and must review all the other functions and processes involved. Value engineering always considers better value alternatives with regards to the components of the project. It usually keeps the team on check, so us to minimize wasteful process and inefficiency in the design. Value engineering is different from value management in theory and in practice, the implementation is different in both cases. it is rarely justified for the soft, messy and ill-defined problems which often dominate during the early stages of building design . The technique adopted for the purpose of problem structuring, for hard technical problems. It usually saves money through cutting down waste and improving standards. Value Engineering is concerned with the achievement of necessary functions at minimum cost without detriment to quality, reliability, performance or delivery. Clearly, it focuses on cost, constant effort will be made to maintain the quality of the project. Used in assessing possibilities of the building by comparing the resources available. Typical action to reduce risk arising from value engineering studies can take the form of re-designing , detailed design or further site investigation to improve the information on which estimates and programs are based. The ratio of function to cost, the underlying factor of the whole process, here is either enhancing function or reducing cost. The value is optimized by weaving a mix of performance, a structured thought process, the aim is to weigh the benefits derived from a function or process. 10. Value engineering team The team would carry out the techniques in accordance with great skill an expertise, due the projects weight, a few more members maybe required including the designer or architect, project manager, constructor, team coordinator, operations manager. In covering the entire community, if the experts are not fully trained to handle cost there might be frictions in the realization of the project. Each of the team members should have had about 40 hours value engineering seminar or prior training, with at least a 10 year experience in the field. The proposed schedule should support design schedule and include reports for processing at the end of the project. 11. Focus for value engineering Value engineering uses techniques at various design phases to cut down cost. The following steps are required to build and develop the value engineering exercise: Information gathering Function analysis Creative phase Evaluation Development Implementation Evaluating the function of the process and focusing on poor value items/functions. This approach requires extensive team interaction and creativity. The specific task required to satisfy a customer need is what the function is about and the cost is the resource consumed in achieving the function. Function analysis is done at the initial stages. After which various alternatives are explored to indentify the most expedient. Risk Management In practice In achieving excellence in construction procurement, client leadership and robust project management are prerequisites, risk management entails an analysis of possible loss. Every successful project may have been exposed to some form of risk or the other. The success of the project depends on management’s ability to anticipate possible failures and threats and by so doing making amendments and preparations for it. Managing risk with the solutions associated with whole life business. Many may regard the project as some sought of barrier to success in the project, that is not the case however, excellent projects have been well managed and have included the so called wanton requirements of risk, most of these turn out better. Poor risk management on the other hand would have significant consequences for the project. Failure to comply would not only harm profits but result in an unfortunate appeal to the end product. Although separate problems, separate evaluation methods, different use of technology and procedure, it must be understood that risk and value management work together. It would be worthwhile to tabulate a parallel application of the two processions to achieve the requisite. An assessment of what actually constitutes value should be a good omen to instigate the procedure on. The assessment would be reviewed from time to time throughout the project life-cycle as a directional function and to achieve an optimum balance of risk and value. Inadequacy in the training and understanding of proper risk analysis are on the leading dialogues on construction development, it is seen as the progress delay catalyst. A full dependence on risk assessment may sometimes hinder entrepreneurial initiatives, risk are not always negative, sometimes there are benefits associated with taking risk, whatever the case, it is certain that risk is inevitable. Some degree of deliberate acceptance of risk, a common procedure in construction pronounces rewarding value and if you may profits. Critical examination of the project at significant stages by employing the gateway process helps to reduce the overall risk. The team should arrange for an (RPA), the risk potential assessment plays an important role in gateway risk analysis, pertaining to objectivity and innovation. Stakeholder needs are ranked on a high priority, needs should be identified and proper arrangements for meeting those need should be made. Strategic assessment, high level risk assessment value study all forms part of the process. Specifications are developed out of the study to be used in the project. Residual risk and continuous management of risk allowance and covering all the aspects of risk, this implantation is done with careful planning in a joint risk management approach. Risk management continues even in the construction stage, where it is done from time to time along with the construction. The aim of risk management is to ensure that threats are acknowledged facing the program and throughout the construction and possibly the impacts reduced. A risk analysis strategy involving Identification, where the attributes that results in risk are identified and Assessment where the probability of its incidence; frequency of occurrence is monitored. Risk management process Risk identification Identify project, product and business risks; Risk analysis Assess the likelihood and consequences of risk Risk planning Draw up plans to avoid or minimize the effects of the risk; Risk monitoring Monitor the risks throughout the project; The identification implies the following questions: What they are? What effects they cause? What measures we can take against risk? Various types of risk can be identified, some includes: Technology risk The design, quality of materials, new technologies used People risk Skill level of people Organisational risk Effectiveness, competitive advantage Estimation risk Omissions, accuracy, timeliness Tools For Identifying Risk Brain storming The session is attended by the project owner, project manager, risk manager and design team Interviews The use of various techniques Questionnaires Combination of previous experience and project criteria Use of specialists Previous experience An assessment may be either quantitative or qualitative. On qualitative measures, it will imply the classification of references ; environmental- site condition, health and safety contractual, client, contractor third party design planning permission . Here there should be a clear description of risk and the relationship to other risk, it’s potential impact and probability of occurrence. The risk responsibility owner should be clearly stated with a method of response or mitigation strategy. Quantitative Assessment involves simple assessment , probabilistic analysis, multiple estimating using risk analysis, sensitivity analysis, multiple estimating using risk analysis, decision trees, simulation. The chosen strategy has to do with the type of risk or function. The cost of risk Risk would be constantly changing, the use of a risk register to record this changes and other discoveries on the risk issues would offer a data base or record to assess future risk, in that all records are kept, it also ensure some form of monitoring. Coordination, planning, control is overseen by the risk manager. After the transfer of risk, there should still be some form of monitoring, if not, negligence would set in and cripple the whole process. Core and supplementary reading is identified in each unit with, where appropriate, specific chapter references given relating to the material discussed in the unit. Reading is drawn from the following texts. Core texts Kelly J and Male S, Kelly J, Male S and Graham D, Value Management of Construction Projects, Blackwell 2004 Flanagan , R and Norman, G Risk Management and Construction Blackwell Science 1993. Appendix 2 and 3 – These are produced by the Office of Government Commerce as part of their Achieving Excellence in Construction Series of Procurement Guides. They explain how VM and RM can be integrated into “normal” project management. Appendix 4 – HM Treasury “The Step by Step Guide to the PFI Procurement Process” 1999. Supplementary reading Norton B R and McElligott W C, Value Management in Construction: a practical guide, MacMillan. Kelly J, Male S and Graham D, Value Management of Construction Projects, Blackwell 2004 S Male and J Kelly et al, The Value Management Benchmark: A Good Practice Framework for Clients and Practitioner, Thomas Telford publishing, 1998. Raftery, J Risk Analysis in Project Management E and FN Spon 1994. Edwards , L Practical Risk Management in the Construction Industry Thomas Telford 1995. Sawczuk, B Risk Avoidance for the Building Team E and FN Spon 1996. Smith, N.J Managing Risk in Construction Projects Blackwell Science 1999. Also, see individual units for further details Read More